<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
_______________
<TABLE>
<S> <C>
For Quarter Ended Commission File Number
July 16, 1995 33-59212
</TABLE>
FOOD 4 LESS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0642810
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification Number)
1100 West Artesia Boulevard
Compton, California 90220
(Address of principal executive offices) (Zip code)
</TABLE>
(310) 884-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____.
-----
At August 31, 1995, there were 16,796,928 shares of Common Stock
outstanding. There is no public market for the Common Stock.
===============================================================================
<PAGE> 2
FOOD 4 LESS HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated balance sheets as of
July 16, 1995 and January 29, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated statements of operations for the 12 weeks ended
July 16, 1995 and June 25, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated statements of operations for the 24 weeks ended
July 16, 1995 and June 25, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated statements of cash flows for the 24 weeks ended
July 16, 1995 and June 25, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated statements of stockholders' equity as of
July 16, 1995 and January 29, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART II. OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . 22
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Index to Exhibits
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
1
<PAGE> 4
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
July 16, January 29,
ASSETS 1995 1995
---------- ----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 51,379 $ 19,560
Trade receivables, net 59,273 23,377
Notes and other receivables 5,778 3,985
Inventories 477,209 224,686
Patronage receivables from suppliers 2,405 5,173
Prepaid expenses and other 29,254 13,051
---------- ----------
Total current assets 625,298 289,832
INVESTMENTS IN AND NOTES RECEIVABLE FROM
SUPPLIER COOPERATIVES:
A. W. G. 7,288 6,718
Certified and Others 5,651 5,686
PROPERTY AND EQUIPMENT:
Land 185,872 23,488
Buildings 215,217 24,172
Leasehold improvements 221,534 110,020
Store equipment and fixtures 409,033 190,016
Construction in progress 22,834 8,042
Leased property under capital leases 167,764 82,526
Leasehold interests 118,948 96,556
---------- ----------
1,341,202 534,820
Less: Accumulated depreciation and amortization 175,625 154,382
---------- ----------
Net property and equipment 1,165,577 380,438
OTHER ASSETS:
Deferred financing costs, less accumulated amortization
of $2,010 and $20,496 at July 16, 1995 and
January 29, 1995, respectively 86,263 25,469
Goodwill, less accumulated amortization of $45,072
and $38,560 at July 16, 1995 and
January 29, 1995, respectively 1,114,463 263,112
Other, net 37,074 29,440
---------- ----------
$3,041,614 $1,000,695
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
2
<PAGE> 5
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
July 16, January 29,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995
---------- ----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 311,226 $ 190,455
Accrued payroll and related liabilities 92,880 42,007
Accrued interest 17,644 10,730
Other accrued liabilities 149,010 65,279
Income taxes payable 1,491 293
Current portion of self-insurance liabilities 57,169 28,616
Current portion of long-term debt 13,438 22,263
Current portion of obligations under capital leases 18,499 4,965
---------- ----------
Total current liabilities 661,357 364,608
LONG-TERM SENIOR DEBT 1,160,580 320,901
OBLIGATIONS UNDER CAPITAL LEASES 122,613 40,675
SENIOR SUBORDINATED DEBT 801,929 145,000
SENIOR DISCOUNT DEBENTURES 101,208 --
SENIOR DISCOUNT NOTES -- 65,136
DEFERRED INCOME TAXES 19,567 17,534
SELF-INSURANCE LIABILITIES 89,881 41,872
LEASE VALUATION RESERVE 25,493 --
OTHER NON CURRENT LIABILITIES 75,285 12,302
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Convertible Series-A Preferred Stock, $.01 par value,
25,000,000 shares authorized; 16,683,244 shares issued
at July 16, 1995 (aggregate liquidation value of $167.9 million)
and no shares at January 29, 1995 161,832 --
Convertible Series-B Preferred Stock, $.01 par value, 25,000,000
shares authorized; 3,100,000 shares issued at July 16, 1995
(aggregate liquidation value of $31.2 million) and no shares at
January 29, 1995 31,000 --
Common Stock, $.01 par value, 60,000,000 shares and 1,600,000
shares authorized at July 16, 1995 and January 29, 1995,
respectively; 17,207,882 shares and 1,386,169 shares issued
at July 16, 1995 and January 29, 1995, respectively 17 14
Non-Voting Common Stock, $.01 par value, 25,000,000 shares
authorized; no shares issued at July 16, 1995 or January 29, 1995 -- --
Additional paid-in capital 57,745 105,580
Notes receivable from stockholders (675) (702)
Retained deficit (262,774) (112,225)
---------- ----------
(12,855) (7,333)
Treasury stock: 410,954 shares of common stock at
July 16, 1995 (3,444) --
---------- ----------
Total stockholders' equity (16,299) (7,333)
---------- ----------
$3,041,614 $1,000,695
========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
3
<PAGE> 6
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
12 Weeks 12 Weeks
Ended Ended
July 16, June 25,
1995 1994
---------- --------
<S> <C> <C>
SALES $ 857,344 $ 581,076
COST OF SALES (including purchases from related parties for
12 weeks ended July 16, 1995 and June 25, 1994 of $37,664
and $29,646, respectively) 695,727 482,671
----------- ----------
GROSS PROFIT 161,617 98,405
SELLING, GENERAL, ADMINISTRATIVE AND OTHER, NET 163,654 76,778
AMORTIZATION OF EXCESS COSTS OVER NET ASSETS ACQUIRED 4,683 1,787
RESTRUCTURING CHARGE 63,587 --
----------- ----------
OPERATING INCOME (LOSS) (70,307) 19,840
INTEREST EXPENSE:
Interest expense, excluding amortization
of deferred financing costs 37,915 16,235
Amortization of deferred financing costs 1,600 1,262
----------- ----------
39,515 17,497
LOSS (GAIN) ON DISPOSAL OF ASSETS (19) 118
----------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE
AND PROVISION FOR INCOME TAXES (109,803) 2,225
PROVISION FOR INCOME TAXES 200 1,600
----------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE (110,003) 625
EXTRAORDINARY CHARGE 35,358 --
----------- ----------
NET INCOME (LOSS) $ (145,361) $ 625
=========== ==========
PRIMARY EARNINGS PER COMMON SHARE:
Earnings (Loss) before extraordinary charges $ (5.33) $ 0.42
Extraordinary charges (1.72) --
----------- ----------
Net earnings (loss) $ (7.05) $ 0.42
=========== ==========
Average Number of Common Shares Outstanding 20,631,431 1,503,406
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE> 7
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
24 Weeks 24 Weeks
Ended Ended
July 16, June 25,
1995 1994
---------- --------
<S> <C> <C>
SALES $1,480,942 $1,168,947
COST OF SALES (including purchases from related parties for the
24 weeks ended July 16, 1995 and June 25, 1994 of $79,434
and $69,869, respectively) 1,212,157 961,853
---------- ----------
GROSS PROFIT 268,785 207,094
SELLING, GENERAL, ADMINISTRATIVE AND OTHER, NET 255,006 167,226
AMORTIZATION OF EXCESS COSTS OVER NET ASSETS ACQUIRED 6,512 3,559
RESTRUCTURING CHARGE 63,587 --
---------- ----------
OPERATING INCOME (LOSS) (56,320) 36,309
INTEREST EXPENSE:
Interest expense, excluding amortization
of deferred financing costs 55,813 32,910
Amortization of deferred financing costs 2,994 2,524
---------- ----------
58,807 35,434
LOSS (GAIN) ON DISPOSAL OF ASSETS (436) 96
PROVISION FOR EARTHQUAKE LOSSES -- 4,504
---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE AND
PROVISION FOR INCOME TAXES (114,691) (3,725)
PROVISION FOR INCOME TAXES 500 2,000
---------- ----------
LOSS BEFORE EXTRAORDINARY CHARGE (115,191) (5,725)
EXTRAORDINARY CHARGE 35,358 --
---------- ----------
NET LOSS $ (150,549) $ (5,725)
========== ==========
LOSS PER COMMON SHARE:
Loss before extraordinary charges $ (5.28) $ (4.14)
Extraordinary charges (1.62) --
---------- ----------
Net loss $ (6.90) $ (4.14)
========== ==========
Average Number of Common Shares Outstanding 21,811,279 1,382,224
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE> 8
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
24 Weeks 24 Weeks
Ended Ended
July 16, June 25,
1995 1994
-------- --------
<S> <C> <C>
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Cash received from customers $ 1,480,754 $ 1,168,947
Cash paid to suppliers and employees (1,459,333) (1,083,621)
Interest paid (42,120) (27,584)
Income taxes received (paid) 100 (1,899)
Interest received 228 417
Other, net (12,276) (2,753)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (32,647) 53,507
CASH USED BY INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 5,471 92
Payment for purchase of property and equipment (30,427) (33,656)
Payment of acquisition costs, net of cash acquired (440,620) (11,050)
Other, net (639) 752
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (466,215) (43,862)
CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 1,021,084 -
Proceeds from the issuance of preferred stock 135,000 -
Payments of long-term debt (621,392) (3,829)
Payments of capital lease obligation (3,294) (2,128)
Net change in Revolving Loan 2,700 -
Purchase of treasury stock, net (3,444) (466)
Other, net 27 (18)
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 530,681 (6,441)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 31,819 3,204
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,560 29,792
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 51,379 $ 32,996
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
6
<PAGE> 9
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
24 Weeks 24 Weeks
Ended Ended
July 16, June 25,
1995 1994
-------- --------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
Net loss $ (150,549) $ (5,725)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Restructuring Charge 63,587 --
Extraordinary charge 23,128 --
Depreciation and amortization 42,233 29,234
Accretion of discount notes 6,779 4,046
Gain on sale of assets (436) (22)
Change in assets and liabilities:
Accounts and notes receivable 4,765 2,491
Inventories 23,590 (1,019)
Prepaid expenses and other 5,520 (58)
Accounts payable and accrued liabilities (51,036) 31,550
Self-insurance liabilities (828) (7,091)
Income taxes payable 600 101
---------- ----------
Total adjustments 117,902 59,232
---------- ----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (32,647) $ 53,507
========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Acquisition of stores:
Fair value of assets acquired, less cash acquired
of $34,380 in 1995 $2,053,528 $ 11,187
Net cash paid in acquisition (440,620) (6,570)
Notes issued to seller (160,000) --
Capital contribution from stockholders (20,000) --
---------- ----------
Liabilities assumed $1,432,908 $ 4,617
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
7
<PAGE> 10
FOOD 4 LESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREFERRED STOCK PREFERRED STOCK NON-VOTING
SERIES A SERIES B COMMON STOCK COMMON STOCK
-------------------- ------------------- ------------------- ---------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- -------- --------- ------- --------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 29, 1995 -- $ -- -- $ -- 1,386,169 $14 -- $ --
STOCK SPLIT OF COMMON STOCK(16.58609143
SHARES TO 1 SHARE) (UNAUDITED) -- -- -- -- 21,604,957 8 -- --
ISSUANCE OF PREFERRED STOCK (UNAUDITED) 16,683,244 166,832 3,100,000 31,000 -- -- -- --
CANCELLATION OF COMMON STOCK (UNAUDITED) -- -- -- -- (5,783,244) (5) -- --
PREFERRED STOCK ISSUANCE COSTS (UNAUDITED) -- (5,000) -- -- -- -- -- --
PURCHASE OF TREASURY STOCK (UNAUDITED) -- -- -- -- -- -- -- --
PAYMENT ON STOCKHOLDER NOTES (UNAUDITED) -- -- -- -- -- -- -- --
ISSUANCE OF STOCK OPTIONS (UNAUDITED) -- -- -- -- -- -- -- --
NET LOSS (UNAUDITED) -- -- -- -- -- -- -- --
---------- -------- --------- ------- ---------- --- --- ------
BALANCES AT JULY 16, 1995 (UNAUDITED) 16,683,244 $161,832 3,100,000 $31,000 17,207,882 $17 -- $ --
========== ======== ========= ======= ========== === === ======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<TABLE>
<CAPTION>
TREASURY STOCK
-------------------
NUMBER STOCK- ADD'L TOTAL
OF HOLDERS' PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT NOTES CAPITAL DEFIICIT EQUITY
-------- ------- ------- ------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 29, 1995 -- $ -- $(702) $105,580 $(112,225) $ (7,333)
STOCK SPLIT OF COMMON STOCK(16.58609143
SHARES TO 1 SHARE) (UNAUDITED) -- -- -- (8) -- --
ISSUANCE OF PREFERRED STOCK (UNAUDITED) -- -- -- -- -- 197,832
CANCELLATION OF COMMON STOCK (UNAUDITED) -- -- -- (57,827) -- (57,832)
PREFERRED STOCK ISSUANCE COSTS (UNAUDITED) -- -- -- -- -- (5,000)
PURCHASE OF TREASURY STOCK (UNAUDITED) (410,954) (3,444) -- -- -- (3,444)
PAYMENT ON STOCKHOLDER NOTES (UNAUDITED) -- -- 27 -- -- 27
ISSUANCE OF STOCK OPTIONS (UNAUDITED) -- -- -- 10,000 -- 10,000
NET LOSS (UNAUDITED) -- -- -- -- (150,549) (150,549)
-------- ------- ----- -------- --------- --------
BALANCES AT JULY 16, 1995 (UNAUDITED) (410,954) $(3,444) $(675) $ 57,745 $(262,744) $(16,299)
======== ======= ===== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
8
<PAGE> 11
FOOD 4 LESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated balance sheet and statement of stockholders'
equity of Food 4 Less Holdings, Inc. (referred to herein as
"Holdings," and together with its wholly owned subsidiary, Ralphs
Grocery Company, which is the successor to Food 4 Less Supermarkets,
Inc., as the "Company") as of July 16, 1995 and the consolidated
statements of operations and cash flows for the interim periods ended
July 16, 1995 and June 25, 1994 are unaudited, but include all
adjustments (consisting of only normal recurring accruals) which the
Company considers necessary for a fair presentation of its
consolidated financial position, results of operations and cash flows
for these periods. These interim financial statements do not include
all disclosures required by generally accepted accounting principles,
and, therefore, should be read in conjunction with the Company's
financial statements and notes thereto included in Holdings' annual
report filed on Form 10-K for the fiscal year ended January 29, 1995.
Results of operations for interim periods are not necessarily
indicative of the results for a full fiscal year.
2. ORGANIZATION AND ACQUISITION
The Company is a retail supermarket company with 441 stores
located in Southern California, Northern California and certain areas
of the Midwest. The Company's Southern California division includes
manufacturing facilities, with bakery and creamery operations, and
full-line warehouse and distribution facilities.
ACQUISITION
On June 14, 1995, Food 4 Less Supermarkets, Inc. ("F4L
Supermarkets") acquired all of the common stock of Ralphs
Supermarkets, Inc. ("RSI") in a transaction accounted for as a
purchase by F4L Supermarkets. The consideration for the acquisition
consisted of $375 million in cash, $131.5 million principal amount of
13.625% Senior Subordinated Pay-In-Kind Debentures due 2007 of
Holdings (the "Seller Debentures") and $18.5 million initial accreted
value of 13.625% Senior Discount Debentures due 2005 of Holdings (the
"New Discount Debentures"). F4L Supermarkets, RSI and RSI's wholly
owned subsidiary Ralphs Grocery Company ("RGC") combined through
mergers (the "Merger") in which RSI remained as the surviving entity
and changed its name to Ralphs Grocery Company ("Ralphs"). The
financial statements reflect the preliminary allocation of the
purchase price as certain appraisals and other information needed to
complete the purchase price allocation have not been completed. The
allocation of the purchase price will be finalized in fiscal 1996.
The following unaudited pro forma information presents the
results of the Company's operations, adjusted to reflect interest
expense and depreciation and amortization, as though the Merger had
been consummated at the beginning of each period.
<TABLE>
<CAPTION>
24 Weeks 24 Weeks
Ended Ended
July 16, 1995 June 25, 1994
------------- -------------
(dollars in thousands, except share amounts)
<S> <C> <C>
Sales $2,506,633 $2,409,892
Loss before extraordinary charge (122,389) (110,940)
Net loss (159,547) (153,713)
Loss per common share:
Loss before extraordinary charge $ (7.29) $ (6.63)
Net loss $ (9.50) $ (9.19)
</TABLE>
The unaudited pro forma results of operations are not
necessarily indicative of the actual results of operations that would
have occurred had the purchase actually been made at the beginning of
each period, or of the results which may occur in the future.
9
<PAGE> 12
3. SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories, which consist primarily of grocery products,
are stated at the lower of cost or market. Cost has been principally
determined using the last-in, first-out ("LIFO") method. If
inventories had been valued using the first-in, first-out ("FIFO")
method, inventories would have been higher by $18,525,000 and
$16,531,000 at July 16, 1995 and January 29, 1995, respectively, and
gross profit and operating income would have been greater by $959,000
and $1,994,000 for the 12 and 24 weeks ended July 16, 1995,
respectively, and less by $2,256,000 and $1,521,000 for the 12 and 24
weeks ended June 25, 1994, respectively.
Reclassifications
Certain prior period amounts in the consolidated financial
statements have been reclassified to conform to the July 16, 1995
presentation.
4. RESTRUCTURING CHARGE
The Company has recorded a $63.6 million one-time
charge associated with the closing of 39 stores and one
warehouse facility. Pursuant to the settlement agreement with
the State of California, 24 Food 4 Less stores (as well as 3
Ralphs stores) must be divested by December 31, 1995.
Although not required by such settlement agreement, an
additional 15 under-performing stores are scheduled to be
closed by June 30, 1996. The restructuring charge consists of
write-downs of property, plant and equipment ($40.6 million)
less estimated proceeds ($16.0 million); reserve for closed
stores and warehouse facility ($16.1 million); write-off of
the Alpha Beta trademark ($8.3 million); write-off of other
assets ($8.0 million); lease termination expenses ($4.0
million); and miscellaneous expenses ($2.6 million). The
expected cash payments to be made in connection with the
restructuring charge total $7.2 million. It is expected that
cash payments will be made by June 30, 1996. The increase in
the restructuring charge over previous estimates is due
primarily to the addition of the $16.1 million reserve for the
closure of the warehouse and stores. The remaining increase
results from the identification of additional assets to be
written-off. During the 12 weeks ended July 16, 1995, the
Company utilized $44.7 million of the reserve for
restructuring costs. The charges consisted of write-downs of
property, plant and equipment ($31.3 million); write-off of
the Alpha Beta trademark ($8.3 million); and write-off of
other assets ($5.1 million). No additional expenses are
expected to be incurred in future periods in connection with
these closings. The Company has determined that there is no
impairment of existing goodwill related to the store closures
based on its projections of future undiscounted cash flows.
5. EXTRAORDINARY CHARGE
The extraordinary charge of $35.4 million relates to
the refinancing of F4L Supermarkets' old credit facility,
10.45% Senior Notes due 2000 (the "Old F4L Senior Notes")
and 13.75% Senior Subordinated Notes due 2001 (the "Old F4L
Senior Subordinated Notes") and Holdings' 15.25% Senior
Discount Notes due 2004 in connection with the Merger and the
write-off of their related debt issuance costs.
10
<PAGE> 13
6. LONG-TERM SENIOR DEBT AND SENIOR SUBORDINATED DEBT
The Company's long-term senior debt is summarized as
follows:
<TABLE>
<CAPTION>
July 16, January 29,
1995 1995
-------------- -------------
<S> <C> <C>
New Term Loan, principal due quarterly through
2003, with interest payable quarterly in arrears $ 600,000,000 $ --
Old Bank Term Loan, principal due quarterly through
January 1999, with interest payable monthly in -- 125,732,000
arrears
10.45 percent Senior Notes principal due 2004 with
interest payable semi-annually in arrears 520,326,000 --
10.45 percent Senior Notes principal due 2000 with
interest payable semi-annually in arrears 4,674,000 175,000,000
Revolving Loan 30,000,000 27,300,000
13.625 percent Senior Discount Debentures due 2005,
after June 2000 interest payable semi-annually in
arrears 101,208,000 --
15.25 percent Senior Discount Notes due 2004, after
December 15, 1997 interest payable semi-annually in
arrears -- 65,136,000
Notes payable in varying monthly installments
including interest ranging from 11.5 percent to
18.96 percent. Final payments due through November
1996. Secured by equipment with a net book value of
$25.6 million 4,676,000 --
10.0 percent secured promissory note, collateralized
by the stock of Bell, due June 1996, interest
payable quarterly through June 1996 8,000,000 8,000,000
10.625 percent first real estate mortgage due 1998,
$12,000 of principal plus interest payable monthly
secured by land and building with a net book value
of $2.1 million 1,477,000 1,498,000
10.8 percent notes payable, collateralized
equipment, due September 1995, $72,000 of principal
plus interest payable monthly, plus balloon payment
of $1,004,000 1,057,000 1,420,000
Other long-term debt 3,808,000 4,214,000
-------------- -------------
1,275,226,000 408,300,000
Less--current portion 13,438,000 22,263,000
-------------- -------------
$1,261,788,000 $ 386,037,000
============== =============
</TABLE>
Long-Term Senior Debt
As part of the Merger financing, the Company entered
into a new credit agreement (the "New Credit Facility") with certain
banks, comprised of a $600 million term loan facility (the "New Term
Loans") and a revolving credit facility of $325 million (the "Revolving
Credit Facility") less amounts outstanding under a $150 million standby
letter of credit facility (the "Letter of Credit Facility").
11
<PAGE> 14
At July 16, 1995, $600 million was outstanding under the
New Term Loans, $30 million was outstanding under the Revolving
Credit Facility, and $93.6 million of standby letters of credit had
been issued on behalf of the Company. A commitment fee of 1/2 of 1
percent is charged on the average daily unused portion of the
Revolving Credit Facility; such commitment fees are due quarterly in
arrears. Interest on borrowings under the New Term Loans is at the
bank's Base Rate (as defined) plus a margin ranging from 1.50 percent
to 2.75 percent or the adjusted Eurodollar Rate (as defined) plus a
margin ranging from 2.75 percent to 4.00 percent. At July 16, 1995,
the weighted average interest rate on the New Term Loans was 9.12
percent. Interest on borrowings under the Revolving Credit Facility
is at the bank's Base Rate (as defined) plus a margin of 1.50 percent
or the Adjusted Eurodollar Rate (as defined) plus a margin of 2.75
percent. At July 16, 1995, the interest rate on the Revolving Credit
Facility was 10.25 percent.
Quarterly principal installments on the New Term Loans
continue to December 2003, with amounts payable in each year as
follows: $1.6 million in fiscal 1995, $19.7 million in fiscal 1996,
$47.2 million in fiscal 1997, $60.1 million in fiscal 1998, $63.7
million in fiscal 1999, $67.4 in fiscal 2000, $86.6 in fiscal 2001,
$102.9 in fiscal 2002 and $150.6 in fiscal 2003. The principal
installments can be accelerated from time to time by certain mandatory
prepayments which are required under the New Credit Facility. To
the extent that borrowings under the Revolving Credit Facility are not
paid earlier, they are due in December 2003. The common stock of
Ralphs and certain of its direct and indirect subsidiaries has been
pledged as security under the New Credit Facility.
F4L Supermarkets issued $350,000,000 of new 10.45 Senior
Notes due 2004 (the "New F4L Senior Notes") and exchanged
$170,326,000 principal amount of Old F4L Senior Notes (together
with the F4L New Senior Notes, the "Senior Notes"), for an equal
amount of the New F4L Senior Notes, leaving an outstanding balance
of $4,674,000 on the Old F4L Senior Notes. The New Senior Notes are
due on June 15, 2004 and the Old F4L Senior Notes are due in two equal
sinking fund payments on April 15, 1999 and 2000. The Senior Notes
are senior unsecured obligations of Ralphs and rank "pari passu" in
right of payment with other senior unsecured indebtedness of Ralphs.
However, the Senior Notes are effectively subordinated to all secured
indebtedness of Ralphs and its subsidiaries, including indebtedness
under the New Credit Facility. Interest on the New F4L Senior Notes
is payable semiannually in arrears on each June 15 and December 15,
commencing on December 15, 1995. Interest on the Old F4L Senior Notes
is payable semiannually in arrears on each April 15 and October 15.
The New F4L Senior Notes may be redeemed, at the
option of Ralphs, in whole at any time or in part from time to time,
beginning in fiscal 2000, at a redemption price of 105.225 percent.
The redemption price declines ratably to 100 percent in fiscal 2003.
In addition, on or prior to June 15, 1998, Ralphs, at its option,
may use the net cash proceeds of one or more public equity offerings
to redeem up to an aggregate of 35 percent of the principal amount of
the New F4L Senior Notes originally issued, at a redemption price
equal to 110.450 percent, 108.957 percent, and 107.464 percent of the
principal amount thereof if redeemed during the 12 months commencing
on June 1, 1995, June 1, 1996, and June 1, 1997, respectively, in each
case plus accrued and unpaid interest, if any, to the redemption date.
The Old F4L Senior Notes may be redeemed beginning in fiscal year 1996
at 104.48 percent, declining ratably to 100 percent in fiscal 1999.
Holdings issued new 13.625% Senior Discount Debentures
due 2005 (the "New Discount Debentures") in the aggregate principal
amount (at maturity) of $193,363,570. No interest will accrue on the
New Discount Debentures until June 15, 2000, but the New Discount
Debentures will accrete in value at a rate of 13.625 percent from June
14, 1995, until June 15, 2000, such that the Accreted Value (as
defined) on June 15, 2000 shall be equal to the full principal amount
of the New Discount Debentures at maturity. Beginning on June 15,
2000, cash interest on the New Discount Debentures will accrue at a
rate of 13.625 percent per annum and will be payable semiannually in
arrears on June 15 and December 15, of each year, commencing on
December 15, 2000.
The New Discount Debentures may be redeemed, in whole or
in part at the option of Holdings, at any time after June 15, 2000,
at an initial redemption price of 106.8125 percent. The redemption
price declines ratably to 100 percent in fiscal 2004. The New
Discount Debentures are senior unsecured obligations of Holdings and
rank senior in right of payment to all subordinated indebtedness of
Holdings.
12
<PAGE> 15
Scheduled maturities of principal of long-term senior debt at
July 16, 1995 are as follows:
<TABLE>
<S> <C>
Fiscal Year
-----------
1995 $ 3,269,000
1996 29,690,000
1997 47,448,000
1998 60,322,000
1999 65,225,000
Later years 1,069,272,000
--------------
$1,275,226,000
==============
</TABLE>
Senior Subordinated Debt
Holdings issued $131,500,000 of new 13.625% Senior
Subordinated Pay-In-Kind Debentures due 2007 (the "Seller Debentures")
as partial consideration to the sellers (the "Selling Stockholders")
of the RSI common stock for the sale of such stock. Interest is
payable semiannually on each June 15 and December 15 commencing on
December 15, 1995. Holdings has the option, in its sole discretion,
to issue additional securities ("Secondary Securities") in lieu of a
cash payment of any or all of the interest due on each interest
payment date prior to and including June 15, 2000.
The Seller Debentures may be redeemed, in whole or in part
at the option of Holdings, at any time after June 15, 2000, at an
initial redemption price of 106.8125 percent. The redemption price
declines ratably to 100 percent in fiscal 2004. The Seller Debentures
are senior subordinated unsecured obligations of Holdings and are
subordinate in right of payment to all senior indebtedness of
Holdings.
Up to $10 million of the Seller Debentures were subject to
an agreement (the "Put Agreement") between The Yucaipa Companies
("Yucaipa") and the majority Selling Stockholder in which Yucaipa was
required to purchase up to $10 million of the Seller Debentures from
the Selling Stockholder upon a put by such Selling Stockholder. On
June 14, 1995, such Selling Stockholder put $10 million of the Seller
Debentures ("Put Debentures") to Yucaipa. Yucaipa then sold the Put
Debentures to Bankers Trust Company at a price of $6.5 million.
Holdings subsequently recorded a $3.5 million discount to the Seller
Debentures resulting in a beginning balance of $128 million, net of
the discount.
F4L Supermarkets issued $100,000,000 of new 11% Senior
Subordinated Notes due 2005 (the "New RGC Notes") and exchanged
(i) $149,722,000 principal amount of the RGC 9% Senior Subordinated
Notes due 2003 (the "Old RGC 9% Notes") and (ii) $296,964,000 principal
amount of the RGC 10.25% Senior Subordinated Notes due 2002 (the "Old
RGC 10.25% Notes," and together with the Old RGC 9% Notes, the "Old
RGC Notes") for an equal amount of the New RGC Notes, leaving an
outstanding balance of $278,000 on the Old RGC 9% Notes and an
outstanding balance of $3,036,000 on the Old RGC 10.25% Notes. These
outstanding balances are subject to a change of control provision in
which each holder of the Old RGC Notes has the right to require Ralphs
to repurchase such holder's Old RGC Notes at 101 percent of the
principal amount thereof, together with accrued and unpaid interest to
the date of redemption. Each holder of the Old RGC Notes is required
to elect whether or not Ralphs shall repurchase the Old RGC Notes on
August 31, 1995. The New RGC Notes are senior subordinated unsecured
obligations of Ralphs and are subordinated in right of payment to all
senior indebtedness including Ralphs' obligations under the New Credit
Facility and the Senior Notes. Interest on the New RGC Notes is
payable semiannually in arrears on each June 15 and December 15,
commencing on December 15.
The New RGC Notes may be redeemed at the option of
Ralphs, in whole at any time or in part from time to time, beginning
in fiscal year 2000, at an initial redemption price of 105.5 percent.
The redemption price declines ratably to 100 percent in fiscal 2003.
In addition, on or prior to June 15, 1998, Ralphs may, at its option,
use the net cash proceeds of one or more public equity offerings to
redeem up to an aggregate of 35 percent of the principal amount of the
New RGC Notes originally issued, at a redemption price equal to 111
percent, 109.429 percent, and 107.857 percent of the principal amount
thereof if redeemed during the 12 months commencing on June 15, 1995,
June 15, 1996, and June 15, 1997, respectively, in each case plus
accrued and unpaid interest, if any, to the redemption date.
F4L Supermarkets exchanged $140,184,000 of the Old F4L
Senior Subordinated Notes for an equal amount of new 13.75% Senior
Subordinated Notes due 2005 (the "New F4L Senior Subordinated Notes,"
and together with the Old F4L Senior Subordinated Notes, the "13.75%
Senior Subordinated Notes"), leaving an outstanding balance of
$4,816,000 on the Old F4L Senior Subordinated Notes. The 13.75%
Senior Subordinated Notes are senior unsecured obligations of Ralphs
and are subordinated in right of payment to all senior indebtedness
including Ralphs' obligations under the New Credit Facility and the
Senior Notes. Interest on the 13.75% Senior Subordinated Notes is
payable semiannually in arrears on each June 15 and December 15
commencing on December 15, 1995. The 13.75% Senior Subordinated Notes
may be redeemed beginning in fiscal year 1996 at a redemption price of
106.111 percent. The redemption price declines ratably to 100 percent
in fiscal 2000.
13
<PAGE> 16
The New Credit Facility, among other things, requires the
Company to maintain minimum levels of net worth (as defined), to
maintain minimum levels of earnings, to maintain a hedge agreement to
provide interest rate protection, and to comply with certain ratios
related to fixed charges and indebtedness. In addition, the New
Credit Facility and the indentures governing the New F4L Senior Notes,
the New RGC Senior Notes, New F4L Senior Subordinated Notes, the
Seller Debentures and the New Discount Debentures limit, among other
things, additional borrowings, dividends on, and redemption of,
capital stock and the acquisition and the disposition of assets. At
July 16, 1995, the Company was in compliance with the financial
covenants of its debt agreements. At July 16, 1995, dividends and
certain other payments are restricted based on terms in the debt
agreements.
The proceeds of the New Credit Facility and the new debt
issuances (as described above) were used as sources of financing for
the Merger (see footnote 2 - "Organization and Acquisition").
7. STOCKHOLDERS' EQUITY
At July 16, 1995, Holdings' Stockholders equity consisted of
the following; (i) the authorized capital stock of Holdings consisted
of 60,000,000 shares of Common Stock, $.01 par value, 25,000,000
shares of Non-Voting Common Stock, $.01 par value, 25,000,000 shares
of Series A Preferred Stock, $.01 par value, and 25,000,000 shares of
Series B Preferred Stock, $.01 par value, (ii) 16,796,928 shares of
Common Stock, 16,683,244 shares of Series A Preferred Stock and
3,100,000 shares of Series B Preferred Stock were outstanding and held
by approximately 100 holders of record and 410,954 shares of common
stock were held in treasury, (iii) 2,008,874 shares of Common Stock
were reserved for issuance upon the exercise of outstanding warrants
held by institutional investors, and (iv) 3,000,000 shares of Common
Stock were reserved for issuance upon the exercise of the stock
options (see footnote 4 - "Stock Options"). An additional 8,000,000
shares of Common Stock were reserved for issuance upon the exercise of
a warrant issued to Yucaipa upon closing of the Merger.
There is no public trading market for the capital stock of
Holdings. Holdings does not expect in the foreseeable future to pay
any dividends on its capital stock. Holders of Common Stock of
Holdings are entitled to dividends when and as declared by the Board
of Directors of Holdings from funds legally available therefor, and
upon liquidation, are entitled to share ratably in any distribution to
holders of Common Stock. All holders of Holdings Common Stock are
entitled to one vote per share on any matter coming before the
stockholders for a vote.
The Series A Preferred stock initially had an aggregate
liquidation preference of $166,832,440, or $10 per share, which will
accrete as described below. The holders of the Series A Preferred
Stock vote (on an as-converted basis) together with the Common Stock
as a single class on all matters submitted for stockholder vote. Each
share of Series A Preferred Stock is convertible at the option of the
holder thereof into a number of shares of Holdings Common Stock equal
to the liquidation preference of such share of Series A Preferred
Stock divided by $10. Upon consummation of an initial public offering
of Holdings equity securities which meets certain criteria, the shares
of Series A Preferred Stock will automatically convert into shares of
Common Stock of Holdings at the same rate as applicable to an optional
conversion.
The Series B Preferred Stock initially had an aggregate
liquidation preference of $31,000,000, or $10 per share, which
accretes as described below. The holders of Series B Preferred Stock
generally are not entitled to vote on any matters, except as required
by the Delaware General Corporation Law. Upon the occurrence of a
change of control, each share of Series B Preferred Stock will be
convertible at the option of the holder thereof into a number of
shares of Holdings Common Stock or Non-Voting Common Stock equal to
the liquidation preference of such share of Series B Preferred Stock
divided by $10. Upon consummation of an initial public offering of
Holdings equity securities which meets certain criteria, shares of
Series B Preferred Stock will automatically convert into shares of
Non-Voting Common Stock of Holdings at the same rate as applicable to
an optional conversion.
The liquidation preference of the Series A Preferred Stock and
the Series B Preferred Stock initially will accrete daily at the rate
of 7% per annum, compounded quarterly. The rate of accretion of the
liquidation preference may vary in the future based on certain
performance measures to which the company is subject.
Shares of Series A Preferred Stock or Series B Preferred Stock
may be converted (subject to certain conditions) at the option of the
holder into shares of the other series. The holders of Series A
Preferred Stock and Series B Preferred Stock have no rights to any
fixed dividend with respect thereof. Subject to certain exceptions,
Holdings will be prohibited from declaring dividends with respect to,
or redeem, purchase or otherwise acquire, shares of its capital stock
without the consent of holders of a majority of the Series A Preferred
Stock. If dividends are declared on the Series A Preferred Stock or
the Series B Preferred Stock which are payable in voting securities of
Holdings, Holdings will make available to each holder of Series A
Preferred stock and Series B Preferred Stock, at such holder's
request, dividends consisting of non-voting securities of Holdings
which are otherwise identical to the voting securities and which are
convertible into or exchangeable for such voting securities upon a
change of control.
14
<PAGE> 17
Prior to consummation of the Merger, Holdings effected a stock
split of its outstanding Common Stock. The stock split resulted in
the issuance of 16.58609143 shares of Common Stock for each previously
outstanding share of Common Stock.
8. EARNINGS PER SHARE
Primary earnings per share is computed based on the weighted
average number of shares of common stock and common stock equivalent
shares outstanding, after giving effect to the assumed exercise of
dilutive common stock purchase warrants issued in conjunction with the
placement of the Holdings Senior Discount Notes (the "Warrants").
Holdings had a weighted average number of shares outstanding for the
12 weeks ended June 25, 1994 of 1,503,406 shares inclusive of the
dilutive effect of the 121,118 Warrants which were outstanding for the
entire 12-week period. The Warrants were the only common stock
equivalents outstanding for the 12-week period ended June 25, 1994,
and as such, Holdings' primary and fully diluted earnings per share
were the same for this 12-week period. There was not a dilutive
effect for the 24 weeks ended June 25, 1994, or for the 12 and 24
weeks ended July 16, 1994, as the Company incurred a loss in each of
these periods.
9. STOCK OPTIONS
Holdings established the Food 4 Less Holdings, Inc. 1995 Stock
Option Plan (the "Plan") to grant officers and other key employees of
the Company the opportunity to acquire Holdings common stock and to
create an incentive for such persons to remain in the employ of the
Company. The Plan is administered by a committee (the "Committee")
which consists of selected members of the Holdings' Board of
Directors. The Committee may grant both incentive and non-qualified
stock options and each such option shall be evidenced by a written
Stock Option Agreement between the option holder and Holdings. Each
individual Stock Option Agreement may differ from person to person,
but must comply with the terms and conditions of the Plan.
The cumulative aggregate number of shares of common stock to
be issued under the Plan may not to exceed 3,000,000 plus any shares
acquired by Holdings by repurchase of shares of common stock
previously issued to certain officers and other key employees under a
prior stock incentive program of Holdings.
The exercise price of each incentive stock option shall be
determined by the Committee, but, in the case of each incentive stock
option, shall not be less than 100% of the fair market value of the
common stock on the date of grant. The exercise price of each
non-qualified stock option is determined by the Committee in its
discretion.
The Committee determines the date that a particular option
shall become exercisable provided, however, that each option shall
become exercisable in full no later than five years after such option
is granted, and each option shall become exercisable as to at least
20% of the shares of common stock covered thereby on each anniversary
of the date such option is granted. The options are exercisable in
whole or in part and the expiration date which is determined on an
option-by-option basis by the Committee cannot exceed 10 years from
the date of issuance of such option.
Prior to the Merger, RSI had 1,500,000 Equity Appreciation
Rights ("EARs") outstanding that were granted under the 1988 Equity
Appreciation Rights Plan, as amended, to certain officers and key
employees of RGC. In connection with the Merger, a portion of the EAR
payment in the amount of $10 million was canceled in exchange for the
issuance of certain non-qualified stock options (collectively, the
"Reinvestment Options"). In addition to the Reinvestment Options,
Holdings granted stock options to certain management employees of the
Company and to one senior executive officer of Holdings. Compensation
expense was not recorded as the cancellation of the EAR liabilities in
consideration of the Reinvestment Options was deemed by management to
reflect fair and equal value. Each of the options granted in
connection with the Merger will expire on June 14, 2005. All of the
Reinvestment Options were fully exercisable upon the date of issuance.
At July 16, 1995, stock options covering 2,415,000 shares of
Holdings common stock, all of which were granted in connection with
the Merger, were the only options issued under the Plan and none of
these options had been exercised or canceled. Each of such stock
options has an exercise price of $10, which has been adjusted with
respect to each option holder to reflect the cancellation of the EAR
payments.
15
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
On June 14, 1995, Food 4 Less Supermarkets, Inc. ("F4L Supermarkets")
completed its acquisition of Ralphs Supermarkets, Inc. ("RSI") and its wholly
owned subsidiary, Ralphs Grocery Company ("RGC"). The acquisition was
effected through the merger of F4L Supermarkets with and into RSI (the "RSI
Merger"), followed by the merger of RGC with and into RSI (the "RGC Merger")
and, together with the RSI Merger, the "Merger". The surviving corporation in
the Merger was renamed Ralphs Grocery Company ("Ralphs"). Concurrently with
the consummation of the Merger, Ralphs received a significant equity
investment from its parent, Food 4 Less Holdings, Inc. ("Holdings," and
together with Ralphs, the "Company") and refinanced a substantial portion of
the existing indebtedness of F4L Supermarkets and RGC. See "Liquidity and
Capital Resources."
The Company's results of operations for 12 weeks ended July 16, 1995
include seven weeks of the operations of F4L Supermarkets prior to the Merger
and five weeks of operations of the combined Company. Management believes that
the Company's results of operations for periods ending after the consummation
of the Merger are not directly comparable to its results of operations for
periods ending prior to such date. This lack of comparability is attributed to
several factors, including the size of the combined Company (since the Merger
is expected to approximately double F4L Supermarkets' annual sales volume), the
addition of 174 conventional stores to the Company's overall store mix and the
material changes in the Company's capital structure.
The Merger will be accounted for as a purchase of RGC by the Company.
As a result, all financial statements for periods subsequent to June 14, 1995,
the date the Merger was consummated, will reflect RGC's assets and liabilities
at their estimated fair market values as of June 14, 1995. The purchase price
in excess of the fair market value of the Company's assets will be recorded as
goodwill and amortized over a 40-year period. The purchase price allocation
reflected in the Company's unaudited balance sheet at July 16, 1995 is based on
management's preliminary estimates. The actual purchase accounting
adjustments, including adjustments to loss contingency accruals, will be
determined within one year following the Merger and may vary from the
preliminary estimates at July 16, 1995.
At July 16, 1995, the Company operated 326 conventional supermarkets
and 53 Food 4 Less warehouse stores in Southern California. It also operated
62 additional stores in Northern California and certain areas of the Midwest.
Following the Merger, the Company commenced the process of converting the
Company's Alpha Beta, Boys and Viva stores to the Ralphs format and also began
converting selected Ralphs stores to the Food 4 Less warehouse format. As of
August 27, 1995, 81 of 154 former Alpha Beta, Boys or Viva stores had been
converted to the Ralphs format.
At July 16, 1995, the Company's bakery, creamery and deli
manufacturing operations and the management of major corporate departments had
been consolidated. The full integration of the Company's administrative
departments is expected to be completed by the end of fiscal 1995. The
consolidation of the Company's warehousing and distribution facilities into
three primary facilities located in Compton, the Atwater District of Los
Angeles and La Habra, California is proceeding on schedule and all distribution
functions are expected to be managed centrally from the Compton facility in the
third quarter of 1995.
16
<PAGE> 19
RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth the selected unaudited operating
results of the Company for the 12 and 24 weeks ended July 16, 1995 and June 25,
1994:
<TABLE>
<CAPTION>
12 WEEKS ENDED 24 WEEKS ENDED
-------------- --------------
JULY 16, 1995 JUNE 25, 1994 JULY 16, 1995 JUNE 25, 1994
------------------- ----------------- ---------------- -------------------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 857.3 100.0% $581.1 100.0% $1,480.9 100.0% $1,168.9 100.0%
Gross profit 161.6 18.8 98.4 16.9 268.8 18.2 207.1 17.7
Selling, general, administrative
and other, net 163.7 19.1 76.8 13.2 255.0 17.2 167.2 14.3
Amortization of excess costs over
net assets acquired 4.7 0.5 1.8 0.3 6.5 0.4 3.6 0.3
Restructuring charge 63.6 7.4 -- -- 63.6 4.3 -- --
Operating income (loss) (70.3) -8.2 19.8 3.4 (58.8) -3.8 36.3 3.1
Interest expense 39.5 4.6 15.5 2.7 52.5 4.0 31.4 2.7
Loss (gain) on disposal of assets -- -- 0.1 -- (0.4) -- 0.1 --
Provision for earthquake losses -- -- -- -- -- -- 4.5 0.4
Provision for income taxes 0.2 -- 1.6 0.3 0.5 -- 2.0 0.2
Income (loss) before extraordinary charge (110.0) -12.8 2.6 0.4 (115.2) -7.8 (1.7) -0.1
Extraordinary charge 35.4 4.1 -- -- 35.4 2.4 -- --
Net income (loss) $ (145.4) -17.0 $ 2.6 0.4 $ (150.5) 10.2 $ (1.7) -0.1
</TABLE>
Sales. Sales per week increased $23.0 million, or 47.5%, from $48.4
million in the 12 weeks ended June 25, 1994 to $71.4 million in the 12 weeks
ended July 16, 1995 and increased $13.0 million, or 26.7%, from $48.7 million
in the 24 weeks ended June 25, 1994 to $61.7 million in the 24 weeks ended July
16, 1995. The increase in sales for the 12 and 24 weeks ended July 16, 1995,
was primarily attributable to the addition of 174 conventional supermarkets
acquired through the Merger. The sales increase was partially offset by a
comparable store sales decline of 3.6% and 2.5% for the 12 and 24 weeks ended
July 16, 1995, respectively. Management believes that the decline in
comparable store sales is primarily attributable to the continuing weak
economy and additional competitive store openings and remodels in Southern
California. Notwithstanding these factors, comparable store sales in fiscal
1995 are improving relative to recent years.
Gross Profit. Gross profit increased as a percentage of sales from
16.9% in the 12 weeks ended June 25, 1994 to 18.8% in the 12 weeks ended July
16, 1995 and increased from 17.7% in the 24 weeks ended June 25, 1994 to 18.2%
in the 24 weeks ended July 16, 1995. The increase in gross profit margin was
primarily attributable to the addition of 174 conventional supermarkets which
diluted the effect of the Company's warehouse stores (which have lower gross
margins than the Company's conventional supermarkets) on its overall gross
margin for the period. Gross profit during the 12 and 24 weeks ended July 16,
1995 was also impacted by certain one-time costs associated with the
integration of the Company's operations. See "Operating Income (Loss)."
Selling, General, Administrative and Other, Net. Selling, general,
administrative and other expenses ("SG&A") were $76.8 million and $163.7
million for the 12 weeks and $167.2 million and $255.0 million for the 24 weeks
ended June 25, 1994 and July 16, 1995, respectively. SG&A increased as a
percentage of sales from 13.2% to 19.1% and from 14.3% to 17.2% for the same
periods. The increase in SG&A as a percentage of sales was due primarily to
the addition of 174 conventional supermarkets acquired through the Merger. The
additional conventional supermarkets diluted the effect of the Company's
warehouse stores (which have lower SG&A than the Company's conventional
supermarkets) on its SG&A margin for the period. SG&A during the 12 and 24
weeks ended July 16, 1995 was also impacted by certain one-time costs
associated with the integration of the Company's operations. See "Operating
Income (Loss)."
Restructuring Charge. The Company has recorded a $63.6 million
one-time charge associated with the closing of 39 stores and one warehouse
facility. Pursuant to the settlement agreement with the State of California,
24 Food 4 Less stores (as well as 3 Ralphs stores) must be divested by
December 31, 1995. Although not required by such settlement agreement, an
additional 15 under-performing stores also are scheduled to be closed by June
30, 1996. The restructuring charge consists of write-downs of property, plant
and equipment ($40.6 million) less estimated proceeds ($16.0 million); reserve
for closed stores and warehouse facility ($16.1 million); write-off of the
Alpha Beta trademark ($8.3 million); write-off of other assets ($8.0 million);
lease termination expenses ($4.0 million); and miscellaneous expenses ($2.6
million). The expected cash payments to be made in connection with the
restructuring charge total $7.2 million. It is expected that cash payments will
be
17
<PAGE> 20
made by June 30, 1996. The increase in the restructuring charge over previous
estimates is due primarily to the addition of the $16.1 million reserve for
the closure of the warehouse and stores. The remaining increase results from
the identification of additional assets to be written-off.
During the 12 weeks ended July 16, 1995, the Company utilized $44.7
million of the reserve for restructuring costs. The charges consisted of
write-downs of property, plant and equipment ($31.3 million); write-off of the
Alpha Beta trademark ($8.3 million); and write-off of other assets ($5.1
million). No additional expenses are expected to be incurred in future periods
in connection with these closings. The Company has determined that there is no
impairment of existing goodwill related to the store closures based on its
projections of future undiscounted cash flows.
Operating Income (Loss). In addition to the factors discussed above,
operating income for the 12 and 24 weeks ended July 16, 1995 was impacted by
approximately $30 million of one-time costs associated with the conversion of
stores and integration of the Company's operations. Management anticipates
these costs to continue during fiscal 1995 until the integration plan is
completed. During the 12 and 24 week periods, these costs related primarily
to (i) markdowns on clearance inventory at the Company's Alpha Beta, Boy and
Viva stores being converted to the Ralphs format, (ii) the stepped-up
advertising campaign promoting the store conversion program and (iii)
incremental labor costs associated with the training of Company personnel
following store conversions.
Provision for Earthquake Losses. On January 17, 1994, Southern
California was experienced a major earthquake which resulted in the temporary
closure of 31 of the Company's stores. The closures were caused primarily by
loss of electricity, water, inventory, or structural damage. All but one of
the closed stores reopened within a week of the earthquake. The final closed
store reopened on March 24, 1994. The Company is insured against earthquake
losses (including business interruption). The pre-tax financial impact, net of
insurance recoveries, was $4.5 million. The Company reserved for this charge
during the 24 weeks ended June 25, 1994.
Interest Expense. Interest expense (including amortization of
deferred financing costs) was $15.5 million and $39.5 million for the 12 weeks
and $31.4 million and $52.5 million for the 24 weeks ended June 25, 1994 and
July 16, 1995, respectively. The increase in interest expense was primarily
due to the increased indebtedness incurred in conjunction with the Merger, see
"Liquidity and Capital Resources".
Income (Loss) Before Extraordinary Charge. Primarily as a result of
the factors discussed above, the Company's income before extraordinary charge
decreased from $2.6 million in the 12 weeks ended June 25, 1994 to a loss
before extraordinary charge of $110.0 million in the 12 weeks ended July 16,
1995, and loss before extraordinary charge increased from $1.7 million in the
24 weeks ended June 25, 1994 to $115.2 million in the 24 weeks ended July 16,
1995.
Extraordinary Charge. The extraordinary charge of $35.4 million
relates to the refinancing of the F4L Supermarkets old credit facility, the
10.45% Senior Notes due 2000, and the 13.75% Senior Subordinated Notes due 2001
and the Food 4 Less Holdings, Inc. 15.25% Senior Discount Notes due 2004 in
connection with the Merger and the write-off of related debt issuance costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company utilized total new financing proceeds of approximately
$525 million to consummate the Merger, which included the issuance of preferred
stock by Holdings to a group of investors led by Apollo Advisors, L.P. for cash
proceeds of approximately $140 million (the "New Equity Investment"). In
addition, Ralphs entered into a new credit facility (the "New Credit Facility")
pursuant to which, upon the closing of the Merger, it incurred $600 million
under the term loan portion of the New Credit Facility (the "New Term Loans")
and approximately $91.6 million under the standby letter of credit facility
(the "Letter of Credit Facility"). Holdings is a guarantor under the New
Credit Facility. Ralphs also issued $350 million aggregate principal amount of
new 10.45% Senior Notes due 2004 (the "New F4L Senior Notes") and $100 million
aggregate principal amount of new 11% Senior Subordinated Notes due 2005 (the
"New RGC Notes") pursuant to public offerings (the "Public Offerings").
The proceeds from the New Credit Facility, the Public Offerings and
the New Equity Investment and the issuance by Holdings of $59.0 million initial
accreted value of 13-5/8% Senior Discount Debentures due 2005 (the "New
Discount Debentures") for cash, $41.0 million in initial accreted value of
additional New Discount Debentures as Merger consideration and $131.5 million
aggregate principal amount of 13-5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 (the "Seller Debentures"), provided the sources of
financing required to consummate the Merger and to repay outstanding bank debt
of approximately $176.5 million at F4L Supermarkets and $228.9 million at RGC,
to repay existing mortgage debt of $174.0 million (excluding prepayment fees)
at RGC and to pay $84.4 million to the holders of the Senior Discount Notes due
2004 of Holdings (the "Discount Notes") (excluding related fees). Proceeds
from the New Credit Facility and the Public Offerings were used to pay the cash
portions of F4L Supermarkets' exchange offers and consent solicitations with
respect to (i) the 10.25% Senior Subordinated Notes due 2002 of RGC (the "Old
RGC 10.25% Notes") and the 9% Senior Subordinated Notes due 2003 of RGC (the
"Old RGC 9% Notes," and together with the RGC 10.25% Notes, the "Old RGC
Notes") (collectively, the "RGC Exchange Offers"), and (ii) the 10.45% Senior
Notes due 2000 of F4L Supermarkets (the "Old F4L Senior Notes") and the 13.75%
Senior Subordinated Notes due 2001 of F4L Supermarkets (the "Old F4L Senior
18
<PAGE> 21
Subordinated Notes") (collectively, the "F4L Exchange Offers," and together
with the RGC Exchange Offers, the "Exchange Offers"), as well as the Change of
Control Offer (as defined below) and accrued interest on all exchanged debt
securities in the amount of $27.8 million, to pay $17.8 million of the holders
of the RGC Equity Appreciation Rights and to loan $5.0 million to an affiliate
for the benefit of such holders, to pay approximately $137.1 million of fees
and expenses of the Merger and the related financing and to pay $3.4 million to
purchase shares of common stock of Holdings from certain dissenting
shareholders. Ralphs assumed certain existing indebtedness of F4L
Supermarkets and RGC in connection with the Exchange Offers pursuant to which
(i) holders of the Old RGC Notes exchanged approximately $424 million
aggregate principal amount of Old RGC Notes for an equal principal amount of
New RGC Notes, (ii) holders of the Old F4L Senior Notes exchanged approximately
$170.3 million aggregate principal amount of Old F4L Senior Notes for an equal
principal amount of new F4L Senior Notes, and (iii) holders of the Old F4L
Senior Subordinated Notes exchanged approximately $140.2 million aggregate
principal amount of Old F4L Senior Subordinated Notes for an equal principal
amount of new 13.75% Senior Subordinated Notes due 2005. In addition, pursuant
to the terms of the indentures governing the Old RGC Notes, the consummation of
the Merger required Ralphs to make an offer to purchase all of the outstanding
Old RGC Notes that were not exchanged in the RGC Offers (the "Change of Control
Offer"). The Change of Control Offer expires on August 31, 1995, at which time
Ralphs will be obligated to purchase up to $3.3 million of outstanding Old RGC
Notes that may be tendered in the Change of Control Offer.
The New Credit Agreement provides for a revolving credit facility of
$325 million (the "Revolving Credit Facility") less amounts outstanding under a
$150 million standby Letter of Credit Facility. At August 31, 1995, $10.6
million was drawn on the Revolving Credit Facility and $92.6 million of standby
letters of credit had been issued under the Letter of Credit Facility. Under
the terms of the New Credit Agreement, the Company is required to repay $1.6
million of the New Term Loans in fiscal 1995.
Cash flow from operations, amounts available under the Revolving
Credit Facility and leases are the Company's principal sources of liquidity.
The Company believes that these sources will be adequate to meet its
anticipated capital expenditures, working capital needs and debt service
requirements during fiscal 1995. However, there can be no assurance that the
Company will continue to generate cash flow from operations at historical
levels or that it will be able to make future borrowings under the Revolving
Credit Facility.
During the 24 week period ended July 16, 1995, the Company used
approximately $32.6 million of cash for its operating activities compared to
cash provided by operating activities of $53.5 million for the 24 weeks ended
June 25, 1994. The decrease in cash from operating activities is due primarily
to changes in operating assets and liabilities for the 24 weeks ended July 16,
1995, combined with a decrease in operating income due primarily to the impact
of certain one-time costs associated with the integration of the Company's
operations subsequent to the Merger. The Company's principal use of cash in
its operating activities is inventory purchases. The Company's high inventory
turnover allows it to finance a substantial portion of its inventory through
trade payables, thereby reducing its short-term borrowing needs. At July 16,
1995, this resulted in a working capital deficit of $36.1 million.
Cash used for investing activities was $366.2 million for the 24 weeks
ended July 16, 1995. Investing activities consisted primarily of $340.6
million of acquisition costs associated with the Merger and capital
expenditures of $30.4 million, partially offset by $4.1 million of
sale/leaseback transactions. The capital expenditures, net of the proceeds
from sale/leaseback transactions, were financed primarily from cash provided by
financing activities.
The capital expenditures discussed above were made to build 10 new
stores (4 of which had been completed at July 16, 1995), to remodel 7 stores
(all of which had been completed at July 16, 1995) and convert 122 conventional
format stores to the Ralphs banner in conjunction with the Merger (29 of which
had been completed at July 16, 1995). The Company currently anticipates that
its aggregate capital expenditures for fiscal 1995 will be approximately $141.5
million. The remaining portion of the fiscal 1995 capital expenditure budget
(approximately $110 million) will be used to (i) complete construction of the 6
new stores in process at July 16, 1995 and begin construction on an additional
12 stores scheduled to open during the first half of fiscal 1996, (ii) convert
the remaining 93 conventional supermarkets to the Ralphs banner, (iii) convert
15 supermarkets from the Ralphs format to Food 4 Less warehouse stores and (iv)
complete the transition of the La Habra based data center to the data center
located in the main office in Compton. Consistent with past practices, the
Company intends to finance these capital expenditures primarily with cash
provided by operations and through leasing transactions. At July 16, 1995, the
Company had approximately $15.5 million of unused equipment leasing facilities.
No assurance can be given that sources of financing for capital expenditures
will be available or sufficient. However, the capital expenditure program has
substantial flexibility and is subject to revision based on various factors,
including changes in business conditions, and cash flow requirements.
Management believes that if the Company were to substantially reduce or
postpone these programs, there would be no substantial impact on short-term
operating profitability. However, management also believes that the
construction of new stores is an important component of its operating strategy.
In the long term, if these programs were substantially reduced, management
believes its operating businesses, and ultimately its cash flow, would be
adversely affected.
The capital expenditures discussed above do not include potential
acquisitions which the Company could make to expand within its existing markets
or to enter other markets. The Company has grown through acquisition in the
past and from time to time engages in discussions with potential sellers of
individual stores, groups of stores or other retail supermarket chains.
Currently the Company is focusing on the integration of its operations
following the Merger.
19
<PAGE> 22
Cash provided by financing activities was $440.9 million for the 24
weeks ended July 16, 1995. Financing activities consisted primarily of the
following; (i) proceeds from issuance of new debt in the amount of $985.1
million including proceeds of $600 million under the New Credit Agreement,
proceeds of $350 million from the issuance of New F4L Senior Notes and proceeds
of $100 million from the issuance of New RGC Notes net of issuance costs of
$64.9 million and (ii) proceeds from cash capital contributions by Holdings of
$12.1 million. These sources were partially offset by principal payments on
long-term debt of $552.3 million including: $125.7 million under the old credit
agreement, $228.9 million under the old RGC term loan; and $174.0 million in
real estate loans.
Holdings has $100 million initial accreted value of the New Discount
Debentures and $131.5 million principal amount of the Seller Debentures
outstanding. Holdings is a holding company which has no assets other than the
capital stock of Ralphs. Holdings will be required to commence semi-annual
cash payments of interest on the New Discount Debentures and the Seller
Debentures commencing five years from their date of issuance in the amount of
approximately $61 million per annum. Subject to the limitations contained in
its debt instruments, Ralphs intends to make dividend payments to Holdings in
amounts which are sufficient to permit Holdings to service its cash interest
requirements. Ralphs may pay other dividends to Holdings in connection with
certain employee stock repurchases and for routine administrative expenses.
The Company is highly leveraged. At July 16, 1995, the Company's
total long-term indebtedness (including current maturities) and stockholder's
deficit were $2.2 billion and $16.3 million, respectively. Based upon current
levels of operations and anticipated cost savings and future growth, the
Company believes that its cash flow from operations, together with available
borrowings under the Revolving Credit Facility and its other sources of
liquidity (including lease financing), will be adequate to meet its anticipated
requirements for working capital, capital expenditures, integration costs and
interest payments. There can be no assurance, however, that the Company's
business will continue to generate cash flow at or above current levels or that
future cost savings and growth can be achieved.
EFFECTS OF INFLATION AND COMPETITION
The Company's primary costs, inventory and labor, are affected by a
number of factors that are beyond its control, including availability and price
of merchandise, the competitive climate and general and regional economic
conditions. As is typical of the supermarket industry, the Company has
generally been able to maintain margins by adjusting its retail prices, but
competitive conditions may from time to time render it unable to do so while
maintaining its market share.
The supermarket industry is highly competitive and characterized by
narrow profit margins. The Company's competitors in each of its operating
divisions include national and regional supermarket chains, independent and
specialty grocers, drug and convenience stores, and the newer "alternative
format" food stores, including warehouse club stores, deep discount drug stores
and "super centers". Supermarket chains generally compete on the basis of
location, quality of products, service, price, product variety and store
condition. The Company regularly monitors its competitors' prices and adjusts
its prices and marketing strategy as management deems appropriate.
20
<PAGE> 23
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In connection with the Exchange Offers, F4L Supermarkets solicited
consents from the holders of the Old F4L Senior Notes, the Old F4L Senior
Subordinated Notes and the Old RGC Notes (collectively, the "Notes") to certain
amendments (collectively, the "Amendments") to each of the indentures
(collectively, the "Old Indentures") governing the Notes. The Amendments took
effect on May 30, 1995. The Amendments eliminated covenants from the Old
Indentures pertaining to (a) limitations on restricted payments, (b)
maintenance of net worth (c) transactions with affiliates, (d) the incurrence
of indebtedness, (e) dividend and payment restrictions affecting subsidiaries
or restrictions on preferred stock of subsidiaries, (f) limitations on liens,
(g) limitations on change of control, (h) limitations on disposition of assets,
(i) guarantees of indebtedness, and (j) mergers and consolidations.
21
<PAGE> 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Prior to and in order to facilitate the Merger, Food 4 Less, Inc., a
Delaware corporation ("FFL"), and Food 4 Less Holdings, Inc., a California
corporation ("Old Holdings"), solicited consents to (i) the merger of FFL with
and into Old Holdings as the surviving corporation (the "FFL Merger") and (ii)
the merger of Old Holdings with and into Holdings as the surviving corporation
(the "Reincorporation Merger").
The number of FFL shares as to which consents to the FFL Merger were
delivered or withheld were 10,425,185 and 313,524 respectively. The number of
Old Holdings shares (after giving effect to the stock split described above) as
to which consents to the Reincorporation Merger were delivered or withheld were
22,580,241 and 738,451, respectively.
22
<PAGE> 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
For the exhibits incorporated by reference and for the exhibits
filed as part of this Quarterly Report on Form 10-Q see the Index
to Exhibits.
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K dated June 14,
1995 with respect to the acquisition by Food 4 Less Supermarkets,
Inc. of Ralphs Supermarkets, Inc. pursuant to a merger of Food 4
Less Supermarkets, Inc. with and into Ralphs Supermarkets, Inc.
23
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the County of Los Angeles, State
of California.
Dated: August 31, 1995 FOOD 4 LESS HOLDINGS, INC.
/s/ Alan J. Reed
--------------------------------------
Alan J. Reed
Senior Vice President and
Chief Financial Officer
/s/ Jan Charles Gray
--------------------------------------
Jan Charles Gray
Senior Vice President, General Counsel
and Secretary
/s/ Robert W. Gossman
--------------------------------------
Robert W. Gossman
Group Vice President and
Controller
24
<PAGE> 27
FOOD 4 LESS HOLDINGS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
3.1 Restated Certificate of Incorporation of Food 4 Less Holdings,
Inc.
4.1 Credit Agreement dated as of June 14, 1995 by and among Food 4
Less Holdings, Inc., Food 4 Less Supermarkets, Inc., the Lenders,
Co-Agents, and Co-Arrangers named therein and Bankers Trust
Company.
4.2 Indenture for the 13-5/8% Senior Discount Debentures due 2005,
dated as of June 1, 1995, by and among Food 4 Less Holdings, Inc.
and United States Trust Company of New York, as trustee.
4.3 Indenture for the 13-5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007, dated as of June 1, 1995, by and among Food
4 Less Holdings, Inc. and Norwest Bank Minnesota, National
Association, as trustee.
4.4.1 Indenture for the 10.45% Senior Notes due 2004, dated as of
June 1, 1995, by and among Food 4 Less Supermarkets, Inc., the
subsidiary guarantors identified therein and Norwest Bank
Minnesota, National Association, as trustee.
4.4.2 First Supplemental Indenture for the 10.45% Senior Notes due
2004, dated as of June 14, 1995, by and among Ralphs Grocery
Company (as successor by merger to Food 4 Less Supermarkets,
Inc.), the subsidiary guarantors identified therein, Crawford
Stores, Inc. and Norwest Bank Minnesota, National Association,
trustee.
4.5.1 Indenture for the 13.75% Senior Subordinated Notes due 2005,
dated as of June 1, 1995, by and among Food 4 Less Supermarkets,
Inc., the subsidiary guarantors
</TABLE>
E-1
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
identified therein and United States Trust Company of New York,
as trustee.
4.5.2 First Supplemental Indenture for the 13.75% Senior Subordinated
Notes due 2005, dated as of June 14, 1995, by and among Ralphs
Grocery Company (as successor by merger to Food 4 Less
Supermarkets, Inc.), the subsidiary guarantors identified
therein, Crawford Stores, Inc. and United States Trust Company of
New York, as trustee.
4.6.1 Indenture for the 11% Senior Subordinated Notes due 2005, dated
as of June 1, 1995, by and among Food 4 Less Supermarkets,
Inc., the subsidiary guarantors identified therein and United
States Trust Company of New York, as trustee.
4.6.2 First Supplemental Indenture for the 11% Senior Subordinated
Notes due 2005, dated as of June 14, 1995, by and among Ralphs
Grocery Company (as successor by merger to Food 4 Less
Supermarkets, Inc.), the subsidiary guarantors identified
therein, Crawford Stores, Inc. and United States Trust Company of
New York, as trustee.
4.7.1 Indenture for the 10 1/4% Senior Subordinated Notes due 2002,
dated as of July 29, 1992, by and between Ralphs Grocery Company
and United States Trust Company of New York, as trustee
(incorporated herein by reference to Exhibit 4.3 of Ralphs
Grocery Company's Quarterly Report on Form 10-Q for the quarter
ended July 19, 1992).
4.7.2 First Supplemental Indenture for the 10 1/4% Senior
Subordinated Notes due 2002, dated as of May 30, 1995, by and
between Ralphs Grocery Company and United States Trust Company of
New York, as trustee (incorporated herein by reference to Exhibit
4.1 of Ralphs Grocery Company's Quarterly Report on Form 10-Q for
the quarter ended April 23, 1995).
4.7.3 Second Supplemental Indenture for the 10 1/4% Senior
Subordinated Notes due 2002, dated as of June 14, 1995,
</TABLE>
E-2
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- ------------------------
<S> <C>
by and between Ralphs Grocery Company (as successor) and
United States Trust Company of New York, as Trustee.
4.8.1 Indenture for the 9% Senior Subordinated Notes due 2003, dated
as of March 30, 1993, by and between Ralphs Grocery Company and
United States Trust Company of New York, as trustee (incorporated
herein by reference to Exhibit 4.1 of Ralphs Grocery Company's
Registration Statement on Form S-4, No. 33-61812).
4.8.2 First Supplemental Indenture for the 9% Senior Subordinated
Notes due 2003, dated as of June 23, 1993, by and between Ralphs
Grocery Company and United States Trust Company of New York, as
trustee (incorporated herein by reference to Exhibit 4.2 of
Ralphs Grocery Company's Registration Statement on Form S-4, No.
33-61812).
4.8.3 Second Supplemental Indenture for the 9% Senior Subordinated
Notes due 2003, dated as of May 30, 1995, by and between Ralphs
Grocery Company and United States Trust Company of New York, as
trustee (incorporated herein by reference to Exhibit 4.2 of
Ralphs Grocery Company's Quarterly Report on Form 10-Q for the
quarter ended April 23, 1995).
4.8.4 Third Supplemental Indenture for the 9% Senior Subordinated
Notes due 2003, dated as of June 14, 1995, by and between Ralphs
Grocery Company (as successor) and United States Trust Company
of New York, as trustee.
4.9.1 Senior Note Indenture, dated as of April 15, 1992, by and among
Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National
Association, as trustee (incorporated herein by reference to
Exhibit 4.1 to Food 4 Less Supermarkets, Inc.'s Registration
Statement on Form S-1, No. 33-46750).
</TABLE>
E-3
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
4.9.2 First Supplemental Indenture, dated as of July 24, 1992, by and
among Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and Norwest Bank Minnesota, National
Association, as trustee (incorporated herein by reference to
Exhibit 4.1 to Food 4 Less Supermarkets, Inc.'s Annual Report on
Form 10-K for the fiscal year ended June 27, 1992).
4.9.3 Second Supplemental Indenture for the 10.45% Senior Notes due
2000, dated as of May 30, 1995, by and among Food 4 Less
Supermarkets, Inc., the subsidiary guarantors identified therein
and Norwest Bank Minnesota, National Association, as trustee.
4.9.4 Third Supplemental Indenture for the 10.45% Senior Notes due
2000, dated as of June 14, 1995, by and among Ralphs Grocery
Company (as successor by merger to Food 4 Less Supermarkets,
Inc.), the subsidiary guarantors identified therein and Norwest
Bank Minnesota, National Association, as trustee.
4.10.1 Senior Subordinated Note Indenture dated as of June 15, 1991 by
and among Food 4 Less Supermarkets, Inc., the subsidiary
guarantors identified therein and United States Trust Company of
New York, as trustee (incorporated herein by reference to Exhibit
4.1 to Food 4 Less Supermarkets, Inc.'s Annual Report on Form
10-K for the fiscal year ended June 29, 1991).
4.10.2 First Supplemental Indenture dated as of April 8, 1992 by and
among Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and United States Trust Company of New York,
as trustee (incorporated herein by reference to Exhibit 4.2.1 to
Food 4 Less Supermarkets, Inc.'s Annual Report on Form 10-K for
the fiscal year ended June 27, 1992).
4.10.3 Second Supplemental Indenture dated as of May 18, 1992 by and
among Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and United States Trust Company of New York,
as trustee (incorporated herein by reference to Exhibit 4.2.2 to
Food 4 Less
</TABLE>
E-4
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
Supermarkets, Inc.'s Annual Report on Form 10-K for the fiscal
year ended June 27, 1992).
4.10.4 Third Supplemental Indenture dated as of July 24, 1992 by and
among Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and United States Trust Company of New York,
as trustee (incorporated herein by reference to Exhibit 4.2.3 to
Food 4 Less Supermarkets, Inc.'s Annual Report on Form 10-K for
the fiscal year ended June 27, 1992).
4.10.5 Fourth Supplemental Indenture for the 13.75% Senior
Subordinated Notes due 2001, dated as of May 30, 1995 by and
among Food 4 Less Supermarkets, Inc., the subsidiary guarantors
identified therein and United States Trust Company of New York,
as trustee.
4.10.6 Fifth Supplemental Indenture for the 13.75% Senior
Subordinated Notes due 2001, dated as of June 14, 1995 by and
among Ralphs Grocery Company (as successor by merger to Food 4
Less Supermarkets, Inc.), the subsidiary guarantors identified
therein and United States Trust Company of New York, as trustee.
10.1 Second Amended and Restated Tax Sharing Agreement dated as of
June 14, 1995 by and among Food 4 Less Holdings, Inc., Ralphs
Grocery Company and the subsidiaries of Ralphs Grocery Company.
10.2 Stockholders Agreement of Food 4 Less Holdings, Inc. dated as
of June 14, 1995 by and among Food 4 Less Holdings, Inc., Ralphs
Grocery Company and the investors listed on the signature pages
thereto.
10.3 Registration Rights Agreement dated as of June 14, 1995 by and
among Food 4 Less Holdings, Inc. and the investors listed on the
signature pages thereto.
10.4 Consulting Agreement dated as of June 14, 1995 by and among The
Yucaipa Companies, Food 4 Less Holdings, Inc. and Ralphs Grocery
Company.
</TABLE>
E-5
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
10.5 Common Stock Purchase Warrant of Food 4 Less Holdings, Inc.
dated June 14, 1995 issued to The Yucaipa Companies.
10.6* Food 4 Less Holdings, Inc. 1995 Stock Option Plan.
10.7 Stock Purchase and Exchange Agreement dated as of June 14, 1995
by and among Food 4 Less Holdings, Inc., Food 4 Less
Supermarkets, Inc., CLH Supermarket Corp. and the Purchasers
listed on Schedule 1 hereto.
10.8 Registration Rights Agreement dated as of June 14, 1995 by and
among Food 4 Less Holdings, Inc., Food 4 Less Supermarkets, Inc.
and the Holders of the 13-5/8% Senior Discount Debentures due
2005 of Food 4 Less Holdings, Inc.
10.9 Registration Rights Agreement dated as of June 14, 1995 by and
among Food 4 Less Holdings, Inc., Food 4 Less Supermarkets, Inc.
and the Holders of the 13-5/8% Senior Subordinated Pay-in-kind
Debentures due 2007 of Food 4 Less Holdings, Inc.
10.10* Employment Agreement dated as of June 14, 1995 between Food 4
Less Holdings, Inc., Ralphs Grocery Company and George G.
Golleher.
10.11* Management Stockholders Agreement dated as of June 14, 1995 by
and between Food 4 Less Holdings, Inc. and the management
employers listed on the signature pages thereto.
27 Financial Data Schedule
</TABLE>
E-6
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF CORRECTION
OF
FOOD 4 LESS HOLDINGS, INC.
It is hereby certified that:
1. The name of the corporation is Food 4 Less Holdings,
Inc. (the "Corporation").
2. The Restated Certificate of Incorporation of the
Corporation (the "Certificate"), which was filed with the Secretary of State of
the State of Delaware on June 28, 1995, is hereby corrected.
3. The inaccuracy to be corrected in the Certificate is
the omission of the Certificate of Designations of Series A Preferred Stock of
the Corporation (the "Series A Certificate") and the Certificate of
Designations of Series B Preferred Stock of the Corporation (the "Series B
Certificate"), which were filed with the Secretary of State of the State of
Delaware on June 9, 1995.
4. The Certificate shall be corrected to add the Series A
Certificate and the Series B Certificate. The Certificate in corrected form is
attached hereto in full.
August 17, 1995 /s/ Jan Charles Gray
Jan Charles Gray
Senior Vice President, General
Counsel and Secretary
<PAGE> 2
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
FOOD 4 LESS HOLDINGS, INC.
Food 4 Less Holdings, Inc., a corporation existing under the laws of
the State of Delaware which was originally incorporated on December 19, 1994
(the "Corporation"), does hereby certify:
FIRST: That the Restated Certificate of Incorporation of the
Corporation is hereby amended and restated to read as follows:
1. The name of the corporation is:
Food 4 Less Holdings, Inc.
2. The address of its registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent. The
name of its registered agent at such address is The Prentice-Hall Corporation
System, Inc.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
4. The total number of shares of stock which the corporation
shall have authority to issue is 135,000,000, consisting of 60,000,000 shares
of Common Stock, par value $.01 per share (the "Common Stock"); 25,000,000
shares of Non-Voting Common Stock, par value $.01 per share (the "Non-Voting
Common Stock"); and 50,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock").
(a) Common Stock and Non-Voting Common Stock.
i) General. Except as provided below, the Common Stock
and Non-Voting Common Stock shall have the same rights and privileges
and shall rank equally, share ratably and be identical in all respects
as to all matters, including rights in liquidation.
ii) Dividends. Subject to the rights of holders of
Preferred Stock, when, as and if dividends are declared on the Common
Stock or Non-Voting Common Stock, whether payable in cash, in property
or in securities of the Corporation, the holders of Common Stock and
Non-Voting Common Stock shall be entitled to share equally, share for
share, in such dividends; provided, that if the Corporation shall
declare dividends that are payable in securities that are entitled to
vote for the election of directors of the Corporation or otherwise
entitled to Vote, the Corporation shall make available to each such
holder, at such holder's request, dividends consisting of securities
of the Corporation that are not voting securities but that are
otherwise identical to such voting securities in all
<PAGE> 3
material respects, and that are convertible into or exchangeable for
such voting securities in a manner similar to the manner by which
Non-Voting Common Stock is convertible into Common Stock pursuant to
subsection (iv) below.
iii) Voting. The holders of Common Stock shall be
entitled to one vote per share on all matters to be voted on by the
stockholders of the Corporation, and except as otherwise expressly
required by law, the holders of Non-Voting Common Stock shall have no
right to vote on any matter to be voted on by the stockholders of the
Corporation (including, without limitation, any election or removal of
the directors of the Corporation) and the Non-Voting Common Stock
shall not be included in determining the number of shares voting or
entitled to vote on such matters.
iv) Conversion. Each share of Common Stock shall be
convertible at the option of the holder thereof into one validly
issued, fully paid and nonassessable share of Non-Voting Common Stock
and, subject to subsection (F) below, each share of Non-Voting Common
Stock shall be convertible at the option of the holder thereof into
one validly issued, fully paid and nonassessable share of Common
Stock.
A. To convert shares of Common Stock into
Non-Voting Common Stock or shares of Non-Voting Common Stock into
Common Stock, a holder must (1) surrender the certificate or
certificates evidencing the shares to be converted, duly endorsed in a
form reasonably satisfactory to the Corporation, at the office of the
Corporation or of the transfer agent for the Common Stock or
Non-Voting Common Stock, as applicable, (2) give written notice to the
Corporation, at such office, that such holder elects to convert such
shares and the number of shares to be converted, (3) state in writing
the name or names in which the certificate or certificates for shares
of Non-Voting Common Stock or Common Stock, as applicable, are to be
issued, (4) provide evidence reasonably satisfactory to the
Corporation that such holder has satisfied any conditions contained in
any agreement or any legend on the certificates representing the
shares to be converted, relating to the transfer thereof, if shares
are to be issued in a name or names other than the holder's, and (5)
pay any transfer or similar tax if required as provided in subsection
(E) below. If a holder fails to notify the Corporation of the number
of shares to be converted, such holder shall be deemed to have elected
to convert all shares represented by the certificate or certificates
surrendered for conversion. Such conversion, to the extent permitted
by law, regulation, rule or other requirement of any governmental
authority (collectively, "Laws") and the provisions hereof, shall be
deemed to have been effected as of the close of business on the date
on which the holder satisfies all of the foregoing requirements with
respect to such conversion (such date is referred to herein as the
"Conversion Date" for purposes of any such conversion). As soon as
practical on or following the Conversion Date, the Corporation shall
deliver to such former holder, or at its direction, a certificate
representing the shares of Non-Voting Common Stock or Common Stock
issued upon such conversion,
2
<PAGE> 4
together with a new certificate representing the unconverted portion,
if any, of the shares of Common Stock or Non-Voting Common Stock
formerly represented by the certificate or certificates surrendered
for conversion.
B. Immediately following the conversion of
shares of Common Stock into Non-Voting Common Stock or shares of
Non-Voting Common Stock into Common Stock, on the Conversion Date (1)
such converted shares shall be deemed no longer outstanding, and (2)
the persons entitled to receive the shares of Non-Voting Common Stock
or Common Stock upon such conversion shall be treated for all purposes
as having become the owners of record of such shares. Shares of
Non-Voting Common Stock or Common Stock issued upon conversion of
shares of Common Stock or Non-Voting Common Stock shall be deemed to
be duly authorized, validly issued, fully paid and nonassessable.
Notwithstanding anything to the contrary contained herein, any holder
of shares of Common Stock or Non-Voting Common Stock may convert such
shares into Non-Voting Common Stock or Common Stock, as applicable, on
a conditional basis, such that such conversion will not take effect
unless the condition to which conversion is subject is satisfied, and
the Corporation shall make such arrangements as may be necessary or
appropriate to allow such conditional conversion and to enable the
holder to satisfy such condition.
C. If there shall occur any capital
reorganization or any reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with or into
another entity, or the conveyance of all or substantially all of the
assets of the Corporation to another person or entity, each share of
Non-Voting Common Stock shall thereafter be convertible into the
number of shares or other securities or property to which a holder of
the number of shares of Common Stock deliverable upon conversion of
such Non-Voting Common Stock would have been entitled upon such
reorganization, reclassification, consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined in good
faith in the sole discretion of the Board of Directors of the
Corporation) shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of the
holders of the Non-Voting Common Stock, to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares or other property
thereafter deliverable upon the conversion of the Non-Voting Common
Stock;provided, that if pursuant to any such reorganization,
reclassification, consolidation, merger or conveyance, the holders of
Common Stock or Non-Voting Common Stock receive securities that are
entitled to vote for the election of directors of the Corporation or
any applicable successor, or otherwise entitled to vote, then the
Corporation or such successor shall make available, upon conversion of
Non-Voting Common Stock, at the request of each holder of Non-Voting
Common Stock, securities that are not voting securities but that are
otherwise identical to such voting securities in all material
respects, and that are convertible into or exchangeable for such
voting
3
<PAGE> 5
securities in a manner similar to the manner by which Non-Voting
Common Stock is convertible into Common Stock pursuant to this
subsection (iv).
D. The Corporation shall at all times reserve
and keep available, out of its authorized but unissued shares of
Non-Voting Common Stock and Common Stock or treasury shares thereof,
solely for the purpose of issuance upon the conversion of Common Stock
and Non-Voting Common Stock, the full number of shares of Non-Voting
Common Stock deliverable upon the conversion of all Common Stock from
time to time outstanding and the full number of shares of Common Stock
deliverable upon the conversion of all Non-Voting Common Stock from
time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the State of Delaware, increase the
authorized amount of its Non-Voting Common Stock and Common Stock if
at any time the authorized number of shares of Non-Voting Common Stock
or Common Stock remaining unissued shall not be sufficient to permit
the conversion of all of the Common Stock or Non-Voting Common Stock,
respectively, at the time outstanding.
E. The Corporation shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of
Non-Voting Common Stock or Common Stock upon conversion of the Common
Stock or Non-Voting Common Stock. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Non-Voting Common Stock
or Common Stock in a name other than that in which the Common Stock or
Non-Voting Common Stock so converted was registered, and no such issue
or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation that such tax has
been paid.
F. Notwithstanding any right of conversion of
Non-Voting Common Stock provided for in this subsection (iv), unless
otherwise permitted by Law, no shares of Non-Voting Common Stock
beneficially owned by a bank holding company or an Affiliate (as
defined below) of a bank holding company shall be converted into
shares of Common Stock by the initial holder thereof or any direct or
indirect transferee of such holder such that immediately after such
conversion such person and its Affiliates would own more than 4.9% of
any class of voting securities (as interpreted by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"))
of the Corporation, unless such shares are being distributed, disposed
of or sold in any one of the following transactions (each a
"Conversion Event"):
1. such shares are being sold in a
public offering of such shares registered under the Securities Act of
1933, as amended (the "Securities Act"), or a public sale pursuant to
Rule 144 promulgated under the Securities Act or any similar rule then
in force;
4
<PAGE> 6
2. such shares are being sold
(including by virtue of a merger, consolidation or similar transaction
involving the Corporation) to a person or group of persons (within the
meaning of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) and, after such sale, such person or group of persons
in the aggregate would own or control securities of the Corporation
(excluding any Common Stock to be issued upon such conversion and sold
to such person or group of persons in connection wish such Conversion
Event) which possess in the aggregate the ordinary voting power to
elect a majority of the Corporation's directors;
3. such shares are being sold to a
person or group of persons (within the meaning of the Exchange Act)
and after such sale such person or group of persons in the aggregate
would not own, control or have the right to acquire more than two
percent of the outstanding securities of any class of voting
securities of the Corporation; or
4. such shares are being sold in any
other manner permitted by the Federal Reserve Board.
For purposes of this subsection (F): (x) the
term "Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person; and (y) percentages of the
Corporation's outstanding voting securities shall include shares issuable upon
exercise or conversion of Non-Voting Common Stock and other convertible
securities, options, warrants or other similar instruments owned by such bank
holding company, its transferees and their respective Affiliates, but shall not
include shares issuable upon exercise or conversion of convertible securities,
option, warrants or other similar instruments owned by any other person.
(b) Preferred Stock. The Board of Directors is expressly authorized
at any time, and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, with such voting powers, full or limited
or without voting powers, and with such powers, designations, preferences and
relative, participating, optional or other rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the Board
of Directors, and as are not stated and expressed in this Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(i) the designation of and number of shares constituting such series;
(ii) the dividend rate, if any, of such series, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any other class or
classes or on any other series of any other class or classes of capital stock,
and whether such dividends shall be cumulative or noncumulative;
5
<PAGE> 7
(iii) whether the shares of such series shall be subject to redemption
by the corporation, and, if made subject to such redemption, the times, prices
and other terms and conditions of such redemption;
(iv) the terms and amounts of any sinking fund provided for the
purchase or redemption of the shares of such series;
(v) the extent, if any, to which the shares of such series shall be
convertible into or exchangeable for shares of any other class or classes or of
any other series of any class or classes of capital stock of the corporation,
and, if provision be made for conversion or exchange, the time, prices, rates,
adjustments, and other terms and conditions of such conversion or exchange;
(vi) the extent, if any, to which the holders of the shares of such
series shall be entitled to vote as a class or otherwise with respect to the
election of directors or otherwise;
(vii) the restrictions, if any, on the issue or reissue of any
additional preferred stock; and
(viii) the rights of the holders of the shares of such series upon the
dissolution of, or upon the distribution of assets of, the corporation.
The Certificate of Designations of Series A Preferred Stock
and the Certificate of Designations of Series B Preferred Stock are attached
hereto as Exhibit A and Exhibit B, respectively, and incorporated by reference
herein.
5. The name and mailing address of the incorporator is:
Linda B. Jankovic
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
6. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation.
7. Election of directors need not be by written ballot unless the
bylaws of the corporation shall so provide.
8. No director of this corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit.
6
<PAGE> 8
SECOND: That, thereafter by written consent of the holders of a
majority of the outstanding shares of voting stock of the Corporation in
accordance with Section 228 of the General Corporation Law of the State of
Delaware, the necessary number of shares required by Statute were voted in
favor of the Restated Certificate of Incorporation.
THIRD: That this Restated Certificate of Incorporation be duly adopted
in accordance with the provisions of Section 242 and 245 of the General
Corporation Law of the State of Delaware.
7
<PAGE> 9
IN WITNESS WHEREOF, FOOD 4 LESS HOLDINGS, INC., pursuant to the
General Corporation Law of the State of Delaware, has caused this Restated
Certificate of Incorporation to be signed by Jan Charles Gray, its Senior Vice
President, General Counsel and Secretary on this 23rd day of June 1995.
FOOD 4 LESS HOLDINGS, INC.
By: /s/Jan Charles Gray
----------------------------
Jan Charles Gray
Title: Senior Vice President,
General Counsel and Secretary
8
<PAGE> 10
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
OF
FOOD 4 LESS HOLDINGS, INC.
_______________________
Pursuant to Section 151
of the General Corporation Law of the State of Delaware
Food 4 Less Holdings, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, does by
its executive vice president hereby certify that pursuant to the provisions of
Section 151 of the General Corporation Law of the State of Delaware, its Board
of Directors, by unanimous written consent dated June 8, 1995, duly adopted the
following resolution, establishing the rights, preferences, privileges and
restrictions of a series of preferred stock of the corporation which resolution
remains in full force and effect as of the date hereof:
"WHEREAS, the Board of Directors of Food 4 Less Holdings, Inc.
(the "Corporation") is authorized, within the limitations and restrictions
stated in its Certificate of Incorporation (the "Certificate of
Incorporation"), to fix by resolution or resolutions the designation of each
series of preferred stock and the powers, designations, preferences and
relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, including, without
limiting the generality of the foregoing, such provisions as may be desired
concerning voting, redemption, dividends, dissolution or the distribution of
assets, conversion or exchange, and such other subjects or matters as may be
fixed by resolution or resolutions of the Board of Directors under the General
Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of preferred stock and the number of shares constituting such
series;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Paragraph 4
of the Certificate of Incorporation, there is hereby authorized such series of
preferred stock on the terms and with the provisions herein set forth:
9
<PAGE> 11
5. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this paragraph 1 shall have, for all purposes of this resolution, the meanings
specified (with terms defined in the singular having comparable meanings when
used in the plural).
Accretion Increase Event. The term "Accretion Increase Event"
shall mean any of the events described in clauses (a), (b) and (c) following,
provided that no more than one Accretion Increase Event shall be deemed to
occur under any single clause: (a) the failure by the Corporation to report
EBITDA of at least $400 million (as such amount may be adjusted pursuant to the
provisions of the next sentence) for the four Fiscal Quarters ending closest to
the third anniversary of the Initial Issue Date or for the rolling
four-Fiscal-Quarter period ending on any of the three subsequent Fiscal
Quarter-ends, (b) the failure by the Corporation to report EBITDA of at least
$425 million (as such amount may be adjusted pursuant to the provisions of the
next sentence) for the four Fiscal Quarters ending closest to the fourth
anniversary of the Initial Issue Date or for the rolling four- Fiscal-Quarter
period ending on any of the three subsequent Fiscal Quarter-ends or (c) the
failure by the Corporation to report EBITDA of at least $450 million (as such
amount may be adjusted pursuant to the provisions of the next sentence) for the
four Fiscal Quarters ending closest to the fifth anniversary of the Initial
Issue Date. Each of the EBITDA thresholds provided for in the preceding
sentence shall be subject to (a) increase in the event the Corporation or any
of its subsidiaries purchases or acquires any Operating Unit, which increase
shall be in an amount equal to the EBITDA of the purchased or acquired
Operating Unit, for the four Fiscal Quarters preceding the date of acquisition
and (b) decrease in the event the Corporation or any of its subsidiaries
disposes of or divests any Operating Unit, which decrease shall be in an amount
equal to the EBITDA of the disposed or divested operating Unit (excluding that
portion, if any, of such EBITDA attributable to any of the 48 stores which may
be divested or closed in connection with the acquisition of Ralphs
Supermarkets, Inc. by the Corporation), for the four Fiscal Quarters preceding
the date of disposition; provided, however, that (i) each such increase or
decrease shall be prorated for the first four Fiscal Quarters after the
applicable Operating Unit is acquired or divested (but not thereafter) based on
that portion of such four Fiscal Quarter period remaining after such Operating
Unit is acquired or divested; and (ii) the adjustment otherwise specified above
shall be an increase if the disposed or divested Operating Unit had negative
EBITDA for the four Fiscal Quarters preceding the date of disposition, and
shall be a decrease if the purchased or acquired Operating Unit had negative
EBITDA for the four Fiscal Quarters preceding the date of acquisition.
Affiliate. The term "Affiliate" shall mean, with respect to
any person, any other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified person. For
the purposes of this definition, "control" when used with respect to any 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.
10
<PAGE> 12
Cessation Date. The term "Cessation Date" shall mean the
later of (i) the fifth anniversary of the Initial Issue Date and (ii) the last
day of the first Fiscal Period ending on or after the first anniversary of the
Initial Issue Date as to which the Corporation reports EBITDA for the thirteen
consecutive Fiscal Periods then ending equal to or exceeding the Minimum
Threshold.
Change of Control. The term "Change of Control" shall mean
(I) the acquisition after the Initial 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 the Corporation 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
the then outstanding voting securities entitled to vote on a regular basis for
a majority of the Board of Directors of the Corporation (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); provided, 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 the Corporation's Board of Directors or (II) the Corporation
ceasing to own 100% of the outstanding voting securities entitled to vote on a
regular basis to elect a majority of the Board of Directors of Ralphs Grocery
Company; provided, however, that no Change of Control shall be deemed to have
occurred by virtue of any merger of the Corporation with any wholly-owned
subsidiary of the Corporation or any merger of two wholly-owned subsidiaries of
the Corporation if, in any such merger, the proportionate ownership interests
of the stockholders of the Corporation remain unchanged.
Common Stock. The term "Common Stock" shall mean the common
stock, par value $.01 per share, of the Corporation.
Conversion Date. The term "Conversion Date" shall have the
meaning set forth in Sections 6(e), 6(f) or 6(g) below, as applicable.
Conversion Price. The term "Conversion Price" shall have the
meaning set forth in Section 6(h) below.
Disallowed Reserve. The term "Disallowed Reserve" shall have
the meaning set forth in the Stockholders Agreement.
EBITDA. The term "EBITDA" shall mean, with respect to any
person for any period, (a) the net income (or loss) of such person and its
subsidiaries on a consolidated basis for such period, determined in accordance
with generally accepted accounting principles, excluding (to the extent
included therein), without duplication, (i) all net extraordinary gains (or
losses), (ii) total interest expense (including that portion attributable to
capital leases in
11
<PAGE> 13
accordance with generally accepted accounting principles) of such person and
its subsidiaries on a consolidated basis with respect to outstanding
indebtedness of such person and its subsidiaries, including without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
interest rate swap, cap, collar or similar agreements, (iii) provisions for
taxes based on income, (iv) total depreciation expense, (v) total amortization
expense, (vi) LIFO provision, (vii) reserves for non-cash restructuring charges
("Restructuring Reserve"), (viii) tax indemnification payments to Federated
Department Stores, Inc., (ix) provision for earthquake losses or other natural
disasters, (x) gain (or loss) on disposal of assets, (xi) the cumulative effect
of any accounting changes, and (xii) other non-cash, non-operating items
reducing net income and other non-cash, non-operating items increasing net
income, minus (b) cash expenditures charged against, or adjustments resulting
in a decrease of, the Restructuring Reserve or the Disallowed Reserve, all of
the foregoing as determined on a consolidated basis for such person and its
subsidiaries in accordance with generally accepted accounting principles.
Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Fiscal Period. The term "Fiscal Period" shall mean the
four-week fiscal periods of the Corporation as observed for financial reporting
purposes; provided that when and if the fiscal calendar of the Corporation
includes any five-week fiscal period, the term "Fiscal Period" shall mean such
five-week fiscal period, and the calculation of EBITDA for such five-week
fiscal period, for any purpose hereunder, shall be taken as four-fifths of
actual EBITDA for such fiscal period.
Fiscal Quarter. The term "Fiscal Quarter" shall mean the
twelve-week, thirteen-week and sixteen-week fiscal periods of the Corporation
as observed for financial reporting purposes; provided that when and if the
fiscal calendar of the Corporation includes four consecutive Fiscal Quarters
that include 53 weeks in the aggregate, the calculation of EBITDA for such four
Fiscal Quarter period, for any purpose hereunder, shall be taken as 52/53ds of
actual EBITDA for such four Fiscal Quarter period.
Initial Issue Date. The term "Initial Issue Date" shall mean
the date that shares of Series A Preferred Stock are first issued by the
Corporation.
Junior Preferred Stock. The term "Junior Preferred Stock"
shall mean any stock of the Corporation, other than the Common Stock, ranking
junior to the Series A Preferred Stock as to dividends and upon liquidation.
Liquidation. The term "Liquidation" shall mean any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary; provided, that neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation, nor the
consolidation or merger of the Corporation with one or more other entities,
shall, by itself, be deemed a Liquidation.
12
<PAGE> 14
Liquidation Preference Amount. The term "Liquidation
Preference Amount" shall mean an amount initially equal to $10.00 per share of
Series A Preferred Stock, which amount shall accrete daily (based on a 360-day
year of twelve 30-day months) from and after the Initial Issue Date at a rate
of 7% per annum, compounded quarterly on March 15, June 15, September 15 and
December 15 of each year, with such compounding to commence September 15, 1995.
The Liquidation Preference Amount shall cease to accrete as of the Cessation
Date, and the Liquidation Preference Amount thereafter shall remain fixed, for
so long as the Series A Preferred Stock remains outstanding, at the amount in
effect on the Cessation Date. Notwithstanding the foregoing, until the
Cessation Date, the Liquidation Preference Amount shall accrete daily (based on
a 360-day year of twelve 30-day months, and compounded as described above) at a
rate of (i) 9% per annum upon the occurrence of any one Accretion Increase
Event, (ii) 11% per annum upon the occurrence of any two Accretion Increase
Events and (iii) 13% per annum upon the occurrence of any three Accretion
Increase Events, with any increase in the rate of accretion as specified in
this sentence to take effect on the first day after the last day of the fiscal
quarter with respect to which an Accretion Increase Event occurred.
Minimum Threshold. The term "Minimum Threshold" shall mean
initially $500 million, (a) subject to increase in the event the Corporation or
any of its subsidiaries purchases or acquires any Operating Unit, which
increase shall be in an amount equal to the EBITDA of the purchased or acquired
Operating Unit, for the thirteen Fiscal Periods preceding the date of
acquisition and (b) subject to decrease in the event the Corporation or any of
its subsidiaries disposes of or divests any Operating Unit, which decrease
shall be in an amount equal to the EBITDA of the disposed or divested Operating
Unit (excluding that portion, if any, of such EBITDA attributable to any of the
48 stores which may be divested or closed in connection with the acquisition of
Ralphs Supermarkets, Inc. by the Corporation) for the thirteen Fiscal Periods
preceding the date of disposition; provided, however, that (i) each such
increase or decrease in the Minimum Threshold shall be prorated for the first
thirteen Fiscal Periods after the applicable Operating Unit is acquired or
divested (but not thereafter) based on that portion of such thirteen-month
period remaining after such Operating Unit is acquired or divested; and (ii)
the adjustment to the Minimum Threshold otherwise specified above shall be an
increase if the disposed or divested Operating Unit had negative EBITDA for the
thirteen Fiscal Periods preceding the date of disposition, and shall be a
decrease if the purchased or acquired Operating Unit had negative EBITDA for
the thirteen Fiscal Periods preceding the date of acquisition.
Non-Voting Stock. The term "Non-Voting Stock" shall mean the
non-voting common stock, par value $.01 per share, of the Corporation.
Operating Unit. The term "Operating Unit" shall mean any
operating unit consisting of ten or more supermarkets.
Parity Preferred Stock. The term "Parity Preferred Stock"
shall mean any stock of the Corporation, other than the Series A Preferred
Stock and Series B Preferred Stock, ranking on a par with the Series A
Preferred Stock as to dividends and upon liquidation.
Permitted Holder. The term "Permitted Holder" shall mean (i)
Food 4 Less Equity Partners, L.P., Yucaipa or any entity controlled thereby or
any of the partners thereof,
13
<PAGE> 15
(ii) Apollo Advisors, L.P., Lion Advisors, L.P., Apollo Advisors II, L.P., or
any entity controlled thereby or any of the partners thereof, (iii) an employee
benefit plan of the Corporation or any subsidiary of the Corporation, or any
participant therein, (iv) a trustee or other fiduciary holding securities under
an employee benefit plan of the Corporation or any of its subsidiaries or (v)
any Permitted Transferee of any of the foregoing persons.
Permitted Transferee. The term "Permitted Transferee" shall
mean, 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, (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 the Corporation, (iv) any investment account whose investment
managers and investment advisors consist solely of such person and/or Permitted
Transferees of such person and (v) any investment fund or investment entity
that is a subsidiary of such person or a Permitted Transferee of such person.
Preferred Stock. The term "Preferred Stock" shall mean the
Series A Preferred Stock and the Series B Preferred Stock.
Qualified IPO. The term "Qualified IPO" shall have the
meaning set forth in the Stockholders Agreement.
Ralphs Grocery Company. The term "Ralphs Grocery Company"
shall mean Ralphs Grocery Company, a Delaware corporation which is a subsidiary
of the Corporation as of the Initial Issue Date and is the successor by merger
to Food 4 Less Supermarkets, Inc.
Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
Series A Preferred Stock. The term "Series A Preferred Stock"
shall mean the Series A Preferred Stock authorized hereby.
Series B Preferred Stock. The term "Series B Preferred Stock"
shall mean the Series B Preferred Stock, $.01 par value, authorized by the
Board of Directors pursuant to a Certificate of Designations of Series B
Preferred Stock, dated of even date herewith.
Stockholders Agreement. The term "Stockholders Agreement"
shall mean that certain stockholders agreement of the Corporation dated as of
June 14, 1995, as in effect on the Initial Issue Date, a copy of which shall be
maintained by the Secretary of the Corporation and which shall be available to
any stockholder of the Corporation upon request.
Trigger Amount. The term "Trigger Amount" shall have the
meaning set forth in the Stockholders Agreement.
Yucaipa. The term "Yucaipa" shall mean The Yucaipa Companies,
a California general partnership.
14
<PAGE> 16
6. Designation.
The series of preferred stock authorized hereby shall be
designated as the "Series A Preferred Stock." The number of shares
constituting such series shall be 25,000,000. The par value of the Series A
Preferred Stock shall be $.01 per share.
7. Voting Rights.
Except as otherwise required by law, the shares of Series A
Preferred Stock shall be entitled to vote together with the shares of Common
Stock as one class at all annual and special meetings of stockholders of the
Corporation, and to act by written consent in the same manner as the Common
Stock, upon the following basis: Each holder of Series A Preferred Stock shall
be entitled to such number of votes for the Series A Preferred Stock held by
the holder on the record date fixed for such meeting, or on the effective date
of such written consent, as shall be equal to the number of whole shares of
Common Stock into which all of such holder's shares of Series A Preferred Stock
are convertible immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent. To the
fullest extent permitted by law, as to any matter on which the Preferred Stock
votes as a separate class from the Common Stock, the Series A Preferred Stock
and the Series B Preferred Stock shall vote together as a single class and in
such case each share of Series A Preferred Stock and Series B Preferred Stock
will be entitled to one vote per share.
8. Liquidation Preference Amount.
(a) In the event of any Liquidation, holders of the
Series A Preferred Stock and the Series B Preferred Stock will be entitled to
receive, after payment of creditors, the Liquidation Preference Amount before
any payment or distribution of the assets of the Corporation shall be made to
holders of Junior Preferred Stock or Common Stock. The Series A Preferred
Stock and the Series B Preferred Stock shall rank pari passu in right of
payment or distribution upon any Liquidation. If upon any Liquidation, the
amounts payable with respect to the Series A Preferred Stock and the Series B
Preferred Stock are not paid in full, the holders of the Series A Preferred
Stock and the Series B Preferred Stock will share equally and ratably in any
distribution of assets of the Corporation in proportion to the full Liquidation
Preference Amount to which each is entitled.
(b) After payment of the full Liquidation Preference
Amount to which each holder of Series A Preferred Stock or Series B Preferred
Stock is entitled, and the payment of any liquidation preference to which any
holder of Junior Preferred Stock or Parity Preferred Stock is entitled, the
remaining assets and funds of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock, Non-Voting
Stock, Series A Preferred Stock and Series B Preferred Stock pro rata on the
basis of the number of shares of Common Stock or Non-Voting Stock owned by each
such holder (assuming, in the case of holders of Series A Preferred Stock and
Series B Preferred Stock, the conversion, immediately prior to such
distribution, of all shares of Series A Preferred Stock and Series B Preferred
Stock owned by such holder into shares of Common Stock), provided that the
Liquidation Preference Amount paid to each holder of Series A Preferred Stock
or Series B Preferred Stock shall be
15
<PAGE> 17
credited against the pro rata distribution otherwise payable to each such
holder under this Section 4(b).
9. Dividends.
(a) Without the prior written consent of holders of a
majority of the shares of Series A Preferred Stock, (i) no dividends or other
distributions shall be declared, made, paid or set apart for payment or
distribution upon any shares of Common Stock, Non-Voting Stock, Junior
Preferred Stock or Parity Preferred Stock (other than dividends or
distributions payable in Common Stock, Non-Voting Stock or Junior Preferred
Stock, provided that concurrently therewith a dividend or distribution is made
on the shares of Series A Preferred Stock and Series B Preferred Stock in an
amount determined as if the holders thereof had converted such shares into
Common Stock immediately prior to the close of business on the applicable
record date) and (ii) the Corporation shall not, and shall not permit any of
its subsidiaries to, directly or indirectly redeem, purchase, or otherwise
acquire any Common Stock, Non-Voting Stock, Junior Preferred Stock or Parity
Preferred Stock for any consideration (or pay any moneys to, or make any monies
available for, a sinking fund for the redemption of any shares of such stock).
Notwithstanding the foregoing, nothing in this resolution shall prevent the
Corporation or its subsidiaries from repurchasing shares of Common Stock held
by bona fide, full- time employees of the Corporation or its subsidiaries
(other than Ronald W. Burkle or any other partner of Yucaipa) in connection
with the death, disability or termination of such employees in accordance with
the terms of any employee benefit plan, provided that the aggregate amount of
all such repurchases shall not exceed $10,000,000 per fiscal year of the
Corporation plus, commencing as of the second full fiscal year of the
Corporation after the Initial Issue Date, any unused portion of such
$10,000,000 amount from the prior fiscal year up to a maximum amount of
$20,000,000 in any fiscal year.
(b) If the Corporation shall declare dividends on the
Series A Preferred Stock that are payable in securities of the Corporation that
are entitled to vote for the election of directors of the Corporation or
otherwise entitled to vote, the Corporation shall make available to each holder
of Series A Preferred Stock, at such holder's request, dividends consisting of
securities of the Corporation that are not voting securities but which are
otherwise identical to such voting securities in all material respects, and
which are convertible into or exchangeable for such voting securities, in a
manner similar to the manner by which Series B Preferred Stock is convertible
into Series A Preferred Stock.
10. Conversion.
(a) Each share of Series A Preferred Stock shall be
convertible at the option of the holder thereof into validly issued, fully paid
and nonassessable shares of Common Stock, in an amount determined in accordance
with Sections 6(h) and 6(i) below.
(b) Upon consummation of a Qualified IPO, each share of
Series A Preferred Stock will automatically convert, without action on the part
of the holder thereof, into validly issued, fully paid and nonassessable shares
of Common Stock, in an amount determined in accordance with Sections 6(h) and
6(i) below.
16
<PAGE> 18
(c) Each share of Series A Preferred Stock shall be
convertible at the option of the holder thereof into one share of validly
issued, fully paid and nonassessable Series B Preferred Stock.
(d) Immediately following the conversion of Series A
Preferred Stock into Common Stock or Series B Preferred Stock, on the
Conversion Date (i) such converted shares of Series A Preferred Stock shall be
deemed no longer outstanding and (ii) the persons entitled to receive the
Common Stock or Series B Preferred Stock upon the conversion of such converted
Series A Preferred Stock shall be treated for all purposes as having become the
owners of record of such Common Stock or Series B Preferred Stock, as
applicable. Upon the issuance of shares of Common Stock or Series B Preferred
Stock upon conversion of Series A Preferred Stock pursuant to this Section 6,
such shares of Common Stock or Series B Preferred Stock shall be deemed to be
duly authorized, validly issued, fully paid and nonassessable. Notwithstanding
anything to the contrary in this Section 6, any holder of Series A Preferred
Stock may convert shares of such Series A Preferred Stock into Common Stock or
Series B Preferred Stock in accordance with Section 6 on a conditional basis,
such that such conversion will not take effect unless the Qualified IPO under
Section 6(b) is consummated or such other condition to which conversion under
Section 6(a) or (c) is subject is satisfied, and the Corporation shall make
such arrangements as may be necessary or appropriate to allow such conditional
conversion and to enable the holder to participate in such Qualified IPO or to
satisfy such other condition.
(e) To convert Series A Preferred Stock into Common Stock
at the option of the holder pursuant to Section 6(a), a holder must (i)
surrender the certificate or certificates evidencing the shares of Series A
Preferred Stock to be converted, duly endorsed in a form reasonably
satisfactory to the Corporation, at the office of the Corporation or of the
transfer agent for the Series A Preferred Stock, (ii) give written notice to
the Corporation at such office that such holder elects to convert Series A
Preferred Stock into Common Stock, and the number of shares to be converted,
(iii) state in writing the name or names in which the certificate or
certificates for shares of Common Stock are to be issued, (iv) provide evidence
reasonably satisfactory to the Corporation that such holder has satisfied any
conditions, contained in any agreement or any legend on the certificates
representing the Series A Preferred Stock, relating to the transfer thereof, if
shares of Common Stock are to be issued in a name or names other than the
holder's, and (v) pay any transfer or similar tax if required as provided in
Section 6(n) below. In the event that a holder fails to notify the Corporation
of the number of shares of Series A Preferred Stock to be converted, such
holder shall be deemed to have elected to convert all shares represented by the
certificate or certificates surrendered for conversion. Such conversion, to
the extent permitted by law, regulation, rule or other requirement of any
governmental authority (collectively, "Laws") and the provisions hereof, shall
be deemed to have been effected as of the close of business on the date on
which the holder satisfies all of the foregoing requirements with respect to
such conversion (such date is referred to herein as the "Conversion Date" for
purposes of any conversion of Series A Preferred Stock pursuant to Section
6(a)). As soon as practical on or following the Conversion Date, the
Corporation shall deliver to such former holder of Series A Preferred Stock or
at its direction, a certificate representing the shares of Common Stock issued
upon the conversion, together with a new certificate representing the
unconverted portion, if any, of the shares of Series A Preferred Stock formerly
represented by the certificate or certificates surrendered for conversion.
17
<PAGE> 19
(f) To convert Series A Preferred Stock into Series B
Preferred Stock at the option of the holder pursuant to Section 6(c), a holder
must (i) surrender the certificate or certificates evidencing the shares of
Series A Preferred Stock to be converted, duly endorsed in a form reasonably
satisfactory to the Corporation, at the office of the Corporation or of the
transfer agent for the Series A Preferred Stock, (ii) give written notice to
the Corporation at such office that such holder elects to convert Series A
Preferred Stock into Series B Preferred Stock, and the number of shares to be
converted, (iii) state in writing the name or names in which the certificate or
certificates for shares of Series B Preferred Stock are to be issued, (iv)
provide evidence reasonably satisfactory to the Corporation that such holder
has satisfied any conditions, contained in any agreement or any legend on the
certificates representing the Series A Preferred Stock, relating to the
transfer thereof, if shares of Series B Preferred Stock are to be issued in a
name or names other than the holder's, and (v) pay any transfer or similar tax
if required as provided in Section 6(n) below. In the event that a holder
fails to notify the Corporation of the number of shares of Series A Preferred
Stock to be converted, such holder shall be deemed to have elected to convert
all shares surrendered for conversion. Such conversion, to the extent
permitted by Law and the provisions hereof, shall be deemed to have been
effected as of the close of business on the date on which the holder satisfies
all of the foregoing requirements with respect to such conversion (such date is
referred to herein as the "Conversion Date" for purposes of any conversion of
Series A Preferred Stock pursuant to Section 6(c)). As soon as practical on or
following the Conversion Date, the Corporation shall deliver to the named
transferee or transferees of such shares formerly representing shares of Series
A Preferred Stock or at its direction, a certificate representing the shares of
Series B Preferred Stock issued upon the conversion, together with a new
certificate representing the unconverted portion, if any, of the shares of
Series A Preferred Stock formerly represented by the certificate or
certificates requested to be transferred.
(g) To receive share certificates representing Common
Stock upon any automatic conversion of Series A Preferred Stock into Common
Stock pursuant to Section 6(b), a holder must (i) surrender the certificate or
certificates evidencing the shares of Series A Preferred Stock to be converted,
duly endorsed in a form reasonably satisfactory to the Corporation, at the
office of the Corporation or of the transfer agent for the Series A Preferred
Stock, (ii) state in writing the name or names in which the certificate or
certificates for shares of Common Stock are to be issued, (iii) provide
evidence reasonably satisfactory to the Corporation that such holder has
satisfied any conditions, contained in any agreement or any legend on the
certificates representing the Series A Preferred Stock, relating to the
transfer thereof, if shares of Common Stock are to be issued in a name or names
other than the holder's, and (iv) pay any transfer or similar tax if required
as provided in Section 6(n) below. Whether or not the holder has satisfied any
of the foregoing requirements, the date on which a Qualified IPO has been
consummated shall be deemed the "Conversion Date" for purposes of any automatic
conversion of Series A Preferred Stock pursuant to Section 6(b). As soon as
practical following the satisfaction by the holder of all of the foregoing
requirements, the Corporation shall deliver to such former holder of Series A
Preferred Stock or at its direction, a certificate representing the shares of
Common Stock issued upon the conversion.
(h) For the purposes of the conversion of Series A
Preferred Stock into Common Stock pursuant to Sections 6(a) or 6(b), each share
of Series A Preferred Stock shall
18
<PAGE> 20
be convertible into the number of shares of Common Stock equal to the
Liquidation Preference Amount divided by the Conversion Price in effect on the
Conversion Date. The number of full shares of Common Stock issuable to a
single holder upon conversion of the Series A Preferred Stock shall be based on
the aggregate Liquidation Preference Amount of all shares of Series A Preferred
Stock owned by such holder. The Conversion Price initially shall equal $10.00
per share, subject to adjustment from time to time in accordance with Section
6(i) below.
(i) If the Corporation shall at any time subdivide, by
stock split, reclassification or otherwise, the outstanding shares of Common
Stock or shall issue a dividend on its outstanding Common Stock payable in
capital stock (as to which subdivision or stock dividend the holders of the
Series A Preferred Stock have not participated pursuant to Section 5(a) above
or otherwise), the Conversion Price in effect immediately prior to such
subdivision or the issuance of such dividend shall be proportionately
decreased, and in case the Corporation shall at any time combine, by stock
split, reclassification or otherwise, the outstanding shares of Common Stock,
the Conversion Price in effect immediately prior to such combination shall be
proportionately increased, effective at the close of business on the date of
such subdivision, dividend, combination or other event, as the case may be.
(j) No fractional shares of Common Stock shall be issued
upon the conversion of Series A Preferred Stock; provided, that if the fair
market value of a share of Common Stock is greater than or equal to $10,000,
the Corporation shall issue any fractional interest in a share of Common Stock
deliverable upon the conversion of Series A Preferred Stock. If any fractional
interest in a share of Common Stock would, except for the provisions of this
subparagraph (j), be deliverable upon the conversion of any Series A Preferred
Stock, the Corporation shall, in lieu of delivering the fractional share
therefor, adjust such fractional interest by payment to the holder of such
converted Series A Preferred Stock of an amount in cash equal (computed to the
nearest cent) to the fair market value of such fractional interest as of the
end of the Corporation's last fiscal year as determined in good faith in the
sole discretion of the Board of Directors of the Corporation.
(k) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly mail a notice of the adjustment to
holders of Series A Preferred Stock by first class mail. The Corporation shall
forthwith maintain at its principal executive office and file with the transfer
agent, if any, for Series A Preferred Stock, a statement, signed by the
Chairman of the Board, or the President, or a Vice President of the Corporation
and by its chief financial officer or an Assistant Treasurer, showing in
reasonable detail the facts requiring such adjustment and the Conversion Price
after such adjustment. Such transfer agent shall be under no duty or
responsibility with respect to any such statement except to exhibit the same
from time to time to any holder of Series A Preferred Stock desiring an
inspection thereof.
(l) If there shall occur any capital reorganization or
any reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another entity, or the conveyance of all
or substantially all of the assets of the Corporation to another person or
entity, each share of Series A Preferred Stock shall thereafter be convertible
into the number of shares or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Series A Preferred Stock
19
<PAGE> 21
would have been entitled upon such reorganization, reclassification,
consolidation, merger or conveyance; and, in any such case, appropriate
adjustment (as determined in good faith in the sole discretion of the Board of
Directors of the Corporation) shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Series A Preferred Stock, to the end that the provisions
set forth herein (including provisions with respect to changes in and other
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares or other property thereafter
deliverable upon the conversion of the Series A Preferred Stock; provided, that
if pursuant to any such reorganization, reclassification, consolidation, merger
or conveyance, the holders of Common Stock receive securities that are entitled
to vote for the election of directors of the Corporation or any applicable
successor, or otherwise entitled to vote, then the Corporation or such
successor shall make available, upon conversion of Series A Preferred Stock, at
the request of each holder of Series A Preferred Stock, securities that are not
voting securities but which are otherwise identical to such voting securities
in all material respects, and which are convertible into or exchangeable for
such voting securities in a manner similar to the manner by which Series B
Preferred Stock is convertible into Series A Preferred Stock.
(m) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued shares of Common Stock and Series
B Preferred Stock or treasury shares thereof, solely for the purpose of
issuance upon the conversion of Series A Preferred Stock, the full number of
shares of Common Stock and Series B Preferred Stock deliverable upon the
conversion of all Series A Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with the laws of the State
of Delaware, increase the authorized amount of its Common Stock and Series B
Preferred Stock if at any time the authorized number of shares of Common Stock
and Series B Preferred Stock remaining unissued shall not be sufficient to
permit the conversion of all of the Series A Preferred Stock at the time
outstanding.
(n) The Corporation shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock upon
conversion of the Series A Preferred Stock into Common Stock. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of Common Stock in a name
other than that in which the Series A Preferred Stock so converted was
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation that such tax
has been paid. In addition, the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of Series B Preferred Stock upon a conversion of Series A Preferred
Stock, and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax,
or has established to the satisfaction of the Corporation that such tax has
been paid.
11. Exclusion of Other Rights.
Except as otherwise required by law, shares of the Series A
Preferred Stock shall not have any preferences or relative, participating,
optional or other special rights, other than
20
<PAGE> 22
those specifically set forth in this resolution and in the Certificate of
Designations filed pursuant hereto (as such Certificate may be amended from
time to time) and in the Certificate of Incorporation. No shares of Series A
Preferred Stock shall have any rights of preemption or subscription whatsoever
as to any securities of the Corporation, except as expressly provided in any
written agreement among the Corporation and any holder or holders of Series A
Preferred Stock.
12. Reissuance of Preferred Stock.
Shares of Series A Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the General
Corporation Law of the State of Delaware) have the status of authorized and
unissued shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of preferred stock.
13. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
14. Severability of Provisions.
If any right, preference or limitation of the Series A
Preferred Stock set forth in this resolution and in the Certificate of
Designations for the Series A Preferred Stock (as such Certificate may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule or law or public policy, all other rights, preferences
and limitations set forth in such Certificate of Designations (as so amended)
which can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
15. Notice.
All notices and other communications required or permitted to
be given to the Corporation hereunder shall be made by hand delivery or
registered or certified mail, return receipt requested, to the Corporation at
its principal executive offices (currently located on the date of the adoption
of these resolutions at 1100 West Artesia Boulevard, Compton, California
90220), Attention: Secretary. Minor imperfections in any such notice shall
not affect the validity thereof."
21
<PAGE> 23
IN WITNESS WHEREOF, Food 4 Less Holdings, Inc. has caused this
certificate to be signed by Ronald W. Burkle, its Chairman of the Board and
President, this 8th day of June, 1995.
FOOD 4 LESS HOLDINGS, INC.,
a Delaware corporation
By: /s/ Mark A. Resnik
-----------------------------
Mark A. Resnik
Vice President and Secretary
22
<PAGE> 24
CERTIFICATE OF DESIGNATIONS
OF
SERIES B PREFERRED STOCK
OF
FOOD 4 LESS HOLDINGS, INC.
_______________________
Pursuant to Section 151
of the General Corporation Law of the State of Delaware
_______________________
Food 4 Less Holdings, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, does by
its executive vice president hereby certify that pursuant to the provisions of
Section 151 of the General Corporation Law of the State of Delaware, its Board
of Directors, by unanimous written consent dated June 8, 1995, duly adopted the
following resolution, establishing the rights, preferences, privileges and
restrictions of a series of preferred stock of the corporation which resolution
remains in full force and effect as of the date hereof:
"WHEREAS, the Board of Directors of Food 4 Less Holdings, Inc.
(the "Corporation") is authorized, within the limitations and restrictions
stated in its Certificate of Incorporation (the "Certificate of
Incorporation"), to fix by resolution or resolutions the designation of each
series of preferred stock and the powers, designations, preferences and
relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, including, without
limiting the generality of the foregoing, such provisions as may be desired
concerning voting, redemption, dividends, dissolution or the distribution of
assets, conversion or exchange, and such other subjects or matters as may be
fixed by resolution or resolutions of the Board of Directors under the General
Corporation Law of the State of Delaware; and
WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to authorize and fix the
terms of a series of preferred stock and the number of shares constituting such
series;
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Paragraph 4
of the Certificate of Incorporation, there is hereby authorized such series of
preferred stock on the terms and with the provisions herein set forth:
23
<PAGE> 25
16. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this paragraph 1 shall have, for all purposes of this resolution, the meanings
specified (with terms defined in the singular having comparable meanings when
used in the plural).
Accretion Increase Event. The term "Accretion Increase Event"
shall mean any of the events described in clauses (a), (b) and (c) following,
provided that no more than one Accretion Increase Event shall be deemed to
occur under any single clause: (a) the failure by the Corporation to report
EBITDA of at least $400 million (as such amount may be adjusted pursuant to the
provisions of the next sentence) for the four Fiscal Quarters ending closest to
the third anniversary of the Initial Issue Date or for the rolling
four-Fiscal-Quarter period ending on any of the three subsequent Fiscal
Quarter-ends, (b) the failure by the Corporation to report EBITDA of at least
$425 million (as such amount may be adjusted pursuant to the provisions of the
next sentence) for the four Fiscal Quarters ending closest to the fourth
anniversary of the Initial Issue Date or for the rolling four-Fiscal-Quarter
period ending on any of the three subsequent Fiscal Quarter-ends or (c) the
failure by the Corporation to report EBITDA of at least $450 million (as such
amount may be adjusted pursuant to the provisions of the next sentence) for the
four Fiscal Quarters ending closest to the fifth anniversary of the Initial
Issue Date. Each of the EBITDA thresholds provided for in the preceding
sentence shall be subject to (a) increase in the event the Corporation or any
of its subsidiaries purchases or acquires any Operating Unit, which increase
shall be in an amount equal to the EBITDA of the purchased or acquired
Operating Unit, for the four Fiscal Quarters preceding the date of acquisition
and (b) decrease in the event the Corporation or any of its subsidiaries
disposes of or divests any Operating Unit, which decrease shall be in an amount
equal to the EBITDA of the disposed or divested operating Unit (excluding that
portion, if any, of such EBITDA attributable to any of the 48 stores which may
be divested or closed in connection with the acquisition of Ralphs
Supermarkets, Inc. by the Corporation), for the four Fiscal Quarters preceding
the date of disposition; provided, however, that (i) each such increase or
decrease shall be prorated for the first four Fiscal Quarters after the
applicable Operating Unit is acquired or divested (but not thereafter) based on
that portion of such four Fiscal Quarter period remaining after such Operating
Unit is acquired or divested; and (ii) the adjustment otherwise specified above
shall be an increase if the disposed or divested Operating Unit had negative
EBITDA for the four Fiscal Quarters preceding the date of disposition, and
shall be a decrease if the purchased or acquired Operating Unit had negative
EBITDA for the four Fiscal Quarters preceding the date of acquisition.
Affiliate. The term "Affiliate" shall mean, with respect to
any person, any other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified person. For
the purposes of this definition, "control" when used with respect to any 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.
24
<PAGE> 26
Cessation Date. The term "Cessation Date" shall mean the
later of (i) the fifth anniversary of the Initial Issue Date and (ii) the last
day of the first Fiscal Period ending on or after the first anniversary of the
Initial Issue Date as to which the Corporation reports EBITDA for the thirteen
consecutive Fiscal Periods then ending equal to or exceeding the Minimum
Threshold.
Change of Control. The term "Change of Control" shall mean
(I) the acquisition after the Initial 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 the Corporation 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
the then outstanding voting securities entitled to vote on a regular basis for
a majority of the Board of Directors of the Corporation (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); provided, 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 the Corporation's Board of Directors or (II) the Corporation
ceasing to own 100% of the outstanding voting securities entitled to vote on a
regular basis to elect a majority of the Board of Directors of Ralphs Grocery
Company; provided, however, that no Change of Control shall be deemed to have
occurred by virtue of any merger of the Corporation with any wholly-owned
subsidiary of the Corporation or any merger of two wholly-owned subsidiaries of
the Corporation if, in any such merger, the proportionate ownership interests
of the stockholders of the Corporation remain unchanged.
Common Stock. The term "Common Stock" shall mean the common
stock, par value $.01 per share, of the Corporation.
Conversion Date. The term "Conversion Date" shall have the
meaning set forth in Sections 6(e), 6(f) or 6(g) below, as applicable.
Conversion Event. The term "Conversion Event" shall have the
meaning set forth in Section 6(o) below.
Conversion Price. The term "Conversion Price" shall have the
meaning set forth in Section 6(h) below.
Disallowed Reserve. The term "Disallowed Reserve" shall have
the meaning set forth in the Stockholders Agreement.
EBITDA. The term "EBITDA" shall mean, with respect to any
person for any period, (a) the net income (or loss) of such person and its
subsidiaries on a consolidated basis
25
<PAGE> 27
for such period, determined in accordance with generally accepted accounting
principles, excluding (to the extent included therein), without duplication,
(i) all net extraordinary gains (or losses), (ii) total interest expense
(including that portion attributable to capital leases in accordance with
generally accepted accounting principles) of such person and its subsidiaries
on a consolidated basis with respect to outstanding indebtedness of such person
and its subsidiaries, including without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under interest rate swap, cap, collar or
similar agreements, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) LIFO provision,
(vii) reserves for non-cash restructuring charges ("Restructuring Reserve"),
(viii) tax indemnification payments to Federated Department Stores, Inc., (ix)
provision for earthquake losses or other natural disasters, (x) gain (or loss)
on disposal of assets, (xi) the cumulative effect of any accounting changes,
and (xii) other non-cash, non-operating items reducing net income and other
non-cash, non-operating items increasing net income, minus (b) cash
expenditures charged against, or adjustments resulting in a decrease of, the
Restructuring Reserve or the Disallowed Reserve, all of the foregoing as
determined on a consolidated basis for such person and its subsidiaries in
accordance with generally accepted accounting principles.
Exchange Act. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Fiscal Period. The term "Fiscal Period" shall mean the
four-week fiscal periods of the Corporation as observed for financial reporting
purposes; provided that when and if the fiscal calendar of the Corporation
includes any five-week fiscal period, the term "Fiscal Period" shall mean such
five-week fiscal period, and the calculation of EBITDA for such five-week
fiscal period, for any purpose hereunder, shall be taken as four-fifths of
actual EBITDA for such fiscal period.
Fiscal Quarter. The term "Fiscal Quarter" shall mean the
twelve-week, thirteen-week and sixteen-week fiscal periods of the Corporation
as observed for financial reporting purposes; provided that when and if the
fiscal calendar of the Corporation includes four consecutive Fiscal Quarters
that include 53 weeks in the aggregate, the calculation of EBITDA for such four
Fiscal Quarter period, for any purpose hereunder, shall be taken as 52/53ds of
actual EBITDA for such four Fiscal Quarter period.
Initial Issue Date. The term "Initial Issue Date" shall mean
the date that shares of Series B Preferred Stock are first issued by the
Corporation.
Junior Preferred Stock. The term "Junior Preferred Stock"
shall mean any stock of the Corporation, other than the Common Stock, ranking
junior to the Series B Preferred Stock as to dividends and upon liquidation.
Liquidation. The term "Liquidation" shall mean any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary; provided, that neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation, nor the
26
<PAGE> 28
consolidation or merger of the Corporation with one or more other entities,
shall, by itself, be deemed a Liquidation.
Liquidation Preference Amount. The term "Liquidation
Preference Amount" shall mean an amount initially equal to $10.00 per share of
Series B Preferred Stock, which amount shall accrete daily (based on a 360-day
year of twelve 30-day months) from and after the Initial Issue Date at a rate
of 7% per annum, compounded quarterly on March 15, June 15, September 15 and
December 15 of each year, with such compounding to commence September 15, 1995.
The Liquidation Preference Amount shall cease to accrete as of the Cessation
Date, and the Liquidation Preference Amount thereafter shall remain fixed, for
so long as the Series B Preferred Stock remains outstanding, at the amount in
effect on the Cessation Date. Notwithstanding the foregoing, until the
Cessation Date, the Liquidation Preference Amount shall accrete daily (based on
a 360-day year of twelve 30-day months, and compounded as described above) at a
rate of (i) 9% per annum upon the occurrence of any one Accretion Increase
Event, (ii) 11% per annum upon the occurrence of any two Accretion Increase
Events and (iii) 13% per annum upon the occurrence of any three Accretion
Increase Events, with any increase in the rate of accretion as specified in
this sentence to take effect on the first day after the last day of the fiscal
quarter with respect to which an Accretion Increase Event occurred.
Minimum Threshold. The term "Minimum Threshold" shall mean
initially $500 million, (a) subject to increase in the event the Corporation or
any of its subsidiaries purchases or acquires any Operating Unit which increase
shall be in an amount equal to the EBITDA of the purchased or acquired
Operating Unit for the thirteen Fiscal Periods preceding the date of
acquisition and (b) subject to decrease in the event the Corporation or any of
its subsidiaries disposes of or divests any Operating Unit, which decrease
shall be in an amount equal to the EBITDA of the disposed or divested Operating
Unit (excluding that portion, if any, of such EBITDA attributable to any of the
48 stores which may be divested or closed in connection with the acquisition of
Ralphs Supermarkets, Inc. by the Corporation) for the thirteen Fiscal Periods
preceding the date of disposition; provided, however, that (i) each such
increase or decrease in the Minimum Threshold shall be prorated for the first
thirteen Fiscal Periods after the applicable Operating Unit is acquired or
divested (but not thereafter) based on that portion of such thirteen-month
period remaining after such Operating Unit is acquired or divested; and (ii)
the adjustment to the Minimum Threshold otherwise specified above shall be an
increase if the disposed or divested Operating Unit had negative EBITDA for the
thirteen Fiscal Periods preceding the date of disposition, and shall be a
decrease if the purchased or acquired Operating Unit had negative EBITDA for
the thirteen Fiscal Periods preceding the date of acquisition.
Non-Voting Stock. The term "Non-Voting Stock" shall mean the
non-voting common stock, par value $.01 per share, of the Corporation.
Operating Unit. The term "Operating Unit" shall mean any
operating unit consisting of ten or more supermarkets.
Parity Preferred Stock. The term "Parity Preferred Stock"
shall mean any stock of the Corporation, other than the Series A Preferred
Stock and Series B Preferred Stock, ranking on a par with the Series B
Preferred Stock as to dividends and upon liquidation.
27
<PAGE> 29
Permitted Holder. The term "Permitted Holder" shall mean (i)
Food 4 Less Equity Partners, L.P., Yucaipa or any entity controlled thereby or
any of the partners thereof, (ii) Apollo Advisors, L.P., Lion Advisors, L.P.,
Apollo Advisors II, L.P., or any entity controlled thereby or any of the
partners thereof, (iii) an employee benefit plan of the Corporation or any
subsidiary of the Corporation, or any participant therein, (iv) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its subsidiaries or (v) any Permitted Transferee of any
of the foregoing persons.
Permitted Transferee. The term "Permitted Transferee" shall
mean, 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, (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 the Corporation, (iv) any investment account whose investment
managers and investment advisors consist solely of such person and/or Permitted
Transferees of such person and (v) any investment fund or investment entity
that is a subsidiary of such person or a Permitted Transferee of such person.
Preferred Stock. The term "Preferred Stock" shall mean the
Series A Preferred Stock and the Series B Preferred Stock.
Qualified IPO. The term "Qualified IPO" shall have the
meaning set forth in the Stockholders Agreement.
Ralphs Grocery Company. The term "Ralphs Grocery Company"
shall mean Ralphs Grocery Company, a Delaware corporation which is a subsidiary
of the Corporation as of the Initial Issue Date and is the successor by merger
to Food 4 Less Supermarkets, Inc.
Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
Series A Preferred Stock. The term "Series A Preferred Stock"
shall mean the Series A Preferred Stock, $.01 par value, authorized by the
Board of Directors pursuant to a Certificate of Designations of Series A
Preferred Stock, dated of even date herewith.
Series B Preferred Stock. The term "Series B Preferred Stock"
shall mean the Series B Preferred Stock authorized hereby.
Stockholders Agreement. The term "Stockholders Agreement"
shall mean that certain stockholders agreement of the Corporation dated as of
June 14, 1995, as in effect on the Initial Issue Date, a copy of which shall be
maintained by the Secretary of the Corporation and which shall be available to
any stockholder of the Corporation upon request.
Trigger Amount. The term "Trigger Amount" shall have the
meaning set forth in the Stockholders Agreement.
28
<PAGE> 30
Yucaipa. The term "Yucaipa" shall mean The Yucaipa Companies,
a California general partnership.
17. Designation.
The series of preferred stock authorized hereby shall be
designated as the "Series B Preferred Stock." The number of shares
constituting such series shall be 25,000,000. The par value of the Series B
Preferred Stock shall be $.01 per share.
18. Voting Rights.
Except as otherwise required by law, the holders of the Series
B Preferred Stock shall not be entitled to any voting rights.
19. Liquidation Preference Amount.
(a) In the event of any Liquidation, holders of the
Series A Preferred Stock and the Series B Preferred Stock will be entitled to
receive, after payment of creditors, the Liquidation Preference Amount before
any payment or distribution of the assets of the Corporation shall be made to
holders of Junior Preferred Stock or Common Stock. The Series A Preferred
Stock and the Series B Preferred Stock shall rank pari passu in right of
payment or distribution upon any Liquidation. If upon any Liquidation, the
amounts payable with respect to the Series A Preferred Stock and the Series B
Preferred Stock are not paid in full, the holders of the Series A Preferred
Stock and the Series B Preferred Stock will share equally and ratably in any
distribution of assets of the Corporation in proportion to the full Liquidation
Preference Amount to which each is entitled.
(b) After payment of the full Liquidation Preference
Amount to which each holder of Series A Preferred Stock or Series B Preferred
Stock is entitled, and the payment of any liquidation preference to which any
holder of Junior Preferred Stock or Parity Preferred Stock is entitled, the
remaining assets and funds of the Corporation available for distribution to
stockholders shall be distributed among the holders of Common Stock, Non-Voting
Stock, Series A Preferred Stock and Series B Preferred Stock pro rata on the
basis of the number of shares of Common Stock or Non-Voting Stock owned by each
such holder (assuming, in the case of holders of Series A Preferred Stock and
Series B Preferred Stock, the conversion, immediately prior to such
distribution, of all shares of Series A Preferred Stock and Series B Preferred
Stock owned by such holder into shares of Common Stock), provided that the
Liquidation Preference Amount paid to each holder of Series A Preferred Stock
or Series B Preferred Stock shall be credited against the pro rata distribution
otherwise payable to each such holder under this Section 4(b).
20. Dividends.
(a) Without the prior written consent of holders of a
majority of the shares of Series A Preferred Stock, (i) no dividends or other
distributions shall be declared, made, paid or set apart for payment or
distribution upon any shares of Common Stock, Non-Voting Stock,
29
<PAGE> 31
Junior Preferred Stock or Parity Preferred Stock (other than dividends or
distributions payable in Common Stock, Non-Voting Stock or Junior Preferred
Stock, provided that concurrently therewith a dividend or distribution is made
on the shares of Series A Preferred Stock and Series B Preferred Stock in an
amount determined as if the holders thereof had converted such shares into
Common Stock immediately prior to the close of business on the applicable
record date) and (ii) the Corporation shall not, and shall not permit any of
its subsidiaries to, directly or indirectly redeem, purchase, or otherwise
acquire any Common Stock, Non-Voting Stock, Junior Preferred Stock or Parity
Preferred Stock for any consideration (or pay any moneys to, or make any monies
available for, a sinking fund for the redemption of any shares of such stock).
Notwithstanding the foregoing, nothing in this resolution shall prevent the
Corporation or its subsidiaries from repurchasing shares of Common Stock held
by bona fide, full-time employees of the Corporation or its subsidiaries (other
than Ronald W. Burkle or any other partner of Yucaipa) in connection with the
death, disability or termination of such employees in accordance with the terms
of any employee benefit plan, provided that the aggregate amount of all such
repurchases shall not exceed $10,000,000 per fiscal year of the Corporation
plus, commencing as of the second full fiscal year of the Corporation after the
Initial Issue Date, any unused portion of such $10,000,000 amount from the
prior fiscal year up to a maximum amount of $20,000,000 in any fiscal year.
(b) If the Corporation shall declare dividends on the
Series B Preferred Stock that are payable in securities of the Corporation that
are entitled to vote for the election of directors of the Corporation or
otherwise entitled to vote, the Corporation shall make available to each holder
of Series B Preferred Stock, at such holder's request, dividends consisting of
securities of the Corporation that are not voting securities but which are
otherwise identical to such voting securities in all material respects, and
which are convertible into or exchangeable for such voting securities, in a
manner similar to the manner by which Series B Preferred Stock is convertible
into Series A Preferred Stock pursuant to Section 6 below.
21. Conversion.
(a) Each share of Series B Preferred Stock shall be
convertible at the option of the holder thereof into validly issued, fully paid
and nonassessable shares of Non-Voting Stock, in an amount determined in
accordance with Sections 6(i) and 6(j) below.
(b) Subject to Section 6(p), upon a Change of Control,
each share of Series B Preferred Stock shall be convertible at the option of
the holder thereof into validly issued, fully paid and nonassessable shares of
Common Stock, in an amount determined in accordance with Sections 6(i) and 6(j)
below.
(c) Upon consummation of a Qualified IPO, each share of
Series B Preferred Stock will automatically convert, without action on the part
of the holder thereof, into validly issued, fully paid and nonassessable shares
of Non-Voting Stock or, at the election of the holder thereof and subject to
Section 6(p), Common Stock, in an amount determined in accordance with Sections
6(i) and 6(j) below.
30
<PAGE> 32
(d) Subject to Section 6(p), each share of Series B
Preferred Stock shall be convertible at the option of the holder thereof into
one share of validly issued, fully paid and nonassessable Series A Preferred
Stock.
(e) Immediately following the conversion of Series B
Preferred Stock into Common Stock, Non-Voting Stock or Series A Preferred
Stock, on the Conversion Date (i) such converted shares of Series B Preferred
Stock shall be deemed no longer outstanding, and (ii) the persons entitled to
receive the Common Stock, Non-Voting Stock or Series A Preferred Stock upon the
conversion of such converted Series B Preferred Stock shall be treated for all
purposes as having become the owners of record of such Common Stock, Non-Voting
Stock or Series A Preferred Stock, as applicable. Upon the issuance of shares
of Common Stock, Non- Voting Stock or Series A Preferred Stock upon conversion
of Series B Preferred Stock pursuant to this Section 6, such shares of Common
Stock, Non-Voting Stock or Series A Preferred Stock shall be deemed to be duly
authorized, validly issued, fully paid and nonassessable. Notwithstanding
anything to the contrary in this Section 6, any holder of Series B Preferred
Stock may convert shares of such Series B Preferred Stock into Common Stock,
Non-Voting Stock or Series A Preferred Stock in accordance with this Section 6
on a conditional basis, such that such conversion will not take effect unless
the Change of Control or Qualified IPO, as applicable under Section 6(b) or
(c), is consummated, or such other condition to which conversion under Section
6(d) is subject is satisfied, and the Corporation shall make such arrangements
as may be necessary or appropriate to allow such conditional conversion and to
enable the holder to participate in such Change of Control or Qualified IPO or
to satisfy such other condition.
(f) To convert Series B Preferred Stock into Non-Voting
Stock or Common Stock at the option of the holder pursuant to Section 6(a) or
6(b), respectively, a holder must (i) surrender the certificate or certificates
evidencing the shares of Series B Preferred Stock to be converted, duly
endorsed in a form reasonably satisfactory to the Corporation, at the office of
the Corporation or of the transfer agent for the Series B Preferred Stock, (ii)
give written notice to the Corporation at such office that such holder elects
to convert Series B Preferred Stock into Common Stock or Non-Voting Stock and
the number of shares to be converted, (iii) state in writing the name or names
in which the certificate or certificates for shares of Common Stock or Non-
Voting Stock are to be issued, (iv) provide evidence reasonably satisfactory to
the Corporation that such holder has satisfied any conditions, contained in any
agreement or any legend on the certificates representing the Series B Preferred
Stock, relating to the transfer thereof, if shares of Common Stock or
Non-Voting Stock are to be issued in a name or names other than the holder's,
and (v) pay any transfer or similar tax if required as provided in Section 6(o)
below. In the event that a holder fails to notify the Corporation of the
number of shares of Series B Preferred Stock to be converted, such holder shall
be deemed to have elected to convert into Non-Voting Stock or Common Stock, as
applicable, all shares represented by the certificate or certificates
surrendered for conversion. Such conversion, to the extent permitted by law,
regulation, rule or other requirement of any governmental authority
(collectively, "Laws") and the provisions hereof, shall be deemed to have been
effected as of the close of business on the date on which the holder satisfies
all of the foregoing requirements with respect to such conversion (such date is
referred to herein as the "Conversion Date" for purposes of any conversion of
Series B Preferred Stock pursuant to Section 6(a) or 6(b)). As soon as
practical on or following the Conversion Date, the Corporation shall deliver to
such former holder of
31
<PAGE> 33
Series B Preferred Stock or at its direction, a certificate representing the
shares of Common Stock or Non-Voting Stock issued upon the conversion, together
with a new certificate representing the unconverted portion, if any, of the
shares of Series B Preferred Stock formerly represented by the certificate or
certificates surrendered for conversion.
(g) To convert Series B Preferred Stock into Series A
Preferred Stock at the option of the holder pursuant to Section 6(d), a holder
must (i) surrender the certificate or certificates evidencing the shares of
Series B Preferred Stock to be converted, duly endorsed in a form reasonably
satisfactory to the Corporation, at the office of the Corporation or of the
transfer agent for the Series B Preferred Stock, (ii) give written notice to
the Corporation at such office that such holder elects to convert Series B
Preferred Stock into Series A Preferred Stock, and the number of shares to be
converted, (iii) state in writing the name or names in which the certificate or
certificates for shares of Series A Preferred Stock are to be issued, (iv)
provide evidence reasonably satisfactory to the Corporation that such holder
has satisfied any conditions, contained in any agreement or any legend on the
certificates representing the Series B Preferred Stock, relating to the
transfer thereof, if shares of Series A Preferred Stock are to be issued in a
name or names other than the holder's, and (v) pay any transfer or similar tax
if required as provided in Section 6(o) below. In the event that a holder
fails to notify the Corporation of the number of shares of Series B Preferred
Stock to be converted, such holder shall be deemed to have elected to convert
all shares surrendered for conversion. Such conversion, to the extent
permitted by Law and the provisions hereof, shall be deemed to have been
effected as of the close of business on the date on which the holder satisfies
all of the foregoing requirements with respect to such conversion (such date
is referred to herein as the "Conversion Date" for purposes of any conversion
of Series B Preferred Stock pursuant to Section 6(d)). As soon as practical on
or following the Conversion Date, the Corporation shall deliver to the named
transferee or transferees of such shares formerly representing shares of Series
B Preferred Stock or at its direction, a certificate representing the shares of
Series A Preferred Stock issued upon the conversion, together with a new
certificate representing the unconverted portion, if any, of the shares of
Series B Preferred Stock formerly represented by the certificate or
certificates requested to be transferred.
(h) To receive share certificates representing Non-Voting
Stock or Common Stock upon any automatic conversion of Series B Preferred Stock
into Non-Voting Stock or Common Stock pursuant to Section 6(c), a holder must
(i) surrender the certificate or certificates evidencing the shares of Series B
Preferred Stock to be converted, duly endorsed in a form reasonably
satisfactory to the Corporation, at the office of the Corporation or of the
transfer agent for the Series B Preferred Stock, (ii) state in writing the name
or names in which the certificate or certificates for shares of Non-Voting
Stock or Common Stock are to be issued, (iii) provide evidence reasonably
satisfactory to the Corporation that such holder has satisfied any conditions,
contained in any agreement or any legend on the certificates representing the
Series B Preferred Stock, relating to the transfer thereof, if shares of
Non-Voting Stock or Common Stock are to be issued in a name or names other than
the holder's, and (iv) pay any transfer or similar tax if required as provided
in Section 6(o) below. Whether or not the holder has satisfied any of the
foregoing requirements, the date on which a Qualified IPO has been consummated
shall be deemed the "Conversion Date" for purposes of any automatic conversion
of Series B Preferred Stock pursuant to Section 6(c). As soon as practical
following the
32
<PAGE> 34
satisfaction by the holder of all of the foregoing requirements, the
Corporation shall deliver to such former holder of Series B Preferred Stock or
at its direction, a certificate representing the shares of Non-Voting Stock or
Common Stock issued upon the conversion.
(i) For the purposes of the conversion of Series B
Preferred Stock into Common Stock or Non-Voting Stock pursuant to Sections
6(a), 6(b) or 6(c), each share of Series B Preferred Stock shall be convertible
into the number of shares of Common Stock or Non-Voting Stock equal to the
Liquidation Preference Amount divided by the Conversion Price in effect on the
Conversion Date. The number of full shares of Common Stock or Non-Voting Stock
issuable to a single holder upon conversion of the Series B Preferred Stock
shall be based on the aggregate Liquidation Preference Amount of all shares of
Series B Preferred Stock owned by such holder. The Conversion Price initially
shall equal $10.00 per share, subject to adjustment from time to time in
accordance with Section 6(j) below.
(j) If the Corporation shall at any time subdivide, by
stock split, reclassification or otherwise, the outstanding shares of Common
Stock or Non-Voting Stock or shall issue a dividend on its outstanding Common
Stock or Non-Voting Stock payable in capital stock (as to which subdivision or
stock dividend the holders of the Series B Preferred Stock have not
participated pursuant to Section 5(a) above or otherwise), the Conversion Price
in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Corporation shall
at any time combine, by stock split, reclassification or otherwise, the
outstanding shares of Common Stock or Non-Voting Stock, the Conversion Price in
effect immediately prior to such combination shall be proportionately
increased, effective at the close of business on the date of such subdivision,
dividend, combination or other event, as the case may be.
(k) No fractional shares of Common Stock or Non-Voting
Stock shall be issued upon the conversion of Series B Preferred Stock;
provided, that if the fair market value of a share of Common Stock or
Non-Voting Stock is greater than or equal to $10,000, the Corporation shall
issue any fractional interest in a share of Common Stock or Non-Voting Stock
deliverable upon the conversion of Series B Preferred Stock. If any fractional
interest in a share of Common Stock or Non-Voting Stock would, except for the
provisions of this subparagraph (k), be deliverable upon the conversion of any
Series B Preferred Stock, the Corporation shall, in lieu of delivering the
fractional share therefor, adjust such fractional interest by payment to the
holder of such converted Series B Preferred Stock of an amount in cash equal
(computed to the nearest cent) to the fair market value of such fractional
interest as of the end of the Corporation's last fiscal year as determined in
good faith in the sole discretion of the Board of Directors of the Corporation.
(l) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly mail a notice of the adjustment to
holders of Series B Preferred Stock by first class mail. The Corporation shall
forthwith maintain at its principal executive office and file with the transfer
agent, if any, for Series B Preferred Stock, a statement, signed by the
Chairman of the Board, or the President, or a Vice President of the Corporation
and by its chief financial officer or an Assistant Treasurer, showing in
reasonable detail the facts requiring such adjustment and the Conversion Price
after such adjustment. Such transfer agent shall be under
33
<PAGE> 35
no duty or responsibility with respect to any such statement except to exhibit
the same from time to time to any holder of Series B Preferred Stock desiring
an inspection thereof.
(m) If there shall occur any capital reorganization or
any reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another entity, or the conveyance of all
or substantially all of the assets of the Corporation to another person or
entity, each share of Series B Preferred Stock shall thereafter be convertible
into the number of shares or other securities or property to which a holder of
the number of shares of Common Stock or Non-Voting Stock deliverable upon
conversion of such Series B Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation, merger or conveyance; and, in
any such case, appropriate adjustment (as determined in good faith in the sole
discretion of the Board of Directors of the Corporation) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series B Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares or other
property thereafter deliverable upon the conversion of the Series B Preferred
Stock; provided, that if pursuant to any such reorganization, reclassification,
consolidation, merger or conveyance, the holders of Common Stock or Non-Voting
Stock receive securities that are entitled to vote for the election of
directors of the Corporation or any applicable successor, or otherwise entitled
to vote, then the Corporation or such successor shall make available, upon
conversion of Series B Preferred Stock, at the request of each holder of Series
B Preferred Stock, securities that are not voting securities but which are
otherwise identical to such voting securities in all material respects, and
which are convertible into or exchangeable for such voting securities in a
manner similar to the manner by which Series B Preferred Stock is convertible
into Series A Preferred Stock pursuant to this Section 6.
(n) The Corporation shall at all times reserve and keep
available, out of its authorized but unissued shares of Common Stock,
Non-Voting Stock and Series A Preferred Stock or treasury shares thereof,
solely for the purpose of issuance upon the conversion of Series B Preferred
Stock, the full number of shares of Common Stock, Non-Voting Stock and Series A
Preferred Stock deliverable upon the conversion of all Series B Preferred Stock
from time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the State of Delaware, increase the authorized
amount of its Common Stock, Non-Voting Stock and Series A Preferred Stock if at
any time the authorized number of shares of Common Stock, Non-Voting Stock and
Series A Preferred Stock remaining unissued shall not be sufficient to permit
the conversion of all of the Series B Preferred Stock at the time outstanding.
(o) The Corporation shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock or
Non-Voting Stock upon conversion of the Series B Preferred Stock into Common
Stock or Non-Voting Stock. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of Common Stock or Non-Voting Stock in a name other than
that in which the Series B Preferred Stock so converted was registered, and no
such issue or delivery shall be made unless and until the person requesting
such issue has paid to the Corporation the amount of any such tax, or has
established to the satisfaction of the Corporation
34
<PAGE> 36
that such tax has been paid. In addition, the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of Series A Preferred Stock upon a
conversion of Series B Preferred Stock, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established to the Corporation
that such tax has been paid.
(p) Notwithstanding any right of conversion of Series B
Preferred Stock provided for in this Section 6, unless otherwise permitted by
applicable law or regulation, no shares of Series B Preferred Stock
beneficially owned by a bank holding company or an Affiliate of a bank holding
company shall be converted into shares of Common Stock or Series A Preferred
Stock by the initial holder thereof or any direct or indirect transferee of
such holder such that immediately after such conversion such person and its
Affiliates would own more than 4.9% of any class of voting securities (as
interpreted by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board")) of the Corporation, unless such shares are being
distributed, disposed of or sold in any one of the following transactions (each
a "Conversion Event"):
(i) such shares are being sold in a
public offering of such shares registered under the Securities Act or a public
sale pursuant to Rule 144 promulgated under the Securities Act or any similar
rule then in force;
(ii) such shares are being sold
(including by virtue of a merger, consolidation or similar transaction
involving the Corporation) to a person or group of persons (within the meaning
of the Exchange Act) and, after such sale, such person or group of persons in
the aggregate would own or control securities of the Corporation (excluding any
Common Stock to be issued upon such conversion and sold to such person or group
of persons in connection with such Conversion Event) which possess in the
aggregate the ordinary voting power to elect a majority of the Corporation's
directors;
(iii) such shares are being sold to a
person or group of persons (within the meaning of the Exchange Act) and after
such sale such person or group of persons in the aggregate would not own,
control or have the right to acquire more than two percent of the outstanding
securities of any class of voting securities of the Corporation; or
(iv) such shares are being sold in any
other manner permitted by the Federal Reserve Board.
For purposes of this Section 6(p), percentages of the
Corporation's outstanding voting securities shall include shares issuable upon
exercise or conversion of Series B Preferred Stock and other convertible
securities, options, warrants or other similar instruments owned by such bank
holding company, its transferees and their respective Affiliates, but shall not
include shares issuable upon exercise or conversion of convertible securities,
options, warrants or other similar instruments owned by any other person.
35
<PAGE> 37
22. Exclusion of Other Rights.
Except as otherwise required by law, shares of the Series B
Preferred Stock shall not have any preferences or relative, participating,
optional or other special rights, other than those specifically set forth in
this resolution and in the Certificate of Designations filed pursuant hereto
(as such Certificate may be amended from time to time) and in the Certificate
of Incorporation. No shares of Series B Preferred Stock shall have any rights
of preemption or subscription whatsoever as to any securities of the
Corporation, except as expressly provided in any written agreement among the
Corporation and any holder or holders of Series B Preferred Stock.
23. Reissuance of Preferred Stock.
Shares of Series B Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the General
Corporation Law of the State of Delaware) have the status of authorized and
unissued shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of preferred stock.
24. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
25. Severability of Provisions.
If any right, preference or limitation of the Series B
Preferred Stock set forth in this resolution and in the Certificate of
Designations for the Series B Preferred Stock (as such Certificate may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule or law or public policy, all other rights, preferences
and limitations set forth in such Certificate of Designations (as so amended)
which can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
26. Notice.
All notices and other communications required or permitted to
be given to the Corporation hereunder shall be made by hand delivery or
registered or certified mail, return receipt requested, to the Corporation at
its principal executive offices (currently located on the date of the adoption
of these resolutions at 1100 West Artesia Boulevard, Compton, California
90220), Attention: Secretary. Minor imperfections in any such notice shall
not affect the validity thereof."
36
<PAGE> 38
IN WITNESS WHEREOF, Food 4 Less Holdings, Inc. has caused this
certificate to be signed by Ronald W. Burkle, its Chairman of the Board and
President, this 8th day of June, 1995.
FOOD 4 LESS HOLDINGS, INC.,
a Delaware corporation
By: /s/ Mark A. Resnik
----------------------------
Mark A. Resnik
Vice President and Secretary
37
<PAGE> 1
Exhibit 4.1
FOOD 4 LESS HOLDINGS, INC.
AND
FOOD 4 LESS SUPERMARKETS, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of June 14, 1995 and entered
into by and among FOOD 4 LESS HOLDINGS, INC., a Delaware corporation ("NEW
HOLDINGS"), FOOD 4 LESS SUPERMARKETS, INC., a Delaware corporation ("FOOD 4
LESS"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
BANQUE INDOSUEZ, BANQUE PARIBAS, BARCLAYS BANK PLC, and CREDIT LYONNAIS CAYMAN
ISLAND BRANCH, as co-agents for Lenders (each individually referred to herein
as a "CO-AGENT" and collectively as "CO-AGENTS"), BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, THE CHASE MANHATTAN BANK, N.A., CAMPAGNIE
FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, CREDIT SUISSE, THE MITSUBISHI TRUST
AND BANKING CORPORATION, NATWEST BANK N.A., UNION BANK, UNITED STATES NATIONAL
BANK OF OREGON and WELLS FARGO BANK, N.A., as co-arrangers for Lenders (each
individually referred to herein as a "CO-ARRANGER" and collectively as
"CO-ARRANGERS"), and BANKERS TRUST COMPANY ("BANKERS"), as administrative agent
for Lenders (in such capacity, "AGENT").
R E C I T A L S
WHEREAS, prior to the consummation of the transactions
referred to herein, F4L Parent (capitalized terms used herein without
definition shall have the meanings set forth in Section 1 below) has merged
with and into Old Holdings with Old Holdings being the surviving corporation;
WHEREAS, in order to effect the reincorporation of Old
Holdings as a Delaware corporation, Old Holdings has merged with and into New
Holdings with New Holdings being the surviving corporation and, as a result of
the Reincorporation Merger, New Holdings has succeeded to all of the rights and
obligations of Old Holdings;
WHEREAS, pursuant to the Merger Agreement, Holdings and Food 4
Less will acquire all of the outstanding capital stock of Ralphs Supermarkets;
1
<PAGE> 2
WHEREAS, Holdings and Food 4 Less will effect the acquisition
of all of the outstanding capital stock of Ralphs Supermarkets (a) by Holdings
making a cash payment to the Sellers of approximately $100,000,000 and issuing
the Seller Debentures and $18,500,000 initial accreted value of Holdings
Discount Debentures to the Sellers in consideration for approximately 48% of
the issued and outstanding capital stock of Ralphs Supermarkets, which capital
stock will thereupon be contributed by Holdings to Food 4 Less, and (b) upon
receipt of such capital stock, by merging Food 4 Less with and into Ralphs
Supermarkets with Ralphs Supermarkets being the surviving corporation and the
Sellers receiving a cash payment of approximately $275,900,000 in consideration
for the remaining approximately 52% of the issued and outstanding capital stock
of Ralphs Supermarkets;
WHEREAS, immediately upon consummation of the RSI Merger,
Ralphs Grocery will be merged with and into Ralphs Supermarkets, with Ralphs
Supermarkets being the surviving corporation, and immediately upon consummation
of the RGC Merger, Ralphs Supermarkets' name will be changed to "Ralphs Grocery
Company";
WHEREAS, to effect the Acquisition as herein described, (a)
Holdings (i) is offering to purchase for cash all of the Holdings Discount
Notes for an aggregate amount not to exceed $85,500,000 and (ii) is soliciting
consents from holders of the Holdings Discount Notes to certain amendments to
the Holdings Discount Note Indenture, (b) Food 4 Less (i) is offering to
holders of the Old F4L Senior Notes and the Old F4L Senior Subordinated Notes
to exchange such notes for New F4L Senior Notes and the New F4L Senior
Subordinated Notes, respectively, and a cash payment, and (ii) is soliciting
consents from holders of the Old F4L Senior Notes and the Old F4L Senior
Subordinated Notes to certain amendments to the Old F4L Senior Note Indenture
and the Old F4L Senior Subordinated Note Indenture, and (c) Food 4 Less (i) is
offering to holders of the Old RGC 9% Subordinated Notes and the Old RGC
10-1/4% Subordinated Notes to exchange not less than a majority in aggregate
principal amount of such notes for an equivalent aggregate principal amount of
the New RGC Senior Subordinated Notes and a cash payment, (ii) is offering to
purchase for cash at 101% of the principal amount thereof the Old RGC 9%
Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes in excess of the
minimum required exchange amount and (iii) is soliciting consents from holders
of the Old RGC 9% Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes
to certain amendments to the Old RGC 9% Subordinated Note Indenture and the Old
RGC 10-1/4% Subordinated Note Indenture;
WHEREAS, as a result of the change of control of Ralphs
Supermarkets effected by the Acquisition, Company will thereafter offer to
purchase any then outstanding Old RGC 9% Subordinated Notes and Old RGC 10-1/4%
Subordinated Notes for a purchase price of 101% of the principal amount thereof
plus accrued interest;
2
<PAGE> 3
WHEREAS, in order to finance (a) the payment of the
approximately $375,900,000 cash purchase consideration to the Sellers and
management stockholders and option holders in connection with the Acquisition,
(b) the refinancing of approximately $615,500,000 of existing indebtedness of
Food 4 Less and Ralphs Grocery, (c) the payment of up to $22,800,000 pursuant
to the provisions of the equity appreciation rights of Ralphs Supermarkets, (d)
the purchase of not less than $19,000,000 and up to $30,000,000 in Old RGC 9%
Subordinated Notes and Old RGC 10-1/4% Subordinated Notes in the Ralphs Grocery
Offers described herein, (e) the repayment in full of the principal amount of
the Holdings Discount Notes plus accrued interest and premiums thereon in an
aggregate amount not to exceed $85,500,000, and (f) the payment of up to
$173,000,000 in fees, expenses, premiums and other costs in connection with the
Acquisition, (i) Holdings will receive not less than $140,000,000 in proceeds
from the issuance of preferred stock in a private placement, (ii) Holdings will
issue the Seller Debentures in an aggregate principal amount of $131,500,000 to
the Sellers, (iii) Holdings will issue the Holdings Discount Debentures in an
initial accreted value of not less than $100,000,000, (iv) the management of
Ralphs Grocery will invest not less than $10,000,000 in cash contributions in
Food 4 Less (in the form of a cancellation of their rights to receive certain
cash payments upon consummation of the RSI Merger), (v) Lenders have agreed to
make the Term Loans to Food 4 Less in an aggregate amount of up to $600,000,000
and Revolving Lenders have agreed to make up to $13,500,000 (less an amount
equal to the aggregate accreted value of the Holdings Discount Notes
outstanding as of the Closing Date) of Revolving Loans to Food 4 Less and (vi)
Food 4 Less will receive not less than $450,000,000 in aggregate proceeds from
the issuance of New F4L Senior Notes and New RGC Senior Subordinated Notes in
the Public Offering;
WHEREAS, in addition to the Revolving Loans made to Food 4
Less on the Closing Date, Company has requested that Revolving Lenders provide
a revolving credit facility which shall allow for the making of Revolving Loans
and the issuance of Letters of Credit to meet the working capital requirements
and general corporate purposes of Company and its Subsidiaries;
WHEREAS, Holdings has agreed to guaranty the Obligations of
Company and to secure such guaranty by pledging to Agent on behalf of Lenders
all of the capital stock of Company; and
WHEREAS, each of Company's Subsidiaries has agreed to guaranty
the Obligations of Company, and Company has agreed to secure its Obligations as
the borrower hereunder and each of Company's Subsidiaries has agreed to secure
its guaranty by pledging (a) all of the capital stock of the Subsidiaries owned
by it, (b) certain of its personal property and (c) certain of its interests in
real property.
3
<PAGE> 4
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Holdings, Company,
Lenders, Co-Agents, Co-Arrangers and Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the
following meanings:
"ACQUISITION" means the consummation of the RSI Merger in
accordance with the terms of the Merger Agreement, which shall result in
Holdings owning all of the outstanding capital stock of Ralphs Supermarkets.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the arithmetic average
(rounded upward to the nearest 1/16 of one percent) of the offered quotation,
if any, to first class banks in the interbank Eurodollar market by each of the
Reference Lenders for U.S. Dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loan of that
Reference Lender for which the Adjusted Eurodollar Rate is then being
determined with maturities comparable to such Interest Period as of
approximately 10:00 A.M. (New York City time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus the stated maximum
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable on such Interest
Rate Determination Date to any member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided that if any
Reference Lender fails to provide Agent with its aforementioned quotation then
the Adjusted Eurodollar Rate shall be determined based on the quotation(s)
provided to Agent by the other Reference Lender(s).
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means (i) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise, or (ii) the ownership of more
4
<PAGE> 5
than 10% of the voting securities of that Person; provided that Bankers Trust
New York Corporation and each of its Affiliates (as defined above) shall not be
considered to be an "Affiliate" of Holdings or any of its Subsidiaries.
"AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
administrative agent appointed pursuant to subsection 10.5A.
"AGREEMENT" means this Credit Agreement dated as of June 14,
1995, as it may be amended, supplemented or otherwise modified from time to
time.
"ALPHA BETA" means Alpha Beta Company, a California
corporation.
"AMOUNT OF UNFUNDED BENEFIT LIABILITY" means, with respect to
any Pension Plan, (i) if set forth on the most recent actuarial valuation
report with respect to such Pension Plan, the amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise,
the excess of (a) the greater of the current liability (as defined in Section
412(l)(7) of the Internal Revenue Code) or the actuarial present value of the
accrued benefits with respect to such Pension Plan over (b) the market value of
the assets of such Pension Plan.
"APPLICABLE BASE RATE MARGIN" means, as of any date of
determination, (i) 1.25% per annum in the event that (a) the Interest Coverage
Ratio is equal to or greater than 2.00:1.00 and (b) the aggregate outstanding
principal amount of Term Loans is less than $600,000,000; (ii) notwithstanding
clause (i), 1.00% per annum in the event that (a) the Interest Coverage Ratio
is equal to or greater than 2.50:1.00 and (b) the aggregate outstanding
principal amount of Term Loans is less than $525,000,000; and (iii) 1.50% per
annum in the event that neither of the foregoing clauses (i) or (ii) is
applicable, including for the period from the Closing Date until a Margin
Determination Certificate is delivered pursuant to subsection 6.1(xviii)
establishing that either of clause (i) or clause (ii) is applicable.
"APPLICABLE EURODOLLAR MARGIN" means, as of any date of
determination, (i) 2.50% per annum in the event that (a) the Interest Coverage
Ratio is equal to or greater than 2.00:1.00 and (b) the aggregate outstanding
principal amount of Term Loans is less than $600,000,000; (ii) notwithstanding
clause (i), 2.25% per annum in the event that (a) the Interest Coverage Ratio
is equal to or greater than 2.50:1.00 and (b) the aggregate outstanding
principal amount of Term Loans is less than $525,000,000; and (iii) 2.75% per
annum in the event that neither of the foregoing clauses (i) or (ii) is
applicable, including for the period from the Closing Date until a Margin
Determination Certificate is delivered pursuant to subsection 6.1(xviii)
establishing that either of clause (i) or clause (ii) is applicable.
5
<PAGE> 6
"ASSET SALE" means (i) the sale, lease, assignment or other
transfer (whether voluntary or involuntary) for value (collectively, a
"transfer") by Company or any of its Subsidiaries to any Person other than
Company or any of its wholly-owned Subsidiaries of (a) any of the stock of any
of Company's Subsidiaries, (b) substantially all of the assets of any division
or line of business of Company or any of its Subsidiaries, or (c) any other
assets (whether tangible or intangible) of Company or any of its Subsidiaries,
excluding (1) any Cash Equivalents or inventory sold in the ordinary course of
business, (2) any such transfer to the extent that the aggregate value of the
stock or assets transferred in any single transaction or related series of
transactions is equal to $50,000 or less, or $1,000,000 or less in the
aggregate in any Fiscal Year for all such excluded transfers and all excluded
occurrences described in clause (ii) below, and (3) any transfer in an
arm's-length transaction by Company or a Subsidiary of Company to a Developer
of a Development Site constituting a Development Investment permitted under
subsection 7.3(vii), or (ii) the occurrence of any complete or partial loss,
damage or destruction of any assets of Company or any of its Subsidiaries
giving rise to insurance proceeds, excluding any such occurrence to the extent
that the aggregate value of the assets lost, destroyed or damaged in any single
occurrence or related series of occurrences is equal to $50,000 or less, or
$1,000,000 or less in the aggregate in any Fiscal Year for all such excluded
occurrences and all excluded transfers described in clause (i)(2) above.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit XXII annexed hereto.
"AUDITOR'S LETTER" means each of (i) a letter, substantially
in the form of Exhibit XXIII-A annexed hereto, acknowledged and agreed to by
Company and Arthur Andersen LLP and (ii) a letter, substantially in the form of
Exhibit XXIII-B annexed hereto, acknowledged and agreed to by Company and KPMG
Peat Marwick LLP, each of which shall be delivered to Agent pursuant to
subsection 4.1W, and "AUDITOR'S LETTERS" shall mean both of such letters,
collectively.
"BANKERS" has the meaning assigned to that term in the
introduction to this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is .50% per annum in excess of the Federal Funds
Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in subsection 2.2A.
6
<PAGE> 7
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New York or the
State of California or is a day on which banking institutions located in the
State of New York or in the State of California are authorized or required by
law or other governmental action to close.
"CALA" means Cala Co., a Delaware corporation.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is required to be accounted for as a capital lease on
the balance sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, the highest
rating obtainable from either Standard & Poor's Ratings Group ("S&P") or
Moody's Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's; and (vi) repurchase agreements with respect to, and which are fully
secured by a security interest in, obligations of the type described in clause
(i) or clause (ii) above and are with any commercial bank described in clause
(iv) above.
"CASH PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to,
or monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
7
<PAGE> 8
"CERTIFICATE RE NON-BANK STATUS" means a certificate in form
and substance satisfactory to Agent delivered by a Lender to Agent pursuant to
subsection 2.7B(iii) pursuant to which such Lender certifies that it is not (i)
a "bank" as such term is defined in subsection 881(c)(3) of the Internal
Revenue Code; (ii) a 10 percent shareholder of Company within the meaning of
Section 871(h)(3)(B) or Section 881(c)(3)(B) of the Internal Revenue Code; or
(iii) a "controlled" foreign corporation related to Company within the meaning
of Section 864(d)(4) of the Internal Revenue Code.
"CHANGE OF CONTROL" means any of (a) the failure at any time
of Ronald W. Burkle (other than as a result of death or incapacity) to have
economic ownership of, directly or indirectly (including through his ownership
interest in the Yucaipa Investors), a percentage (calculated without regard to
any dilution resulting from (i) the accretion on the Holdings Preferred Stock,
(ii) the exercise of warrants to purchase Holdings Voting Stock which are
outstanding on the Closing Date; provided, however, that in the event any such
warrant (of which Ronald W. Burkle has direct or indirect economic ownership on
the Closing Date) is exercised, in addition to the percentage of Holdings
Voting Stock otherwise required to be maintained under this clause (a), Ronald
W. Burkle shall continue to have economic ownership of, directly or indirectly
(including through his ownership interest in the Yucaipa Investors), at least
50% of the number of shares of Holdings Voting Stock in which he had such
economic interest under such warrant on the Closing Date, or (iii) the exercise
of employee stock options) of issued and outstanding shares of Holdings Voting
Stock, which percentage shall be at least 50% of the percentage of the issued
and outstanding Holdings Voting Stock economically owned, directly or
indirectly (including through his ownership interest in the Yucaipa Investors),
by Ronald W. Burkle on the Closing Date, (b) the failure at any time of Yucaipa
and the Yucaipa Investors collectively to beneficially own and control and to
have economic ownership of, directly or indirectly, a percentage (calculated
without regard to any dilution resulting from (i) the accretion on the Holdings
Preferred Stock, (ii) the exercise of warrants to purchase Holdings Voting
Stock which are outstanding on the Closing Date; provided, however, that in the
event any such warrant (of which the Yucaipa Investors have direct or indirect
economic ownership on the Closing Date) is exercised, in addition to the
percentage of Holdings Voting Stock otherwise required to be maintained under
this clause (b), Yucaipa and The Yucaipa Investors collectively shall continue
to have economic ownership of, directly or indirectly, at least 50% of the
number of shares of Holdings Voting Stock in which they had such economic
interest under such warrant on the Closing Date, or (iii) the exercise of
employee stock options) of issued and outstanding Holdings Voting Stock, which
percentage shall be at least 50% of the percentage of the issued and
outstanding Holdings Voting Stock beneficially owned and controlled or
economically owned, directly or indirectly, by Yucaipa and the Yucaipa
Investors collectively on the Closing Date, (c) the failure at any time of
Ronald W. Burkle, directly or indirectly, to have the ability to elect a
majority of the members of the Board of Directors of Holdings and of Company;
provided that no Change in Control shall be deemed to have occurred under this
clause (c) as a result of the death or
8
<PAGE> 9
incapacity of Ronald W. Burkle for a period of 60 days after such death or
incapacity, (d) the failure at any time of Holdings to beneficially own and
control 100% of the issued and outstanding shares of capital stock of Company
or the failure at any time of Holdings to have the ability to elect all of the
Board of Directors of Company, or (e) the occurrence of any "Change of Control"
as defined in any of the Subordinated Debt Indentures or the Senior Debt
Indentures. As used herein, the term "beneficially own" or "beneficial
ownership" shall have the meaning set forth in the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"CHANGE OF CONTROL OFFER" means an offer by Company, following
the Mergers, to holders of Old RGC 9% Subordinated Notes and Old RGC 10-1/4%
Subordinated Notes who did not exchange or sell such notes pursuant to the
Ralphs Grocery Offers to purchase such holders' Old RGC 9% Subordinated Notes
and Old RGC 10-1/4% Subordinated Notes at 101% of the principal amount thereof,
together with accrued interest thereon to the date of purchase.
"CHANGE OF CONTROL PURCHASE DATE" means the date, which shall
be not later than 91 days after the Closing Date, on which Company purchases
any or all of the then outstanding Old RGC 9% Subordinated Notes and the Old
RGC 10-1/4% Subordinated Notes pursuant to the Change of Control Offer.
"CLASS" means, with respect to Lenders, each class of Lenders
under this Agreement, with there being two separate classes of Lenders, i.e.,
(i) Lenders having Tranche A Term Loan Exposure and/or Revolving Loan Exposure
(taken together as a single class) and (ii) Lenders having Tranche B Term Loan
Exposure, Lenders having Tranche C Term Loan Exposure and/or Lenders having
Tranche D Term Loan Exposure (taken together as a single class).
"CLOSING DATE" means the date on or before June 30, 1995, on
which the initial Loans are made.
"CO-AGENTS" has the meaning assigned to that term in the
introduction to this Agreement.
"CO-ARRANGERS" has the meaning assigned to that term in the
introduction to this Agreement.
"COLLATERAL" means all the real, personal and mixed property
made subject to a Lien pursuant to the Collateral Documents.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in
the Collateral Account Agreement.
9
<PAGE> 10
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account
Agreement executed and delivered by Company and Agent on the Closing Date,
substantially in the form of Exhibit XXV annexed hereto, pursuant to which
Company may pledge cash to Agent to secure the obligations of Company to
reimburse Issuing Lenders for payments made under one or more Letters of Credit
as provided in Section 8, as such Collateral Account Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means the Holdings Pledge Agreement,
the Pledge Agreements, the Security Agreement, the Trademark Security
Agreement, the Deposit Accounts Security Agreement, the Deeds of Trust, the F4L
GM Security Agreement, the Collateral Account Agreement and all other
instruments or documents delivered by Holdings, Company or any of Company's
Subsidiaries in order to grant to Agent Liens on any of their respective
property.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or
similar instrument issued for the purpose of providing the primary payment
mechanism in connection with the purchase of any materials, goods or services
by Company or any of its Subsidiaries in the ordinary course of business of
Company or such Subsidiary.
"COMMITMENT FEE PERCENTAGE" means .50% per annum.
"COMMITMENTS" means the commitments of Lenders to make Loans
as set forth in subsection 2.1A.
"COMPANY" means, prior to the RSI Merger, Food 4 Less; upon
consummation of the RSI Merger and prior to consummation of the RGC Merger,
Ralphs Supermarkets; and, upon the consummation of the RGC Merger, Ralphs
Grocery.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit X annexed hereto delivered to Agent and Lenders by Company
pursuant to subsection 6.1(iv).
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Cash Interest Expense, (iii) provisions for taxes
based on income, (iv) total depreciation expense, (v) total amortization
expense, (vi) Restructuring Charges and (vii) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, an
amount equal to (i) the sum of (a) the aggregate of all expenditures (whether
paid in cash or other consideration or accrued as a liability and including
that portion of Capital Leases
10
<PAGE> 11
which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "property, plant or equipment" or
comparable items reflected in the consolidated balance sheets of Company and
its Subsidiaries plus (b) to the extent not covered by clause (i)(a) of this
definition, the aggregate of all expenditures by Company and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
or fixed assets (other than current assets consisting of inventory or accounts
receivable) of any Person, or the stock or other evidence of beneficial
ownership of any Person that, as a result of such acquisition, becomes a
Subsidiary of Company minus (ii) the sum of (a) Consolidated Capital
Expenditures (as defined in clause (i) above) constituting Development
Investments permitted under subsection 7.3(vii), (b) the proceeds of
Indebtedness permitted under subsections 7.1(iii) and 7.1(viii), (c) an amount
equal to the proceeds received by Company or any of its Subsidiaries from a
sale-leaseback transaction of a store or equipment permitted under subsection
7.10 so long as such transaction occurs within 180 days of the completion of
such store or acquisition of such equipment and to the extent prior
expenditures, up to an equivalent amount for the asset so sold and leased back,
constituted Consolidated Capital Expenditures (as defined above) in such period
or in any prior period, and (d) expenditures in an amount not to exceed the
proceeds of insurance, condemnation awards (or payments in lieu thereof) or
indemnity payments received from third parties, so long as such expenditures
were made for purposes of replacing or repairing the assets in respect of which
such proceeds, awards or payments were received and so long as such
expenditures are made not later than 18 months of the occurrence of the damage
to or loss of the assets being replaced or repaired; provided that, solely for
purposes of the calculations made under subsection 7.8 for the period
commencing on the Closing Date and ending on January 28, 1996, the exclusions
set forth in clauses (b) and (c) of clause (ii) above shall not be applicable
in determining "Consolidated Capital Expenditures."
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
total interest expense net of any interest income received in Cash by Company
or any of its Subsidiaries (including that portion attributable to Capital
Leases in accordance with GAAP and capitalized interest) of Company and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Company and its Subsidiaries, including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
Interest Rate Agreements, plus all dividends on capital stock of Company paid
or payable in Cash and used by Holdings to pay interest on Indebtedness of
Holdings, including without limitation the Holdings Discount Debentures, the
Holdings Discount Notes and the Seller Debentures, but excluding, however, (i)
any amounts referred to in subsection 2.3 payable to Agent and Lenders on or
before the Closing Date, (ii) any interest expenses not payable in Cash
(including amortization of discounts and amortization of debt issuance costs),
and (iii) the fees, costs and expenses payable by Company relating to the
issuance of or consent to modifications of Subordinated Indebtedness and/or
Senior Indebtedness in connection with the Acquisition.
11
<PAGE> 12
"CONSOLIDATED EXCESS CASH FLOW" means, for any Fiscal Year, an
amount equal to (i) the sum (without duplication) of the amounts for such
Fiscal Year of (a) Consolidated Net Income, (b) any after-tax gains
attributable to returned surplus assets of any Pension Plan, (c) the amount of
Net Cash Proceeds of Asset Sales received in such Fiscal Year that are not
otherwise included in Consolidated Net Income and that are required to be used
to prepay the Term Loans and/or permanently reduce the Revolving Loan
Commitments pursuant to subsection 2.4B(iii)(a), but excluding amounts returned
to Company pursuant to the last sentence of subsection 2.4B(iv)(b) which are
not used by Company to prepay the Term Loans and/or permanently reduce the
Revolving Loan Commitments, (d) the aggregate amount of Cash proceeds (net of
underwriting discounts, similar placement fees and commissions and other
reasonable costs and expenses associated therewith) from the issuance after the
Closing Date of any debt or equity Securities of Holdings or any of its
Subsidiaries that are required to be used to prepay the Loans pursuant to
subsections 2.4B(iii)(b) or 2.4B(iii)(c), as the case may be, but excluding
amounts returned to Company pursuant to the last sentence of subsection
2.4B(iv)(b) which are not used by Company to prepay the Terms Loans and/or
permanently reduce the Revolving Loan Commitments, (e) consolidated
depreciation and amortization expense for such Fiscal Year, (f) other non-cash
charges reducing Consolidated Net Income, including the net decrease (if any)
in deferred tax assets and the net increase (if any) in deferred tax
liabilities of Company and its Subsidiaries, (g) (to the extent not included in
Consolidated Net Income) any cash extraordinary gains, (h) an amount equal to
the Net Cash Proceeds of Asset Sales excluded from mandatory prepayments
required to be made under subsection 2.4B(iii)(a) pursuant to clauses (i), (ii)
and (iv) of the first proviso thereof, and (i) all Cash proceeds received by
Company or any of its Subsidiaries in payment or repayment of any Development
Investment previously made by Company or such Subsidiary minus (ii) the sum
(without duplication) of the amounts for such Fiscal Year of (a) Consolidated
Capital Expenditures permitted under subsection 7.8 made during such Fiscal
Year, (b) payments of principal made in respect of any outstanding Indebtedness
of Company or any of its Subsidiaries to the extent such payments are permanent
reductions in Funded Debt and not prohibited under subsection 7.5, (c) the net
increase (if any) in deferred tax assets and the net decrease (if any) in
deferred tax liabilities, (d) the amount of all Development Investments paid or
payable in cash permitted under subsection 7.3(vii) made during such Fiscal
Year and (e) other non-cash charges increasing Consolidated Net Income, all of
the foregoing as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"CONSOLIDATED FIXED CHARGES" means, without duplication, for
any period, the sum of the amounts for such period of (i) Consolidated Cash
Interest Expense, (ii) Consolidated Rental Payments, and (iii) scheduled
principal payments attributable to Capital Leases of Company and its
Subsidiaries, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
12
<PAGE> 13
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP after deductions for (a) the aggregate dividends paid by Company to
Holdings with respect to capital stock of Company during such period or during
any prior period to the extent that such dividends are or were used by Holdings
to pay amounts recognized as expenses by Holdings during such period in
conformity with GAAP and (b) to the extent not included in the immediately
preceding clause (a), the aggregate dividends paid by Company to Holdings with
respect to capital stock of Company during such period to the extent that such
dividends are used by Holdings to pay interest on Indebtedness of Holdings,
including without limitation the Holdings Discount Debentures, the Holdings
Discount Notes and the Seller Debentures; provided that there shall be excluded
(i) the income (or loss) of any Person (other than a Subsidiary of Company) in
which any other Person (other than Company or any of its Subsidiaries) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to Company or any of its Subsidiaries by such
Person during such period, (ii) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of Company or is merged into or
consolidated with Company or any of its Subsidiaries or that Person's assets
are acquired by Company or any of its Subsidiaries, (iii) the income of any
Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" means, as at any date of
determination, without duplication, the sum of (i) the capital stock and
additional paid-in capital plus retained earnings (or minus accumulated
deficits) of Company and its Subsidiaries on a consolidated basis determined in
conformity with GAAP, (ii) the after tax impact (if any) of the cumulative
amount of Restructuring Charges incurred or reflected subsequent to the Closing
Date, (iii) the amount, not to exceed $50,000,000, for the write-off of
goodwill taken by Company and its Subsidiaries on a consolidated basis
determined in conformity with GAAP and (iv) to the extent that the net value of
the capital stock of Holdings held by any employee stock ownership plan of
Company or any of its Subsidiaries as shown on the consolidated balance sheet
of Company and its Subsidiaries is not included in clause (i) above, such net
value; provided that for purposes of this definition, notwithstanding any
adjustment made or required to be made after the Closing Date as a result of
the receipt on the Closing Date of debt Securities of Holdings by Sellers and
the other Persons receiving such debt Securities on such date, (a) the value
assigned to the Seller Debentures, and to any capital contribution made by
Holdings to Company on the Closing Date the amount of which is calculated with
reference to the value of the Seller Debentures, will be $131,500,000 (as
adjusted from
13
<PAGE> 14
time to time pursuant to any adjustments required to be made after the Closing
Date other than as a result of the receipt on the Closing Date of debt
Securities of Holdings by Sellers and the other Persons receiving such debt
Securities on the such date) and (b) the value assigned to the Holdings
Discount Debentures, and to any capital contribution made to Company by
Holdings on the Closing Date the amount of which is calculated with reference
to the value of the Holdings Discount Debentures, will be $100,000,000 (as
adjusted from time to time pursuant to any adjustments required to be made
after the Closing Date other than as a result of the receipt on the Closing
Date of debt Securities of Holdings by Sellers and the other Persons receiving
such debt Securities on such date).
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the
aggregate amount of all rents paid or payable by Company and its Subsidiaries
on a consolidated basis during that period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease
income).
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness of
Company and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP.
"CONSULTING AGREEMENT" means that certain Consulting Agreement
dated as of the Closing Date among Holdings, Company and Yucaipa, as such
Consulting Agreement may be amended from time to time after the Closing Date to
the extent permitted under subsection 7.15A.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to
make take-or-pay or similar payments if required regardless of non-performance
by any other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or
14
<PAGE> 15
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof
is as described in the preceding sentence. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"COVERED REAL PROPERTY" has the meaning assigned to that term
in subsection 6.11.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement designed to protect Company or any of
its Subsidiaries against fluctuations in currency values.
"DEED OF TRUST" means any deed of trust, mortgage, security
agreement and fixture filing relating to any fee or leasehold interest of any
Loan Party in real property, which shall be substantially in the form of
Exhibit XVI annexed hereto, in each case (i) with appropriate insertions and
deletions based upon the nature of the real property interest (i.e., fee or
leasehold) to be encumbered thereby and (ii) containing such schedules and
including such additional provisions and other deviations from such Exhibit as
are satisfactory to Agent and not inconsistent with the provisions of
subsection 6.11 or as are necessary to conform such Exhibit to applicable local
law, and which shall be dated the date of delivery thereof and made by such
Loan Party as trustor or mortgagor, as the case may be, in favor of Agent, as
beneficiary or mortgagee, delivered for the purpose of securing all Obligations
hereunder, as the same may be amended, supplemented or otherwise modified from
time to time.
"DEFERRED TRADE PAYABLES" means promissory notes (whether
interest bearing or non-interest bearing) executed by Company or any of its
Subsidiaries in favor of such entity's suppliers to finance the purchase price
and delivery costs of inventory in connection with such entity's opening or
acquisition of new stores or remodeling of existing stores.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
15
<PAGE> 16
"DEPOSIT ACCOUNTS SECURITY AGREEMENT" means each Deposit
Accounts Security Agreement to be executed and delivered by Company and certain
of Company's Subsidiaries on the Closing Date and to be executed and delivered
by Subsidiaries of Company from time to time in accordance with subsection
6.10, each substantially in the form of Exhibit XVIII annexed hereto, pursuant
to which Company and such Subsidiaries shall grant to Agent a security interest
in all of its Deposit Accounts maintained with commercial banks or other
depository institutions located in California or in any other jurisdiction
which permits the perfection of a security interest in Deposit Accounts by
notifying the institution that maintains the Deposit Accounts of such security
interest, as each such Deposit Accounts Security Agreement may hereafter be
amended, supplemented or otherwise modified from time to time, and "DEPOSIT
ACCOUNTS SECURITY AGREEMENTS" means all such Deposit Account Security
Agreements, collectively.
"DEVELOPER" means any Person which owns, leases or otherwise
controls or intends to acquire an interest in a Development Site.
"DEVELOPMENT INVESTMENT" means (a) a loan by Company or a
Subsidiary of Company to a Developer, the proceeds of which are to be used to
finance a Development Project of such Developer, (b) a cash contribution by
Company or a Subsidiary of Company to the capital of a Developer, the proceeds
of which are to be used to finance a Development Project of such Developer, or
(c) a contribution by Company or a Subsidiary of Company to the capital of a
Developer of an interest of Company or such Subsidiary in a Development Site.
The amount of any Development Investment shall be the amount of cash loaned or
contributed to a Developer for the purpose specified above or the fair market
value of the interest of a Development Site contributed to the capital of a
Developer, which fair market value shall be determined, without regard to the
proposed investment, at the time of such contribution in good faith by
resolution of the Board of Directors of Company, in each case minus the amount
of cash received by Company or any of its Subsidiaries in repayment of such
Development Investment.
"DEVELOPMENT PROJECT" means a project for the development by
or at the direction of a Developer of a Development Site, including the
construction, remodeling, expansion or renovation of a store thereon, which
store is to be leased to and operated by Company or one of its Subsidiaries.
"DEVELOPMENT SITE" means real property which is identified by
Company or one of its Subsidiaries as the intended location for a store or a
shopping center and related improvements to be constructed, remodeled, expanded
or renovated by or at the direction of the Developer thereof, which in each
case shall include a store intended to be leased to and operated by Company or
one of its Subsidiaries.
16
<PAGE> 17
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank
is acting through a branch or agency located in the United States or (y) such
bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses including, but not limited to,
insurance companies, mutual funds and lease financing companies, in each case
(under clauses (i) through (iv) above) that is reasonably acceptable to Agent;
and (B) any Lender and any Affiliate of any Lender; provided that no Affiliate
of Company shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA (i) which is, or, at any time within the five
calendar years immediately preceding the date hereof, was at any time,
maintained or contributed to by the Loan Parties or any of their respective
ERISA Affiliates or (ii) with respect to which any Loan Party retains any
liability, including any potential joint and several liability as a result of
an affiliation with an ERISA Affiliate or a party that would be an ERISA
Affiliate except for the fact the affiliation ceased more than five calendar
years prior to the date hereof.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity
executed and delivered by Company on the Closing Date substantially in the form
of Exhibit XVII annexed hereto, as such Environmental Indemnity may hereafter
be amended, supplemented or otherwise modified from time to time.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice
of violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Company, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
"ENVIRONMENTAL LAWS" means all statutes, ordinances, orders,
rules, regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages,
17
<PAGE> 18
contribution, cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials, (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials, or (iii)
occupational safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner applicable to
Company or any of its Subsidiaries or any of their respective properties,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. Section 11001 et seq.), each as amended
or supplemented, and any analogous future or present local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as of
the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA AFFILIATE", as applied to any Person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that Person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is, or was at any time within the five calendar years
immediately preceding the date hereof, a member.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (iii) the provision by the administrator of
18
<PAGE> 19
any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent
to terminate such plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the withdrawal by any of the Loan Parties or any of their
respective ERISA Affiliates from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting in liability
pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might reasonably be expected to constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on any of the Loan Parties or
any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal by any of the Loan Parties or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by any of the Loan Parties or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on any of the Loan Parties or any of their
respective ERISA Affiliates of fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i) or
(l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets
thereof, or against any of the Loan Parties or any of their respective ERISA
Affiliates in connection with any such Employee Benefit Plan; (x) receipt from
the Internal Revenue Service of notice of the failure of any Pension Plan (or
any other Employee Benefit Plan intended to be qualified under Section 401(a)
of the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCLUDED SITE" means, as of any date, provided that there
shall not then exist a Potential Event of Default or an Event of Default, all
of the following, excluding any fee interest in Real Property Assets on which
Agent shall have been granted a Lien
19
<PAGE> 20
in accordance with the terms hereof: (a) any fee interest in undeveloped land
acquired by Company or any of its Subsidiaries for the development of a grocery
store, so long as less than a year has elapsed since the date such fee interest
was first acquired by Company or any of its Subsidiaries (the "Acquisition
Date"), (b) any fee interest in Real Property Assets owned by Company or any of
its Subsidiaries consisting of a grocery store under construction, so long as
less than a year has elapsed since the date such construction commenced, and
(c) any fee interest in a grocery store, the construction of which is complete,
which fee interest was not previously a Covered Real Property, so long as not
more than 180 days has elapsed since the date of completion of such
construction; provided that the maximum length of time that a property may be
characterized as an Excluded Site is two years from its Acquisition Date;
provided further that if on any date there are more than five (5) properties
that meet the foregoing definition of "Excluded Site", only the five (5) such
properties with the earliest Acquisition Dates (and on which Agent shall not
have been granted a Lien in accordance with the terms hereof) shall constitute
"Excluded Sites". "EXCLUDED SITE" shall also include (I) any Real Property
Asset located outside of California, so long as Agent has been notified by
Company in writing of the nature and address of such Real Property Asset and of
the amount of expenditures made or to be made to acquire or develop such Real
Property Asset and Agent has not requested a Deed of Trust with respect
thereto, and (II) until the date that is eighteen (18) months after the Closing
Date, any store identified in Schedule 1.1B annexed hereto as a Planned
Disposition and any store identified in Schedule 1.1C annexed hereto as a
Required Disposition. There shall be no limitation on the number of Real
Property Assets constituting Excluded Sites pursuant to the foregoing sentence.
"EXISTING LETTERS OF CREDIT" means the Letters of Credit
listed on Schedule 1.1A annexed hereto.
"F4L GM SECURITY AGREEMENT" means the Security Agreement
executed and delivered by Food 4 Less GM, Inc., a California corporation,
substantially in the form of Exhibit XIX annexed hereto, pursuant to which Food
4 Less GM, Inc. grants a security interest in its general partnership interest
in Golden Alliance to Agent, as such Security Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"F4L MERCHANDISING" means Food 4 Less Merchandising, Inc., a
California corporation.
"F4L PARENT" means Food 4 Less, Inc., a Delaware corporation.
"FACILITIES" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by any of
the Loan Parties or any of their respective predecessors or Affiliates.
20
<PAGE> 21
"FALLEY'S" means Falley's, Inc., a Kansas corporation.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Agent from three Federal funds
brokers of recognized standing selected by Agent.
"FISCAL PERIOD" means a fiscal period of Company and its
Subsidiaries, consisting of a four-week period or five-week period, as the case
may be.
"FISCAL QUARTER" means a fiscal quarter of Company and its
Subsidiaries, consisting of, in the case of each of the first three Fiscal
Quarters of each Fiscal Year, a 12-week period and, in the case of the fourth
Fiscal Quarter of each Fiscal Year, a 16- or 17-week period.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries, consisting of a 52- or 53-week period, ending on the date which
is the Sunday closest to January 31 of the following calendar year. For
purposes of this Agreement, any particular Fiscal Year shall be designated by
reference to the calendar year in which such Fiscal Year commences.
"FOOD 4 LESS" has the meaning assigned to that term in the
introduction to this Agreement.
"FOOD 4 LESS OFFERS" means the offers to exchange the Old F4L
Senior Notes and the Old F4L Senior Subordinated Notes for an equivalent
principal amount of the New F4L Senior Notes and the New F4L Senior
Subordinated Notes, respectively, plus a cash payment, and the solicitation of
consents with respect to the amendment of the Old F4L Senior Note Indenture and
the Old F4L Senior Subordinated Note Indenture, as described in the Amended and
Restated Prospectus and Solicitation Statement dated May 12, 1995 relating
thereto, as supplemented by the Supplement to Prospectus dated May 31, 1995
relating thereto (the "FOOD 4 LESS PROSPECTUS").
"FUNDED DEBT", as applied to any Person, means all
Indebtedness of that Person which by its terms or by the terms of any
instrument or agreement relating thereto matures more than one year from, or is
directly renewable or extendable at the option of the debtor to a date more
than one year from (including an option of the debtor under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of one year or more from), the date of the creation thereof.
21
<PAGE> 22
"FUNDING AND PAYMENT OFFICE" means the office of Agent and
Swing Line Lender located at One Bankers Trust Plaza, New York, New York, or
such other office as shall be designated by Agent in a written notice delivered
to the other parties hereto.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOLDEN ALLIANCE" means Golden Alliance Distribution, a
California general partnership, the general partners of which are Food 4 Less
GM, Inc. and Grocers General Merchandise Company.
"GOLDEN ALLIANCE AGREEMENT" means that certain Joint Venture
Agreement of Golden Alliance Distribution dated as of April 8, 1992 by and
between Food 4 Less GM, Inc., a California corporation, and Grocers General
Merchandise Company, a California corporation, as in effect on the date hereof
and as amended from time to time to the extent permitted pursuant to subsection
7.15B.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"GUARANTY" means the Guaranty Agreement executed and delivered
by certain Subsidiaries of Company on the Closing Date and to be executed and
delivered by Subsidiaries of Company from time to time in accordance with
subsection 6.10, substantially in the form of Exhibit XI annexed hereto, as
such Guaranty Agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances" or
any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes
22
<PAGE> 23
associated with the exploration, development or production of crude oil,
natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii)
urea formaldehyde foam insulation; (viii) electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million; (ix) pesticides; and (x) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to the health
and safety of the owners, occupants or any Persons in the vicinity of the
Facilities.
"HOLDINGS" means, prior to the Reincorporation Merger, Old
Holdings; and upon the consummation of the Reincorporation Merger, New
Holdings.
"HOLDINGS COMMON STOCK" means the Common Stock of Holdings,
par value $0.01 per share, and the Non-Voting Common Stock of Holdings, par
value $0.01 per share.
"HOLDINGS DISCOUNT DEBENTURE INDENTURE" means the indenture
dated as of June 1, 1995 between Holdings and United States Trust Company of
New York pursuant to which the Holdings Discount Debentures were issued, as
such indenture may be amended from time to time to the extent permitted under
subsection 7.15B.
"HOLDINGS DISCOUNT DEBENTURES" means the 13-5/8% Senior
Discount Debentures due 2005 issued by Holdings with an initial accreted value
of not less than $100,000,000 and an aggregate face amount at maturity of
$193,363,570 principal amount, as such debentures may be amended from time to
time to the extent permitted under subsection 7.15B.
"HOLDINGS DISCOUNT NOTE INDENTURE" means the indenture dated
as of December 31, 1992 between Old Holdings and United States Trust Company of
New York pursuant to which the Holdings Discount Notes were issued, as amended
by the First Supplemental Indenture dated May 30, 1995 and on or prior to the
date hereof as described in the Offer to Purchase and Solicitation Statement
dated May 12, 1995, as supplemented by the Supplement to Offer to Purchase and
Solicitation Statement dated May 31, 1995 relating to the Holdings Discount
Notes (the "HOLDINGS OFFER TO PURCHASE"), and as such indenture may be further
amended from time to time to the extent permitted under subsection 7.15B.
"HOLDINGS DISCOUNT NOTES" means the $103,600,000 aggregate
face amount of 15.25% Senior Discount Notes due December 15, 2004, Series A and
Series B, issued by Old Holdings and assumed by New Holdings as described in
the Holdings Offer to Purchase, as such notes may be amended from time to time
to the extent permitted under subsection 7.15B.
23
<PAGE> 24
"HOLDINGS GUARANTY" means the Obligations of Holdings set
forth in Section 9 hereof guaranteeing the Obligations of Company under the
Loan Documents and under Interest Rate Agreements relating thereto.
"HOLDINGS OFFER" means the offer to purchase for cash all of
the outstanding Holdings Discount Notes for an aggregate amount not to exceed
$85,500,000 and the solicitation of consents with respect to the amendment of
the Holdings Discount Note Indenture, as described in the Holdings Offer to
Purchase.
"HOLDINGS PLEDGE AGREEMENT" means the Pledge Agreement
executed and delivered by Holdings on the Closing Date, substantially in the
form of Exhibit XV annexed hereto, as such Pledge Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"HOLDINGS PREFERRED STOCK" means the Series A Preferred Stock
of Holdings, par value $0.01 per share, and the Series B Preferred Stock of
Holdings, par value $0.01 per share.
"HOLDINGS VOTING STOCK" means the Holdings Common Stock, the
Holdings Preferred Stock and any additional class of capital stock of Holdings
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the Board of Directors of Holdings.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (iv) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred under
ERISA), which purchase price is (a) due more than twelve months from the date
of incurrence of the obligation in respect thereof or (b) evidenced by a note
or similar written instrument, and (v) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute Contingent Obligations and not
Indebtedness.
"INDEMNIFICATION AGREEMENT" means that certain Indemnification
Agreement, effective as of February 3, 1992, by and among Federated Department
Stores, Inc., each of its subsidiaries, Allied Stores Corporation, each of its
subsidiaries, Federated Stores, Inc., each of its holding companies and real
estate subsidiaries, Ralphs Grocery and Ralphs Holding Company (now known as
Ralphs Supermarkets), as such Indemnification Agreement may be amended from
time to time after the Closing Date to the extent permitted under subsection
7.15A.
24
<PAGE> 25
"INDEMNITEE" has the meaning assigned to that term in
subsection 11.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or necessary
for the conduct of the business of the Loan Parties as currently conducted that
are material to the condition (financial or otherwise), business or operations
of Company or any of its Subsidiaries.
"INTEREST COVERAGE RATIO" means, as at any date of
determination, the ratio of (i) Consolidated Adjusted EBITDA to (ii)
Consolidated Cash Interest Expense for the four Fiscal Quarters ending as of
the last day of the Fiscal Quarter immediately preceding the Fiscal Quarter
during which such date of determination occurs; except that, if the date of
determination is the last day of a Fiscal Quarter, the four Fiscal Quarters
tested shall include the preceding three Fiscal Quarters and the Fiscal Quarter
then ending.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 15, June 15, September 15 and December 15 of each year,
commencing on September 15, 1995, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
that in the case of each Interest Period of longer than three months "Interest
Payment Date" shall also include the date that is three months after the
commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in interest rates.
"INTEREST RATE EXCHANGERS" has the meaning assigned to that
term in Section 9.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by the Loan Parties of, or of a beneficial interest in, any
Securities of any other Person (other than a Person that, prior to such
purchase or acquisition, was a Subsidiary of Holdings) or (ii) any direct or
indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and
25
<PAGE> 26
similar expenditures in the ordinary course of business) or capital
contribution by any of the Loan Parties to any other Person (other than Company
and any wholly-owned Subsidiary of Company that has executed and delivered a
counterpart of the Guaranty), including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost
of all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"ISSUING LENDER" means, with respect to any Letter of Credit,
the Lender which agrees or is otherwise obligated to issue such Letter of
Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together with
their successors and permitted assigns pursuant to subsection 11.1, and the
term "Lenders" shall include Swing Line Lender unless the context otherwise
requires; provided that the term "Lenders", when used in the context of a
particular Commitment, shall mean Lenders having that Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued by
Issuing Lenders for the account of Company or any wholly-owned Subsidiary of
Company pursuant to subsection 3.1 and the Existing Letters of Credit.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or at any
time thereafter may become available for drawing under all Letters of Credit
then outstanding plus (ii) the aggregate amount of all drawings under Letters
of Credit honored by Issuing Lenders and not theretofore reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B).
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
26
<PAGE> 27
"LOAN" or "LOANS" means one or more of the Term Loans,
Revolving Loans or Swing Line Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the
Guaranty, the Environmental Indemnity, the Collateral Documents and the Letters
of Credit (and any applications for, or other documents or certificates
executed by any Loan Party in favor of an Issuing Lender relating to, the
Letters of Credit).
"LOAN PARTY" means each of Holdings, Ralphs Grocery, Ralphs
Supermarkets, Crawford Stores, Inc., Company and any of Company's Subsidiaries
from time to time executing a Loan Document, and "LOAN PARTIES" means all such
Persons, collectively.
"MARGIN DETERMINATION CERTIFICATE" means an Officers'
Certificate of Company delivered with the financial statements required
pursuant to subsections 6.1(ii) or 6.1(iii) setting forth in reasonable detail
the Interest Coverage Ratio which is applicable as of the date on which such
Officers' Certificate is delivered and the aggregate principal amount of
outstanding Term Loans as of the date which corresponds to the date of
determination of such Interest Coverage Ratio.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of the Loan Parties, taken as a whole, or (ii) the
material impairment of the ability of any Loan Party to perform, or the
impairment of the ability of Agent or Lenders to enforce, the Obligations or
any of the Loan Documents.
"MERGERS" means, collectively, the RSI Merger, the RGC Merger,
the Parent Merger and the Reincorporation Merger.
"MERGER AGREEMENT" means that certain Agreement and Plan of
Merger dated as of September 14, 1994, as amended pursuant to the First
Amendment dated as of January 12, 1995, the Second Amendment dated as of
February 24, 1995, the Third Amendment dated as of April 26, 1995 and the
Fourth Amendment dated as of June 14, 1995, by and among F4L Parent, Old
Holdings, Food 4 Less, Ralphs Supermarkets and the Sellers, pursuant to which
the RSI Merger shall occur, as such Agreement and Plan of Merger may be further
amended from time to time after the Closing Date to the extent permitted under
subsection 7.15A.
"METROPOLITAN DEEDS OF TRUST" means three Deeds of Trust and
Security Agreements with Assignment of Rents and Fixture Filings, each dated
May 30, 1989, as amended, made by Ralphs Grocery as trustor to Commonwealth
Land Title Insurance
27
<PAGE> 28
Company as trustee, for the benefit of Metropolitan Life Insurance Company as
beneficiary and secured party, which deeds of trust secure payment of the RGC
Mortgage Notes.
"MULTIEMPLOYER PLAN" means a "multiemployer plan", as defined
in Section 3(37) of ERISA, (i) to which any of the Loan Parties or any of their
respective ERISA Affiliates is contributing, or, at any time within the five
calendar years immediately preceding the date hereof, has contributed, (ii) to
which any of the Loan Parties or any of their respective ERISA Affiliates has,
or, at any time within the five calendar years immediately preceding the date
hereof, has had, an obligation to contribute or (iii) with respect to which any
of the Loan Parties retains any liability, including any potential joint and
several liability as a result of an affiliation with an ERISA Affiliate or a
party that would be an ERISA Affiliate except for the fact the affiliation
ceased more than five calendar years prior to the date hereof.
"NET CASH PROCEEDS" means, with respect to any Asset Sale,
Cash Proceeds of such Asset Sale net of bona fide direct costs of sale
including (i) income taxes reasonably estimated to be actually payable as a
result of such Asset Sale within two years of the date of such Asset Sale and
(ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on, any Indebtedness (other than the Loans) that is secured
by a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale.
"NEW F4L SENIOR NOTE INDENTURE" means the indenture dated as
of June 1, 1995 among Food 4 Less, the subsidiary guarantors named therein and
Norwest Bank Minnesota, National Association pursuant to which the New F4L
Senior Notes were issued, as such indenture is amended on the date hereof as
described in the Food 4 Less Prospectus and may be further amended from time to
time to the extent permitted under subsection 7.15B.
"NEW F4L SENIOR NOTES" means up to $525,000,000 in aggregate
principal amount of 10.45% Senior Notes due 2004 of the Company, as such notes
may be amended from time to time to the extent permitted under subsection
7.15B.
"NEW F4L SENIOR SUBORDINATED NOTE INDENTURE" means the
indenture dated as of June 1, 1995 among Food 4 Less, the subsidiary guarantors
named therein and United States Trust Company of New York pursuant to which the
New F4L Senior Subordinated Notes were issued, as such indenture is amended on
the date hereof as described in the Food 4 Less Prospectus and may be further
amended from time to time to the extent permitted under subsection 7.15B.
"NEW F4L SENIOR SUBORDINATED NOTES" means up to $145,000,000
in aggregate principal amount of 13.75% Senior Subordinated Notes due 2005 of
the
28
<PAGE> 29
Company, as such notes may be amended from time to time to the extent permitted
under subsection 7.15B.
"NEW HOLDINGS" has the meaning assigned to that term in the
introduction to this Agreement.
"NEW RGC SENIOR SUBORDINATED NOTES" means the up to
$530,000,000 in aggregate principal amount of 11% Senior Subordinated Notes due
2005 of the Company, as such notes may be amended from time to time to the
extent permitted under subsection 7.15B.
"NEW RGC SENIOR SUBORDINATED NOTE INDENTURE" means the
indenture dated as of June 1, 1995 among Food 4 Less, the subsidiary guarantors
named therein and United States Trust Company of New York pursuant to which the
New RGC Senior Subordinated Notes are issued, as such indenture is amended on
the date hereof as described in the Ralphs Prospectus and may be further
amended from time to time to the extent permitted under subsection 7.15B.
"NON-RECOURSE INDEBTEDNESS" means, as applied to any Person,
all Indebtedness of that Person secured by Liens on specified assets of that
Person under the terms of which (i) no recourse may be had against that or any
other Person for the payment of the principal of or interest or premium on such
Indebtedness or for any claim based thereon and (ii) the enforcement of all
obligations relating to such Indebtedness is limited to foreclosure or other
actions with respect to such specified assets, in each case other than
customary exceptions for fraud, waste or environmental indemnification.
"NOTES" means one or more of the Tranche A Term Notes, Tranche
B Term Notes, Tranche C Term Notes, Tranche D Term Notes, Revolving Notes or
Swing Line Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by Company to
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
29
<PAGE> 30
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman or vice
chairman of the board (if an officer) or its president or one of its executive
or senior vice presidents and by its chief financial officer or its treasurer;
provided that every Officers' Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall include (i) a
statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with; and provided further that any Officers'
Certificate required pursuant to subsection 2.4B(iii) may be executed by any
one of the officers referred to in this definition.
"OLD F4L SENIOR NOTE INDENTURE" means the indenture dated as
of July 24, 1992 among Food 4 Less, the subsidiary guarantors named therein and
Norwest Bank Minnesota, National Association, pursuant to which the Old F4L
Senior Notes were issued, as amended by the First Supplemental Indenture dated
July 24, 1992, the Second Supplemental Indenture dated as of May 30, 1995 and
as amended and described in the Food 4 Less Prospectus and as such indenture
may be further amended from time to time to the extent permitted under
subsection 7.15B.
"OLD F4L SENIOR NOTES" means Company's $175,000,000 in
aggregate principal amount of 10.45% Senior Notes due June 15, 2000.
"OLD F4L SENIOR SUBORDINATED NOTE INDENTURE" means the
indenture dated as of June 15, 1991 among Food 4 Less, the subsidiary
guarantors named therein and United States Trust Company of New York pursuant
to which the Old F4L Senior Subordinated Notes were issued, as amended by the
First Supplemental Indenture dated as of April 18, 1992, the Second
Supplemental Indenture dated as of May 18, 1992, the Third Supplemental
Indenture dated as of July 24, 1992, the Fourth Supplemental Indenture dated as
of May 30, 1995 and as amended as described in the Food 4 Less Prospectus and
as such indenture may be further amended from time to time to the extent
permitted under subsection 7.15B.
"OLD F4L SENIOR SUBORDINATED NOTES" means Company's
$145,000,000 in initial aggregate principal amount of 13.75% Senior
Subordinated Notes due April 15, 2001.
30
<PAGE> 31
"OLD HOLDINGS" means Food 4 Less Holdings, Inc., a California
corporation, the rights and obligations of which were succeeded to by New
Holdings as a result of the Reincorporation Merger.
"OLD RGC 9% SUBORDINATED NOTE INDENTURE" means the indenture
dated as of March 30, 1993 between Ralphs Grocery and United States Trust
Company of New York pursuant to which the Old RGC 9% Subordinated Notes were
issued, as amended by the First Supplemental Indenture dated as of June 23,
1993, the Second Supplemental Indenture dated as of May 30, 1995 and as amended
as described in the Ralphs Prospectus and as such indenture may be further
amended from time to time to the extent permitted under subsection 7.15B.
"OLD RGC 9% SUBORDINATED NOTES" means the $150,000,000 in
aggregate principal amount of 9% Senior Subordinated Notes due April 1, 2003
issued by Ralphs Grocery and assumed by Company upon consummation of the RGC
Merger.
"OLD RGC 10-1/4% SUBORDINATED NOTE INDENTURE" means the
indenture dated as of July 29, 1992 between Ralphs Grocery and United States
Trust Company of New York pursuant to which the Old RGC 10-1/4% Subordinated
Notes were issued, as amended by the First Supplemental Indenture dated as of
May 30, 1995 and and as amended as described in the Ralphs Prospectus and as
such indenture may be further amended from time to time to the extent permitted
under subsection 7.15B.
"OLD RGC 10-1/4% SUBORDINATED NOTES" means the $300,000,000 in
aggregate principal amount of 10-1/4% Senior Subordinated Notes due July 15,
2002 issued by Ralphs Grocery and assumed by Company upon consummation of the
RGC Merger.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"PARENT MERGER" means the merger of F4L Parent and Old
Holdings with Old Holdings being the surviving corporation.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
31
<PAGE> 32
"PERMITTED ENCUMBRANCES" means the following types of Liens
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges
or claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords and banks and rights of
offset, and Liens of carriers, warehousemen, workmen, repairmen,
mechanics and materialmen and of growers on inventory consisting of
agricultural products and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or being
contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
utility payments, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 8.8;
(v) leases or subleases granted to others not interfering
in any material respect with the ordinary conduct of the business of
Company or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of Company or any of its
Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor
(other than any Loan Party) under any lease permitted by subsection
7.9, (b) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to (including without limitation
ground leases or other prior leases of the demised premises,
mortgages, mechanics liens, tax liens and easements), or (c)
subordination of the interest of the lessee or sublessee under such
lease to any restriction or encumbrance referred to in the preceding
clause (b);
(viii) Liens arising from filing UCC financing statements
for precautionary purposes relating solely to true leases of personal
property
32
<PAGE> 33
permitted by this Agreement under which Company or any of its
Subsidiaries is a lessee;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the
use of any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the ordinary
course of business of Company and its Subsidiaries; and
(xii) any other title exception with respect to Real
Property Assets disclosed by the preliminary title report, title
commitment report or other search of title provided to Agent in
accordance with subsection 4.1N unless disapproved by Agent prior to
the Closing Date.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"PLANNED DISPOSITION" means the sale of any store identified
in Schedule 1.1B annexed hereto or of all or any portion of the real property
or personal property related to any such store.
"PLEDGE AGREEMENT" means each Pledge Agreement executed and
delivered by Company and certain Subsidiaries of Company on the Closing Date
and to be executed and delivered by Subsidiaries of Company from time to time
in accordance with subsection 6.10, each substantially in the form of Exhibit
XII annexed hereto, as each such Pledge Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, and "PLEDGE AGREEMENTS"
means all such Pledge Agreements, collectively.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that Bankers announces from time
to time as its prime lending rate, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any
33
<PAGE> 34
customer. Bankers or any other Lender may make commercial loans or other loans
at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means, on any date of determination, (i) with
respect to all payments, computations and other matters relating to a Type of
Term Loan Commitment or a Type of Term Loan of any Lender, the percentage
obtained by dividing (x) the Term Loan Exposure of such Type of that Lender on
such date by (y) the aggregate Term Loan Exposure of such Type of all Lenders
on such date, (ii) with respect to all payments, computations and other matters
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender
or any Letters of Credit issued or participations therein purchased by any
Lender or any participations in any Swing Line Loans purchased by any Lender,
the percentage obtained by dividing (x) the Revolving Loan Exposure of that
Lender on such date by (y) the aggregate Revolving Loan Exposure of all Lenders
on such date, and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Term Loan Exposure of all
Types of that Lender on such date plus the Revolving Loan Exposure of that
Lender on such date by (y) the sum of the aggregate Term Loan Exposure of all
Types of all Lenders on such date plus the aggregate Revolving Loan Exposure of
all Lenders on such date, in any such case as the applicable percentage may be
adjusted by assignments permitted pursuant to subsection 11.1. The initial Pro
Rata Share of each Lender for purposes of the preceding sentence is set forth
opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PUBLIC OFFERING" means (i) the issuance of $350,000,000
aggregate principal amount of New F4L Senior Notes in a public offering
registered under the Securities Act, as described in the Prospectus dated May
31, 1995 and (ii) the issuance of $100,000,000 aggregate principal amount of
New RGC Senior Subordinated Notes in a public offering registered under the
Securities Act, as described in the Prospectus dated May 31, 1995.
"RALPHS GROCERY" means, prior to the RGC Merger, Ralphs
Grocery Company, a Delaware corporation, and a wholly-owned Subsidiary of
Ralphs Supermarkets, and following the RGC Merger, Ralphs Supermarkets (which
shall subsequently change its name to "Ralphs Grocery Company").
"RALPHS GROCERY OFFERS" means the offers (i) to exchange not
less than $225,500,000 aggregate principal amount of the Old RGC 9%
Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes for an equivalent
principal amount of the New RGC Senior Subordinated Notes plus a cash payment
and (ii) to purchase for cash up to $224,500,000 aggregate principal amount of
the Old RGC 9% Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes at
the principal amount thereof plus a premium and accrued interest thereon, and
the solicitation of consents with respect to the amendment of the Old RGC 9%
Subordinated Note Indenture and the Old RGC 10-1/4% Subordinated Note
Indenture, as described in the Amended and Restated
34
<PAGE> 35
Prospectus and Solicitation Statement dated May 12, 1995 relating thereto, as
supplemented by the Supplement to Prospectus dated May 31, 1995 relating
thereto (the "RALPHS PROSPECTUS").
"RALPHS SUPERMARKETS" means Ralphs Supermarkets, Inc., a
Delaware corporation, which, following the consummation of the RSI Merger,
shall be a wholly-owned Subsidiary of Holdings, and which, subsequent to the
consummation of the RGC Merger, shall change its name to "Ralphs Grocery
Company".
"REAL PROPERTY ASSETS" means interests in land, buildings,
improvements and fixtures attached thereto or used in the operation thereof, in
each case owned or leased (as lessee) by any Loan Party.
"REFERENCE LENDERS" means Bankers, The Mitsubishi Trust and
Banking Corporation and NatWest Bank N.A.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that
term in subsection 2.1A(vi).
"REGISTER" has the meaning assigned to that term in subsection
2.1D(i).
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT AGREEMENT" means that certain Reimbursement
Agreement, dated as of January 31, 1992, between Ralphs Grocery and The Edward
J. DeBartolo Corporation, as such Reimbursement Agreement may be amended from
time to time after the Closing Date to the extent permitted under subsection
7.15A.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"REINCORPORATION MERGER" means the merger of Old Holdings and
New Holdings with New Holdings being the surviving corporation.
"RELATED FINANCING DOCUMENTS" means, collectively, the
Subordinated Debt Indentures, the Subordinated Indebtedness, the Senior Debt
Indentures, the Senior Indebtedness and all other agreements or instruments
delivered pursuant to or in connection with any of the foregoing including any
purchase agreement or registration rights agreement.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including,
35
<PAGE> 36
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), or into or out of
any Facility, including the movement of any Hazardous Material through the air,
soil, surface water, groundwater or property.
"REPORTING DIVISION" means each of (a) Company and its
Subsidiaries on a consolidated basis, (b) Cala and its Subsidiaries on a
consolidated basis, (c) Falley's and its Subsidiaries on a consolidated basis
and (d) Company and its Subsidiaries (other than the Subsidiaries included in
the foregoing clauses (b) and (c)) on a consolidated basis.
"REQUIRED DISPOSITION" means any disposition of any store
identified in Schedule 1.1C annexed hereto by Company or any of its
Subsidiaries if such disposition is (i) required or made pursuant to any
agreement with the Federal Trade Commission or the California Attorney General
or (ii) required or made pursuant to any other state or federal antitrust law,
in each case as approved by Agent and Requisite Lenders.
"REQUISITE LENDERS" means Lenders having or holding a majority
of the sum of the aggregate Tranche A Term Loan Exposure of all Tranche A Term
Lenders plus the aggregate Tranche B Term Loan Exposure of all Tranche B Term
Lenders plus the aggregate Tranche C Term Loan Exposure of all Tranche C Term
Lenders plus the aggregate Tranche D Term Loan Exposure of all Tranche D Term
Lenders plus the aggregate Revolving Loan Exposure of all Revolving Lenders.
"REQUISITE CLASS LENDERS" means, at any time, (i) for the
Class Lenders having Tranche A Term Loan Exposure and/or Revolving Loan
Exposure, Lenders having or holding 66 and 2/3% of the sum of the aggregate
Tranche A Term Loan Exposure of all Lenders plus the aggregate Revolving Loan
Exposure of all Lenders, and, (ii) for the Class Lenders having Tranche B Term
Loan Exposure, Tranche C Term Loan Exposure and/or Tranche D Term Loan
Exposure, Lenders having or holding 66 and 2/3% of the sum of the aggregate
Tranche B Term Loan Exposure of all Lenders plus the aggregate Tranche C Term
Loan Exposure of all Lenders plus the aggregate Tranche D Term Loan Exposure of
all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of Holdings or Company now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of Holdings or Company now or hereafter outstanding, (iii) any payment
made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Holdings or
Company now or hereafter outstanding, and (iv) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
36
<PAGE> 37
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Subordinated Indebtedness.
"RESTRUCTURING CHARGES" means, for any period subsequent to
the Closing Date, (i) the amount of cash restructuring charges and integration
costs incurred by Company and its Subsidiaries in connection with the
restructuring and integration of Company's and its Subsidiaries' operations as
a result of the Acquisition and related transactions, the divestitures of
stores by and the consolidation of facilities of Company and its Subsidiaries
and other similar restructurings or integrations; provided that the aggregate
amount of such cash charges and costs included in Consolidated Adjusted EBITDA
and Consolidated Net Worth for all periods shall not exceed $45,000,000, and
(ii) the amount of non-cash restructuring charges and integration costs
reflected on the consolidated financial statements of Company and its
Subsidiaries; provided that the aggregate amount of such non-cash charges and
costs included in Consolidated Adjusted EBITDA and Consolidated Net Worth for
all periods shall not exceed $55,000,000, in each case to the extent such
restructuring charges and integration costs reduce the net income of Company
and its Subsidiaries.
"REVOLVING LENDER" or "REVOLVING LENDERS" means the Lender or
Lenders having a Revolving Loan Commitment or having Revolving Loans
outstanding.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A(v), to issue
and/or purchase participations in Letters of Credit pursuant to Section 3 and,
except for Swing Line Lender, to purchase participations in Swing Line Loans
pursuant to subsection 2.1A(vi), and "REVOLVING LOAN COMMITMENTS" means such
commitments of all Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means June 15,
2001.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination, (i) prior to the termination of the Revolving
Loan Commitments, that Lender's Revolving Loan Commitment, and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is an Issuing Lender, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (in each case
net of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit plus (d) in the case of
Swing Line Lender, the aggregate outstanding principal amount of all Swing Line
Loans (net of any participations therein purchased by other Lenders) plus (e)
the
37
<PAGE> 38
aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(v).
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E on the Closing Date to evidence the
Revolving Loans of any Lender and (ii) any promissory notes issued by Company
pursuant to the last sentence of subsection 11.1B(i) in connection with
assignments of the Revolving Loan Commitments and Revolving Loans of any
Lenders, in each case substantially in the form of Exhibit VIII annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.
"RGC MERGER" means the merger of Ralphs Supermarkets and
Ralphs Grocery with Ralphs Supermarkets being the surviving corporation.
"RGC MERGER CERTIFICATE" means that certain Certificate of
Merger dated as of June 14, 1995 executed by Ralphs Supermarkets and Ralphs
Grocery and filed with the Secretary of State of the State of Delaware on the
Closing Date in order to consummate the RGC Merger, as in effect on the Closing
Date, as such Certificate of Merger may be amended from time to time after the
Closing Date to the extent permitted under subsection 7.15A.
"RGC MORTGAGE NOTES" means three promissory notes, each dated
May 30, 1989, made by Ralphs Grocery to Metropolitan Life Insurance Company, in
the original principal amounts of $135,000,000, $45,000,000 and $25,000,000, as
such promissory notes have been amended and modified prior to the date hereof.
"RSI MERGER" means the merger of Food 4 Less and Ralphs
Supermarkets with Ralphs Supermarkets being the surviving corporation.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing; provided,
however, that, solely for purposes of subsection 2.4B(iii)(b), notes issued by
Company to evidence any of the Obligations or to evidence Indebtedness incurred
after the Closing Date pursuant to subsection 7.1 shall not be deemed
"Securities".
38
<PAGE> 39
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SECURITY AGREEMENT" means each Security Agreement executed
and delivered by Holdings, Company and certain Subsidiaries of Company on the
Closing Date and to be executed and delivered by Subsidiaries of Company from
time to time in accordance with subsection 6.10, each substantially in the form
of Exhibit XIII annexed hereto, as each such Security Agreement may hereafter
be amended, supplemented or otherwise modified from time to time, and "SECURITY
AGREEMENTS" means all such Security Agreements, collectively.
"SELLER DEBENTURES" means the $131,500,000 principal amount of
13-5/8% Senior Subordinated Pay-In-Kind Debentures due 2007 of Holdings issued
on the Closing Date to the Sellers pursuant to the Seller Debenture Indenture,
together with such 13-5/8% Senior Subordinated Pay-In-Kind Debentures due 2007
issued by Holdings subsequent to the Closing Date as payment in-kind interest
payments in accordance with the Seller Debenture Indenture, as such debentures
may be amended from time to time to the extent permitted under subsection
7.15B.
"SELLER DEBENTURE INDENTURE" means the indenture dated as of
June 1, 1995 between Holdings and Norwest Bank Minnesota, National Association
pursuant to which the Seller Debentures are issued, which is in substantially
the form of Exhibit A attached to the Merger Agreement, as such Seller
Debenture Indenture may be amended from time to time to the extent permitted
under subsection 7.15B.
"SELLERS" means the selling stockholders of Ralphs
Supermarkets, consisting of The Edward J. DeBartolo Corporation, Camdev
Properties Inc., Bank of Montreal, Banque Paribas and Federated Department
Stores, Inc.
"SENIOR DEBT INDENTURES" means any or all of the Old F4L
Senior Note Indenture, the New F4L Senior Note Indenture, the Holdings Discount
Note Indenture and the Holdings Discount Debenture Indenture.
"SENIOR INDEBTEDNESS" means any or all of the Old F4L Senior
Notes, the New F4L Senior Notes, the Holdings Discount Notes and the Holdings
Discount Debentures.
"SHAREHOLDERS AGREEMENT" means that certain Stockholders
Agreement of Holdings dated as of June 14, 1995 by and among each of the
purchasers and investors listed therein, Yucaipa, certain Affiliates of
Yucaipa, Holdings and Ralphs Grocery, as such Stockholders Agreement may be
amended from time to time after the Closing Date to the extent permitted under
subsection 7.15A.
39
<PAGE> 40
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person;
(ii) such Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably believe) that it
will incur, debts beyond its ability to pay such debts as they become due; and
(B) such Person is "solvent" within the meaning given that term and similar
terms under applicable laws relating to fraudulent transfers and conveyances.
For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"SPECIFIED OFFICERS" means, with respect to any Loan Party,
such Loan Party's chairman of the board, vice chairman of the board, chief
executive officer, president, executive vice presidents, senior vice presidents
and, to the extent not included in any of the foregoing, all officers whose
functional areas include finance, real estate, law, employee benefits or human
resources (including without limitation the general counsel, chief financial
officer, treasurer and controller), and all other officers of such Loan Party
who have functions or duties that are equivalent or similar to those of any of
the foregoing.
"STANDBY LETTER OF CREDIT" means any standby letter of credit
issued for the purpose of supporting (i) Indebtedness of Company or any of its
Subsidiaries in respect of industrial revenue or development bonds or
financings, (ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of Company or any
of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring
third party insurers, (iv) obligations with respect to Capital Leases or
Operating Leases of Company or any of its Subsidiaries, and (v) performance,
payment, deposit or surety obligations of Company or any of its Subsidiaries,
in any case if required by law or governmental rule or regulation or in
accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting trade
payables or any Indebtedness constituting "antecedent debt" (as that term is
used in Section 547 of the Bankruptcy Code).
"SUBORDINATED DEBT INDENTURES" means, collectively, the Old
F4L Senior Subordinated Note Indenture, the New F4L Senior Subordinated Note
Indenture, the Old RGC 9% Subordinated Note Indenture, the Old RGC 10-1/4%
Subordinated Note Indenture, the New RGC Senior Subordinated Note Indenture and
the Seller Debenture Indenture.
40
<PAGE> 41
"SUBORDINATED INDEBTEDNESS" means (i) the Old F4L Senior
Subordinated Notes, the New F4L Senior Subordinated Notes, the New RGC Senior
Subordinated Notes, the Seller Debentures, the Old RGC 9% Subordinated Notes
and the Old RGC 10-1/4% Subordinated Notes and (ii) any other Indebtedness of
Holdings or Company subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material
terms in form and substance satisfactory to Agent and Requisite Lenders.
"SUBSCRIPTION AGREEMENT" means that certain Subscription
Agreement dated as of June 14, 1995 among RGC Partners, L.P., Holdings, Company
and the partnership investors signatory thereto, as such Subscription Agreement
may be amended from time to time after the Closing Date to the extent permitted
under subsection 7.15A.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association, joint venture or other business entity
of which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.
"SWING LINE LENDER" means Bankers, or any Person serving as a
successor Agent hereunder, in its capacity as Swing Line Lender hereunder and
under the other Loan Documents.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing
Line Lender to make Swing Line Loans to Company pursuant to subsection
2.1A(vi).
"SWING LINE LOANS" means the Loans made by Swing Line Lender
to Company pursuant to subsection 2.1A(vi).
"SWING LINE NOTE" means (i) the promissory note of Company
issued pursuant to subsection 2.1E on the Closing Date to evidence the Swing
Line Loans of Swing Line Lender and (ii) any promissory note issued by Company
to any successor Agent and Swing Line Lender pursuant to the last sentence of
subsection 10.6B, in each case substantially in the form of Exhibit IX annexed
hereto, as it may be amended, supplemented or otherwise modified from time to
time.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that "TAX ON THE OVERALL INCOME" of a Person
shall be construed as
41
<PAGE> 42
a reference to a tax imposed by the jurisdiction in which that Person's
principal office (and/or, in the case of a Lender, its lending office) is
located or in which that Person is organized or is deemed to be doing business
on all or part of the net income, profits, gains or receipts of that Person
(whether worldwide, or only insofar as such income, profits, gains or receipts
are considered to arise in or to relate to a particular jurisdiction, or
otherwise).
"TAX ELECTION AGREEMENT" means that certain Tax Election
Agreement, effective as of February 3, 1992, by and among The Edward J.
DeBartolo Corporation, Federated Department Stores, Inc., Federated Stores,
Inc., and Ralphs Holding Company (now known as Ralphs Supermarkets, and
following its name change after the RGC Merger, Ralphs Grocery), as such Tax
Election Agreement may be amended from time to time after the Closing Date to
the extent permitted under subsection 7.15A.
"TERM LOAN COMMITMENT" or "TERM LOAN COMMITMENTS" means the
commitments of Lenders to make the Term Loans pursuant to subsection 2.1A in
the aggregate.
"TERM LOAN EXPOSURE" means, with respect to a Lender of a Type
of Term Loan as of any date of determination, (i) prior to the termination of
all of a Lender's Commitment with respect to the Term Loans of such Type, that
Lender's Term Loan Commitment of such Type (or any portion thereof that has not
been terminated) plus the outstanding principal amount of the Term Loan of such
Type of that Lender, and (ii) after the termination of all of a Lender's
Commitment with respect to the Term Loans of such Type, the outstanding
principal amount of the Term Loan of such Type of that Lender.
"TERM LOANS" means one or more of the Tranche A Term Loans,
the Tranche B Term Loans, the Tranche C Term Loans or the Tranche D Term Loans.
"TERM NOTES" means (i) the promissory notes of Company
evidencing the Term Loans of a Type of Term Loan issued pursuant to subsection
2.1E on the Closing Date, and (ii) any promissory notes issued by Company
pursuant to the last sentence of subsection 11.1B(i) in connection with
assignments of the Term Loan Commitments of such Type or of the Term Loans of
such Type, in each case substantially in the form of Exhibit IV annexed hereto
in the case of Tranche A Term Loans, Exhibit V annexed hereto in the case of
Tranche B Term Loans, Exhibit VI annexed hereto in the case of Tranche C Term
Loans and Exhibit VII annexed hereto in the case of Tranche D Term Loans, as
they may be amended, supplemented or otherwise modified from time to time.
"TITLE INSURANCE POLICIES" means ALTA loan title insurance
policies issued by a title insurance company reasonably satisfactory to Agent,
in the amounts reasonably satisfactory to Agent with respect to any particular
Real Property Assets subject to a Deed of Trust, assuring Agent that the
applicable Deed of Trust creates a
42
<PAGE> 43
valid and enforceable first priority lien on the respective Real Property Asset
subject to such Deed of Trust, free and clear of all defects and encumbrances
except Permitted Encumbrances, which Title Insurance Policies shall be in form
and substance reasonably satisfactory to Agent and shall include an endorsement
for any matters that Agent may reasonably request and for future advances under
this Agreement, the Notes and the other Loan Documents, and shall provide for
affirmative insurance and such reinsurance as Agent may request, all of the
foregoing in form and substance reasonably satisfactory to Agent.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
"TRADEMARK SECURITY AGREEMENT" means each Trademark Collateral
Security Agreement and Conditional Assignment executed and delivered by Company
and certain Subsidiaries of Company on the Closing Date and to be executed and
delivered by Subsidiaries of Company from time to time in accordance with
subsection 6.10, each substantially in the form of Exhibit XIV annexed hereto,
as each such Trademark Collateral Security Agreement and Conditional Assignment
may hereafter be amended, supplemented or otherwise modified from time to time,
and "TRADEMARK SECURITY AGREEMENTS" means all such Trademark Collateral
Security Agreements and Conditional Assignments, collectively.
"TRANCHE A TERM LENDER" or "TRANCHE A TERM LENDERS" means the
Lender or Lenders having a Tranche A Term Loan Commitment or having a Tranche A
Term Loan outstanding.
"TRANCHE A TERM LOAN COMMITMENT" means the commitment of a
Tranche A Term Lender to make a Tranche A Term Loan to Company pursuant to
subsection 2.1A(i), and "TRANCHE A TERM LOAN COMMITMENTS" means such
commitments of all Tranche A Term Lenders in the aggregate.
"TRANCHE A TERM LOANS" means the Loans made by Tranche A Term
Lenders to Company pursuant to subsection 2.1A(i).
"TRANCHE B TERM LENDER" or "TRANCHE B TERM LENDERS" means the
Lender or Lenders having a Tranche B Term Loan Commitment or having a Tranche B
Term Loan outstanding.
"TRANCHE B TERM LOAN COMMITMENT" means the commitment of a
Tranche B Term Lender to make a Tranche B Term Loan to Company pursuant to
subsection 2.1A(ii), and "TRANCHE B TERM LOAN COMMITMENTS" means such
commitments of all Tranche B Term Lenders in the aggregate.
43
<PAGE> 44
"TRANCHE B TERM LOANS" means the Loans made by Tranche B Term
Lenders to Company pursuant to subsection 2.1A(ii).
"TRANCHE C TERM LENDER" or "TRANCHE C TERM LENDERS" means the
Lender or Lenders having a Tranche C Term Loan Commitment or having a Tranche C
Term Loan outstanding.
"TRANCHE C TERM LOAN COMMITMENT" means the commitment of a
Tranche C Term Lender to make a Tranche C Term Loan to Company pursuant to
subsection 2.1A(iii), and "TRANCHE C TERM LOAN COMMITMENTS" means such
commitments of all Tranche C Term Lenders in the aggregate.
"TRANCHE C TERM LOANS" means the Loans made by Tranche C Term
Lenders to Company pursuant to subsection 2.1A(iii).
"TRANCHE D TERM LENDER" or "TRANCHE D TERM LENDERS" means the
Lender or Lenders having a Tranche D Term Loan Commitment or having a Tranche D
Term Loan outstanding.
"TRANCHE D TERM LOAN COMMITMENT" means the commitment of a
Tranche D Term Lender to make a Tranche D Term Loan to Company pursuant to
subsection 2.1A(iv), and "TRANCHE D TERM LOAN COMMITMENTS" means such
commitments of all Tranche D Term Lenders in the aggregate.
"TRANCHE D TERM LOANS" means the Loans made by Tranche D Term
Lenders to Company pursuant to subsection 2.1A(iv).
"TRANSACTION DOCUMENTS" means any or all of the Loan
Documents, the Related Financing Documents, the Merger Agreement, the RGC
Merger Certificate, the Tax Election Agreement, the Indemnification Agreement,
the Shareholders Agreement, the Consulting Agreement, the Reimbursement
Agreement and any guaranties relating to any of the foregoing, and all other
agreements or instruments delivered pursuant to or in connection with any of
the foregoing, including any purchase agreement or registration rights
agreement.
"TRANSFER AND ASSUMPTION AGREEMENT" means that certain
Transfer and Assumption Agreement, dated as of June 23, 1989, between Company
(as successor to Food 4 Less) and New Holdings (as successor to Old Holdings),
as it may be amended from time to time after the Closing Date to the extent
permitted under subsection 7.15A.
"TYPE" means a Term Loan, a Revolving Loan or a Swingline Loan
(each of which is a "Type" of Loan) and with respect to a Term Loan, a Tranche
A Term Loan, a Tranche B Term Loan, a Tranche C Term Loan or a Tranche D Term
Loan (each of which is a "Type" of Term Loan).
44
<PAGE> 45
"YUCAIPA" means The Yucaipa Companies, a California general
partnership, or any successor thereto (i) which is an Affiliate of Ronald W.
Burkle, (ii) which has been established for the sole purpose of changing the
form of The Yucaipa Companies from that of a partnership to that of a limited
liability company or such other form acceptable to Agent in its sole discretion
and (iii) the form and structure of which has been approved by Agent in its
sole discretion.
"YUCAIPA INVESTORS" means Ronald W. Burkle; F4L Equity
Partners, L.P.; FFL Partners; Yucaipa Capital Fund L.P.; Yucaipa/F4L Partners;
The Yucaipa Companies and any other entity formed after the Closing Date which
is an Affiliate of Ronald W. Burkle; provided, however, that, in the event that
F4L Equity Partners, L.P. is dissolved in accordance with the terms of its
governing partnership documents following the Closing Date, the shares of
Holdings Voting Stock which would have been distributable to Angeles
Development, BV if F4L Equity Partners, L.P. had been dissolved on the Closing
Date (which shares shall not exceed 20% of the total number of shares of
Holdings Voting Stock owned by F4L Equity Partners, L.P. on the Closing Date)
shall be deemed not to have been owned (economically or beneficially) by the
Yucaipa Investors on the Closing Date for purposes of this Agreement.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP. Financial statements and other information required to be delivered
by Company to Lenders pursuant to clauses (i), (ii) and (iii) of subsection 6.1
shall be prepared in accordance with GAAP as in effect at the time of such
preparation (and delivered together with the reconciliation statements provided
for in subsection 6.1(v)). Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall (i) utilize accounting
principles and policies in conformity with those used to prepare the financial
statements referred to in subsection 5.3, or (ii) if any amendments to the
provisions set forth in Sections 1, 6 or 7 are made pursuant to negotiations
conducted by operation of the following sentence, accounting principles and
policies in effect at the time of the effectiveness of such amendments.
Notwithstanding the foregoing, if any changes in accounting principles from
those used in the preparation of the financial statements referred to in
subsection 5.3 hereafter occasioned by the promulgation of rules, regulations,
pronouncements or opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) result in a change in the method of
calculation of financial covenants, standards or terms found in Sections 1, 6
and 7 hereof, the parties hereto agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such changes with the desired
result that the criteria for evaluating Holdings' and Company's financial
condition shall be the same after such changes as if such changes had not been
made. During the period of such negotiations,
45
<PAGE> 46
but in no event for a period longer than 60 days, Company shall not be required
to deliver the additional financial statements required pursuant to subsection
6.1(v). After the parties agree on amendments to the provisions of Sections 1,
6 and 7 necessitated by such changes, Company shall not be required to deliver
the additional financial statements required pursuant to subsection 6.1(v) with
respect to such changes.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural,
depending on the reference.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Holdings
and Company herein set forth, each Lender hereby severally agrees to make the
Loans described in subsections 2.1A(i), 2.1A(ii), 2.1A(iii), 2.1A(iv) and
2.1A(v), as applicable, and Swing Line Lender hereby agrees to make the Loans
described in subsection 2.1A(vi).
(i) Tranche A Term Loans. Each Tranche A Term Lender
severally agrees to lend to Company on the Closing Date an amount not
exceeding its Pro Rata Share of the aggregate amount of the Tranche A
Term Loan Commitments to be used for the purposes identified in the
first sentence of subsection 2.5A. The amount of each Tranche A Term
Lender's Tranche A Term Loan Commitment is set forth opposite its name
on Schedule 2.1 annexed hereto and the aggregate amount of the Tranche
A Term Loan Commitments is $275,000,000; provided that the Tranche A
Term Loan Commitments of Tranche A Term Lenders shall be adjusted to
give effect to any assignments of the Tranche A Term Loan Commitments
pursuant to subsection 11.1B. Each Tranche A Term Lender's Tranche A
Term Loan Commitment shall expire immediately and without further
action on the earlier of (x) the date on which the Merger Agreement is
terminated in accordance with Article XI thereof and (y) June 30, 1995
if the initial Term Loans are not made on or before that date.
Company may make only one borrowing on the Closing Date under the
Tranche A Term Loan Commitments. Amounts borrowed under this
subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed.
(ii) Tranche B Term Loans. Each Tranche B Term Lender
severally agrees to lend to Company on the Closing Date an amount not
exceeding its Pro
46
<PAGE> 47
Rata Share of the aggregate amount of the Tranche B Term Loan
Commitments to be used for the purposes identified in subsection 2.5A.
The amount of each Tranche B Term Lender's Tranche B Term Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate amount of the Tranche B Term Loan Commitments
is $108,333,333; provided that the Tranche B Term Loan Commitments of
Tranche B Term Lenders shall be adjusted to give effect to any
assignments of the Tranche B Term Loan Commitments pursuant to
subsection 11.1B. Each Tranche B Term Lender's Tranche B Term Loan
Commitment shall expire immediately and without further action on the
earlier of (x) the date on which the Merger Agreement is terminated in
accordance with Article XI thereof and (y) June 30, 1995 if the
initial Term Loans are not made on or before that date. Company may
make only one borrowing on the Closing Date under the Tranche B Term
Loan Commitments. Amounts borrowed under this subsection 2.1A(ii) and
subsequently repaid or prepaid may not be reborrowed.
(iii) Tranche C Term Loans. Each Tranche C Term Lender
severally agrees to lend to Company on the Closing Date an amount not
exceeding its Pro Rata Share of the aggregate amount of the Tranche C
Term Loan Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Tranche C Term Lender's Tranche C
Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche C Term Loan
Commitments is $108,333,333; provided that the Tranche C Term Loan
Commitments of Tranche C Term Lenders shall be adjusted to give effect
to any assignments of the Tranche C Term Loan Commitments pursuant to
subsection 11.1B. Each Tranche C Term Lender's Tranche C Term Loan
Commitment shall expire immediately and without further action on the
earlier of (x) the date on which the Merger Agreement is terminated in
accordance with Article XI thereof and (y) June 30, 1995 if the
initial Term Loans are not made on or before that date. Company may
make only one borrowing on the Closing Date under the Tranche C Term
Loan Commitments. Amounts borrowed under this subsection 2.1A(iii)
and subsequently repaid or prepaid may not be reborrowed.
(iv) Tranche D Term Loans. Each Tranche D Term Lender
severally agrees to lend to Company on the Closing Date an amount not
exceeding its Pro Rata Share of the aggregate amount of the Tranche D
Term Loan Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Tranche D Term Lender's Tranche D
Term Loan Commitment is set forth opposite its name on Schedule
2.1 annexed hereto and the aggregate amount of the Tranche D Term Loan
Commitments is $108,333,334; provided that the Tranche D Term Loan
Commitments of Tranche D Term Lenders shall be adjusted to give effect
to any assignments of the Tranche D Term Loan Commitments pursuant to
subsection 11.1B. Each Tranche D Term Lender's
47
<PAGE> 48
Tranche D Term Loan Commitment shall expire immediately and without
further action on the earlier of (x) the date on which the Merger
Agreement is terminated in accordance with Article XI thereof and (y)
June 30, 1995 if the initial Term Loans are not made on or before that
date. Company may make only one borrowing on the Closing Date under
the Tranche D Term Loan Commitments. Amounts borrowed under this
subsection 2.1A(iv) and subsequently repaid or prepaid may not be
reborrowed.
(v) Revolving Loans. Each Revolving Lender severally
agrees, subject to the limitations set forth below with respect to the
maximum amount of Revolving Loans permitted to be outstanding from
time to time, to lend to Company from time to time during the period
from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date an aggregate amount not exceeding its Pro Rata Share
of the aggregate amount of the Revolving Loan Commitments to be used
for the purposes identified in subsection 2.5B. The original amount
of each Revolving Lender's Revolving Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate
original amount of the Revolving Loan Commitments is
$325,000,000; provided that the Revolving Loan Commitments of Revolving
Lenders shall be adjusted to give effect to any assignments of the
Revolving Loan Commitments pursuant to subsection 11.1B; and provided
further that the amount of the Revolving Loan Commitments shall be
reduced from time to time by the amount of any reductions thereto made
pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Revolving
Lender's Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that
date; provided that each Revolving Lender's Revolving Loan Commitment
shall expire immediately and without further action on the earlier of
(x) the date on which the Merger Agreement is terminated in accordance
with Article XI thereof and (y) June 30, 1995 if the initial Term
Loans are not made on or before that date. Amounts borrowed under
this subsection 2.1A(v) may be repaid and reborrowed to but excluding
the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan
Commitments shall be subject to the following limitations in the
amounts and during the periods indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect; and
(b) for 30 consecutive days during the
twelve-month period immediately following the Closing Date and
thereafter during each twelve-
48
<PAGE> 49
month period that immediately follows the Company's most
recent compliance with this subparagraph (b), the sum of (1)
the aggregate outstanding principal amount of all Revolving
Loans plus (2) the aggregate outstanding principal amount of
all Swing Line Loans shall not exceed $75,000,000.
(vi) Swing Line Loans. Swing Line Lender hereby agrees,
subject to the limitations set forth below with respect to the maximum
amount of Swing Line Loans permitted to be outstanding from time to
time, to make a portion of the Revolving Loan Commitments available to
Company from time to time during the period from the Closing Date to
but excluding the Revolving Loan Commitment Termination Date by making
Swing Line Loans to Company in an aggregate amount not exceeding the
amount of the Swing Line Loan Commitment to be used for the purposes
identified in subsection 2.5B, notwithstanding the fact that such
Swing Line Loans, when aggregated with Swing Line Lender's outstanding
Revolving Loans and Swing Line Lender's Pro Rata Share of the Letter
of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $30,000,000; provided that any reduction of the
Revolving Loan Commitments made pursuant to subsection 2.4B(ii) or
2.4B(iii) which reduces the aggregate Revolving Loan Commitments to an
amount less than the then current amount of the Swing Line Loan
Commitment shall result in an automatic corresponding reduction of the
Swing Line Loan Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the part of
Company, Agent or Swing Line Lender. The Swing Line Loan Commitment
shall expire on the Revolving Loan Commitment Termination Date and all
Swing Line Loans and all other amounts owed hereunder with respect to
the Swing Line Loans shall be paid in full no later than that
date; provided that the Swing Line Loan Commitment shall expire
immediately and without further action on the earlier of (x) the date
on which the Merger Agreement is terminated in accordance with Article
XI thereof and (y) June 30, 1995 if the Term Loans are not made on or
before that date. Amounts borrowed under this subsection 2.1A(vi) may
be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan
Commitment shall be subject to the following limitations in the
amounts and during the periods indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving
Loan Commitments then in effect; and
49
<PAGE> 50
(b) for 30 consecutive days during the
twelve-month period immediately following the Closing Date and
thereafter during each twelve-month period that immediately
follows the Company's most recent compliance with this
subparagraph (b), the sum of (1) the aggregate outstanding
principal amount of all Revolving Loans plus (2) the aggregate
outstanding principal amount of all Swing Line Loans shall not
exceed $75,000,000.
With respect to any Swing Line Loans which have not been
voluntarily prepaid by Company pursuant to subsection 2.4B(i), Swing
Line Lender (i) may, at any time in its sole and absolute discretion,
and (ii) shall, at least once every seven days, deliver to Agent (with
a copy to Company), no later than 1:00 P.M. (New York City time) on
the first Business Day in advance of the proposed Funding Date, a
notice requesting Revolving Lenders to make Revolving Loans that are
Base Rate Loans on such Funding Date in an amount equal to the amount
of such Swing Line Loans (the "REFUNDED SWING LINE LOANS") outstanding
on the date such notice is given which Swing Line Lender requests
Revolving Lenders to prepay. Anything contained in this Agreement to
the contrary notwithstanding, (i) the proceeds of such Revolving Loans
made by Revolving Lenders other than Swing Line Lender shall be
immediately delivered by Agent to Swing Line Lender (and not to
Company) and applied to repay a corresponding portion of the Refunded
Swing Line Loans and (ii) on the day such Revolving Loans are made,
Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans
shall be deemed to be paid with the proceeds of a Revolving Loan made
by Swing Line Lender, and such portion of the Swing Line Loans deemed
to be so paid shall no longer be outstanding as Swing Line Loans and
shall no longer be due under the Swing Line Note of Swing Line Lender
but shall instead constitute part of Swing Line Lender's outstanding
Revolving Loans and shall be due under the Revolving Note of Swing
Line Lender. Company hereby authorizes Agent and Swing Line Lender to
charge Company's accounts with Agent and Swing Line Lender (up to the
amount available in each such account) in order to immediately pay
Swing Line Lender the amount of the Refunded Swing Line Loans to the
extent the proceeds of such Revolving Loans made by Revolving Lenders,
including the Revolving Loan deemed to be made by Swing Line Lender,
are not sufficient to repay in full the Refunded Swing Line Loans. If
any portion of any such amount paid (or deemed to be paid) to Swing
Line Lender should be recovered by or on behalf of Company from Swing
Line Lender in bankruptcy, by assignment for the benefit of creditors
or otherwise, the loss of the amount so recovered shall be ratably
shared among all Revolving Lenders in the manner contemplated by
subsection 11.5.
Immediately upon the funding of each Swing Line Loan by Swing
Line Lender, each Revolving Lender shall be deemed to, and hereby
agrees to, have purchased a participation in such outstanding Swing
Line Loans in an amount
50
<PAGE> 51
equal to its Pro Rata Share (calculated without giving effect to
clauses (d) and (e) of the definition of Revolving Loan Exposure) of
the unpaid amount together with accrued interest thereon. Upon one
Business Day's notice from Swing Line Lender, each Revolving Lender
shall deliver to Swing Line Lender an amount equal to its respective
participation in same day funds at the Funding and Payment Office. In
order to evidence such participation each Revolving Lender agrees to
enter into a participation agreement at the request of Swing Line
Lender in form and substance reasonably satisfactory to all parties.
In the event any Revolving Lender fails to make available to Swing
Line Lender the amount of such Revolving Lender's participation as
provided in this paragraph, Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender together with
interest thereon at the rate customarily used by Swing Line Lender for
the correction of errors among banks for three Business Days and
thereafter at the Base Rate. In the event Swing Line Lender receives
a payment of any amount in which other Revolving Lenders have
purchased participations as provided in this paragraph, Swing Line
Lender shall promptly distribute to each such other Revolving Lender
its Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, (i)
each Revolving Lender's obligation to make Revolving Loans for the
purpose of repaying any Refunded Swing Line Loans pursuant to the
second preceding paragraph and each Revolving Lender's obligation to
purchase a participation in any unpaid Swing Line Loans pursuant to
the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including
without limitation (a) any set-off, counterclaim, recoupment, defense
or other right which such Revolving Lender may have against Swing Line
Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event
of Default; (c) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Holdings or any of its Subsidiaries; (d) any breach of this Agreement
or any other Loan Document by any party thereto; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided that such obligations of each Revolving
Lender are subject to the satisfaction of one of the following: (X)
Swing Line Lender believed in good faith that all conditions under
Section 4 to the making of the applicable Swing Line Loans to be
refunded, were satisfied at the time such Swing Line Loans were made,
(Y) such Revolving Lender had actual knowledge, by receipt of any
notices required to be delivered to Revolving Lenders pursuant to
subsection 6.1(ix) or otherwise, that any such condition had not been
satisfied and such Revolving Lender failed to notify Swing Line Lender
and Agent in writing that it had no obligation to make Revolving Loans
until such condition was satisfied (any such notice to be effective as
of the date of receipt thereof by Swing Line Lender and Agent), or (Z)
the satisfaction of any such condition not satisfied had been waived
in accordance with subsection 11.6; and (ii) Swing
51
<PAGE> 52
Line Lender shall not be obligated to make any Swing Line Loans if it
has elected not to do so after the occurrence and during the
continuation of a Potential Event of Default or Event of Default.
B. BORROWING MECHANICS. Term Loans or Revolving Loans made on
any Funding Date (other than Revolving Loans made pursuant to a request by
Swing Line Lender pursuant to subsection 2.1A(vi) for the purpose of repaying
any Refunded Swing Line Loans or Revolving Loans made pursuant to subsection
3.3B for the purpose of reimbursing any Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it) that are made as (i) Eurodollar
Rate Loans shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount or (ii) Base Rate Loans shall
be in an aggregate minimum amount of $2,000,000 and integral multiples of
$500,000 in excess of that amount. Swing Line Loans made on any Funding Date
shall be in an aggregate minimum amount of $500,000 and integral multiples of
$250,000 in excess of that amount. Whenever Company desires that Lenders make
Term Loans or whenever Company desires that Revolving Lenders make Revolving
Loans Company shall deliver to Agent a Notice of Borrowing no later than 1:00
P.M. (New York City time) at least three Business Days in advance of the
proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one
Business Day in advance of the proposed Funding Date (in the case of a Base
Rate Loan). Whenever Company desires that Swing Line Lender make a Swing Line
Loan, it shall deliver to Agent a Notice of Borrowing no later than 1:00 P.M.
(New York City time) on the proposed Funding Date. The Notice of Borrowing
shall specify (i) the proposed Funding Date (which shall be a Business Day),
(ii) the amount and Type of Loans requested, (iii) in the case of Swing Line
Loans, that such Loans shall be Base Rate Loans, (iv) whether such Loans shall
be Base Rate Loans or Eurodollar Rate Loans, and (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Term Loans and Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Agent telephonic notice by the required time of any
proposed borrowing under this subsection 2.1B; provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of Borrowing to Agent
on or before the applicable Funding Date.
Notwithstanding anything contained herein to the contrary,
during the period commencing on (and including) the Closing Date and ending on
the earlier of (i) the three-month anniversary of the date on which the first
Eurodollar Rate Loan is made under this Agreement and (ii) the date Agent sends
notice to Company indicating that Lenders' primary syndication has been
concluded, (a) Company may only request Base Rate Loans and Eurodollar Rate
Loans with an Interest Period of one month and (b) the last day of the Interest
Period applicable to any Eurodollar Rate Loan shall be the one-month
anniversary, the two-month anniversary or the three-month anniversary of the
date on which the first Eurodollar Rate Loan is made under this Agreement.
52
<PAGE> 53
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Company or for otherwise acting in
good faith under this subsection 2.1B, and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected Loans hereunder.
Company shall notify Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing as modified pursuant to the notice provided for
in the first clause of this sentence (it being understood that the making of
such Loans by Lenders shall not in any way be construed as a waiver by Lenders
of any matter set forth in such notice).
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in
lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in
accordance therewith.
C. DISBURSEMENT OF FUNDS. All Term Loans and Revolving Loans
under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares of the Commitments for the
particular Type of Loans requested, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Agent of a
Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu
thereof), Agent shall notify each Lender or Swing Line Lender, as the case may
be, of the proposed borrowing. Each Lender shall make the amount of its Loan
available to Agent not later than 12:00 Noon (New York City time) on the
applicable Funding Date, and Swing Line Lender shall make the amount of its
Swing Line Loan available to Agent not later than 2:00 P.M. (New York City
time) on the applicable Funding Date, in each case in same day funds in
Dollars, at the Funding and Payment Office. Except as provided in subsection
2.1A(vi) or subsection 3.3B with respect to Revolving Loans used to repay
Refunded Swing Line Loans or to reimburse any Issuing Lender for the amount of
a drawing under a Letter of Credit issued by it, upon satisfaction or waiver of
the conditions precedent specified in subsections 4.1 (in the case of Loans
made on the Closing Date) and 4.2 (in the case of all Loans), Agent shall make
the proceeds of such Loans available to Company on the applicable Funding Date
by causing an amount of same day funds in Dollars equal to the proceeds of all
such Loans received by Agent
53
<PAGE> 54
from Lenders or Swing Line Lender, as the case may be, to be credited to the
account of Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Agent the amount of such Lender's Loan requested on such Funding
Date, Agent may assume that such Lender has made such amount available to Agent
on such Funding Date and Agent may, in its sole discretion, but shall not be
obligated to, make available to Company a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at the customary rate
set by Agent for the correction of errors among banks for three Business Days
and thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent shall
promptly notify Company and Company shall immediately pay such corresponding
amount to Agent together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the rate payable under
this Agreement for Base Rate Loans of the applicable type of Loans. Nothing in
this subsection 2.1C shall be deemed to relieve any Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Company
may have against any Lender as a result of any default by such Lender
hereunder.
D. THE REGISTER.
(i) Agent shall maintain, at its address referred to in
subsection 11.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "REGISTER"). The Register shall be available for
inspection by Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Agent shall record in the Register the Tranche A Term
Loan Commitment, the Tranche B Term Loan Commitment, the Tranche C
Term Loan Commitment, the Tranche D Term Loan Commitment and the
Revolving Loan Commitment and the Term Loans and Revolving Loans from
time to time of each Lender, the Swing Line Loan Commitment and the
Swing Line Loans from time to time of Swing Line Lender, and each
repayment or prepayment in respect of the principal amount of the Term
Loans or Revolving Loans of each Lender or the Swing Line Loans of
Swing Line Lender. Any such recordation shall be conclusive and
binding on Company and each Lender, absent manifest error; provided
that failure to make any such recordation, or any error in such
recordation, shall not affect Company's Obligations in respect of the
applicable Loans.
54
<PAGE> 55
(iii) Each Lender shall record on its internal records
(including, without limitation, the Notes held by such Lender) the
amount of the Term Loans and each Revolving Loan made by it and each
payment in respect thereof. Any such recordation shall be conclusive
and binding on Company, absent manifest error; provided that failure to
make any such recordation, or any error in such recordation, shall not
affect Company's Obligations in respect of the applicable Loans;
andprovided, further that in the event of any inconsistency between
the Register and any Lender's records, the recordations in the
Register shall govern, absent manifest error.
(iv) Company, Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any such Commitment
or Loan shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof
shall have been accepted by Agent and recorded in the Register as
provided in subsection 11.1B(ii). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or Loan shall
be owed to the Lender listed in the Register as the owner thereof, and
any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is listed in
the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.
(v) Company hereby designates Bankers to serve as
Company's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1D, and Company hereby agrees that, to
the extent Bankers serves in such capacity, Bankers and its officers,
directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 11.3.
E. NOTES. Company shall execute and deliver on the Closing Date
(i) to each Tranche A Term Lender (or to Agent for that Lender) a Tranche A
Term Note substantially in the form of Exhibit IV annexed hereto to evidence
that Lender's Tranche A Term Loan Commitment, in the principal amount of that
Lender's Tranche A Term Loan and that Lender's Tranche A Term Loan Commitment
and with other appropriate insertions, (ii) to each Tranche B Term Lender (or
Agent for that Lender) a Tranche B Term Note substantially in the form of
Exhibit V annexed hereto to evidence that Lender's Tranche B Term Loan, in the
principal amount of that Lender's Tranche B Term Loan and with other
appropriate insertions, (iii) to each Tranche C Term Lender (or to Agent for
that Lender) a Tranche C Term Note substantially in the form of Exhibit VI
annexed hereto to evidence that Lender's Tranche C Term Loan, in the principal
amount of that Lender's Tranche C Term Loan and with other appropriate
insertions, (iv) to each Tranche D Term Lender (or to Agent for that Lender) a
Tranche D Term Note substantially in the form of Exhibit VII annexed hereto to
evidence that
55
<PAGE> 56
Lender's Tranche D Term Loan, in the principal amount of that Lender's Tranche
D Term Loan and with other appropriate insertions, (v) to each Revolving Lender
(or to Agent for that Lender) a Revolving Note substantially in the form of
Exhibit VIII annexed hereto to evidence that Lender's Revolving Loans, in the
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions, and (vi) to Swing Line Lender a Swing Line Note
substantially in the form of Exhibit IX annexed hereto to evidence Swing Line
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections
2.6 and 2.7, each Term Loan and each Revolving Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate
or the Adjusted Eurodollar Rate, as the case may be. Subject to the provisions
of subsection 2.7, each Swing Line Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate.
The applicable basis for determining the rate of interest with respect to any
Loan shall be selected by Company initially at the time a Notice of Borrowing
is given with respect to such Loan pursuant to subsection 2.1B. The basis for
determining the interest rate with respect to any Term Loan or any Revolving
Loan may be changed from time to time pursuant to subsection 2.2D. If on any
day a Term Loan or Revolving Loan is outstanding with respect to which notice
has not been delivered to Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base
Rate.
(i) Subject to the provisions of subsections 2.2E and
2.7, the Tranche A Term Loans and the Revolving Loans shall bear interest
through maturity as follows:
(A) if a Base Rate Loan, then at the sum of the
Base Rate plus the Applicable Base Rate Margin; or
(B) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus the Applicable Eurodollar Margin.
Upon delivery of the Margin Determination Certificate by
Company to Agent pursuant to subsection 6.1(xviii), the Applicable Base Rate
Margin and the Applicable Eurodollar Margin shall automatically be adjusted in
accordance with such Margin Determination Certificate, such adjustment to
become effective on the next succeeding Business Day following the receipt by
Agent of such Margin Determination Certificate; provided that if a Margin
Determination Certificate is not delivered at the time required pursuant to
subsection 6.1(xviii), clause (iii) of the definitions of
56
<PAGE> 57
"Applicable Base Rate Margin" and "Applicable Eurodollar Rate Margin", as the
case may be, shall be applicable from such time until delivery of a succeeding
Margin Determination Certificate; provided further that if a Margin
Determination Certificate erroneously indicates an applicable margin more
favorable to Company than should be afforded by the actual calculation of the
Interest Coverage Ratio, Company shall promptly pay additional interest and
letter of credit fees to correct for such error.
(ii) Subject to the provisions of subsections 2.2E and
2.7, the Tranche B Term Loans shall bear interest through maturity as follows:
(A) if a Base Rate Loan, then at the sum of the
Base Rate plus 2.00% per annum; or
(B) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 3.25% per annum.
(iii) Subject to the provisions of subsections 2.2E and
2.7, the Tranche C Term Loans shall bear interest through maturity as follows:
(A) if a Base Rate Loan, then at the sum of the
Base Rate plus 2.50% per annum; or
(B) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 3.75% per annum.
(iv) Subject to the provisions of subsections 2.2E and
2.7, the Tranche D Term Loans shall bear interest through maturity as follows:
(A) if a Base Rate Loan, then at the sum of the
Base Rate plus 2.75% per annum; or
(B) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 4.00% per annum.
(v) Subject to the provisions of subsections 2.2E and
2.7, the Swing Line Loans shall bear interest through maturity at the sum of
the Base Rate plus the Applicable Base Rate Margin minus the Commitment Fee
Percentage.
B. INTEREST PERIODS. In connection with each Eurodollar Rate
Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
57
<PAGE> 58
(i) the initial Interest Period for any Eurodollar Rate
Loan shall commence on the Funding Date in respect of such Loan, in
the case of a Loan initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Notice of Conversion/Continuation,
in the case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as such
pursuant to a Notice of Conversion/Continuation, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a
day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the next preceding
Business Day;
(iv) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Tranche A Term Loans shall extend beyond June 15, 2001, no Interest
Period with respect to any portion of the Tranche B Term Loans shall
extend beyond June 15, 2002, no Interest Period with respect to any
portion of the Tranche C Term Loans shall extend beyond June 15, 2003,
no Interest Period with respect to any portion of the Tranche D Term
Loans shall extend beyond February 15, 2004 and no Interest Period
with respect to any portion of the Revolving Loans shall extend
beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of any
Type of Term Loan shall extend beyond a date on which Company is
required to make a scheduled payment of principal of Term Loans of
such Type unless the sum of (a) the aggregate principal amount of Term
Loans of such Type that are Base Rate Loans plus (b) the aggregate
principal amount of Term Loans of such Type that are Eurodollar Rate
Loans with Interest Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on Term Loans of such
Type on such date;
(vii) there shall be no more than 20 Interest Periods
outstanding at any time (it being understood that Interest Periods for
different Types of Loans,
58
<PAGE> 59
whether or not such Interest Periods are for the same period and end
on the same day, constitute separate Interest Periods); and
(viii) in the event Company fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of
Borrowing or Notice of Conversion/Continuation, Company shall be
deemed to have selected an Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection
2.2E, interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date
of such prepayment shall be payable on the next succeeding Interest Payment
Date applicable to Base Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time all or
any part of its outstanding Term Loans or Revolving Loans equal to $5,000,000
and integral multiples of $1,000,000 in excess of that amount from Loans
bearing interest at a rate determined by reference to one basis to Loans
bearing interest at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $5,000,000 and
integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate
Loan; provided, however, that a Eurodollar Rate Loan may only be converted into
a Base Rate Loan on the expiration date of an Interest Period applicable
thereto; provided further that during the period commencing on (and including)
the Closing Date and ending on the earlier of (i) the three-month anniversary
of the date on which the first Eurodollar Rate Loan is made under this
Agreement and (ii) the date Agent sends a notice to Company indicating that
Lenders' primary syndication has been concluded, (a) no Loan may be made or
continued as or converted into a Eurodollar Rate Loan having an Interest Period
of longer than one month and (b) the last day of the Interest Period applicable
to any Eurodollar Rate Loan shall be the one-month anniversary, the two-month
anniversary or the three-month anniversary of the date on which the first
Eurodollar Rate Loan is made under this Agreement; and provided still further
that no Loan may be made as or converted into a Base Rate Loan during the
period from December 24 of any year to and including January 7 of the
immediately succeeding year for the purpose of investing in securities bearing
interest at a rate determined by reference to any other basis for the purpose
of arbitrage or speculation.
Company shall deliver a Notice of Conversion/Continuation to
Agent no later than 1:00 P.M. (New York City time) at least one Business Day in
advance of the
59
<PAGE> 60
proposed conversion date (in the case of a conversion to a Base Rate Loan) and
at least three Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan). A Notice of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
and Type of the Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
2.2D; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Company or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case may be,
hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and
2.6G, a Notice of Conversion/Continuation for conversion to, or continuation
of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation in accordance
therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation
of any Event of Default, the outstanding principal amount of all Loans and, to
the extent permitted by applicable law, any interest payments thereon not paid
when due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a
rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement for Base Rate Loans.
60
<PAGE> 61
Payment or acceptance of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be
computed on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on
any Loan, the date of the making of such Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the Interest Payment Date
with respect to which such interest payment is being made or, with respect to a
Base Rate Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may
be, shall be excluded; provided that if a Loan is repaid on the same day on
which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Agent, for
distribution to each Revolving Lender in proportion to that Revolving Lender's
Pro Rata Share, commitment fees for the period from and including the Closing
Date to and excluding the Revolving Loan Commitment Termination Date equal to
the average of the daily excess of the Revolving Loan Commitments over the
aggregate principal amount of Revolving Loans outstanding (but not any Swing
Line Loans outstanding) multiplied by the Commitment Fee Percentage, such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 15, June
15, September 15 and December 15 of each year, commencing on September 15,
1995, and on the Revolving Loan Commitment Termination Date.
B. OTHER FEES. Company agrees to pay to Agent such other fees in
the amounts and at the times as have been separately agreed upon by letter
agreement between Company and Agent. After receipt of such other fees from
Company, Agent agrees to pay to each Lender such portion of such other fees in
the amounts and at the times as have been separately agreed upon in writing
between Agent and such Lender.
61
<PAGE> 62
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF TERM LOANS.
(i) Scheduled Payments of Tranche A Term Loans. Company
shall make principal payments on the Tranche A Term Loans in equal
quarterly installments on March 15, June 15, September 15 and December
15 of each year commencing on September 15, 1996, such quarterly
installments to comprise the aggregate amounts set forth opposite the
corresponding Payment Period as follows:
<TABLE>
<CAPTION>
Scheduled Repayment
Payment Period of Tranche A Term Loans
-------------- -----------------------
<S> <C>
Closing Date - September 14, 1996 $ 0
September 15, 1996 - June 15, 1997 33,000,000
September 15, 1997 - June 15, 1998 55,000,000
September 15, 1998 - June 15, 1999 58,666,667
September 15, 1999 - June 15, 2000 62,333,333
September 15, 2000 - June 15, 2001 66,000,000
------------
$275,000,000
</TABLE>
; provided that the scheduled installments of principal of the Tranche
A Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided still further that the Tranche A Term
Loans and all other amounts owed hereunder with respect to the Tranche
A Term Loans shall be paid in full no later than June 15, 2001, and the
final installment payable by Company in respect of the Tranche A Term
Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company
shall make principal payments on the Tranche B Term Loans in equal
quarterly installments on March 15, June 15, September 15 and December
15 of each year, commencing on September 15, 1995, such quarterly
installments to comprise the aggregate amounts set forth opposite the
corresponding Payment Period as follows:
62
<PAGE> 63
<TABLE>
<CAPTION>
Scheduled Repayment
Payment Period of Tranche B Term Loans
-------------- -----------------------
<S> <C>
Closing Date - September 14, 1996 $ 1,083,333
September 15, 1996 - June 15, 1997 1,083,333
September 15, 1997 - June 15, 1998 1,083,333
September 15, 1998 - June 15, 1999 1,083,333
September 15, 1999 - June 15, 2000 1,083,333
September 15, 2000 - June 15, 2001 1,083,333
September 15, 2001 - June 15, 2002 101,833,335
------------
$108,333,333
</TABLE>
; provided that the scheduled installments of principal of the Tranche
B Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided still further that the Tranche B Term
Loans and all other amounts owed hereunder with respect to the Tranche
B Term Loans shall be paid in full no later than June 15, 2002, and the
final installment payable by Company in respect of the Tranche B Term
Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Tranche B Term Loans.
(iii) Scheduled Payments of Tranche C Term Loans. Company
shall make principal payments on the Tranche C Term Loans in equal
quarterly installments on March 15, June 15, September 15 and December
15 of each year, commencing on September 15, 1995, such quarterly
installments to comprise the aggregate amounts set forth opposite the
corresponding Payment Period as follows:
<TABLE>
<CAPTION>
Scheduled Repayment
Payment Period of Tranche C Term Loans
-------------- -----------------------
<S> <C>
Closing Date - September 14, 1996 $ 1,083,333
September 15, 1996 - June 15, 1997 1,083,333
September 15, 1997 - June 15, 1998 1,083,333
September 15, 1998 - June 15, 1999 1,083,333
September 15, 1999 - June 15, 2000 1,083,333
September 15, 2000 - June 15, 2001 1,083,333
September 15, 2001 - June 15, 2002 1,083,333
September 15, 2002 - June 15, 2003 100,750,002
------------
$108,333,333
</TABLE>
63
<PAGE> 64
; provided that the scheduled installments of principal of the Tranche
C Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided still further that the Tranche C Term
Loans and all other amounts owed hereunder with respect to the Tranche
C Term Loans shall be paid in full no later than June 15, 2003, and the
final installment payable by Company in respect of the Tranche C Term
Loans on such date shall be in an amount, if such amount is different
from that specified above, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Tranche C Term Loans.
(iv) Scheduled Payments of Tranche D Term Loans. Company
shall make principal payments on the Tranche D Term Loans in equal
quarterly installments on March 15, June 15, September 15 and December
15 of each year, commencing on September 15, 1995, and on February 15,
2004, such quarterly installments to comprise the aggregate amounts set
forth opposite the corresponding Payment Period as follows:
<TABLE>
<CAPTION>
Scheduled Repayment
Payment Period of Tranche D Term Loans
-------------- -----------------------
<S> <C>
Closing Date - September 14, 1996 $ 1,083,333
September 15, 1996 - June 15, 1997 1,083,333
September 15, 1997 - June 15, 1998 1,083,333
September 15, 1998 - June 15, 1999 1,083,333
September 15, 1999 - June 15, 2000 1,083,333
September 15, 2000 - June 15, 2001 1,083,333
September 15, 2001 - June 15, 2002 1,083,333
September 15, 2002 - June 15, 2003 1,083,333
September 15, 2003 - February 15, 2004 99,666,670
------------
$108,333,334
</TABLE>
; provided that the scheduled installments of principal of the Tranche
D Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided still further that the Tranche D Term
Loans and all other amounts owed hereunder with respect to the Tranche
D Term Loans shall be paid in full no later than February 15, 2004, and
the final installment payable by Company in respect of the Tranche D
Term Loans on such date shall be in an amount, if such amount is
different from that specified above, sufficient to repay all amounts
owing by Company under this Agreement with respect to the Tranche D
Term Loans.
64
<PAGE> 65
B. PREPAYMENTS AND REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or
telephonic notice to Agent on or prior to 12:00 Noon (New York City
time) on the date of prepayment, which notice, if telephonic, shall be
promptly confirmed in writing, at any time and from time to time prepay
any Swing Line Loan on any Business Day in whole or in part in an
aggregate minimum amount of $500,000 and integral multiples of $250,000
in excess of that amount. Company may, upon not less than one Business
Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in
the case of Eurodollar Rate Loans, in each case given to Agent by 12:00
Noon (New York City time) on the date required and, if given by
telephone, promptly confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time prepay any Term Loans or Revolving Loans on any Business Day in
whole or in part in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount for
Eurodollar Rate Loans or an aggregate minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of that amount for Base Rate
Loans; provided, however, that a Eurodollar Rate Loan may only be
prepaid on the expiration of the Interest Period applicable thereto.
Notice of prepayment having been given as aforesaid, the principal
amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments.
Company may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Agent (which original written
or telephonic notice Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time terminate
in whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments in an amount up to the amount by which the
Revolving Loan Commitments exceed the Total Utilization of Revolving
Loan Commitments at the time of such proposed termination or reduction;
provided that any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of that amount. Company's
notice to Agent shall designate the date (which shall be a Business
Day) of such termination or reduction and the amount of any partial
reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's
notice and shall reduce the Revolving Loan Commitment of each Lender
proportionately by its Pro Rata Share of such reduction.
65
<PAGE> 66
(iii) Mandatory Prepayments and Mandatory Reductions of
Revolving Loan Commitments.
(a) Prepayments and Reductions from Asset Sales.
No later than the third Business Day following the date of
receipt by Company or any of its Subsidiaries of Cash Proceeds
of any Asset Sale in an aggregate cumulative amount equal to or
exceeding $500,000 (and as to which no prepayment of the Loans
shall have been made pursuant to this subsection 2.4B(iii)(a)),
(1) Company shall prepay the Term Loans in an amount equal to
the Net Cash Proceeds of such Asset Sale and (2) to the extent
the Net Cash Proceeds of such Asset Sale exceed the aggregate
outstanding principal amount of the Term Loans, Company shall
prepay in an amount equal to such excess first the Swing Line
Loans to the full extent thereof and second the Revolving
Loans, and the Revolving Loan Commitments shall be permanently
reduced in an amount equal to such excess; provided, however,
that, so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, the following
Net Cash Proceeds of Asset Sale received by Company and its
Subsidiaries from and after the date hereof need not be applied
to the mandatory prepayment of the Loans pursuant to this
subsection 2.4B(iii)(a): (i) Net Cash Proceeds from the sale of
any store (other than Net Cash Proceeds from Required
Dispositions or Planned Dispositions) to the extent that such
Net Cash Proceeds are reinvested in new stores or the
construction or remodeling of stores within 270 days of such
sale; (ii) Net Cash Proceeds from the sale of a store (other
than Net Cash Proceeds from Required Dispositions or Planned
Dispositions) to the extent that such Net Cash Proceeds do not
exceed the Consolidated Capital Expenditures made to acquire or
build a replacement store in the general vicinity of the store
sold within 270 days preceding the date of such sale, and, so
long as, in the case of clauses (i) and (ii) above, the
aggregate amount of such Net Cash Proceeds so excluded from the
mandatory prepayment provisions does not exceed in any Fiscal
Year the greater of (x) $15,000,000 and (y) the Net Cash
Proceeds, up to a maximum aggregate amount of $25,000,000,
received by Company or any Subsidiary of Company with respect
to the sale of the first five stores in such Fiscal Year with
respect to which Company has not prepaid the Loans, pursuant to
clause (i) and (ii) above, within three Business Days of
receipt of proceeds thereof; (iii) Net Cash Proceeds from the
sale and concurrent lease-back of any store opened or acquired
after the Closing Date or any equipment acquired after the
Closing Date, in each case within 180 days of the completion of
such store or the acquisition of such equipment, in each case
to the extent and only to the extent of Consolidated Capital
Expenditures made with respect to such store or such equipment;
(iv) Net Cash Proceeds from the sale of worn-out or obsolete
equipment, to the extent that such Net Cash Proceeds are
reinvested in the
66
<PAGE> 67
same or similar equipment within 90 days of such sale; and (v)
Net Cash Proceeds from the occurrence of any loss, damage or
destruction of any stores or any other facilities of Company or
any of its Subsidiaries (including any assets located therein)
giving rise to insurance proceeds, to the extent that (a) such
Net Cash Proceeds are reinvested to repair or rebuild the
assets so lost, damaged or destroyed within the earlier of (1)
270 days of receipt of such Net Cash Proceeds and (2) 18 months
of the occurrence of such loss, damage or destruction or (b)
such Net Cash Proceeds do not exceed the expenditures made by
Company or any of its Subsidiaries within the earlier of (1)
270 days of receipt of such Net Cash Proceeds and (2) 18 months
of the occurrence of such loss, damage or destruction, to
repair or rebuild the applicable assets so lost, damaged or
destroyed; provided that the Net Cash Proceeds of Asset Sale
which are not being applied to the payment of the Term Loans
pursuant to clauses (i) through (v) above shall be applied
first to the Swing Line Loans then outstanding and second to
the Revolving Loans then outstanding, but the Revolving Loan
Commitments shall not be reduced by the amount of such Net Cash
Proceeds; provided still further that Company shall, within
three Business Days of the receipt by Company or any of its
Subsidiaries of any Net Cash Proceeds of Asset Sale referred to
in clauses (i) through (v) above, deliver to Agent an Officers'
Certificate setting forth (A) the amount of such Net Cash
Proceeds and the amount of the mandatory prepayment to be made,
if any, pursuant to this subsection 2.4B(iii)(a) and setting
forth in reasonable detail the calculations from which such
amounts were derived, (B) with respect to the receipt of Net
Cash Proceeds of Asset Sale referred to in clauses (i), (iv)
and (v) above, in reasonable detail, the intended application
of such Net Cash Proceeds of Asset Sale and the estimated costs
of the reinvestment referred to in such clauses, and (C) with
respect to the receipt of Net Cash Proceeds of Asset Sales
referred to in clauses (ii), (iii) and (v) above, in reasonable
detail the Consolidated Capital Expenditures made by Company
which accounts for the exclusion of any such Net Cash Proceeds
of Asset Sale from the mandatory prepayment requirements of
this subsection 2.4B(iii)(a), which Officers' Certificate, in
the case of clauses (i) and (iv) and with respect to matters
described in clause (B) above, clause (v), may be amended at
any time and from time to time by Company during the 270-day or
90-day period, as applicable, following receipt of such Net
Cash Proceeds of Asset Sale. In the event that any portion of
any Net Cash Proceeds of Asset Sale received by Company or any
of its Subsidiaries which are excluded from the mandatory
prepayment requirement of this subsection 2.4B(iii)(a) by
operation of clauses (i), (iv) and (v) above are not expended
for the purposes specified in the Officers' Certificate, as
amended, delivered by Company in connection therewith within
the time periods specified in such clauses, Company shall,
immediately upon the expiration of the applicable
67
<PAGE> 68
time period, make a mandatory prepayment of the Loans as
specified in the first sentence of this subsection 2.4B(iii)(a)
in an amount equal to such unexpended portion, but only to the
extent such amount has not been previously applied as a
mandatory prepayment under subsection 2.4B(iii)(e). In the
event that Company shall, at any time after receipt of Cash
Proceeds of any Asset Sale requiring a prepayment or a
reduction of the Revolving Loan Commitments pursuant to this
subsection 2.4B(iii)(a), determine that the prepayments and/or
reductions of the Revolving Loan Commitments previously made in
respect of such Asset Sale were in an aggregate amount less
than that required by the terms of this subsection
2.4B(iii)(a), Company shall promptly make an additional
prepayment of the Term Loans, Swing Line Loans or Revolving
Loans, as the case may be (and, if applicable, the Revolving
Loan Commitments shall be permanently reduced), in the manner
described above in an amount equal to the amount of any such
deficit, and Company shall concurrently therewith deliver to
Agent an Officers' Certificate demonstrating the derivation of
the additional Net Cash Proceeds resulting in such deficit.
If, following the receipt by Company or any of its Subsidiaries
of Cash Proceeds of any Asset Sale, Company is required to
apply or cause to be applied any portion of such Cash Proceeds
to prepay any Indebtedness evidenced by any of the Related
Financing Documents pursuant to the applicable Related
Financing Document, then, notwithstanding anything contained in
this subsection 2.4B(iii)(a), Company shall prepay the Loans
and/or reduce the Revolving Loan Commitments in the order set
forth in this subsection 2.4B(iii)(a) so as to eliminate any
obligation to prepay such Indebtedness. Any mandatory
prepayments pursuant to this subsection 2.4B(iii)(a) shall be
applied as specified in subsection 2.4B(iv).
(b) Prepayments and Reductions Due to Issuance of
Debt Securities. No later than the first Business Day
following the date of receipt by Holdings or any of its
Subsidiaries of the cash proceeds (net of underwriting
discounts, similar placement fees and commissions and other
reasonable costs and expenses associated therewith) from the
issuance of any debt Securities of Holdings or any such
Subsidiary, (1) Company shall prepay the Term Loans in an
amount equal to such net cash proceeds and (2) to the extent
the amount of such net cash proceeds exceeds the aggregate
outstanding principal amount of the Term Loans, Company shall
prepay in an amount equal to such excess first the Swing Line
Loans to the full extent thereof and second the Revolving
Loans, and the Revolving Loan Commitments shall be permanently
reduced in an amount equal to such excess. Any such mandatory
prepayments shall be applied as specified in subsection
2.4B(iv).
68
<PAGE> 69
(c) Prepayments and Reductions Due to Issuance of
Equity Securities. No later than the first Business Day
following the date of receipt by Holdings of the cash proceeds
(net of underwriting discounts, similar placement fees and
commissions and other reasonable costs associated therewith)
from the issuance of any equity Securities of Holdings or the
receipt of any equity contribution by Holdings or Company
(other than issuances of equity to management employees
pursuant to agreements or stock option plans permitted under
subsection 7.12) (without duplication), (1) Company shall
prepay the Term Loans in an amount equal to 50% of such net
cash proceeds (such amount being the "EQUITY REPAYMENT AMOUNT")
and (2) to the extent the Equity Repayment Amount exceeds the
aggregate outstanding principal amount of the Term Loans,
Company shall prepay in an amount equal to such excess first
the Swing Line Loans to the full extent thereof and second the
Revolving Loans to the full extent thereof, and the Revolving
Loan Commitments shall be permanently reduced in an amount
equal to such excess; provided, however, that so long as no
Event of Default or Potential Event of Default shall have
occurred and be continuing, for purposes of this subsection
2.4B(iii)(c), up to 50% of the Equity Repayment Amount (but in
an aggregate amount for the term of this Agreement not to
exceed $25,000,000) may be applied within 60 days of such date
of receipt to redeem, retire or repurchase all or any portion
of any Indebtedness (other than the Loans) of any of Holdings
or Company, as set forth in an Officers' Certificate of Company
delivered to Agent on the date of receipt by Holdings of such
cash proceeds. On the sixtieth day after receipt of such cash
proceeds, (i) Company shall prepay the Term Loans in an amount
equal to the portion of such Equity Repayment Amount that has
not been used to redeem, retire or repurchase such other
Indebtedness as set forth in an Officers' Certificate of
Company delivered to Agent on such sixtieth day and (ii) to the
extent such portion of such Equity Repayment Amount exceeds the
aggregate outstanding principal amount of the Term Loans,
Company shall prepay in an amount equal to such excess first
the Swing Line Loans to the full extent thereof and second the
Revolving Loans, and the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such excess. Any
such mandatory prepayments shall be applied as specified in
subsection 2.4B(iv).
(d) Prepayments and Reductions Due to Reversion of
Surplus Assets of Pension Plans. On the date of return to
Holdings or any of its Subsidiaries of any surplus assets of
any pension plan of Holdings or any of its Subsidiaries, (1)
Company shall prepay the Term Loans in an amount (the "NET
REVERSION AMOUNT") equal to 100% of such returned surplus
assets, net of transaction costs and expenses incurred in
obtaining
69
<PAGE> 70
such return, including incremental taxes payable as a result
thereof, and (2) to the extent the Net Reversion Amount exceeds
the aggregate outstanding principal amount of the Term Loans,
Company shall prepay in an amount equal to such excess first
the Swing Line Loans to the full extent thereof and second the
Revolving Loans to the full extent thereof, and the Revolving
Loan Commitments shall be permanently reduced in an amount
equal to such excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4B(iv).
(e) Prepayments and Reductions Due to Excess Cash
Flow. In the event that there shall be Consolidated Excess
Cash Flow for any Fiscal Year, within 100 days after the last
day of such Fiscal Year (1) Company shall prepay the Term Loans
in an amount equal to 75% of such Consolidated Excess Cash Flow
(such amount being the "CASH FLOW REPAYMENT AMOUNT") and (2) to
the extent the Cash Flow Repayment Amount exceeds the aggregate
outstanding principal amount of the Term Loans, Company shall
prepay in an amount equal to such excess first the Swing Line
Loans to the full extent thereof and second the Revolving Loans
to the full extent thereof, and the Revolving Loan Commitments
shall be permanently reduced in an amount equal to such excess;
provided, however, that so long as no Event of Default or
Potential Event of Default shall have occurred and be
continuing, for purposes of this subsection 2.4B(iii)(e), up to
50% of the Cash Flow Repayment Amount (but in an aggregate
amount for the term of this Agreement not to exceed
$25,000,000) may be applied within 60 days of the date of such
required prepayment to redeem, retire or repurchase all or any
portion of any Indebtedness (other than the Loans) of Company,
as set forth in an Officers' Certificate of Company delivered
to Agent on the date of such required prepayment. On the
sixtieth day after the date the initial prepayment of the Cash
Flow Repayment Amount is required, (i) Company shall prepay the
Term Loans in an amount equal to the portion of such Cash Flow
Repayment Amount that has not been used to redeem, retire or
repurchase such other Indebtedness as set forth in an Officers'
Certificate of Company delivered to Agent on such sixtieth day
and (ii) to the extent such portion of such Cash Flow Repayment
Amount exceeds the aggregate outstanding principal amount of
the Term Loans, Company shall prepay in an amount equal to such
excess first the Swing Line Loans to the full extent thereof
and second the Revolving Loans to the full extent thereof, and
the Revolving Loan Commitments shall be permanently reduced in
an amount equal to such excess. Any such mandatory prepayments
shall be applied as specified in subsection 2.4B(iv).
(f) Prepayments Due to Reductions or Restrictions
of Revolving Loan Commitments. Company shall immediately
prepay first the Swing
70
<PAGE> 71
Line Loans and second the Revolving Loans to the extent
necessary (1) so that the Total Utilization of Revolving Loan
Commitments shall not at any time exceed the Revolving Loan
Commitments then in effect and (2) to give effect to the
limitations set forth in clause (b) of the second paragraph of
subsection 2.1A(v) and clause (b) of the second paragraph of
subsection 2.1A(vi). Any such mandatory prepayments shall be
applied as specified in subsection 2.4B(iv) and shall not
reduce the amount of the Revolving Loan Commitments then in
effect.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type
of Loans and Order of Maturity. Subject to the last sentence
of this subsection 2.4B(iv)(a), any voluntary prepayments
pursuant to subsection 2.4B(i) shall be applied to Term Loans,
Revolving Loans or Swing Line Loans as specified by Company in
the applicable notice of prepayment; provided that in the event
Company fails to specify the Loans to which any such prepayment
shall be applied, such prepayment shall be applied first to
repay outstanding Swing Line Loans to the full extent thereof,
second to repay outstanding Revolving Loans to the full extent
thereof, and third to repay outstanding Term Loans to the full
extent thereof. Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4B(i) shall be applied (x) to the
Tranche A Term Loans, the Tranche B Term Loans, the Tranche C
Term Loans and the Tranche D Loans on a pro rata basis and (y)
to reduce the unpaid scheduled installments of principal of the
Term Loans set forth in subsections 2.4A(i), 2.4A(ii),
2.4A(iii) and 2.4A(iv) on a pro rata basis.
(b) Application of Mandatory Prepayments of Term
Loans by Order of Maturity. Any mandatory prepayments of the
Term Loans pursuant to subsection 2.4B(iii) shall be applied
(x) to the Tranche A Term Loans, the Tranche B Term Loans, the
Tranche C Term Loans and the Tranche D Term Loans on a pro rata
basis and (y) to reduce the unpaid scheduled installments of
principal of the Term Loans set forth in subsections 2.4A(i),
2.4A(ii), 2.4A(iii) and 2.4A(iv) on a pro rata basis; provided
that, in the case of Tranche B Term Loans, Tranche C Term Loans
and Tranche D Term Loans, upon receipt of any mandatory
prepayments pursuant to subsection 2.4B(iii) with respect to
which Company has given Agent written notification prior to
such receipt that Company has elected to give the Tranche B
Term Lenders, the Tranche C Term Lenders and the Tranche D Term
Lenders the right to waive such Lenders' right to receive such
prepayment (the "WAIVABLE MANDATORY PREPAYMENT"), Agent shall
notify the Tranche B Term Lenders, the Tranche C Term Lenders
and the Tranche D Term Lenders of such receipt
71
<PAGE> 72
and the amount of the prepayment to be applied to each such
Lender's Term Loans; provided, still further that Company shall
use its reasonable efforts to notify the Tranche B Term
Lenders, the Tranche C Term Lenders and the Tranche D Term
Lenders of such Waivable Mandatory Prepayment three (3)
Business Days prior to the payment to Agent of such Waivable
Mandatory Prepayments (it being understood that Company shall
have no liabilities for failing to so notify such Lenders). In
the event any such Tranche B Term Lender, Tranche C Term Lender
or Tranche D Term Lender desires to waive such Lender's right
to receive any such Waivable Mandatory Prepayment, such Lender
shall so advise Agent no later than the close of business on
the date of such notice from Agent. In the event that any such
Lender waives such Lender's right to any such Waivable
Mandatory Prepayment, Agent shall apply 50% of the amount so
waived by such Lender to prepay the Tranche A Term Loans and to
reduce unpaid scheduled installments of principal of the
Tranche A Term Loans set forth in subsection 2.4A(i) on a pro
rata basis. Agent shall return the remainder of the amount so
waived by such Lender to Company.
(c) Application of Prepayments to Base Rate Loans
and Eurodollar Rate Loans. Considering Tranche A Term Loans,
Tranche B Term Loans, Tranche C Term Loans, Tranche D Term
Loans and Revolving Loans being prepaid separately, any
prepayment thereof shall be applied first to Base Rate Loans to
the full extent thereof before application to Eurodollar Rate
Loans, in each case in a manner which minimizes the amount of
any payments required to be made by Company pursuant to
subsection 2.6D. To the extent that Company is required to
make a mandatory prepayment of the Loans which is required to
be applied to Eurodollar Rate Loans (following the operation of
the immediately preceding sentence) on a date other than the
last day of an Interest Period applicable to a Eurodollar Rate
Loan, Agent shall hold the amount of such prepayment in an
interest bearing account in the Agent's sole dominion and
control. On the last day of the Interest Period relating to
the next-maturing Eurodollar Rate Loan, Agent shall apply the
amounts held by it in such account to the prepayment of such
maturing Eurodollar Rate Loan and Agent shall notify Company of
the application of such amounts. Upon the direction of
Company, Agent may apply any earnings on amounts held in such
account to the payment of accrued interest on such Eurodollar
Rate Loan or shall release such earnings to Company.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company
of principal, interest, fees and other Obligations hereunder, under the
Notes and under the other Loan Documents shall be made in Dollars in
same day funds,
72
<PAGE> 73
without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Agent not later than 1:00 P.M. (New York
City time) on the date due at the Funding and Payment Office for the
account of Lenders; funds received by Agent after that time on such due
date shall be deemed to have been paid by Company on the next
succeeding Business Day. Company hereby authorizes Agent to charge its
accounts with Agent in order to cause timely payment to be made to
Agent of all principal, interest, fees and expenses due hereunder
(subject to sufficient funds being available in its accounts for that
purpose).
(ii) Application of Payments to Principal and Interest.
Except as otherwise provided in subsection 2.2C, all payments in
respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and
all such payments shall be applied to the payment of interest before
application to principal.
(iii) Apportionment of Payments. Aggregate principal and
interest payments in respect of Term Loans and Revolving Loans shall be
apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders' respective Pro Rata Shares.
Agent shall promptly distribute to each Lender, at its primary address
set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request, its Pro Rata Share of
all such payments received by Agent and the commitment fees of such
Lender when received by Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii),
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if
any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share
of any Eurodollar Rate Loans, Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be; provided, however, that if the day
on which payment relating to a Eurodollar Rate Loan is due is not a
Business Day but is a day of the month after which no further Business
Day occurs in that month, then the due date thereof shall be the next
preceding Business Day.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which
73
<PAGE> 74
interest thereon has been paid; provided that the failure to make (or
any error in the making of) a notation of any Loan made under such Note
shall not limit or otherwise affect the obligations of Company
hereunder or under such Note with respect to any Loan or any payments
of principal or interest on such Note.
2.5 USE OF PROCEEDS.
A. TERM LOANS. The proceeds of the Term Loans made on the Closing
Date, together with other funds available to Company, shall be applied by
Company (i) to pay Company's share of the $375,900,000 cash component of the
purchase price for the stock of Ralphs Supermarkets (including cash payments
for cancellation of management stock options), (ii) to refinance the existing
bank indebtedness of Ralphs Grocery of approximately $243,000,000 and the
existing bank indebtedness of Food 4 Less, Alpha Beta, Cala Foods, Inc.,
Falley's and F4L Merchandising of approximately $178,000,000, (iii) to purchase
not less than $19,000,000 and up to $30,000,000 aggregate principal amount of
the Old RGC 9% Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes,
(iv) to repay in full the amounts outstanding under the RGC Mortgage Notes,
together with accrued interest and fees relating thereto, in an aggregate
amount not exceeding $194,500,000, (v) to pay up to $22,800,000 pursuant to
documents governing the Ralphs Grocery equity appreciation rights, (vi) to pay
the entire principal amount of the Holdings Discount Notes plus accrued
interest and premiums thereon in an aggregate amount not to exceed $85,500,000,
and (vii) to pay up to $152,000,000 of fees, expenses, premiums and other costs
associated with the Acquisition, the making of the Loans hereunder and the
related transactions described herein.
B. REVOLVING LOANS; SWING LINE LOANS. Up to $13,500,000 (less an
amount equal to the aggregate accreted value of the Holdings Discount Notes
outstanding as of the Closing Date) of the proceeds of Revolving Loans made to
Company on the Closing Date may be applied by Company for the purposes
specified in subsection 2.5A. Up to $10,100,000 of the proceeds of the
Revolving Loans made on the Change of Control Purchase Date may be applied by
Company to purchase then outstanding Old RGC 9% Subordinated Notes and Old RGC
10-1/4% Subordinated Notes pursuant to the Change of Control Offer and to pay
premiums and accrued interest on the Securities so purchased. The proceeds of
any other Revolving Loans and any Swing Line Loans shall be applied by Company
for working capital and general corporate purposes.
C. MARGIN REGULATIONS. No portion of the proceeds of any
borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in each case as in
effect on the date or dates of such borrowing and such use of proceeds.
74
<PAGE> 75
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as
practicable after 10:00 A.M. (New York City time) on each Interest Rate
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate
is then being determined for the applicable Interest Period and shall promptly
give notice thereof (by telefacsimile or by telephone confirmed in writing) to
Company and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event
that Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that, by reason
of circumstances affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the interest rate applicable to such Loans
on the basis provided for in the definition of Adjusted Eurodollar Rate, Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Agent notifies Company and Lenders that the circumstances giving rise to such
notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by
Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In
the event that on any date any Lender shall have determined (which
determination shall be final and conclusive and binding upon all parties hereto
but shall be made only after consultation with Company and Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not
be unlawful), in each case that becomes effective (other than any change in
such law, treaty or governmental rule, regulation or order which was
promulgated prior to the date hereof and which becomes effective in accordance
with its terms after the date hereof) after the date of this Agreement, or (ii)
has become impracticable, or would cause such Lender material hardship, as a
result of contingencies occurring after the date of this Agreement which
materially and adversely affect the interbank Eurodollar market or the position
of such Lender in that market, then, and in any such event, such Lender shall
be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile
or by
75
<PAGE> 76
telephone confirmed in writing) to Company and Agent of such determination
(which notice Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or to convert Loans
to, Eurodollar Rate Loans shall be suspended until such notice shall be
withdrawn by the Affected Lender, (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or
convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"AFFECTED LOANS") shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or
when required by law, and (d) the Affected Loans shall automatically convert
into Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
Company shall have the option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all
Lenders by giving notice (by telefacsimile or by telephone confirmed in
writing) to Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of
rescission Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. Company shall compensate each Lender, upon written request by that
Lender (which request shall set forth in reasonable detail the basis for
requesting such amounts), for all reasonable losses, expenses and liabilities
(including, without limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss,
expense or liability sustained by that Lender in connection with the
liquidation or re-employment of such funds) which that Lender will sustain or
has sustained: (i) if for any reason (other than a default by that Lender) a
borrowing of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request for borrowing, or a
conversion to or continuation of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Notice of Conversion/Continuation or a telephonic
request for conversion or continuation, (ii) if any prepayment or other
principal payment or any conversion of any of its Eurodollar Rate Loans occurs
on a date prior to the last day of an Interest Period applicable to that Loan,
(iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any
date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
76
<PAGE> 77
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of any of its
branch offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of
and during the continuation of a Potential Event of Default or an Event of
Default, unless waived in accordance with the provisions of subsection 11.6,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective (other
than any change in such law, treaty or governmental rule, regulation or order
which was promulgated prior to the date hereof and which becomes effective in
accordance with its terms after the date hereof) after the date hereof, or the
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank, the National Association of
Insurance Commissioners ("NAIC") or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the overall income
of such Lender) with
77
<PAGE> 78
respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected
in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the interbank Eurodollar
market;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending office)
with respect thereto; then, in any such case, Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
benefit of this subsection 2.7A to the extent that any such increased cost or
reduction in amounts was incurred more than one year prior to the time it gives
notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such one
year period so long as such Lender has given such notice to Company no later
than one year from the time such circumstance became applicable to such Lender.
Such Lender shall deliver to Company (with a copy to Agent) a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. Except as provided
specifically to the contrary in paragraphs (ii) and (iii) below, all
sums payable by Company or any other Loan Party to Agent or any Lender
under this Agreement or the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any
deduction or withholding on account of any Tax (other than
78
<PAGE> 79
a Tax on the overall income of any Lender) imposed, levied, collected,
withheld or assessed by or within the United States of America or any
political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf
of Company or by any federation or organization of which the United
States of America or any such jurisdiction is a member at the time of
payment.
(ii) Grossing-up of Payments. If Company or any other
Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by Company to
Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before the date
on which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Company) for its own account
or (if that liability is imposed on Agent or such Lender, as
the case may be) on behalf of and in the name of Agent or such
Lender;
(c) the sum payable by Company in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Agent or such Lender, as the case may be, receives on the due
date and retains (free from any liability in respect of any
such deduction, withholding or payment) a net sum equal to what
it would have received and so retained had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which
it is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Company shall
deliver to Agent evidence satisfactory to the other affected
parties of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each
other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate
of such deduction, withholding or payment from that in effect
79
<PAGE> 80
at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws
of any jurisdiction other than the United States or any state
or other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "NON-US LENDER") shall deliver to Agent
for transmission to Company, on or prior to the Closing Date
(in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement pursuant to
which it becomes a Lender (in the case of each other Lender),
and at such other times as may be necessary in the
determination of Company or Agent (each in the reasonable
exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations
issued thereunder to establish that such Lender is not subject
to deduction or withholding of United States federal income tax
with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or
4224 pursuant to clause (1) above, a Certificate re Non-Bank
Status together with two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly completed
and duly executed by such Lender, together with any other
certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
any payments to such Lender of interest payable under any of
the Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the initial
delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances
renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, such Lender shall (1)
deliver to Agent for transmission to Company two new original
copies of Internal Revenue Service Form 1001 or 4224, or a
Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, properly
completed and duly executed by such Lender, together with any
80
<PAGE> 81
other certificate or statement of exemption required in order
to confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to payments to such Lender under the Loan
Documents or (2) immediately notify Agent and Company of its
inability to deliver any such forms, certificates or other
evidence.
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to satisfy
the requirements of subsection 2.7B(iii)(a); provided that if
such Lender shall have satisfied such requirements on the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment
Agreement pursuant to which it became a Lender (in the case of
each other Lender), nothing in this subsection 2.7B(iii)(c)
shall relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii) in the
event that, as a result of any change after the date of such
satisfaction in any applicable law, treaty or governmental
rule, regulation or order, or any change after the date of such
satisfaction in the interpretation, administration or
application thereof, such Lender is no longer properly entitled
to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not
subject to withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after
the date hereof of any law, rule or regulation (or any provision thereof)
regarding capital adequacy, or, after the date hereof, any change therein or in
the interpretation or administration thereof by any governmental authority,
central bank, the NAIC or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank, the NAIC or comparable agency, has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such
Lender's Loans or Commitments or Letters of Credit or participations therein or
other obligations hereunder with respect to the Loans or the Letters of Credit
to a level below that which such Lender or such controlling corporation could
have achieved but for such adoption, effectiveness, phase-in, applicability,
change or compliance (taking into consideration the policies of such Lender or
such controlling corporation with regard to capital adequacy), then from time
to time, within five Business Days after receipt by Company from such Lender of
the statement referred to in the next sentence, Company shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction; provided that
a Lender shall not be entitled to avail itself of the benefit of this
subsection 2.7C to the extent that any such
81
<PAGE> 82
reduction in return was incurred more than one year prior to the time it gives
notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such one
year period so long as such Lender has given such notice to Company no later
than one year from the time such circumstance became applicable to such Lender.
Such Lender shall deliver to Company (with a copy to Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE; REPLACEMENT OF
LENDER.
A. Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or Issuing Lender
responsible for administering the Loans or Letters of Credit of such Lender or
Issuing Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7 or subsection 3.6, it will, to the extent not
inconsistent with the internal policies of such Lender or Issuing Lender and
any applicable legal or regulatory restrictions, use reasonable efforts (i) to
make, issue, fund or maintain the Commitments of such Lender or the affected
Loans or Letters of Credit of such Lender or Issuing Lender through another
lending or letter of credit office of such Lender or Issuing Lender, or (ii)
take such other measures as such Lender or Issuing Lender may deem reasonable,
if as a result thereof the circumstances which would cause such Lender to be an
Affected Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender or Issuing Lender pursuant to
subsection 2.7 or subsection 3.6 would be materially reduced and if, as
determined by such Lender or Issuing Lender in its sole discretion, the making,
issuing, funding or maintaining of such Commitments or Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the
interests of such Lender or Issuing Lender; provided that such Lender or
Issuing Lender will not be obligated to utilize such other lending or letter of
credit office pursuant to this subsection 2.8 unless Company agrees to pay all
incremental expenses incurred by such Lender or Issuing Lender as a result of
utilizing such other lending or letter of credit office as described in clause
(i) above. A certificate as to the amount of any such expenses payable by
Company pursuant to this subsection 2.8 (setting forth in reasonable detail the
basis for requesting such amount) submitted by such Lender or Issuing Lender to
Company (with a copy to Agent) shall be conclusive absent manifest error.
82
<PAGE> 83
B. If Company receives a notice pursuant to subsection
2.7A, 2.7C or 3.6, so long as (i) no Potential Event of Default or Event of
Default shall have occurred and be continuing and Company has obtained a
commitment from another Lender or an Eligible Assignee to purchase at par such
Lender's Loans, Commitments and other Obligations and to assume all obligations
of the Lender to be replaced, (ii) at such time the Lender to be replaced is
not an Issuing Lender with respect to any Letters of Credit outstanding and
(iii) such Lender to be replaced is unwilling to withdraw the notice delivered
to Company, upon 30 days prior written notice to such Lender and Agent, Company
may require the Lender giving such notice to assign all of its Loans,
Commitments and other Obligations to such other Lender or Eligible Assignee
pursuant to the provisions of subsection 11.1B; provided that, prior to or
concurrently with such replacement (i) Company has paid to the Lender giving
such notice all amounts under subsections 2.6D, 2.7A, 2.7C and 3.6 through such
date of replacement, (ii) Company or the applicable assignee has paid to Agent
the processing and recordation fee required to be paid by subsection 11.1B(i)
and (iii) all of the requirements for such assignment contained in subsection
11.1B, including, without limitation, the consent of Agent (if required) and
the receipt by Agent of an executed Assignment Agreement and other supporting
documents, have been fulfilled.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that
Revolving Lenders make Revolving Loans pursuant to subsection 2.1A(v) and that
Swing Line Lender make Swing Line Loans pursuant to subsection 2.1A(vi),
Company may request, in accordance with the provisions of this subsection 3.1,
from time to time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date, that one or more Revolving Lenders
issue Letters of Credit for the account of Company or any wholly-owned
Subsidiary of Company for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit; provided, that if
any such Letter of Credit is issued for the account of any such Subsidiary,
Company shall execute jointly with such Subsidiary all letter of credit
documentation (including, without limitation, letter of credit application) as
may be required by the applicable Issuing Lender. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Holdings and Company herein set forth, any one or more Revolving
Lenders may, but (except as provided in subsection 3.1B(ii)) shall not be
obligated to, issue such Letters of Credit in accordance with the provisions of
this subsection 3.1; provided that Company shall not request that any Revolving
Lender issue (and no Revolving Lender shall issue):
83
<PAGE> 84
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $150,000,000;
(iii) any Standby Letter of Credit having an expiration date
later than the earlier of (a) the date which is 30 days prior to the
Revolving Loan Commitment Termination Date and (b) the date which is
one year from the date of issuance of such Standby Letter of Credit;
provided that the immediately preceding clause (b) shall not prevent
any Issuing Lender from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive periods not to
exceed one year each unless such Issuing Lender elects not to extend
for any such additional period; provided, further that such Issuing
Lender shall deliver a written notice to Agent setting forth the last
day on which such Issuing Lender may give notice that it will not
extend such Standby Letter of Credit (the "NOTIFICATION DATE" with
respect to such Standby Letter of Credit) at least ten Business Days
prior to such Notification Date; and provided, further that, such
Issuing Lender shall give notice that it will not extend such Standby
Letter of Credit if it has knowledge that an Event of Default has
occurred and is continuing on such Notification Date, unless such Event
of Default has been waived in accordance with the provisions of
subsection 11.6;
(iv) any Commercial Letter of Credit having an expiration
date (a) later than the earlier of (X) the date which is 30 days prior
to the Revolving Loan Commitment Termination Date and (Y) the date
which is 180 days from the date of issuance of such Commercial Letter
of Credit or (b) that is otherwise unacceptable to the applicable
Issuing Lender in its reasonable discretion; or
(v) any Letter of Credit denominated in a currency other
than Dollars.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the
issuance of a Letter of Credit, it shall deliver to the proposed
Issuing Lender (with a copy to Agent if Agent is not the proposed
Issuing Lender) a Notice of Issuance of Letter of Credit substantially
in the form of Exhibit III annexed hereto no later than 1:00 P.M. (New
York City time) at least five Business Days (or such shorter period as
may be agreed to by the Issuing Lender in any particular instance) in
advance of the proposed date of issuance. The Notice of Issuance of
Letter of Credit shall specify (a) the Revolving Lender requested to
issue the Letter of Credit, (b) the proposed date of issuance (which
shall be a Business Day), (c) the face amount of the Letter of Credit,
(d) the expiration date of the Letter of Credit,
84
<PAGE> 85
(e) the name and address of the beneficiary, (f) if such Letter of
Credit is proposed to be issued for the account of a wholly-owned
Subsidiary of Company, the name of such Subsidiary, and (g) the
verbatim text of the proposed Letter of Credit or the proposed terms
and conditions thereof, including a precise description of any
documents and the verbatim text of any certificates to be presented by
the beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit; provided that the
Issuing Lender, in its reasonable discretion, may require changes in
the text of the proposed Letter of Credit or any such documents or
certificates; and provided, further that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the
same business day (under the laws of the jurisdiction in which the
office of the Issuing Lender to which such draft is required to be
presented is located) that such draft is presented if such presentation
is made after 10:00 A.M. (in the time zone of such office of the
Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender
(and Agent, if Agent is not such Issuing Lender) prior to the issuance
of any Letter of Credit in the event that any of the matters to which
Company is required to certify in the applicable Notice of Issuance of
Letter of Credit is no longer true and correct as of the proposed date
of issuance of such Letter of Credit, and upon the issuance of any
Letter of Credit Company shall be deemed to have re-certified, as of
the date of such issuance, as to the matters to which Company is
required to certify in the applicable Notice of Issuance of Letter of
Credit.
(ii) Determination of Issuing Lender. Upon receipt by a
proposed Issuing Lender of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of a Letter of
Credit, (a) in the event Agent is the proposed Issuing Lender, (1) if
Agent elects to issue such Letter of Credit, Agent shall promptly so
notify Company and Agent shall be the Issuing Lender with respect
thereto and (2) if Agent, in its sole discretion, elects not to issue
such Letter of Credit, Agent shall promptly so notify Company,
whereupon Company may request any Co-Arranger to issue such Letter of
Credit by delivering to such Co-Arranger a copy of the applicable
Notice of Issuance of Letter of Credit and any Co-Arranger so requested
to issue such Letter of Credit shall promptly notify Company and Agent
whether or not, in its sole discretion, it has elected to issue such
Letter of Credit, and any such Co-Arranger which so elects to issue
such Letter of Credit shall be the Issuing Lender with respect thereto;
provided that in the event that all Co- Arrangers shall have declined
to issue such Letter of Credit, notwithstanding the prior election of
Agent not to issue such Letter of Credit, Agent shall be obligated to
issue such Letter of Credit and shall be the Issuing Lender with
respect to such Letter of Credit, notwithstanding the fact that the
Letter of Credit Usage with respect to such Letter of Credit and with
respect to all other Letters of Credit issued by Agent, when aggregated
with Agent's
85
<PAGE> 86
outstanding Revolving Loans and Swing Line Loans, may exceed Agent's
Revolving Loan Commitment then in effect; and (b) in the event any
other Revolving Lender is the proposed Issuing Lender, such Revolving
Lender shall promptly notify Company and Agent whether or not, in its
sole discretion, it has elected to issue such Letter of Credit, and (1)
if such Revolving Lender so elects to issue such Letter of Credit, it
shall be the Issuing Lender with respect thereto and (2) if such
Revolving Lender fails to so promptly notify Company and Agent or
declines to issue such Letter of Credit, Company may request Agent or
another Revolving Lender to be the Issuing Lender with respect to such
Letter of Credit in accordance with the provisions of this subsection
3.1B.
(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 11.6) of the conditions set forth
in subsection 4.3, the Issuing Lender shall issue the requested Letter
of Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Revolving Lenders. Upon the issuance
of any Letter of Credit the applicable Issuing Lender shall promptly
notify Agent and each other Revolving Lender of such issuance, which
notice shall be accompanied by a copy of such Letter of Credit.
Promptly after receipt of such notice, Agent shall notify each
Revolving Lender of the amount of such Revolving Lender's respective
participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
(v) Reports to Revolving Lenders. Within 15 days after
the end of each month, in the case of Commercial Letters of Credit, and
of each calendar quarter, in the case of Standby Letters of Credit,
ending after the Closing Date, so long as any Letter of Credit shall
have been outstanding during such month or calendar quarter, as the
case may be, each Issuing Lender shall deliver to each other Revolving
Lender and Agent a report setting forth the average for such month or
calendar quarter, as the case may be, of the daily maximum amount
available to be drawn under the Letters of Credit issued by such
Issuing Lender that were outstanding during such month or calendar
quarter, as the case may be.
C. REVOLVING LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF
CREDIT. Immediately upon the issuance of each Letter of Credit, each Revolving
Lender shall be deemed to, and hereby agrees to, have irrevocably purchased
from the Issuing Lender a participation in such Letter of Credit and drawings
thereunder in an amount equal to such Revolving Lender's Pro Rata Share
(calculated without giving effect to clauses (b) and (c) of the definition of
Revolving Loan Exposure) of the maximum amount which is or at any time may
become available to be drawn thereunder. Upon satisfaction of the conditions
set forth in subsection 4.1, the Existing Letters of Credit shall, effective as
of the Closing Date, become Letters of Credit under this Agreement to the same
extent as if initially issued hereunder and each Revolving Lender shall be
deemed to have
86
<PAGE> 87
irrevocably purchased from the Issuing Lender(s) of such Existing Letters of
Credit a participation in such Letters of Credit and drawings thereunder in an
amount equal to such Revolving Lender's Pro Rata Share of the maximum amount
which is or at any time may become available to be drawn thereunder. All such
Existing Letters of Credit which become Letters of Credit under this Agreement
shall be fully secured by the Collateral commencing on the Closing Date to the
same extent as if initially issued hereunder on such date.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts with respect to
Letters of Credit:
(i) with respect to each Standby Letter of Credit, (a) to
the applicable Issuing Lender, a fronting fee equal to 0.25% per annum
of the daily maximum amount available to be drawn under such Standby
Letter of Credit, but in any event not less than $500 per year per
Standby Letter of Credit and (b) to Agent, a letter of credit fee equal
to (x) the Applicable Eurodollar Margin minus the Commitment Fee
Percentage multiplied by (y) the daily maximum amount available to be
drawn under such Standby Letter of Credit, in each case payable in
arrears on and to (but excluding) each March 15, June 15, September 15
and December 15 of each year and computed on the basis of a 360-day
year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a)
to the applicable Issuing Lender, a fronting fee equal to 0.25% per
annum of the daily maximum amount available to be drawn under such
Commercial Letter of Credit, but in any event not less than $500 per
year per Commercial Letter of Credit and (b) to Agent, a letter of
credit fee equal to (x) the Applicable Eurodollar Margin minus the sum
of (A) 1.0% per annum and (B) the Commitment Fee Percentage multiplied
by (y) the daily maximum amount available to be drawn under such
Commercial Letter of Credit, in each case payable in arrears on and to
(but excluding) each March 15, June 15, September 15 and December 15 of
each year and computed on the basis of a 360-day year for the actual
number of days elapsed; and
(iii) to the applicable Issuing Lender, with respect to the
issuance, amendment, assignment or transfer of each Letter of Credit
and each drawing made thereunder (without duplication of the fees
payable under clauses (i) and (ii) above), documentary and processing
charges in accordance with such Issuing Lender's standard schedule for
such charges in effect at the time of such issuance, amendment,
assignment, transfer or drawing, as the case may be.
87
<PAGE> 88
Promptly upon receipt by Agent of any amount described in clause (i)(b) or
(ii)(b) of this subsection 3.2, Agent shall distribute to each Revolving Lender
such Revolving Lender's Pro Rata Share of such amount. With respect to
Existing Letters of Credit, the fees described in clauses (i) and (ii) above
shall accrue from and including the Closing Date.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to determine
that the documents and certificates required to be delivered under such Letter
of Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS DRAWN UNDER LETTERS OF
CREDIT. In the event an Issuing Lender has determined to honor a drawing under
a Letter of Credit issued by it, such Issuing Lender shall immediately notify
Company and Agent, and Company shall reimburse such Issuing Lender on or before
the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day
funds equal to the amount of such drawing (whether or not Company is the
account party under such Letter of Credit); provided that, anything contained
in this Agreement to the contrary notwithstanding, (i) unless Company shall
have notified Agent and such Issuing Lender prior to 12:00 Noon (New York City
time) on the date of such drawing that Company intends to reimburse such
Issuing Lender for the amount of such drawing with funds other than the
proceeds of Revolving Loans, Company shall be deemed to have given a timely
Notice of Borrowing (it being understood, however, that such deemed Notice of
Borrowing shall not be deemed to be a representation of Company that the
representations and warranties contained in the Loan Documents are true,
correct and complete in all material respects on and as of the date of such
deemed Notice of Borrowing) to Agent requesting Revolving Lenders to make
Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount
in Dollars equal to the amount of such drawing and (ii) subject to satisfaction
or waiver of the conditions specified in subsection 4.2B, Revolving Lenders
shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans
in the amount of such drawing, the proceeds of which shall be applied directly
by Agent to reimburse such Issuing Lender for the amount of such drawing; and
provided, further that if for any reason proceeds of Revolving Loans are not
received by such Issuing Lender on the Reimbursement Date in an amount equal to
the amount of such drawing, Company shall reimburse such Issuing Lender, on
demand, in an amount in same day funds equal to the excess of the amount of
such drawing over the aggregate amount of such Revolving Loans, if any, which
are so received. Nothing in this subsection 3.3B shall be deemed to relieve
any Revolving Lender from its obligation to make Revolving Loans on the terms
and conditions set forth in this Agreement, and Company shall retain any and
all rights it may have against
88
<PAGE> 89
any Revolving Lender resulting from the failure of such Revolving Lender to
make such Revolving Loans under this subsection 3.3B.
C. PAYMENT BY REVOLVING LENDERS OF UNREIMBURSED DRAWINGS UNDER
LETTERS OF CREDIT.
(i) Payment by Revolving Lenders. In the event that
Company shall fail for any reason to reimburse any Issuing Lender as
provided in subsection 3.3B in an amount equal to the amount of any
drawing honored by such Issuing Lender under a Letter of Credit issued
by it, such Issuing Lender shall promptly notify each other Revolving
Lender of the unreimbursed amount of such drawing and of such other
Revolving Lender's respective participation therein based on such
Revolving Lender's Pro Rata Share. Each Revolving Lender shall make
available to such Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at the office of such
Issuing Lender specified in such notice, not later than 1:00 P.M. (New
York City time) on the first business day (under the laws of the
jurisdiction in which such office of such Issuing Lender is located)
after the date notified by such Issuing Lender. In the event that any
Revolving Lender fails to make available to such Issuing Lender on such
business day the amount of such Revolving Lender's participation in
such Letter of Credit as provided in this subsection 3.3C, such Issuing
Lender shall be entitled to recover such amount on demand from such
Revolving Lender together with interest thereon at the rate customarily
used by such Issuing Lender for the correction of errors among banks
for three Business Days and thereafter at the Base Rate. Nothing in
this subsection 3.3C shall be deemed to prejudice the right of any
Revolving Lender to recover from any Issuing Lender any amounts made
available by such Revolving Lender to such Issuing Lender pursuant to
this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Revolving Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Revolving Lenders of Reimbursements
Received From Company. In the event any Issuing Lender shall have been
reimbursed by other Revolving Lenders pursuant to subsection 3.3C(i)
for all or any portion of any drawing honored by such Issuing Lender
under a Letter of Credit issued by it, such Issuing Lender shall
distribute to each other Revolving Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such drawing
such other Revolving Lender's Pro Rata Share of all payments
subsequently received by such Issuing Lender from Company in
reimbursement of such drawing when such payments are received. Any
such distribution shall be made to a Revolving Lender at its primary
address set forth below its name on
89
<PAGE> 90
the appropriate signature page hereof or at such other address as such
Revolving Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay
to each Issuing Lender, with respect to drawings made under any Letters
of Credit issued by it (whether or not Company is the account party
thereunder), interest on the amount paid by such Issuing Lender in
respect of each such drawing from the date of such drawing to but
excluding the date such amount is reimbursed by Company (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date of
such drawing to but excluding the Reimbursement Date, the rate then in
effect under this Agreement with respect to Revolving Loans that are
Base Rate Loans and (b) thereafter, a rate which is 2% per annum in
excess of the rate of interest otherwise payable under this Agreement
with respect to Revolving Loans that are Base Rate Loans. Interest
payable pursuant to this subsection 3.3D(i) shall be computed on the
basis of a 360-day year for the actual number of days elapsed in the
period during which it accrues and shall be payable on demand or, if no
demand is made, on the date on which the related drawing under a Letter
of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing under a Letter
of Credit issued by it, (a) such Issuing Lender shall distribute to
each other Revolving Lender, out of the interest received by such
Issuing Lender in respect of the period from the date of such drawing
to but excluding the date on which such Issuing Lender is reimbursed
for the amount of such drawing (including any such reimbursement out of
the proceeds of Revolving Loans pursuant to subsection 3.3B), the
amount that such other Revolving Lender would have been entitled to
receive in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been made under such Letter of Credit,
and (b) in the event such Issuing Lender shall have been reimbursed by
other Revolving Lenders pursuant to subsection 3.3C(i) for all or any
portion of such drawing, such Issuing Lender shall distribute to each
other Revolving Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Revolving
Lender's Pro Rata Share of any interest received by such Issuing Lender
in respect of that portion of such drawing so reimbursed by other
Revolving Lenders for the period from the date on which such Issuing
Lender was so reimbursed by other Revolving Lenders to and including
the date on which such portion of such drawing is reimbursed by
Company. Any such distribution shall be made to a Revolving Lender at
its primary address set forth below its name on the
90
<PAGE> 91
appropriate signature page hereof or at such other address as such
Revolving Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse each Issuing Lender for
drawings made under the Letters of Credit issued by it (whether or not Company
is the account party thereunder) and to repay any Revolving Loans made by
Revolving Lenders pursuant to subsection 3.3B and the obligations of Revolving
Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company, any Subsidiary that is an account party thereunder
or any Revolving Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any
such transferee may be acting), any Issuing Lender or other Revolving
Lender or any other Person or, in the case of a Revolving Lender,
against Company or any Subsidiary that is an account party under a
Letter of Credit, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction
(including any underlying transaction between Company or one of its
Subsidiaries and the beneficiary for which any Letter of Credit was
procured) other than the defense of payment in accordance with the
terms of this Agreement;
(iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment to the beneficiary of such Letter of Credit by
the applicable Issuing Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Holdings or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto (other than a breach by the applicable
Issuing Lender relating to the Letter of Credit in question);
91
<PAGE> 92
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and of internal counsel) which such
Issuing Lender may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit by such Issuing Lender, other than
as a result of (a) the gross negligence or willful misconduct of such Issuing
Lender as determined by a final judgment of a court of competent jurisdiction
or (b) subject to the following clause (ii), the wrongful dishonor by such
Issuing Lender of a proper demand for payment made under any Letter of Credit
issued by it or (ii) the failure of such Issuing Lender to honor a drawing
under any such Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government
or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Lender shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) failure of the beneficiary
of any such Letter of Credit to comply fully with any conditions required in
order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they are in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission
or otherwise
92
<PAGE> 93
of any document required in order to make a drawing under any such Letter of
Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary
of any such Letter of Credit of the proceeds of any drawing under such Letter
of Credit; or (viii) any consequences arising from causes beyond the control of
such Issuing Lender, including without limitation any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting of, any of
such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put such Issuing
Lender under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability directly attributable to the gross negligence
or willful misconduct of such Issuing Lender or to the wrongful dishonor by any
Issuing Lender of a proper demand for payment made under any Letter of Credit
issued by it, in each case, as determined by a final judgment of a court of
competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that any Issuing Lender or any Revolving Lender
shall determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof (other than any change in such law,
treaty or governmental rule, regulation or order which was promulgated prior to
the date hereof and which becomes effective in accordance with its terms after
the date hereof), or the compliance by any Issuing Lender or any Revolving
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Issuing Lender or such Revolving Lender
(or its applicable lending or letter of credit office) to any
additional Tax (other than any Tax on the overall income of such
Issuing Lender or Revolving Lender) with respect to the issuing or
maintaining of any Letters of Credit or the purchasing or maintaining
of any participations therein or any other obligations under this
Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
93
<PAGE> 94
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit
issued by any Issuing Lender or participations therein purchased by any
Revolving Lender; or
(iii) imposes any other condition (other than with respect
to a Tax matter) on or affecting such Issuing Lender or such Revolving
Lender (or its applicable lending or letter of credit office) regarding
this Section 3 or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or such Revolving Lender of agreeing to issue, issuing or maintaining
any Letter of Credit or agreeing to purchase, purchasing or maintaining any
participation therein or to reduce any amount received or receivable by such
Issuing Lender or such Revolving Lender (or its applicable lending or letter of
credit office) with respect thereto; then, in any case, Company shall promptly
pay to such Issuing Lender or such Revolving Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts
as may be necessary to compensate such Issuing Lender or such Revolving Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
benefit of this subsection 3.6 to the extent that any such increased cost or
reduction in amounts was incurred more than one year prior to the time it gives
notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such one
year period so long as such Lender has given such notice to Company no later
than one year from the time such circumstance became applicable to such Lender.
Such Issuing Lender or such Revolving Lender shall deliver to Company a written
statement, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Issuing Lender or such Revolving Lender under
this subsection 3.6, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO TERM LOANS AND INITIAL REVOLVING LOANS AND SWING LINE
LOANS.
The obligations of Lenders to make the Term Loans and any
Revolving Loans and Swing Line Loans to be made on the Closing Date are, in
addition to the
94
<PAGE> 95
conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company
shall deliver or cause to be delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender) the
following with respect to each Loan Party, each, unless otherwise noted, dated
the Closing Date:
(i) Certified copies of its Certificate or Articles of
Incorporation (other than the certified copy of Alpha Beta's Articles
of Incorporation), together with a good standing certificate from the
Secretary of State of the jurisdiction of its incorporation and each
other state in which it is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
states, each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date
by its corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors (a) approving
and authorizing the execution, delivery and performance of each of the
Loan Documents to which it is a party, and (b) approving and
authorizing the execution, delivery and performance of the other
Transaction Documents to which it is a party and, to the extent
applicable, approving and authorizing the Acquisition, the Mergers, the
Public Offering, the exchanges, purchases and consents pursuant to the
Holdings Offer, the Food 4 Less Offers, the Ralphs Grocery Offers and
all transactions related thereto, in each case certified as of the
Closing Date by its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers
executing each of the Loan Documents to which it is a party;
(v) Executed originals of this Agreement, the Notes (duly
executed in accordance with subsection 2.1E, drawn to the order of each
Lender and Swing
95
<PAGE> 96
Line Lender and with appropriate insertions) and the other Loan
Documents, including, without limitation, the Guaranty executed by each
of Company's active Subsidiaries, the Pledge Agreement executed by
Company and each of Company's active Subsidiaries, Deeds of Trust
executed by each of Company, Alpha Beta, Bay Area Warehouse Stores,
Inc., Bell Markets, Inc., Cala Foods, Inc., Falley's and Food 4 Less of
California, Inc., the Environmental Indemnity executed by Company, the
Security Agreement executed by Holdings, Company and each of its active
Subsidiaries, the Trademark Security Agreement executed by Company and
each of its active Subsidiaries, the Holdings Pledge Agreement executed
by Holdings, the Collateral Account Agreement executed by Company, the
F4L GM Security Agreement executed by Food 4 Less GM, Inc. and the
Deposit Accounts Security Agreement executed by Holdings, Company and
each of its active Subsidiaries; and
(vi) Such other documents as Agent may reasonably request.
B. NEW EQUITY. Holdings shall have received contributions of not
less than $10,000,000 from individuals comprising management of Ralphs Grocery
(such contributions to be made in the form of a cancellation of such
individuals' rights to receive certain cash payments upon consummation of the
RSI Merger), plus not less than $140,000,000 in cash proceeds from the issuance
of preferred stock in a private placement. The terms and conditions of such
preferred stock, including the type and amount of dividend payments and any
redemption provisions, shall be satisfactory to Agent; provided that such
preferred stock shall not be subject to any mandatory redemption and no
payments of cash dividends shall be required thereon. Holdings shall have
delivered to Agent an Officers' Certificate in form and substance reasonably
satisfactory to Agent setting forth in reasonable detail (i) the percentage of
issued and outstanding shares of Holdings Voting Stock beneficially owned,
directly or indirectly (including through his ownership interest in the Yucaipa
Investors) by Ronald W. Burkle on the Closing Date and (ii) the percentage of
the issued and outstanding Holdings Voting Stock beneficially owned and
controlled, directly or indirectly, by Yucaipa and the Yucaipa Investors
collectively on the Closing Date.
C. SELLER DEBENTURES AND HOLDINGS DISCOUNT DEBENTURES. Holdings
shall have issued $131,500,000 in aggregate principal amount of the Seller
Debentures to the Sellers pursuant to the requirements contained in the Merger
Agreement. The Seller Debenture Indenture shall be substantially in the form
of Exhibit A to the Merger Agreement with such amendments and modifications
which are required or approved by Agent and Requisite Lenders, and a fully
executed or conformed copy of the Seller Debenture Indenture shall have been
delivered to Agent. Holdings shall have issued the Holdings Discount
Debentures in an initial accreted value of not less than $100,000,000, (i)
$59,000,000 of which shall have been issued in consideration for not less than
$59,000,000 in cash, (ii) $18,500,000 of which shall have been issued to the
Sellers as partial consideration for issued and outstanding capital stock of
Ralphs Supermarkets,
96
<PAGE> 97
and (iii) $22,500,000 of which shall have been issued to certain shareholders
of Holdings (or their Affiliates) in satisfaction of fees otherwise payable by
Company and Holdings in connection with the Mergers and the Acquisition. The
terms and conditions of the Holdings Discount Debentures shall be as described
in the documents distributed in connection with the Holdings Offer and shall be
in form and substance satisfactory to Agent and Requisite Lenders. Holdings
shall have delivered to Agent a fully executed or conformed copy of the
Holdings Discount Debenture Indenture.
D. RALPHS GROCERY OFFERS. Pursuant to the Ralphs Grocery Offers,
Food 4 Less shall have (i) issued New RGC Senior Subordinated Notes in an
aggregate principal amount not less than $420,000,000, and shall have exchanged
such New RGC Senior Subordinated Notes and a cash payment in an amount not
exceeding $20 for each $1,000 of principal amount thereof for a like aggregate
principal amount of Old RGC 9% Subordinated Notes and Old RGC 10-1/4%
Subordinated Notes and (ii) purchased for cash not less than $19,000,000 and up
to $30,000,000 of the Old RGC 9% Subordinated Notes and the Old RGC 10-1/4%
Subordinated Notes at the principal amount thereof plus accrued interest
thereon and a premium thereon, the amount of which premium, to the extent it
exceeds 1% of such principal amount, is approved by Agent and Requisite
Lenders. The terms and conditions of the New RGC Senior Subordinated Notes,
including, without limitation, with respect to the interest rates, covenants,
defaults, remedies and subordination provisions shall be as described in the
documents distributed in connection with the Ralphs Grocery Offers and shall be
in form and substance satisfactory to Agent and Requisite Lenders. Company
shall have delivered to Agent a fully executed or conformed copy of the New RGC
Senior Subordinated Note Indenture and resolutions of the Board of Directors of
Ralphs Grocery approving and authorizing the RGC Merger and the exchanges,
purchases and consents pursuant to the Ralphs Grocery Offers and all
transactions related thereto, certified as of the Closing Date by its corporate
secretary or an assistant secretary as being in full force and effect without
modification or amendment.
E. OLD RALPHS GROCERY DEBT SECURITIES. Company shall have
obtained all such consents and amendments to the Old RGC 9% Subordinated Note
Indenture and the Old RGC 10-1/4% Subordinated Note Indenture as may be
required to permit the Mergers, the borrowings of the Loans and the other
transactions described herein. The terms and conditions of such consents and
amendments shall be as described in the Ralphs Grocery Offers and shall be in
form and substance satisfactory to Agent and Requisite Lenders. Company shall
otherwise be in compliance with its obligations under the Old RGC 9%
Subordinated Note Indenture and the Old RGC 10-1/4% Subordinated Note
Indenture. Company shall have delivered to Agent a fully executed or conformed
copy of each of the Old RGC 9% Subordinated Note Indenture and the Old RGC
10-1/4% Subordinated Note Indenture, in each case as so amended.
F. FOOD 4 LESS OFFERS. Pursuant to the Food 4 Less Offers, not
less than 80% of the Old F4L Senior Notes and Old F4L Senior Subordinated Notes
shall have
97
<PAGE> 98
been tendered for exchange for an equivalent principal amount of New F4L Senior
Notes and New F4L Senior Subordinated Notes, respectively, and a cash payment
in an amount not exceeding $5 for each $1,000 of principal amount of such New
F4L Senior Notes and $20 for each $1,000 of principal amount of such New F4L
Senior Subordinated Notes. The terms and conditions of the New F4L Senior
Notes and New F4L Senior Subordinated Notes, including, without limitation,
with respect to the interest rates, covenants, defaults, remedies and, with
respect to the New F4L Senior Subordinated Notes, subordination provisions,
shall be as described in the documents distributed in connection with the Food
4 Less Offers and shall be in form and substance satisfactory to Agent and
Requisite Lenders. Company shall have delivered to Agent a fully executed or
conformed copy of each of the New F4L Senior Note Indenture and the New F4L
Senior Subordinated Note Indenture.
G. HOLDINGS OFFER AND COMPANY SOLICITATIONS. Pursuant to the
Holdings Offer, not less than 91% of the Holdings Discount Notes shall have
been purchased for cash. Old Holdings and Company shall have obtained all such
consents and amendments to the Holdings Discount Note Indenture and the Old F4L
Senior Note Indenture and the Old F4L Senior Subordinated Note Indenture as may
be required to permit the RSI Merger, the borrowings of the Loans and the other
transactions described herein. The terms and conditions of such consents and
amendments shall be as described in the Holdings Offer and the Food 4 Less
Offers, respectively, and shall be in form and substance satisfactory to Agent
and Requisite Lenders. Holdings and Company shall otherwise be in compliance
with their respective obligations under the Holdings Discount Note Indenture
and the Old F4L Senior Note Indenture and the Old F4L Senior Subordinated Note
Indenture. Company shall have delivered to Agent a fully executed or conformed
copy of each of the Holdings Discount Note Indenture, the Old F4L Senior Note
Indenture and the Old F4L Senior Subordinated Note Indenture, in each case as
so amended.
H. RGC MORTGAGE NOTES; EVIDENCE OF REMAINING INDEBTEDNESS. Ralphs
Grocery shall have repaid in full the amounts outstanding under the RGC
Mortgage Notes and shall have obtained all required terminations and releases
of the RGC Mortgage Notes and the Metropolitan Deeds of Trust with the result
that Company has no obligations thereunder (other than obligations which are
contingent and unliquidated and not due and owing on the Closing Date and which
pursuant to the provisions of such documents survive the termination of such
documents, the repayment of obligations thereunder, the termination of the
commitments thereunder and the expiration or cancellation of all letters of
credit issued thereunder) and all liens securing the indebtedness evidenced by
the RGC Mortgage Notes have been released, and all such terminations and
releases shall be in form and substance satisfactory to Agent. Company shall
have delivered to Agent a fully executed or conformed copy of each of the RGC
Mortgage Notes and the Metropolitan Deeds of Trust, together with such
terminations and releases. Agent shall have received an Officers' Certificate
of Company certifying that as of the Closing Date, after giving effect to the
transactions
98
<PAGE> 99
contemplated by this Agreement, the Indebtedness of the Loan Parties (other
than the Indebtedness under the Loan Documents and the Related Financing
Documents) consists of (i) approximately $21,800,000 of outstanding principal
amount of existing Funded Debt described in Schedule 7.1 annexed hereto and
(ii) obligations under existing Capital Leases of all Loan Parties as of the
Closing Date (which shall be described in Schedule 7.1 annexed hereto) and
reflected as capital lease obligations on the consolidated balance sheets of
Company prepared in accordance with GAAP, which obligations do not exceed
$145,100,000.
I. PUBLIC OFFERING. Company shall have issued (i) $350,000,000 in
aggregate principal amount of New F4L Senior Notes in connection with the
Public Offering and (ii) $100,000,000 in aggregate principal amount of New RGC
Senior Subordinated Notes in connection with the Public Offering. The terms
and conditions of the New F4L Senior Notes issued in connection with the Public
Offering shall be identical in all respects to the New F4L Senior Notes issued
in connection with the Food 4 Less Offers and shall be in form and substance
satisfactory to Agent and Requisite Lenders. The terms and conditions of the
New RGC Senior Subordinated Notes issued in connection with the Public Offering
shall be identical in all respects to the New RGC Senior Subordinated Notes
issued in connection with the Ralphs Grocery Offers and shall be in form and
substance satisfactory to Agent and Requisite Lenders.
J. DISCHARGE OF BANK INDEBTEDNESS; EXISTING LETTERS OF CREDIT.
All existing bank indebtedness of Ralphs Grocery in the approximate aggregate
principal amount of $243,000,000 and of Food 4 Less and certain of its
Subsidiaries in the approximate aggregate principal amount of $178,000,000
shall have been repaid in full, all commitments thereunder shall have been
terminated and all liens securing all such indebtedness shall have been
released. Ralphs Grocery and Food 4 Less, as the case may be, shall have
furnished to Agent copies of all Existing Letters of Credit and all amendments
to such Existing Letters of Credit. Company shall have paid to the lenders
with respect to such Existing Letters of Credit all fees and other amounts
owing with respect thereto to but excluding the Closing Date.
K. MERGERS. The Certificate of Ownership and Merger executed by
F4L Parent and Old Holdings filed with the Secretary of State of the States of
California and Delaware prior to the Closing Date in order to consummate the
Parent Merger (the "PARENT MERGER CERTIFICATE") and the Certificate of
Ownership and Merger executed by Old Holdings and New Holdings filed with the
Secretary of State of the States of California and Delaware on the Closing Date
in order to consummate the Reincorporation Merger (the "REINCORPORATION MERGER
CERTIFICATE") shall be in form and substance satisfactory to Agent and shall be
in full force and effect and shall not have been modified or waived in any
material respect without the consent of Agent. Company shall have delivered to
Agent a fully executed or conformed copy of the Parent Merger Certificate and
the Reincorporation Merger Certificate. Company shall have provided evidence
in form and substance satisfactory to Agent that each of the
99
<PAGE> 100
Parent Merger and the Reincorporation Merger has been consummated and has
become effective in all respects in accordance with the Parent Merger
Certificate and the Reincorporation Merger Certificate, respectively. The
Merger Agreement shall be in full force and effect and shall not have been
modified or waived in any material respect without the consent of Agent and
Requisite Lenders. Company shall have delivered to Agent a fully executed or
conformed copy of the Merger Agreement. In consideration for the cash payment
to the Sellers of $100,000,000 and the issuance of the Seller Debentures and
$18,500,000 initial accreted value of Holdings Discount Debentures, Holdings
shall have received approximately 48% of the outstanding capital stock of
Ralphs Supermarkets and Holdings shall have contributed such stock to Food 4
Less. The remaining approximately 52% of the outstanding capital stock of
Ralphs Supermarkets shall have been cancelled in the RSI Merger in exchange for
cash consideration of $275,900,000. The RSI Merger shall have occurred as
contemplated by the Merger Agreement and no conditions to the consummation of
the RSI Merger contained in the Merger Agreement shall have been amended or
waived in any material respect without the prior consent of Agent and Requisite
Lenders. Ralphs Grocery shall have executed and delivered a counterpart of
this Agreement and the other Loan Documents to which it is a party. All shares
of the capital stock of Company shall be owned by Holdings. Company shall have
delivered to Agent resolutions of the Board of Directors of Ralphs Supermarkets
approving and authorizing the Acquisition and the Mergers and all transactions
related thereto, certified as of the Closing Date by its corporate secretary or
an assistant secretary as being in full force and effect without modification
or amendment. The RGC Merger Certificate shall be in form and substance
satisfactory to Agent and shall be in full force and effect and shall not have
been modified or waived in any material respect without the consent of Agent.
Company shall have delivered to Agent a fully executed or conformed copy of the
RGC Merger Certificate. Company shall have provided evidence in form and
substance satisfactory to Agent that (i) each of the RSI Merger and the RGC
Merger has been consummated and has become effective in all respects in
accordance with the Merger Agreement and the RGC Merger Certificate,
respectively, and (ii) the name change of Company to "Ralphs Grocery Company"
has become effective.
L. SHAREHOLDERS AGREEMENT; CERTAIN OTHER DOCUMENTS. Agent shall
have received a fully executed copy of the Shareholders Agreement and such
Shareholders Agreement shall be in full force and effect and shall be in form
and substance satisfactory to Agent and shall not have been modified or waived
in any respect without the consent of Agent. The share ownership of Company
and its Subsidiaries shall be as set forth on Schedule 5.1 annexed hereto.
Agent shall have received (i) a fully executed, complete and correct copy of
(a) the Consulting Agreement, (b) each agreement between Holdings and any
shareholder of Holdings, in its capacity as a shareholder of Holdings, that is
not a party to the Shareholders Agreement, (c) the warrant issued by Holdings
described in subsection 7.12(ix), (d) the Transfer and Assumption Agreement
described in subsection 7.12(x), (e) the certificate of designations with
respect to the Holdings Preferred Stock, (f) the Indemnification Agreement, (g)
the Reimbursement Agreement,
100
<PAGE> 101
(h) the Tax Election Agreement, (i) the Golden Alliance Agreement, (j) each
guarantee entered into by any Subsidiary on or prior to the Closing Date
pursuant to subsection 7.4(vi), and (k) the Subscription Agreement, and each
such document shall be in form and substance satisfactory to Agent, and (ii) an
Officers' Certificate from Company, in form and substance satisfactory to
Agent, certifying to the effect that each such document (which shall be
attached thereto) is correct and complete and is in full force and effect and
certifying as to such matters with respect to each of the Related Financing
Documents.
M. SECURITY INTERESTS. To the extent not otherwise satisfied
pursuant to subsection 4.1N, each Loan Party shall have taken or caused to be
taken (and Agent shall have received satisfactory evidence thereof) such
actions (other than the filing or recording of items described in clauses (ii),
(iii) and (iv) below) in such a manner so that Agent has a valid and perfected
first priority security interest as of such date in the entire Collateral
(subject to Permitted Encumbrances and Liens set forth in Schedule 7.2 annexed
hereto on specific property described in such Schedule and except to the extent
any such security interest cannot be granted under applicable laws). Such
actions shall include, without limitation, (i) delivery to Agent of
certificates (which certificates shall be properly endorsed in blank for
transfer or accompanied by irrevocable undated stock powers duly endorsed in
blank, all in form and substance satisfactory to Agent) representing the
capital stock pledged pursuant to the Holdings Pledge Agreement and the Pledge
Agreements, and delivery to Agent of all other instruments (duly endorsed where
appropriate) evidencing the Collateral, (ii) delivery to Agent of Uniform
Commercial Code financing statements as to the Collateral for all jurisdictions
as may be necessary or desirable to perfect the security interests granted to
Agent in the Collateral, (iii) delivery to Agent of the Trademark Security
Agreement together with the cover sheet required for filing with the United
States Patent and Trademark Office and (iv) delivery to Agent of such other
documents and instruments that Agent deems necessary or advisable to establish,
preserve and perfect the first priority Liens granted to Agent on behalf of
Lenders under the Collateral Documents.
N. DELIVERY OF DEEDS OF TRUST; TITLE INSURANCE POLICIES;
APPRAISALS. Schedule 4.1N annexed hereto shall set forth all Real Property
Assets of Company or any of its Subsidiaries as of the Closing Date after
giving effect to the Mergers. Agent shall have received from Company and each
of its Subsidiaries having Real Property Assets (i) fully executed counterparts
of Deeds of Trust, which Deeds of Trust shall cover the fee interest and/or
leasehold interest of Company or such Subsidiary in each Real Property Asset
designated as a "MORTGAGED PROPERTY" on Schedule 4.1N annexed hereto (each a
"MORTGAGED PROPERTY" and collectively the "MORTGAGED PROPERTIES"), together
with evidence (which may be in the form of recording instructions accepted by
title insurers, which instructions may authorize the title insurer to remove
from the counterpart of the Deed of Trust being recorded any exhibit pages
rejected by the county recorder which, if not removed, would prevent the
recordation of such Deed of Trust counterpart) that counterparts of the Deeds
of Trust have been or promptly will be
101
<PAGE> 102
recorded in all places to the extent necessary or desirable, in the reasonable
judgment of Agent, so as to effectively create a valid and enforceable first
priority lien (subject only to Permitted Encumbrances, and subject, where
applicable, to the effect, if any, on lien priority of the absence of a
recorded memorandum of lease) on each Mortgaged Property in favor of Agent (or
such other trustee as may be required or desired under local law) for the
benefit of Lenders; (ii) a preliminary title report, title commitment or lot
book guaranty obtained by Company or such Subsidiary in respect of each
Mortgaged Property; (iii) an opinion of counsel (which counsel shall be
reasonably satisfactory to Agent) in the state in which each Mortgaged Property
is located with respect to the enforceability of the Deeds of Trust recorded in
such state and such other matters as Agent may request, in form and substance
satisfactory to Agent; (iv) in the case of each real property leasehold
interest of Company or such Subsidiary constituting Mortgaged Property, such
estoppel letters, consents and waivers from the landlords on such real property
as may be required by Agent, which letters, consents, waivers and agreements
shall be in form and substance reasonably satisfactory to Agent; (v) Title
Insurance Policies with respect to the Mortgaged Properties designated in Part
I of Schedule 4.1N annexed hereto, in amounts not less than the respective
amounts designated on such Schedule 4.1N with respect to any particular
Mortgaged Property; (vi) information sufficient for Agent to determine whether
(1) any Mortgaged Property is in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards (any Real
Property Asset located within such an area being a "FLOOD HAZARD PROPERTY") and
(2) the community in which each Flood Hazard Property is located is
participating in the National Flood Insurance Program; (vii) if any Mortgaged
Properties are Flood Hazard Properties, Company's or such Subsidiary's written
acknowledgment of receipt of written notification from Agent (1) as to the
existence of each such Flood Hazard Property and (2) as to whether the
community in which each such Flood Hazard Property is located is participating
in the National Flood Insurance Program; (viii) appraisals of the Real Property
Assets so designated on Schedule 4.1N annexed hereto performed by certified
real estate appraisers approved by Agent, which appraisals shall be in form,
scope and substance satisfactory to Agent; and (ix) the evidence of insurance
with respect to the Mortgaged Properties required to be provided to Agent
pursuant to the Deeds of Trust, including flood insurance with respect to each
Mortgaged Property that is a Flood Hazard Property located in a community which
is participating in the National Flood Insurance Program.
O. OPINIONS OF LOAN PARTIES' COUNSEL. Lenders and their
respective counsel shall have received (i) originally executed copies of one or
more favorable written opinions of Latham & Watkins, counsel for the Loan
Parties, in form and substance reasonably satisfactory to Agent and its
counsel, dated the Closing Date and setting forth substantially the matters in
the opinions designated in Exhibit XX-A annexed hereto and as to such other
matters as Agent acting on behalf of Lenders may reasonably request, (ii)
originally executed copies of one or more favorable written opinions of Jan
Charles Gray, Esq., General Counsel of Ralphs Supermarkets and Ralphs Grocery,
in form and substance satisfactory to Agent and its counsel, dated the Closing
Date and setting forth
102
<PAGE> 103
substantially the matters in the opinions designated in Exhibit XX-B annexed
hereto and as to such other matters as Agent acting on behalf of Lenders may
reasonably request, (iii) originally executed copies of one or more favorable
written opinions of Irwin, Clutter & Severson, counsel for Falley's, in form
and substance reasonably satisfactory to Agent and its counsel, dated the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit XX-C annexed hereto and as to such other matters as Agent
acting on behalf of Lenders may reasonably request and (iv) evidence
satisfactory to Agent that Company has requested such counsel to deliver such
opinions to Lenders.
P. OPINIONS FROM RELATED FINANCING TRANSACTIONS. Company shall
have delivered to Agent copies of all legal opinions issued by counsel to any
Loan Party or issued to any Loan Party relating to any transactions occurring
on or about the Closing Date pursuant to any of the Transaction Documents, each
of which opinions shall be accompanied by a written authorization from counsel
issuing such opinion stating that Agent and Lenders may rely on such opinions
as though such opinions were addressed to Agent and Lenders.
Q. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers, counsel to Agent, dated as of the Closing Date,
substantially in the form of Exhibit XXI annexed hereto and as to such other
matters as Agent acting on behalf of Lenders may reasonably request.
R. ENVIRONMENTAL REPORTS. (i) Agent shall have received reports
and other information in form, scope and substance satisfactory to Agent and
(ii) Lenders shall have received summaries of certain of such reports in form,
scope and substance satisfactory to Requisite Lenders, in each case concerning
the Hazardous Materials liabilities of Old Holdings and Ralphs Supermarkets and
their respective Subsidiaries.
S. NO MATERIAL ADVERSE CHANGE. Other than with respect to such
information as is disclosed in filings on Form 10-K for the period ending
January 29, 1995, in the case of Food 4 Less, and on Form 10-K the period
ending January 29, 1995, in the case of Ralphs Grocery, and other than changes
which will occur as a result of the transactions consummated pursuant to the
Transaction Documents, since June 25, 1994, in the case of Food 4 Less and its
Subsidiaries, and January 30, 1994, in the case of Ralphs Grocery and its
Subsidiaries, there shall have occurred no material adverse change in the
condition (financial or otherwise), business, assets, liabilities, properties,
results of operations or prospects of any of (x) Food 4 Less and its
Subsidiaries, taken as a whole, (y) Ralphs Grocery and its Subsidiaries, taken
as a whole, or (z) Food 4 Less and Ralphs Grocery and their respective
Subsidiaries, taken as a whole.
T. NO DISRUPTION OF FINANCIAL AND CAPITAL MARKETS. There shall
have been no material adverse change after April 26, 1995 to the syndication
markets for credit
103
<PAGE> 104
facilities similar in nature to the credit facilities provided herein and there
shall not have occurred and be continuing a material disruption of or material
adverse change in financial, banking or capital markets that would have an
adverse effect on such syndication market, in each case as determined by Agent
in its sole discretion.
U. FINANCIAL STATEMENTS. Agent shall have received on behalf of
Lenders (a) the unaudited financial statements for Food 4 Less and its
Subsidiaries and Ralphs Grocery and its Subsidiaries for the most recently
ended Fiscal Period (or the equivalent period, in the case of Ralphs Grocery
and its Subsidiaries) and (b) a pro forma balance sheet as of the Closing Date
for Company and its Subsidiaries after giving effect to the Mergers. Agent and
Lenders shall have had an opportunity to review such unaudited financial
statements with the independent certified public accountants for Food 4 Less
with the cost of such review being for the account of Food 4 Less.
V. SOLVENCY ASSURANCES. Agent and Lenders shall have received a
solvency opinion from Houlihan, Lokey, Howard and Zukin in form and substance
satisfactory to Agent and a certificate from the chief financial officer of
Ralphs Supermarkets substantially in the form of Exhibit XXIV annexed hereto,
in each case supporting the conclusions that, after giving effect to the
Mergers and related transactions, Company will not be insolvent or will not be
rendered insolvent by the indebtedness incurred in connection with such
transactions, or be left with unreasonably small capital with which to engage
in its businesses or have incurred debts beyond its ability to pay such debts
as they mature.
W. AUDITOR'S LETTERS. Agent shall have received executed copies
of each of the Auditor's Letters.
X. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date
referred to in subsection 2.3.
Y. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Each of Holdings and Company shall have delivered to Agent an Officers'
Certificate, in form and substance satisfactory to Agent, to the effect that
the representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date (both
immediately before and immediately after giving effect to the Mergers) to the
same extent as though made on and as of that date and that each Loan Party
shall have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before the Closing Date except as otherwise disclosed to and agreed to in
writing by Agent and Requisite Lenders.
Z. GOVERNMENTAL AUTHORIZATIONS. Company shall have delivered to
Agent copies of all agreements entered into with the California Attorney
General's office and
104
<PAGE> 105
all other Governmental Authorizations required for the consummation of the
Acquisition, in each case in form and substance satisfactory to Agent, and to
the extent any stores of Ralphs Grocery or Food 4 Less or their Subsidiaries
are required to be divested under the terms of any such agreement or
Governmental Authorizations, Agent shall have approved of such divestitures.
All such agreements with the California Attorney General's office shall be
final and binding and shall be in full force and effect without modification or
amendment. Any waiting period applicable to the Acquisition under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
expired or earlier termination thereof shall have been granted and no action
shall have been instituted by either the United States Department of Justice or
the Federal Trade Commission to prevent the consummation of the Acquisition and
the related transactions or to modify or amend such transactions in any
material manner (including, without limitation, any actions requiring any
material divestiture of assets other than as previously approved by Agent) or,
if any such action shall have been instituted, it shall have been withdrawn or
a final judgment shall have been entered against such Department or Commission,
as the case may be.
AA. CONSENTS. Company shall have delivered to Agent such other
consents, waivers, amendments or approvals as any of Ralphs Supermarkets, Old
Holdings or any of their respective Subsidiaries is required to obtain in
connection with any material agreement in order to enter into and carry out its
obligations under this Agreement and the other Transaction Documents and to
consummate the Acquisition and the Mergers, including, without limitation, a
consent from each lender to any of the foregoing Persons as may be required, in
each case in form and substance satisfactory to Agent.
BB. TRANSACTION COSTS. The transaction costs (including, without
limitation, fees payable to Lenders and Agent, fees, commissions, premiums and
consent fees payable in relation to the Merger Agreement and the Related
Financing Documents) incurred by Holdings and its Subsidiaries in connection
with the Acquisition shall not exceed $173,000,000.
CC. INSURANCE CERTIFICATES. Agent shall have received insurance
certificates (or other satisfactory evidence of endorsements) in form and
substance satisfactory to Agent naming Agent as loss payee or additional
insured under all insurance policies of each Loan Party, in each case in form
and substance satisfactory to Agent.
DD. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby
and by the other Transaction Documents and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such counsel,
and Agent and such counsel shall have received all such counterpart originals
or certified copies of such documents as Agent may reasonably request.
105
<PAGE> 106
Each Lender hereby agrees that by its execution and delivery of its
signature page hereto and by the funding of its Loans to be made on the Closing
Date, such Lender approves of and consents to each of the matters set forth in
this subsection 4.1 which must be approved by, or which must be satisfactory
to, Requisite Lenders; provided that, in the case of any agreement or document
which must be approved by, or which must be satisfactory to, Requisite Lenders,
Agent or Company shall have delivered a copy of such agreement or document to
such Lender on or prior to the Closing Date.
Each of the parties hereto acknowledges that (i) certain of the
conditions contained in this subsection 4.1 relating to the execution and
delivery of certain documents by Ralphs Supermarkets, Ralphs Grocery and/or
Crawford Stores, Inc., relating to the RSI Merger and the RGC Merger, and
relating to repayment of certain Indebtedness and payment of certain other
amounts, to the extent that the satisfaction of such conditions is described in
the Amended and Restated Prospectus and Solicitation Statement dated May 12,
1995 relating to the Ralphs Grocery Offers, as supplemented by the Supplement
to Prospectus dated May 31, 1995 relating thereto, as occurring immediately
after the consummation of the Acquisition (such sequence of events being
necessary due to the fact that the satisfaction of such conditions requires the
use of proceeds from the initial Loans or requires the acquisition by Holdings
and Food 4 Less of all of the capital stock of Ralphs Supermarkets), are
conditions which shall be satisfied by Loan Parties immediately after the
Acquisition (and in any event on the Closing Date) and the failure of Loan
Parties to satisfy each such condition immediately after the Acquisition (and
in any event on the Closing Date) shall be an Event of Default and (ii) each
such condition, to the extent so satisfied, shall be deemed to have been
satisfied concurrently with the funding of the initial Loans hereunder.
4.2 CONDITIONS TO ALL LOANS.
The obligations of each Lender to make Loans on each Funding
Date (other than any Funding Date relating to any Refunded Swing Line Loans)
are subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein
and in the other Loan Documents shall be true, correct and complete in
all material respects on and as of that Funding Date to the same extent
as though made on and as of that date, except to the extent such
representations and warranties specifically relate to
106
<PAGE> 107
an earlier date, in which case such representations and warranties
shall have been true, correct and complete in all material respects on
and as of such earlier date;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
such Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date
shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of any
of the Loan Parties, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Loan
Parties or any property of any of the Loan Parties that has not been
disclosed by Company in writing pursuant to subsection 5.6 or 6.1(x)
prior to the making of the last preceding Loans (or, in the case of the
initial Loans, prior to the execution of this Agreement), and there
shall have occurred no development not so disclosed in any such action,
suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Agent or of
Requisite Lenders, could reasonably be expected to have a Material
Adverse Effect or, prior to the RSI Merger, a material adverse effect
upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Ralphs Supermarkets and its Subsidiaries,
taken as a whole; and no injunction or other restraining order shall
have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief
as a result of, the transactions contemplated by this Agreement or the
making of Loans hereunder.
107
<PAGE> 108
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Notice of Issuance of Letter of Credit, in each
case signed by the chief executive officer, the chief financial officer or the
treasurer of Company or by any executive officer of Company designated by any
of the above-described officers on behalf of Company in a writing delivered to
Agent, together with all other information specified in subsection 3.1B(i) and
such other documents or information as the applicable Issuing Lender may
reasonably require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the
same extent as if the issuance of such Letter of Credit were the making of a
Loan and the date of issuance of such Letter of Credit were a Funding Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce other Lenders to purchase participations therein, each of Holdings and
Company represents and warrants to each Lender, on the date of this Agreement,
on each Funding Date and on the date of issuance of each Letter of Credit,
that, prior to and after giving effect to the Mergers, the following statements
are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each Loan Party has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents and the other Transaction Documents to which it is a party and to
carry out the transactions contemplated thereby.
108
<PAGE> 109
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified
to do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its present business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had and will not have, either individually or in the
aggregate for all such jurisdictions, a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Each Loan Party is engaged only in the
businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Holdings as of the
Closing Date, both before and after giving effect to the Mergers, are
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvii). Notwithstanding anything to the contrary set forth in Schedule 5.1
annexed hereto, Golden Alliance is not and will not become a Subsidiary of
Company and the financial results of the operations of Golden Alliance are not
and will not be included in the consolidated financial reports of Company and
its Subsidiaries. The capital stock of each of the Subsidiaries of Holdings
identified in Schedule 5.1 annexed hereto is duly authorized, validly issued,
fully paid and nonassessable and none of such capital stock constitutes Margin
Stock. Each of the Subsidiaries of Holdings identified in Schedule 5.1 annexed
hereto is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation set forth
therein, has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or to have such corporate power and authority has
not had and will not have, either individually or in the aggregate for all such
failures, a Material Adverse Effect. Other than listing Subsidiaries of
Company which may have been sold, merged, dissolved, transferred or otherwise
disposed of after the Closing Date in accordance with the terms of this
Agreement, Schedule 5.1 annexed hereto correctly sets forth for Holdings and
each of its Subsidiaries (i) the ownership interest of Holdings and each of its
Subsidiaries in each of the Subsidiaries of Holdings identified therein, (ii)
the jurisdiction of incorporation of Holdings and each such Subsidiary, (iii)
the number of issued and outstanding shares of capital stock of Holdings in
each such Subsidiary, and (iv) whether any such Subsidiary is inactive. The
aggregate assets and the annual revenues of all Subsidiaries identified as
inactive on Schedule 5.1 does not and will not exceed $5,000,000 and
$5,000,000, respectively.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of each Loan Document and each other Transaction Document have been
duly authorized
109
<PAGE> 110
by all necessary corporate action on the part of each Loan Party which is a
party to such Loan Document or other Transaction Document.
B. NO CONFLICT. The execution, delivery and performance by each
Loan Party of the Loan Documents and the other Transaction Documents to which
such Loan Party is a party and the consummation of the transactions
contemplated by the Loan Documents and the other Transaction Documents do not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to any of the Loan Parties, the Certificate or Articles
of Incorporation or Bylaws of any of the Loan Parties, or any material order,
judgment or decree of any court or other agency of government binding on any of
the Loan Parties, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any material Contractual
Obligation of any of the Loan Parties which could reasonably be expected to
result in a Material Adverse Effect, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of any of the Loan
Parties (other than any Liens created under any of the Loan Documents in favor
of Agent on behalf of Lenders), or (iv) require any approval of stockholders or
any approval or consent of any Person under any Contractual Obligation of any
of the Loan Parties, except for such approvals or consents which will be
obtained on or before the Closing Date (or, in the case of any Loan Document
executed and delivered after the Closing Date, on or before such date of
execution and delivery) and disclosed in writing to Lenders or such approvals
or consents the failure to obtain could not reasonably be expected individually
or in the aggregate to result in a Material Adverse Effect.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance
by each Loan Party of the Loan Documents and the other Transaction Documents to
which such Loan Party is a party and the consummation of the transactions
contemplated by the Loan Documents and the other Transaction Documents do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other governmental
authority or regulatory body, except for (i) filings and recordings required in
connection with the perfection of the security interests granted pursuant to
the Loan Documents, (ii) such registrations, consents, approvals, notices or
other actions which have been obtained on or before the Closing Date and are
described on Schedule 5.2C annexed hereto and (iii) notices or other actions
required to be taken after the Closing Date relating to operating licenses,
which notices or other actions will be given or taken as required in due course
(or, in the case of any Loan Document or other Transaction Document executed
and delivered after the Closing Date, on or before such date of execution and
delivery).
D. BINDING OBLIGATION. Each of the Loan Documents to which any
Loan Party is a party and each of the other Transaction Documents to which any
Loan Party is a party has been duly executed and delivered by each Loan Party
thereto and is the legally valid and binding obligation of such Loan Party,
enforceable against such Loan Party in accordance with their respective terms,
except as may be limited by bankruptcy,
110
<PAGE> 111
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
E. VALID ISSUANCE OF HOLDINGS COMMON STOCK, HOLDINGS PREFERRED
STOCK AND NEW INDEBTEDNESS OF HOLDINGS AND COMPANY.
(i) (A) Holdings Common Stock. As of the Closing Date,
the number of shares of issued and outstanding Common Stock of Holdings and the
number of shares of issued and outstanding Non-Voting Common Stock of Holdings
are as set forth in Schedule 5.1 annexed hereto. Such shares of Holdings
Common Stock have been duly and validly issued, fully paid and nonassessable.
Any issuance and sale of Holdings Common Stock, upon such issuance and sale,
will either (a) have been registered or qualified under applicable federal and
state securities laws or (b) be exempt therefrom.
(B) Holdings Preferred Stock. As of the Closing
Date the number of shares of issued and outstanding Series A Holdings Preferred
Stock and the number of shares of issued and outstanding Series B Holdings
Preferred Stock are as set forth in Schedule 5.1 annexed hereto. Such shares
of Holdings Preferred Stock have been duly and validly issued, fully paid and
nonassessable. Any issuance and sale of Holdings Preferred Stock, upon such
issuance and sale, will either (a) have been registered and qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
(C) Pre-emptive Rights. Except as set forth in
Schedule 5.2E, no stockholder of Holdings has or will have any preemptive
rights to subscribe for any additional equity Securities of Holdings.
(ii) New Indebtedness of Holdings and Company. Holdings has
the corporate power and authority to issue the Seller Debentures and the
Holdings Discount Debentures and Company has the corporate power and authority
to issue the New RGC Senior Subordinated Notes, the New F4L Senior Notes and
the New F4L Senior Subordinated Notes. The Seller Debentures, the Holdings
Discount Debentures, the New RGC Senior Subordinated Notes, the New F4L Senior
Notes and the New F4L Senior Subordinated Notes, when issued and paid for, will
be the legally valid and binding obligations of Holdings or Company, as the
case may be, enforceable against Holdings or Company, as the case may be, in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights or by equitable principles relating to enforceability. Each
of Holdings and Company represents and warrants and each other party hereto
acknowledges and agrees that the Loans and all other monetary Obligations
hereunder are (i) a refunding or refinancing of the Indebtedness under the
"Credit Agreement", as defined in the Old F4L Senior Subordinated Note
Indenture and (ii) a refinancing or replacement of the "1992 Credit Agreement",
as defined in the Old RGC
111
<PAGE> 112
9% Subordinated Note Indenture and the Old RGC 10-1/4% Subordinated Note
Indenture. The subordination provisions of the Seller Debentures, the New RGC
Senior Subordinated Notes, the Old RGC 9% Subordinated Notes, the Old RGC
10-1/4% Subordinated Notes, the Old F4L Senior Subordinated Notes and the New
F4L Senior Subordinated Notes, are and will be enforceable against the holders
thereof and the Loans and all other monetary Obligations hereunder are and will
be within the definition of "SENIOR INDEBTEDNESS" included in such provisions.
The Seller Debentures, the Holdings Discount Debentures, the New RGC Senior
Subordinated Notes, the New F4L Senior Notes and the New F4L Senior
Subordinated Notes, when issued and sold, will either (i) have been registered
or qualified under applicable federal and state securities laws or (ii) be
exempt therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders'
request, the following financial statements and information: (i) the audited
consolidated balance sheets of Food 4 Less and its Subsidiaries as at January
29, 1995 and the related consolidated statements of operations, stockholders'
equity and cash flows of Food 4 Less and its Subsidiaries for the fiscal year
then ended, and (ii) the audited consolidated balance sheets of Ralphs Grocery
and its Subsidiaries as at January 29, 1995 and the related consolidated
statements of operations, cash flows and stockholder's equity of Ralphs Grocery
and its Subsidiaries for the Fiscal Year then ended. All such statements were
prepared in conformity with GAAP and fairly present the financial position (on
a consolidated basis) of the entities described in such financial statements as
at the respective dates thereof and the results of operations and cash flows
(on a consolidated basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
As of the Closing Date, none of the Loan Parties has (and will not following
the funding of the initial Loans) any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or unusual forward or
long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of the Loan Parties, taken as a whole, other than
(i) the incurrence of the Obligations and obligations under the other
Transaction Documents and (ii) contingent obligations or liabilities for taxes,
long-term leases or forward or long-term commitments disclosed on Schedule 5.3
annexed hereto. Prior to the RSI Merger, Ralphs Supermarkets engaged in no
business activity other than owning the capital stock of Ralphs Grocery and had
no liabilities for the applicable periods not included on the balance sheets of
Ralphs Grocery and its Subsidiaries referred to above.
112
<PAGE> 113
5.4 NO MATERIAL ADVERSE CHANGE.
As of the Closing Date, since January 29, 1995, no event or
change has occurred that has caused or evidences, either in any case or in the
aggregate, a material adverse effect upon the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Ralphs Grocery and
its Subsidiaries, taken as a whole; as of the Closing Date, since January 29,
1995, no event or change has occurred that has caused or evidences, either in
any case or in the aggregate, a material adverse effect upon the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of Food 4 Less and its Subsidiaries, taken as a whole; and since September 17,
1994 (on a pro forma basis after giving effect to the Mergers), no event or
change has occurred that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect.
5.5 TITLE TO PROPERTIES; LIENS.
Each Loan Party has (i) good, sufficient and legal title,
subject only to Permitted Encumbrances and, with respect to Real Property
Assets acquired after the Closing Date by such Loan Party from a Person other
than a Loan Party, such defects in title as existed prior to such acquisition,
to (in the case of fee interests in real property), (ii) valid leasehold
interests, subject only to Permitted Encumbrances and, with respect to Real
Property Assets acquired after the Closing Date by such Loan Party from a
Person other than a Loan Party, such defects in title as existed prior to such
acquisition, in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of its properties and assets reflected in the financial statements referred
to in subsection 5.3 or in the most recent financial statements delivered
pursuant to subsection 6.1, in each case except for assets disposed of since
the date of such financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of any of the
Loan Parties) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of any Loan
Party, threatened against or affecting any of the Loan Parties or any property
of any of the Loan Parties that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. No Loan Party
is (i) in violation of any applicable laws that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
or (ii) subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other
113
<PAGE> 114
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material
tax returns and reports of the Loan Parties required to be filed by any of them
have been timely filed, and all material taxes, assessments, fees and other
governmental charges upon the Loan Parties and upon their respective
properties, assets, income, businesses and franchises which are due and payable
have been paid when due and payable. No Loan Party knows of any material
proposed tax assessment against any of the Loan Parties which is not being
actively contested by the relevant Loan Party in good faith and by appropriate
proceedings; provided that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. No Loan Party is in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any of its material Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
B. No Loan Party is a party to or is otherwise subject to
any agreements or instruments the performance of which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or any charter or other internal restrictions which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
No Loan Party is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other federal or state
statute or regulation which may limit its ability to incur Indebtedness for
borrowed money or which may otherwise render all or any portion of the
Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
A. No Loan Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.
114
<PAGE> 115
B. Following application of the proceeds of each Loan,
not more than 25% of the value of the assets (either of Holdings only or of the
Loan Parties on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Holdings or any other Loan Party and any Lender or any
Affiliate of any Lender, relating to Indebtedness and within the scope of
subsection 8.2, will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Each of the Loan Parties and each of their respective
ERISA Affiliates are in material compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their material obligations under each Employee Benefit Plan.
B. No ERISA Events have occurred or are reasonably
expected to occur which individually or in the aggregate resulted in or might
reasonably be expected to result in a liability of any of the Loan Parties or
any of their respective ERISA Affiliates (unless no Loan Parties shall be
jointly and severally liable therefor) in excess of $3,000,000 during the term
of this Agreement.
C. Except as disclosed on Schedule 5.11 annexed hereto
and except to the extent required under Section 4980B of the Internal Revenue
Code, no Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employees of any
of the Loan Parties or any of their respective ERISA Affiliates (unless no Loan
Parties shall be jointly and severally liable therefor). There are no material
liabilities of any Loan Party under any of the plans listed on Schedule 5.11
annexed hereto that are not reflected in the consolidated financial statements
of Company.
D. As of the most recent valuation date for any Pension
Plan, the Amount of Unfunded Benefit Liabilities, individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation (1)
any Pension Plans which have a negative Amount of Unfunded Benefit Liabilities
and (2) any Pension Plan for which neither Company nor any other Loan Party
would have any liability if the Pension Plan then terminated), does not exceed
$6,000,000.
5.12 CERTAIN FEES.
Except as disclosed on Schedule 5.12 annexed hereto, no
material broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and each of
Holdings and Company hereby indemnifies Lenders against, and agrees that it
will hold Lenders harmless from, any claim, demand or liability for any such
broker's or finder's fees alleged to have been
115
<PAGE> 116
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
A. Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of the Loan Parties (including, without
limitation, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws;
(ii) each of the Loan Parties has obtained all Governmental
Authorizations under Environmental Laws necessary to their respective
operations, and all such Governmental Authorizations are in good
standing, and each of the Loan Parties is in compliance with all
material terms and conditions of such Governmental Authorizations;
(iii) no Loan Party has received (a) any notice or claim to
the effect that it is or may be liable to any Person as a result of or
in connection with any Hazardous Materials except as would not
reasonably be expected to have a Material Adverse Effect or (b) any
letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. Section 9604) or comparable state laws regarding any matter
which could reasonably be expected to result in a Material Adverse
Effect, and, to the best of Holdings' and Company's knowledge, none of
the operations of any of the Loan Parties is the subject of any federal
or state investigation relating to or in connection with any Hazardous
Materials at any Facility or at any other location;
(iv) none of the operations of any of the Loan Parties is
subject to any judicial or administrative proceeding alleging the
violation of or liability under any Environmental Laws which if
adversely determined could reasonably be expected to have a Material
Adverse Effect;
(v) none of the Loan Parties or, to the best knowledge of
Holdings or Company, any predecessor of the Loan Parties has filed any
notice under any Environmental Law indicating past or present treatment
or Release of Hazardous Materials at any Facility except as would not
reasonably be expected to have a Material Adverse Effect, and none of
Loan Parties' operations involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any state equivalent other than in compliance
in all material respects with all applicable Environmental Laws;
116
<PAGE> 117
(vi) no Hazardous Materials exist on, under or about any
Facility in a manner that has a reasonable possibility of giving rise
to an Environmental Claim having a Material Adverse Effect, and no Loan
Party has filed any notice or report of a Release of any Hazardous
Materials that has a reasonable possibility of giving rise to an
Environmental Claim having a Material Adverse Effect;
(vii) none of the Loan Parties or, to the best knowledge of
Holdings or Company, any of their respective predecessors has disposed
of any Hazardous Materials in a manner that has a reasonable
possibility of giving rise to an Environmental Claim having a Material
Adverse Effect;
(viii) no unpermitted underground storage tanks or surface
impoundments are on or at any Facility; and
(ix) no material Lien in favor of any Person relating to or
in connection with any Environmental Claim has been filed or has been
attached to any Facility.
B. None of the Loan Parties or any of their respective
Facilities or operations are subject to any outstanding written order or
agreement with any governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims which could reasonably be
expected to result in a liability to Company or any of its Subsidiaries, after
giving effect to indemnification payable to Company or any Subsidiary with
respect to the LaHabra Complex (Alpha Beta Store No. 1900), in excess of
$12,000,000 individually or in the aggregate.
C. None of the Loan Parties has any contingent liability
in connection with any Release of any Hazardous Materials by the Loan Parties
which could reasonably be expected to result in a liability to Company or any
of its Subsidiaries, after giving effect to indemnification payable to Company
or any Subsidiary with respect to the LaHabra Complex (Alpha Beta Store No.
1900), in excess of $12,000,000 individually or in the aggregate.
D. Notwithstanding anything in this subsection 5.13 to
the contrary, no event or condition has occurred with respect to the Loan
Parties relating to any Environmental Laws or any Release of Hazardous
Materials at any Facility or any other location, including, without limitation,
any matter disclosed on Schedule 5.13 annexed hereto, which, individually, or
in the aggregate, has had a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving any of the Loan Parties that could reasonably be expected to have a
Material Adverse Effect.
117
<PAGE> 118
5.15 SOLVENCY.
Each of the Loan Parties is and, upon the incurrence of any
Obligations by Company on any date on which this representation is made, will
be, Solvent.
5.16 DISCLOSURE.
No representation or warranty of the Loan Parties contained in
any Loan Document, or in any other document, certificate or written statement
furnished to Lenders by or at the direction of any Loan Party for use in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
Holdings or Company, in the case of any document not furnished by it) necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. Any projections and
pro forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by Holdings or Company, as the case
may be, to be reasonable at the time made, it being recognized by Lenders that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There are no facts known (or which should
upon the reasonable exercise of diligence be known) to Holdings or Company
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents,
certificates and statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
5.17 INTELLECTUAL PROPERTY.
A. All Intellectual Property as of the Closing Date is
identified on Schedule 5.17 annexed hereto. Company and its Subsidiaries own,
or are licensed (to the extent required to be so licensed) to use, the
Intellectual Property and all such Intellectual Property is fully protected and
duly and properly registered, filed or issued in the appropriate office and
jurisdictions for such registrations, filings or issuances, and the Loan
Parties own all of the right, title and interest in and to such Intellectual
Property under the applicable laws of the United States free and clear of any
Lien (other than Liens permitted under this Agreement), in each case except
where the failure to do or have the foregoing could not reasonably be expected
to result in a Material Adverse Effect.
B. No material claim has been asserted by any Person with
respect to the use of any such Intellectual Property, or challenging or
questioning the validity or effectiveness of any such Intellectual Property.
The use of such Intellectual Property by Company or any of its Subsidiaries
does not infringe on the rights of any Person, subject to such claims and
infringements as do not, individually or in the aggregate, give rise to
118
<PAGE> 119
any liabilities on the part of Company or any of its Subsidiaries that are
material to Company and its Subsidiaries, taken as a whole. The consummation
of the transactions contemplated by this Agreement will not in any material
manner or to any material extent impair the ownership of (or the license to
use, as the case may be) any of such Intellectual Property by Company or any of
its Subsidiaries.
5.18 REPRESENTATIONS AND WARRANTIES INCORPORATED FROM MERGER AGREEMENT.
A. Company has delivered to Agent a complete and correct
copy of the Merger Agreement and of all exhibits and schedules delivered in
connection with the Merger Agreement.
B. Each of the representations and warranties contained
in the Merger Agreement (other than those made by the Sellers) is true and
correct in all material respects as of the date hereof, except for those
specifically relating to another time or times which were or will be true and
correct in all material respects at such time or times, subject to the
qualifications set forth in the schedules to the Merger Agreement, and will be
true and correct in all material respects as of the Closing Date, except for
those specifically relating to another time or times which were or will be true
and correct in all material respects at such time or times, and such
representations and warranties are hereby incorporated herein by this reference
with the same effect as though set forth in their entirety herein, subject to
the qualifications set forth in the schedules to the Merger Agreement.
C. Notwithstanding anything in the Merger Agreement to
the contrary, the representations and warranties incorporated in this Agreement
by subsection 5.18B shall, solely for purposes of this Agreement, survive the
execution and delivery of this Agreement, the making of the Loans and the
issuance of Letters of Credit hereunder and the execution and delivery of the
Notes.
5.19 PERMITS.
Except as disclosed in Schedule 5.19 annexed hereto, each of the Loan
Parties, prior to and after giving effect to the Acquisition and the Mergers,
has such certificates, permits, licenses, franchises, consents, approvals,
authorizations and clearances that are material to the condition (financial or
otherwise), business or operations of any Loan Party ("PERMITS") and is (and
will be immediately after the consummation of the Acquisition and the Mergers)
in compliance in all material respects with all applicable laws as are
necessary to own, lease or operate its properties and to conduct its businesses
in the manner as presently conducted and to be conducted immediately after the
consummation of the Acquisition and the Mergers, and all such Permits are valid
and in full force and effect and will be valid and in full force and effect
immediately upon consummation of the Acquisition and the Mergers. Each of the
Loan Parties, prior to and after giving effect to the Acquisition and the
Mergers, is and will be in
119
<PAGE> 120
compliance in all material respects with its obligations under such Permits and
no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination of such Permits, except for any such
revocation or termination which could not reasonably be expected to
individually or in the aggregate have a Material Adverse Effect.
5.20 TRANSACTION DOCUMENTS.
Company has delivered to Lenders complete and correct copies of
the Transaction Documents, in each case as in effect as of the Closing Date,
and of all exhibits and schedules thereto.
5.21 MERGERS.
Upon the filing of the Certificates of the Mergers with the
Secretary of State of the State of Delaware, the Mergers shall become effective
and (i) as a result of the Parent Merger, Old Holdings, as the surviving
corporation of the Parent Merger, by operation of law (with no further action
required), will succeed to all of the rights, assets, properties, obligations
and liabilities of F4L Parent as of the effective date of the Parent Merger,
which date shall be the date of filing of the applicable Certificate of Merger,
(ii) as a result of the Reincorporation Merger, New Holdings, as the surviving
corporation of the Reincorporation Merger, by operation of law (with no further
action required), will succeed to all of the rights, assets, properties,
obligations and liabilities of Old Holdings as of the effective date of the
Reincorporation Merger, which date shall be the date of filing of the
applicable Certificate of Merger, (iii) as a result of the RSI Merger, Ralphs
Supermarkets, as the surviving corporation of the RSI Merger, by operation of
law (with no further action required), will succeed to all of the rights,
assets, properties, obligations and liabilities of Food 4 Less as of the
effective date of the RSI Merger, which date shall be the date of filing of the
applicable Certificate of Merger, and (iv) as a result of the RGC Merger,
Ralphs Supermarkets, as the surviving corporation of the RGC Merger, by
operation of law (with no further action required), will succeed to all of the
rights, assets, properties, obligations and liabilities of Ralphs Grocery as of
the effective date of the RGC Merger, which date shall be the date of filing of
the applicable Certificate of Merger.
SECTION 6. AFFIRMATIVE COVENANTS
Each of Holdings and Company covenants and agrees that, so long
as any of the Commitments hereunder shall remain in effect and until payment in
full of all of the Loans and other Obligations and the cancellation or
expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, each of Holdings and Company shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this Section
6.
120
<PAGE> 121
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Agent and Lenders:
(i) Fiscal Period Financials: as soon as practicable and
in any event within 30 days (or, in the case of the last Fiscal Period
in any Fiscal Quarter (other than the last Fiscal Quarter in any Fiscal
Year), 45 days or, in the case of the last Fiscal Period in any Fiscal
Year, 90 days) after the end of each Fiscal Period ending after the
Closing Date, (a) the balance sheets of each Reporting Division as at
the end of such Fiscal Period, (b) the related statements of operations
and cash flows of such Reporting Division and (c) a schedule containing
a summary of comparable store sales growth for such Reporting Division
and for the conventional store businesses of Company and the
Subsidiaries included in clause (d) of the definition of "Reporting
Division" on a consolidated basis and for the warehouse store
businesses of Company and the Subsidiaries included in clause (d) of
the definition of "Reporting Division" on a consolidated basis, in each
case for such Fiscal Period and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Period, setting
forth in each case in comparative form the corresponding figures for
(1) the corresponding periods of the previous Fiscal Year (other than,
during the first year following the Closing Date, the entities
identified in clauses (a) and (d) of the definition of "Reporting
Division") and (2) the corresponding figures from the plan and
financial forecast for the current Fiscal Year delivered pursuant to
subsection 6.1(xiii), all in reasonable detail and certified by the
chief financial officer of Company that they fairly present the
financial condition of such Reporting Division as at the dates
indicated and the results of its operations and its cash flows for the
periods indicated, subject to changes resulting from audit and normal
year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year and within 90 days after the end of the
fourth Fiscal Quarter of each Fiscal Year, the consolidated balance
sheets of each of Holdings and its Subsidiaries and Company and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of operations, stockholders' equity and cash
flows of each of Holdings and its Subsidiaries and Company and its
Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year (other than, during the first year following the Closing
Date, the entities identified in clauses (a) and (d) of the definition
of "Reporting Division"), all as set forth in
121
<PAGE> 122
Holdings' or Company's report on Form 10-Q, as the case may be, and the
corresponding figures from the consolidated plan and financial forecast
for the current Fiscal Year delivered pursuant to subsection 6.1(xiii),
all in reasonable detail and certified by the chief financial officer
of Company that they fairly present the financial condition of Holdings
and its Subsidiaries and Company and its Subsidiaries, as the case may
be, as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments;
(iii) Year-End Financials: as soon as available and in any
event (a) within 90 days after the end of each Fiscal Year, the
consolidated balance sheets of each of Holdings and its Subsidiaries
and Company and its Subsidiaries as at the end of such Fiscal Year and
the related consolidated statements of operations, stockholders' equity
and cash flows of each of Holdings and its Subsidiaries and Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
(other than, during the first year following the Closing Date, the
entities identified in clauses (a) and (d) of the definition of
"Reporting Division"), all as set forth in Holdings' or Company's
report on Form 10-K, as the case may be, and the corresponding figures
from the consolidated plan and financial forecast delivered pursuant to
subsection 6.1(xiii) for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present the financial
condition of each of Holdings and its Subsidiaries and Company and its
Subsidiaries, as the case may be, as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, and (b) within 90 days after the end of each Fiscal Year
(or, if an extension has been obtained from the Securities and Exchange
Commission for filing such report after such 90th day, then on the date
of delivery of such report to the Securities and Exchange Commission
and in any event within 105 days after the end of such Fiscal Year) in
the case of such consolidated financial statements, (1) a report
thereon of Arthur Andersen LLP or other independent certified public
accountants of recognized national standing selected by Company and
satisfactory to Agent, which report shall be unqualified as to scope of
audit, shall express no doubts about the ability of each of Holdings
and its Subsidiaries and Company and its Subsidiaries to continue as a
going concern, and shall state that such consolidated financial
statements fairly present the consolidated financial position of each
of Holdings and its Subsidiaries and Company and its Subsidiaries as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards and (2) a
letter from Arthur Anderson LLP or other independent certified public
accountants,
122
<PAGE> 123
substantially in the form of Exhibit XXIII-A annexed hereto with such
changes as are approved by Agent, acknowledging that Lenders will
receive such consolidated financial statements and such report and will
use such financial statements and report in their credit analyses of
Holdings and its Subsidiaries and Company and its Subsidiaries;
(iv) Officers' and Compliance Certificates: (a) together
with each delivery of financial statements of Holdings and its
Subsidiaries and Company and its Subsidiaries pursuant to subdivisions
(ii) and (iii) above, (1) an Officers' Certificate of Company stating
that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of each of Holdings
and its Subsidiaries and Company and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto;
and (2) a Compliance Certificate duly executed and duly completed in
all respects; and (b) within 100 days after the beginning of each
Fiscal Year and in any event on or prior to the date of any mandatory
prepayments made pursuant to subsection 2.4B(iii)(e) during such Fiscal
Year, an Officers' Certificate of Company setting forth the
Consolidated Excess Cash Flow for the Fiscal Year covered by such
financial statements and demonstrating in reasonable detail the
derivation of such Consolidated Excess Cash Flow;
(v) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the financial statements of Holdings and its
Subsidiaries or any Reporting Division delivered pursuant to
subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1 will
differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions
had no such change in accounting principles and policies been made,
then, subject to subsection 1.2, (a) together with the first delivery
of financial statements pursuant to subdivision (i), (ii), (iii) or
(xiii) of this subsection 6.1 following such change, financial
statements of Holdings and its Subsidiaries or any Reporting Division
for the current Fiscal Year to the effective date of such change, in
each case prepared on a pro forma basis as if such change had been in
effect during such periods, and (b) together with each delivery of
financial statements pursuant to subdivision (i), (ii), (iii) or (xiii)
of this subsection 6.1 following such change, such financial statements
prepared on a basis consistent with the accounting principles and
policies used in the
123
<PAGE> 124
preparation of the financial statements delivered immediately prior to
such change;
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of each of Holdings and
its Subsidiaries and Company and its Subsidiaries pursuant to
subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating
whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Potential Event of
Default that relates to accounting matters has come to their attention
and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (b) stating that based on their audit examination nothing has come
to their attention that causes them to believe that the information
contained in the certificates delivered therewith pursuant to
subdivision (iv) above is not correct;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of any
comment letter submitted to the management of Holdings or Company by
independent certified public accountants in connection with each annual
audit of the financial statements of Holdings and its Subsidiaries or
Company and its Subsidiaries, as the case may be, made by such
accountants;
(viii) SEC Filings and Press Releases: promptly upon the
sending or filing thereof, copies of (a) all financial statements,
reports, notices and proxy statements sent or made available generally
by any Loan Party to its public security holders, (b) all regular and
periodic reports and all registration statements (other than on Form
S-8 or a similar form) and prospectuses, if any, filed by Holdings or
any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority (other than reports of a routine or ministerial
nature which are not material), and (c) all press releases and other
statements made available generally by Holdings or any of its
Subsidiaries to the public concerning material developments in the
business of Holdings or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any Specified
Officer of any Loan Party obtaining knowledge (a) that a condition or
event that constitutes an Event of Default or Potential Event of
Default has occurred and is continuing, or becoming aware that any
Lender or Agent has given any notice (other than to Agent) or taken any
other action with respect to a claimed Event of Default or Potential
Event of Default, (b) that any Person has given any notice to Holdings
or any of its Subsidiaries or taken any other action with respect to a
claimed
124
<PAGE> 125
default or event or condition of the type referred to in subsection
8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Holdings or Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6
of such Form as in effect on the date hereof), or (d) of the occurrence
of any event or change that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and
what action the relevant Loan Party has taken, is taking and proposes
to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon any
Specified Officer of any Loan Party obtaining knowledge of (X) the
institution of, or non-frivolous threat of, any action, suit,
proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting Holdings
or any of its Subsidiaries or any property of Holdings or any of its
Subsidiaries (collectively, "PROCEEDINGS") not previously disclosed in
writing by Company to Lenders or (Y) any material development in any
Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions to occur or which have occurred
pursuant to the Transaction Documents;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon any Specified Officer of
any Loan Party becoming aware of the occurrence of or forthcoming
occurrence of any ERISA Event, a written notice specifying the nature
thereof, what action Holdings or any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of
(a) each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by Holdings or any of its Subsidiaries or any of
their respective ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan; (b) all
125
<PAGE> 126
notices received by Holdings or any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent shall
reasonably request;
(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days after the beginning of each Fiscal Year, a
consolidated plan and financial forecast for such Fiscal Year as
customarily prepared by Holdings and Company, including without
limitation (a) forecasted balance sheets and forecasted statements of
operations and cash flows of Holdings and its Subsidiaries on a
consolidated basis and each Reporting Division for such Fiscal Year,
together with an explanation of the assumptions on which such forecasts
are based, (b) forecasted statements of operations and cash flows of
each Reporting Division for each Fiscal Period of such Fiscal Year,
together with an explanation of the assumptions on which such forecasts
are based, and (c) such other information and projections as any Lender
may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, an Officers' Certificate or other
report, in each case in form and substance satisfactory to Agent
outlining all material insurance coverage maintained as of the date of
such Officers' Certificate or report by Holdings and its Subsidiaries
and all material insurance coverage planned to be maintained by
Holdings and its Subsidiaries in the immediately succeeding Fiscal
Year;
(xv) Environmental Audits and Reports: as soon as
practicable following receipt thereof, copies of all environmental
audits and reports (other than routine follow-up reports to matters
previously disclosed to Lenders), whether prepared by personnel of
Holdings or any of its Subsidiaries or by independent consultants, with
respect to significant environmental matters at any Facility or which
relate to an Environmental Claim which could reasonably be expected to
result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness,
written notice of any change in the Board of Directors of Holdings or
Company;
(xvii) Changes Regarding Subsidiaries: (a) promptly upon any
Person becoming a Subsidiary of Holdings, a written notice setting
forth with respect to such Person (1) the date on which such Person
became a Subsidiary of Holdings and (2) all of the data required to be
set forth in Schedule 5.1 annexed hereto with respect to all
Subsidiaries of Holdings (it being understood that such written notice
shall be deemed to supplement Schedule 5.1 annexed hereto for all
purposes of this Agreement) and (b) together with each delivery of
financial statements of Holdings and its Subsidiaries and Company and
its Subsidiaries pursuant to subdivision (ii) above, a written notice
setting forth with respect to
126
<PAGE> 127
each Subsidiary of Holdings which was sold, merged, dissolved,
transferred or otherwise disposed of during the Fiscal Quarter covered
by such financial statements the circumstances of such transaction in
reasonable detail;
(xviii) Margin Determination Certificate: concurrently with
the delivery of the financial statements required under subsections
6.1(ii) and 6.1(iii), Company shall deliver a Margin Determination
Certificate;
(xix) Amendments to Certain Documents: within five Business
Days of entering into any amendment to or modification of any of the
tax sharing agreements referred to in subsection 7.12(viii) or the
warrant referred to in subsection 7.12(ix), a copy of such amendment or
modification; and
(xx) Other Information: with reasonable promptness, such
other information and data with respect to Holdings or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, each of Holdings and
Company will, and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect its corporate existence and all rights and
franchises material to its business; provided that the corporate existence and
rights and franchises of those Subsidiaries of Holdings identified on Schedule
5.1 annexed hereto as inactive (so long as such Subsidiary owns assets in an
aggregate fair market value (without netting any such fair market value against
any liabilities of such Subsidiary) not exceeding $1,000,000) may be
terminated.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Each of Holdings and Company will, and will cause each
of its Subsidiaries to, pay all material taxes, assessments and other
governmental charges imposed upon it or any of its material properties or
assets or in respect of any of its income, businesses or franchises before any
material penalty accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any material penalty or
fine shall be incurred with respect thereto; provided that no such charge or
claim need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
127
<PAGE> 128
B. Each of Holdings and Company will not, nor will it
permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than Holdings or any of
its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
A. Each of Holdings and Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all of the
Collateral (without limiting any obligations under the Collateral Documents)
and all other material properties used or useful in the business of Holdings
and its Subsidiaries (including, without limitation, Intellectual Property) and
from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof. Each of Holdings and Company will maintain
or cause to be maintained, with financially sound and reputable insurance
companies or associations or with self-insurance programs, in each case to the
extent consistent with prudent business practices and customary in their
respective industries, insurance with respect to its properties and business
and the properties and businesses of its Subsidiaries against loss or damage of
the kinds (including, in any event, business interruption insurance and, to the
extent commercially reasonable, earthquake insurance) and in the amounts
customarily carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses and owning similar
properties in the same general geographic areas in which Holdings, Company or
any of their respective Subsidiaries, as the case may be, operates. In
addition, each of Holdings and Company will maintain or cause to be maintained
flood insurance with respect to each Flood Hazard Property (as defined in
subsection 4.1N) included in the Collateral and located in a community that
participates in the National Flood Insurance Program. All insurance relating
to the Collateral shall comply with the insurance provisions of the Collateral
Documents.
B. In the event that Company or any of its Subsidiaries,
in connection with any casualty or casualties involving assets of Company or
any of its Subsidiaries, receives (a) proceeds of insurance in excess of
$5,000,000 in connection with any one casualty, or (b) aggregate proceeds of
insurance in excess of $15,000,000 from all such casualties (on a cumulative
basis, net of any proceeds already used to restore the assets affected by such
casualty or casualties or to make prepayments in accordance with subsection
2.4B(iii)(a)), Company shall immediately pay all such insurance proceeds (and
not just such excess) over to Agent, and Agent shall hold such proceeds in an
interest bearing account. Agent shall (i) so long as no Event of Default has
occurred and is continuing, disburse all such insurance proceeds (and any
earnings on amounts held in such interest bearing account) held by it to
Company, in accordance with and subject to such customary terms, conditions and
procedures as Agent shall require, for the sole purpose of restoring (or
reimbursing Company or any of its Subsidiaries for restoration costs previously
expended and for costs expended in obtaining such proceeds with respect to) the
affected assets, or, (ii) at Company's option (or if otherwise required
128
<PAGE> 129
by subsection 2.4B(iii)(a)), apply such proceeds and such earnings for the
purpose of making a prepayment in accordance with subsection 2.4. Company
hereby authorizes Agent to make such prepayments with such proceeds and such
earnings. If an Event of Default has occurred and is continuing, Agent may
elect, in its sole and absolute discretion, (i) to apply all or any portion of
such insurance proceeds and such earnings to the restoration of any of the
Collateral, subject to conditions determined by Agent, (ii) to disburse any
such insurance proceeds and such earnings to Company for the purposes set forth
in the immediately preceding sentence, (iii) to hold such insurance proceeds
and such earnings as additional Collateral under the Collateral Documents or
(iv) to apply such insurance proceeds and such earnings as provided for in the
Loan Documents.
6.5 INSPECTION; LENDER MEETING.
Each of Holdings and Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Holdings or any of its
Subsidiaries, including its and their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent public
accountants (provided that representatives of Holdings or any of its
Subsidiaries may, if it so chooses, be present at or participate in any such
discussion), all upon reasonable notice and at such reasonable times during
normal business hours and as often as may be reasonably requested. Without in
any way limiting the foregoing, each of Holdings and Company will, upon the
request of Agent or Requisite Lenders, participate in a meeting of Agent and
Lenders once during each Fiscal Year to be held at Company's corporate offices
(or such other location as may be agreed to by Company and Agent) at such time
as may be agreed to by Company and Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Each of Holdings and Company shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with which
could reasonably be expected to cause a Material Adverse Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION.
A. Each of Holdings and Company shall, and shall cause
each of its Subsidiaries to, exercise all due diligence in order to comply and
cause (i) all tenants under any leases or occupancy agreements affecting any
portion of the Facilities and (ii) all other Persons on or occupying such
property, to comply with all Environmental Laws.
129
<PAGE> 130
B. Each of Holdings and Company agrees that Agent may,
from time to time and in its sole and absolute discretion, retain, at Company's
expense, an independent professional consultant to review any report relating
to Hazardous Materials prepared by or for Holdings or any of its Subsidiaries
and to conduct its own investigation of any Facility currently owned, leased,
operated or used by Holdings or any of its Subsidiaries, and each of Holdings
and Company agrees to use its best efforts to obtain permission for Agent's
professional consultant to conduct its own investigation of any Facility
previously owned, leased, operated or used by Holdings or any of its
Subsidiaries. Each of Holdings and Company hereby grants (to the extent it is
authorized to do so) to Agent and its agents, employees, consultants and
contractors the right to enter into or on to the Facilities currently owned,
leased, operated or used by Holdings or any of its Subsidiaries to perform such
tests on such property as are reasonably necessary to conduct such a review
and/or investigation. Any such investigation of any Facility shall be
conducted, unless otherwise agreed to by such Person and Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at any such Facility or to
cause any damage or loss to any property at such Facility. Each of Holdings
and Company and Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of Agent pursuant to this subsection
6.7B will be obtained and shall only be used by Agent and Lenders for the
purposes of Lenders' internal credit decisions, to monitor and police the Loans
and to protect Lenders' security interests, if any, created by the Loan
Documents. Agent agrees to deliver a copy of any such report to Company with
the understanding that Company acknowledges and agrees that (i) it will
indemnify and hold harmless Agent and each Lender from any costs, losses or
liabilities relating to Holdings' or any of its Subsidiaries' use of or
reliance on such report, (ii) neither Agent nor any Lender makes any
representation or warranty with respect to such report, and (iii) by delivering
such report to Company, neither Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
C. Company shall promptly advise Lenders in writing and
in reasonable detail of (i) any Release of any Hazardous Materials at any
Facility required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with any governmental authority or any adverse party
with respect to any Environmental Claims that have a reasonable possibility of
giving rise to a Material Adverse Effect or with respect to any Release of
Hazardous Materials at any Facility required to be reported to any federal,
state or local governmental or regulatory agency, (iii) any remedial action
taken by Holdings or any of its Subsidiaries or any other Person in response to
(x) any Hazardous Materials on, under or about any Facility, the existence of
which has a reasonable possibility of resulting in an Environmental Claim
having a Material Adverse Effect, or (y) any Environmental Claim that could
reasonably be expected to result in a Material Adverse Effect, (iv) Holdings'
or any of its Subsidiaries' discovery of any occurrence or condition on any
real property adjoining or in the vicinity of any Facility
130
<PAGE> 131
that could cause such Facility or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws, and (v) any request for information from
any governmental agency that suggests such agency is investigating whether
Holdings or any of its Subsidiaries may be potentially responsible for a
Release of Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any
proposed acquisition of stock, assets, or property by Holdings or any of its
Subsidiaries that could reasonably be expected to expose Holdings or any of its
Subsidiaries to, or result in, Environmental Claims that could reasonably be
expected to have a Material Adverse Effect or that could reasonably be expected
to have a material adverse effect on any Governmental Authorization then held
by Holdings or any of its Subsidiaries and (ii) any proposed action to be taken
by Holdings or any of its Subsidiaries to commence manufacturing, industrial or
other operations that could reasonably be expected to subject Holdings or any
of its Subsidiaries to additional laws, rules or regulations which could
reasonably be expected to have a Material Adverse Effect, including, without
limitation, laws, rules and regulations requiring additional environmental
permits or licenses.
E. Each of Holdings and Company shall, at its own
expense, provide copies of such documents or information as Agent may
reasonably request in relation to any matters disclosed pursuant to this
subsection 6.7.
6.8 LOAN PARTIES' REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Each of Holdings and Company shall promptly take, and shall
cause each of its Subsidiaries promptly to take, any and all necessary remedial
action in connection with the presence, storage, use, disposal, transportation
or Release of any Hazardous Materials on, under or about any Facility in order
to comply with all applicable Environmental Laws and Governmental
Authorizations. In the event Holdings or any of its Subsidiaries undertakes
any remedial action with respect to any Hazardous Materials on, under or about
any Facility, Holdings or such Subsidiary shall conduct and complete such
remedial action in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that,
Holdings' or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith by Holdings or such Subsidiary.
6.9 INTEREST RATE PROTECTION.
Within 120 days of the Closing Date, Company shall obtain, and
shall thereafter cause to be maintained for a period of not less than two
years, one or more Interest Rate Agreements with respect to the Loans, in an
aggregate notional principal
131
<PAGE> 132
amount of not less than $300,000,000, each such Interest Rate Agreement to be
in form and substance satisfactory to Agent.
6.10 EXECUTION OF GUARANTY AND COLLATERAL DOCUMENTS BY FUTURE SUBSIDIARIES.
In the event that any Person becomes a Subsidiary of Company
after the date hereof, including, without limitation, Ralphs Supermarkets or
Ralphs Grocery as a result of the non-consummation of the RSI Merger or the RGC
Merger, as the case may be, and Crawford Stores, Inc., a California
corporation, Company will promptly notify Agent of that fact and cause (i) such
Subsidiary to execute and deliver to Agent a counterpart of the Guaranty, the
Security Agreement, the Trademark Security Agreement, Deeds of Trust, the
Deposit Accounts Security Agreement and the Pledge Agreement and to take all
such further action and execute all such further documents and instruments as
may be required to grant and perfect in favor of Agent, for the benefit of
Lenders, a first-priority security interest (subject only to Liens permitted
under this Agreement) in all of the real, personal and mixed property assets of
such Subsidiary (other than with respect to Excluded Sites and other than any
such assets which are subject to Liens permitted under subsection 7.2A(v) and
other Real Property Assets that such Subsidiary would not be obligated to
pledge to Agent pursuant to subsection 6.11 (it being understood and agreed
that all of the requirements of subsection 6.11 are applicable to the Real
Property Assets of such Subsidiary, with the date such Subsidiary became a
Subsidiary of the Company being treated for purposes of subsection 6.11 as the
date on which such Subsidiary acquired all of its Real Property Assets)) and
(ii) the parent of such Subsidiary to execute and deliver to Agent a
counterpart of the Pledge Agreement or a Pledge Amendment to the Pledge
Agreement previously executed by such parent effecting the pledge by such
parent to Agent of all of the capital stock of, or any other equity interest
in, such Subsidiary. Company shall deliver to Agent, together with such
Guaranty and such Collateral Documents, (i) certified copies of such
Subsidiary's Articles or Certificate of Incorporation, together with a good
standing certificate from the Secretary of State of the jurisdiction of its
incorporation, each to be dated a recent date prior to their delivery to Agent,
(ii) a copy of such Subsidiary's Bylaws, certified by its corporate secretary
or an assistant corporate secretary as of a recent date prior to their delivery
to Agent, (iii) a certificate executed by the Secretary or an assistant
secretary of such Subsidiary as to (a) the incumbency and signatures of the
officers of such Subsidiary executing the Guaranty and the Collateral Documents
to which such Subsidiary is a party and (b) the fact that the attached
resolutions of the Board of Directors of such Subsidiary authorizing the
execution, delivery and performance of the Guaranty and such Collateral
Documents are in full force and effect and have not been modified or rescinded,
(iv) the certificate or certificates evidencing all of the capital stock of
(or, if certificated, any other equity interest in) such Subsidiary, and (v) if
requested by Agent, a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Agent and its counsel, as to (a) the due
organization and good standing of such Subsidiary, (b) the due authorization,
execution and delivery by such Subsidiary of the Guaranty and such Collateral
Documents, (c) the
132
<PAGE> 133
enforceability of the Guaranty, and such Collateral Documents against such
Subsidiary, and (d) such other matters as Agent may reasonably request, all of
the foregoing to be satisfactory in form and substance to Agent and its
counsel. Upon the repayment of the indebtedness which is secured by the
capital stock of Bell Markets, Inc. as described in Schedule 7.2 annexed
hereto, Company shall cause Cala to pledge all of the capital stock of Bell
Markets, Inc. to Secured Party (as defined in the Pledge Agreement) pursuant to
the Pledge Agreement.
6.11 ADDITIONAL REAL PROPERTY.
After the Closing Date, each of Holdings and Company shall, and
shall cause its Subsidiaries to,
(I) with respect to each leasehold interest in Real Property
Assets listed in Schedule 4.1N annexed hereto (to the extent the items
listed below in this subsection 6.11 have not already been obtained) or
hereafter acquired by Company or any of its Subsidiaries (in either
case, the "LESSEE"), use its best efforts (which shall not be deemed to
include the payment of monetary consideration other than nominal
monetary consideration and out-of-pocket expenses incurred by any
lessor in connection with obtaining the items listed below, but shall
include, with respect to any leasehold interest acquired after the
Closing Date, efforts to include each of the items listed below in the
terms of the lease itself) to obtain and deliver to Agent as soon as
practicable, and if possible within three months after such acquisition
(or within six months after the Closing Date, with respect to the
leasehold interests listed in Schedule 4.1N annexed hereto):
(A) the agreement of the lessor (if required under the
lease) to the encumbrancing of such Lessee's leasehold interest
under the lease pursuant to a Deed of Trust and to the
assignment of such leasehold interest to Agent or its Affiliate
following a default hereunder, and if the lease allows the
lessor to unreasonably withhold consent to an assignment of the
leasehold interest by Agent or its Affiliate to a subsequent
third party assignee, the agreement of the lessor not to
unreasonably withhold such consent,
(B) with respect to Real Property Assets located
outside of California, the lessor's waiver of all right, title
and interest in the Lessee's personal property and fixtures
located on the leased premises,
(C) a license from the lessor for Agent to enter upon
the leased premises to take possession of or sell such personal
property and fixtures or to exercise other remedies, whether or
not the lease has been terminated,
133
<PAGE> 134
(D) the lessor's agreement to give Agent written
notice of any default by the Lessee under the lease, and not to
terminate the lease unless Agent fails to cure the default
within 30 days after receiving written notice from such lessor,
or within any longer cure period set forth in the lease, and
(E) excluding those leasehold interests in Kansas and
Missouri real property listed in Schedule 4.1N annexed hereto,
an original memorandum of the lease executed and acknowledged
by the lessor thereunder (or, in the case of an existing
leasehold interest which is of record and which is acquired by
the Lessee by assignment, a memorandum of or a recordable
duplicate original of such assignment, executed and
acknowledged by the assigning Lessee), in form sufficient to
give constructive notice (when recorded) of the Lessee's
leasehold interest under the lease to third-party purchasers
and encumbrancers of the affected real property and otherwise
in form reasonably satisfactory to Agent, together with
evidence of its recordation in all places necessary or
desirable, in the reasonable judgment of Agent, to give
constructive notice of the Lessee's leasehold interest to third
parties, and
(II) with respect to each Real Property Asset listed in
Schedule 4.1N annexed hereto (to the extent the items listed below in
this clause (ii) of this subsection 6.11 have not been obtained or
delivered to Agent on the Closing Date) and each Real Property Asset in
which Company or such Subsidiary acquires fee title or a leasehold
interest after the Closing Date (in each case excluding any Real
Property Asset which is and so long as it remains (A) an Excluded Site,
or (B) a leasehold interest as to which encumbrancing requires the
consent of the lessor, where Company and its Subsidiaries have been
unable to obtain the applicable lessor's consent thereto, or (C) an
asset subject to a Lien permitted under subsection 7.2A(iv) or (v))
(such non-excluded Real Property Assets collectively, "COVERED REAL
PROPERTY"), as soon as practicable and in any event within one month
after the applicable Real Property Asset becomes Covered Real Property,
deliver:
(A) fully executed counterparts of a Deed of Trust, or
an amendment to a Deed of Trust, in form satisfactory to Agent,
which Deed of Trust or amendment shall encumber such Covered
Real Property, together with evidence that counterparts of such
Deed of Trust or amendment have been recorded in all places to
the extent necessary or desirable, in the reasonable judgment
of Agent, so as to effectively create a valid and enforceable
first priority lien (subject only to Permitted Encumbrances) on
such Covered Real Property in favor of Agent (or such other
trustee as may be required or desired under local law) for the
benefit of Lenders,
134
<PAGE> 135
(B) if requested by Agent, a title report, title
commitment or other title search satisfactory to Agent obtained
by such Person in respect of such Covered Real Property,
(C) if requested by Agent, an opinion of counsel
(which counsel shall be reasonably satisfactory to Agent) in
the state in which such Covered Real Property is located with
respect to the enforceability of the Deeds of Trust recorded in
such state and such other matters as Agent may request, in form
and substance satisfactory to Agent,
(D) in the case of each such Covered Real Property
consisting of a leasehold interest, a copy of the lease
(including all amendments thereto), together with such estoppel
letters, consents, waivers and agreements from the lessor on
such real property as were obtained pursuant to clause (i)
above,
(E) environmental audits prepared by professional
consultants mutually acceptable to Company and Agent, in form,
scope and substance satisfactory to Agent in its reasonable
discretion,
(F) if Company or any of its Subsidiaries obtains an
owner's or lessee's policy of title insurance with respect to
such Covered Real Property, or if requested by Agent with
respect to any other Covered Real Property having an
acquisition cost or value (as estimated by Agent) in excess of
$2,000,000, a Title Insurance Policy, in an amount reasonably
satisfactory to Agent, with respect to Agent's lien thereon,
(G) information sufficient for Agent to determine
whether (1) any such Real Property Asset is Flood Hazard
Property and (2) the community in which each Flood Hazard
Property is located is participating in the National Flood
Insurance Program,
(H) upon Company's or such Subsidiary's receipt of
written notification from Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community
in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program, written
acknowledgment of the receipt of such notification; and
(I) the evidence of insurance with respect to such
Real Property Asset required to be provided to Agent pursuant
to the terms of the Deeds of Trust, including flood insurance
with respect to each Flood Hazard Property located in a
community that is participating in the National Flood Insurance
Program.
135
<PAGE> 136
Company shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by Agent to visit and inspect
any Real Property Asset for the purpose of obtaining an appraisal of value,
conducted by consultants retained by Agent in compliance with all applicable
banking regulations.
6.12 NOTICE REGARDING CHANGE OF CONTROL OFFER.
Within 30 days after the Closing Date, Company shall deliver to
the trustees under the Old RGC 9% Subordinated Note Indenture and the Old RGC
10-1/4% Subordinated Note Indenture written notice that Company will offer to
purchase all remaining Old RGC 9% Subordinated Notes and Old RGC 10-1/4%
Subordinated Notes pursuant to the Change of Control Offer and as provided in
the applicable indenture, and Company shall at such time deliver to Agent a
copy of such notices.
SECTION 7. NEGATIVE COVENANTS
Each of Holdings and Company covenants and agrees that, so long
as any of the Commitments hereunder shall remain in effect and until payment in
full of all of the Loans and other Obligations and the cancellation or
expiration of all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, each of Holdings and Company shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this Section
7.
7.1 INDEBTEDNESS.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) the Loan Parties may become and remain liable with
respect to Indebtedness which is included among the Obligations;
(ii) Holdings and its Subsidiaries may become and remain
liable with respect to Contingent Obligations permitted by subsection
7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness in respect of Capital Leases;
provided that such Capital Leases are permitted under the terms of
subsection 7.9;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any
wholly-owned
136
<PAGE> 137
Subsidiary of Company may become and remain liable with respect to
Indebtedness to Company or any other wholly-owned Subsidiary of
Company; provided that (a) all such intercompany Indebtedness shall be
evidenced by promissory notes that are pledged to Agent pursuant to the
terms of the applicable Collateral Document, (b) all such intercompany
Indebtedness owed by Company to any of its Subsidiaries shall be
subordinated in right of payment to the payment in full of the
Obligations pursuant to the terms of the applicable promissory notes or
an intercompany subordination agreement, in each case approved by
Agent, and (c) any payment by any Subsidiary of Company under any
guaranty of the Obligations shall result in a pro tanto reduction of
the amount of any intercompany Indebtedness owed by such Subsidiary to
Company or to any of its Subsidiaries for whose benefit such payment is
made;
(v) Holdings may become and remain liable with respect to
Indebtedness evidenced by the Seller Debentures and the Holdings
Discount Debentures and may remain liable with respect to Indebtedness
evidenced by the Holdings Discount Notes; provided that the aggregate
face amount of outstanding Holdings Discount Notes shall not exceed the
lesser of the aggregate face amount of such debt Securities outstanding
as of the Closing Date and $8,500,000 at any time;
(vi) Company may become and remain liable with respect to
Indebtedness evidenced by the Old F4L Senior Notes, the Old F4L Senior
Subordinated Notes, the New F4L Senior Notes, the New F4L Senior
Subordinated Notes, the New RGC Senior Subordinated Notes, the Old RGC
9% Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes;
provided that (a) the aggregate principal amount of outstanding Old F4L
Senior Notes and Old F4L Senior Subordinated Notes shall not exceed the
lesser of the aggregate principal amount of such debt Securities
outstanding as of the Closing Date and $36,800,000 at any time, (b) the
aggregate principal amount of outstanding Old F4L Senior Notes, Old F4L
Senior Subordinated Notes, New F4L Senior Notes and New F4L Senior
Subordinated Notes shall not exceed the lesser of the aggregate
principal amount of such debt Securities outstanding as of the Closing
Date and $670,000,000 at any time, (c) the aggregate principal amount
of outstanding Old RGC 9% Subordinated Notes and Old RGC 10-1/4%
Subordinated Notes shall not exceed the lesser of the aggregate
principal amount of such debt Securities outstanding as of the Closing
Date and $10,000,000 at any time and (d) the outstanding aggregate
principal amount of the New RGC Senior Subordinated Notes, the Old RGC
9% Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes shall
not exceed the lesser of the aggregate principal amount of such debt
Securities outstanding as of the Closing Date and $530,000,000 at any
time;
137
<PAGE> 138
(vii) Company and its Subsidiaries, as applicable, may
remain liable with respect to each of the items of existing
Indebtedness described in Schedule 7.1 annexed hereto and any
Indebtedness incurred to refinance such existing Indebtedness; provided
that after giving effect to such refinancing Indebtedness and the
repayment of the corresponding existing Indebtedness with the proceeds
thereof, (a) the aggregate principal amount of the refinancing
Indebtedness and the corresponding existing Indebtedness so refinanced
shall not be greater than the outstanding principal amount of such
existing Indebtedness immediately prior to such refinancing, (b) the
weighted average life to maturity of such refinancing Indebtedness
shall be no shorter than the existing Indebtedness being refinanced and
(c) such refinancing Indebtedness shall not be secured by any
additional property than that which secures the existing Indebtedness
being refinanced;
(viii) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness incurred to finance (or may assume
Indebtedness originally incurred to finance) (a) the purchase price of
equipment, fixtures and any other similar property or the remodeling or
other improvement costs of any facility of Company or any of its
Subsidiaries or (b) the purchase price of any Real Property Assets
consisting of fee interests in stores; provided that the aggregate
principal amount of such Indebtedness when incurred (and, in the case
of assumed Indebtedness, when originally incurred) shall not be less
than 80% or more than 100% of the fair market value of (a) the
equipment, fixtures and any other similar property acquired plus the
reasonable installation and delivery charges associated therewith or
the remodeling or other improvement costs relating to such facility or
(b) such Real Property Assets, as applicable; provided further that (1)
the aggregate principal amount of all such Indebtedness incurred or
assumed during any Fiscal Year for purposes described in the first
clause (a) of this subsection 7.1(viii) shall not exceed $20,000,000
and (2) the aggregate principal amount of all Indebtedness incurred to
finance the purchase price of any such Real Property Assets (together
with assumed Indebtedness originally incurred to finance the purchase
price of any such Real Property Assets) shall not exceed $10,000,000 at
any time;
(ix) Subsidiaries of Company acquired after the Closing
Date, the acquisition of which is permitted under subsection 7.3(v) and
subsection 7.7(ii), may remain liable with respect to Indebtedness
existing immediately prior to the time any such entity became a
Subsidiary of Company in an aggregate amount for all such Subsidiaries
not to exceed $4,000,000 at any time outstanding; provided that such
Indebtedness is not incurred in contemplation of such acquisition;
(x) Company and its Subsidiaries may become and remain
liable with respect to Indebtedness represented by Deferred Trade
Payables in an aggregate
138
<PAGE> 139
amount for all such Indebtedness not to exceed $5,000,000 at any time
outstanding;
(xi) Food 4 Less GM, Inc. may become and remain liable with
respect to Indebtedness incurred by Golden Alliance in an aggregate
amount not to exceed $2,000,000 at any time outstanding; provided that
such Indebtedness of Food 4 Less GM, Inc. arises solely as a result of
its status as a general partner of Golden Alliance;
(xii) Company may become and remain liable with respect to
Indebtedness evidenced by promissory notes and issued to employees or
former employees of Company and its Subsidiaries in lieu of cash
payments for stock of Holdings required to be repurchased pursuant to
Company's employee stock ownership plan; provided that the aggregate
amount of such Indebtedness does not exceed $4,000,000 at any time
outstanding; and
(xiii) Company and its Subsidiaries may become and remain
liable with respect to other unsecured Indebtedness in an aggregate
principal amount not to exceed $15,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Each of Holdings and Company
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with
respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of Holdings or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under the Uniform
Commercial Code of any State or under any similar recording or notice statute,
except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents,
including Liens securing its obligations to a Lender or an Affiliate of
such Lender which is a counterparty to an Interest Rate Agreement
permitted under subsection 7.4(ii);
(iii) existing Liens described in Schedule 7.2 annexed
hereto;
(iv) Liens on (a) Real Property Assets consisting of fee
interests in stores or (b) equipment, fixtures and other similar
property of Company or any of its Subsidiaries, in each case securing
Indebtedness described in subsections 7.1(iii) and 7.1(viii) and Liens
on inventory of Company and its Subsidiaries,
139
<PAGE> 140
securing Indebtedness described in subsection 7.1(x); provided that
such Liens shall extend only to the equipment, fixtures and other
similar property and inventory so financed and the proceeds thereof;
provided, further, that with respect to any such Lien described in
clause (a) above, (1) no Event of Default or Potential Event of Default
shall have occurred and be continuing at the time of incurrence or
assumption of such Lien, (2) such Lien is limited to such Real Property
Assets (and equipment located in or on such Real Property Assets), (3)
the Indebtedness secured by such Lien is Non-Recourse Indebtedness, and
(4) the aggregate principal amount of all Indebtedness secured by all
such Liens shall not at any time exceed $10,000,000;
(v) Liens securing Indebtedness permitted under subsection
7.1(ix), which Liens are existing prior to the time the entity which
incurred such Indebtedness became a Subsidiary of Company; provided
that such Liens were not incurred in connection with, or in
contemplation of, the acquisition of such Subsidiary and such Liens
extend to or cover only the property and assets of such entity which
were covered by such Liens and which were owned by such entity, in each
case at the time such entity became a Subsidiary of Company;
(vi) Liens in favor of third parties as consignors (or as
creditors of such consignors) in goods which are delivered to Company
or any of its Subsidiaries by such third parties on consignment in the
ordinary course of business, the value of which goods so held on
consignment shall at no time exceed $10,000,000 in the aggregate for
Company and its Subsidiaries;
(vii) Liens not otherwise permitted by clauses (i) through
(vi) above securing Indebtedness of Company or any of its Subsidiaries;
provided that (a) the aggregate principal amount of Indebtedness
secured by Liens permitted by this clause (vii) shall not exceed
$6,000,000 at any time outstanding, (b) any such Indebtedness shall be
permitted under subsection 7.1 and (c) such Liens shall not attach to
any Collateral; and
(viii) the replacement, extension or renewal of any Lien
permitted by this subsection 7.2A upon or in the same property subject
to such Lien and as security for the same obligations or any
refinancings thereof; provided that such Lien does not extend to or
cover any property other than the property covered by such Lien
immediately prior to such replacement, extension or renewal of such
Lien and the principal of the obligations secured thereby is not
increased.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If any of Holdings or any
of its Subsidiaries shall create or assume any Lien upon any of its properties
or assets, whether now owned or hereafter acquired, other than Liens excepted
by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other
140
<PAGE> 141
Indebtedness secured thereby as long as any such Indebtedness shall be so
secured; provided that, notwithstanding the foregoing, this covenant shall not
be construed as a consent by Requisite Lenders to the creation or assumption of
any such Lien not permitted by the provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale and except as
provided in the Senior Debt Indentures and the Subordinated Debt Indentures,
neither Holdings nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired. The foregoing shall not
prohibit the execution or renewal of a store lease which by its term prohibits
the hypothecation of the leasehold interest thereunder (but does not prohibit
the incurrence of liens on any property of Holdings and its Subsidiaries other
than such leasehold interest and equipment related thereto) if, despite the
best efforts of Holdings and its Subsidiaries in accordance with subsection
6.11, the lessor will not agree to permit such hypothecation.
7.3 INVESTMENTS; JOINT VENTURES.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, make or own any Investment
in any Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Holdings and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date (after giving effect
to the Mergers) in any Subsidiaries of Holdings and described on
Schedule 5.1 annexed hereto as in effect on the Closing Date and
Holdings may make additional capital contributions to Company;
(iii) Company and its Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may continue to own the
existing Investments owned by them and described in Schedule 7.3
annexed hereto;
(v) Company and its Subsidiaries may create or acquire new
Subsidiaries to the extent otherwise permitted under this Agreement;
provided that (a) any such new Subsidiary is wholly-owned by Company or
one of its wholly-owned Subsidiaries and the provisions of subsections
6.10 and 6.11 have been complied with and (b) to the extent such
creation or acquisition constitutes a
141
<PAGE> 142
Consolidated Capital Expenditure, such Consolidated Capital Expenditure
is permitted under subsection 7.8;
(vi) Food 4 Less GM, Inc. may continue to own the
Investments owned by it as of the Closing Date in Golden Alliance and
may make and own additional Investments in Golden Alliance in an
aggregate amount not to exceed $4,000,000 at any time; provided that
all such Investments are made pursuant to the provisions of the Golden
Alliance Agreement;
(vii) Company or any of its Subsidiaries may, so long as no
Potential Event of Default or Event of Default has occurred and is
continuing or occurs as a result thereof, make Development Investments
in or to any Developer; provided that (a) no such Development
Investment shall be permitted unless, at the time of the making of such
Development Investment, the Development Site and the store located or
to be located at the Development Site have been leased or irrevocably
committed by the Developer to be leased to Company or one of its
Subsidiaries, (b) neither Company nor any of its Subsidiaries may be or
become a general partner of any Developer or otherwise be liable in any
manner for any Indebtedness or any other obligations of any Developer
(other than pursuant to customary provisions contained in any lease
pertaining to a Development Site or a store leased to Company or one of
its Subsidiaries) and (c) the aggregate Development Investments,
together with the maximum aggregate liability, contingent or otherwise,
of Company and its Subsidiaries in respect of all Contingent
Obligations under subsection 7.4(ix), shall not exceed $35,000,000 at
any time outstanding;
(viii) Company and its Subsidiaries may accept promissory
notes received in consideration of, or the deferral of a portion of the
sales price accepted with respect to, any Asset Sale; provided that (a)
not more than 25% of the aggregate sales price for all Required
Dispositions (all of which must be made on or prior to the first
anniversary of the Closing Date) may be in the form of such promissory
notes or a deferred portion of such sales price, (b) not more than 25%
of the aggregate sales price for all Planned Dispositions in any Fiscal
Year (other than the Fiscal Year in which the aggregate cash proceeds
from all Planned Dispositions and Required Dispositions on a cumulative
basis from the Closing Date first exceeds $20,000,000 (the "SPECIFIED
FISCAL YEAR") and each Fiscal Year thereafter), and not more than 50%
of the aggregate sales price for all Planned Dispositions in the
Specified Fiscal Year or any Fiscal Year thereafter, may be in the form
of such promissory notes or a deferred portion of such sales price, (c)
the aggregate principal amount of such promissory notes and the
deferred portion of such sales prices related to all Asset Sales (other
than Required Dispositions and Planned Dispositions) shall not at any
time exceed $10,000,000 and (d) any such promissory notes so accepted
shall be pledged as security for the Obligations pursuant to the
applicable Collateral Document;
142
<PAGE> 143
(ix) Company and its Subsidiaries may make and own
Investments received in connection with the bankruptcy of suppliers and
customers or received pursuant to a plan of reorganization of any
supplier or customer, in each case in settlement of delinquent
obligations or disputes with such suppliers or customers;
(x) So long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, Company or any of its
Subsidiaries may make loans to its employees for the purpose of
purchasing common stock of Holdings; provided that the aggregate amount
of such loans shall not exceed $4,000,000 at any time outstanding;
(xi) Company and its Subsidiaries may make loans to
redevelopment agencies for business purposes consistent with past
practices in an aggregate amount not to exceed $10,000,000 at any time
outstanding;
(xii) Company and its Subsidiaries may make and own
Investments (a) in suppliers in anticipation of becoming a customer of
such suppliers and in lieu of deposits, cash discounts or concessions
and (b) in connection with joint ventures with suppliers entered into
in the ordinary course of business; provided that the aggregate amount
of all such Investments under clauses (a) and (b), together with the
amount of guarantees permitted under subsection 7.4(v), shall not
exceed $5,000,000 at any time outstanding;
(xiii) Company may make and maintain loans to Holdings for
the purposes described in subsection 7.5A(viii) in an aggregate amount
at any time outstanding which, together with the amount of Restricted
Junior Payments made for such purposes, shall not exceed the amount of
Restricted Junior Payments Company may make to Holdings under
subsection 7.5A(viii) at the time any such loan is made;
(xiv) Company and its Subsidiaries may purchase common stock
of Holdings from an employee stock ownership plan of any Loan Party or
from participants or former participants in any such plan or from any
employee or former employee of any Loan Party as required pursuant to
the applicable plan or agreement; provided that the cash portion of
such purchases and the cash payments with respect to promissory notes
issued to such participants or holders shall not exceed the sum of (a)
$5,000,000 in any Fiscal Year plus (b) the aggregate amount of cash
proceeds received by Holdings in such Fiscal Year from its sale of
shares of its common stock to an employee stock ownership plan of any
Loan Party or to participants in any such plan or to any employee of
any Loan Party during such Fiscal Year; provided, further, that no such
purchase or cash payment will be permitted if it is prohibited under
any Senior Debt Indenture or any Subordinated Debt Indenture; and
143
<PAGE> 144
(xv) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time
$5,000,000.
7.4 CONTINGENT OBLIGATIONS.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create or become or remain
liable with respect to any Contingent Obligation, except:
(i) Company may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit; provided that
no Loan Party shall have granted any Lien securing any obligations
(including any reimbursement obligations) relating to any Existing
Letters of Credit (other than pursuant to the Loan Documents);
(ii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements required under
subsection 6.9 and under other Interest Rate Agreements with respect to
Indebtedness, which Interest Rate Agreements are in form and substance
satisfactory to Agent;
(iii) Holdings may become and remain liable with respect to
Contingent Obligations in respect of the Holdings Guaranty and
Company's Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of the Guaranty, including Contingent
Obligations thereunder for the benefit of a Lender or an Affiliate of
such Lender which is a counterparty to an Interest Rate Agreement
permitted under subsection 7.4(ii);
(iv) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets other than
guaranties of Indebtedness incurred by any Person acquiring all or any
portion of such assets for the purpose of financing such acquisition;
provided that the maximum assumable liability in respect of all such
obligations shall at no time exceed the gross proceeds actually
received by Company and its Subsidiaries in connection with such Asset
Sales and other sales;
(v) Company and its Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees in the
ordinary course of business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries in an
aggregate amount which, together with the amount of Investments
permitted under subsection 7.3(xii), shall not exceed at any time
$5,000,000;
144
<PAGE> 145
(vi) Subsidiaries of Company may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness
of Company permitted by subsection 7.1(vi) pursuant to guarantees
entered into by any Subsidiary of Company; provided that any such
guarantee entered into by any Subsidiary of Company after the Closing
Date shall be in the form of such guarantee as in effect on the Closing
Date and delivered to Agent pursuant to subsection 4.1L, as such form
may be amended from time to time to the extent permitted under
subsection 7.15B;
(vii) Company and its Subsidiaries, as applicable, may
remain liable with respect to existing Contingent Obligations described
in Schedule 7.4 annexed hereto;
(viii) Holding and Company may become and remain liable with
respect to Contingent Obligations under guarantees in respect of
Capital Leases and Operating Leases entered into by Company or any of
Company's Subsidiaries which are permitted under subsection 7.9;
(ix) Company and its Subsidiaries may, so long as no
Potential Event of Default or Event of Default has occurred and is
continuing at the time of becoming liable therefor or occurs as a
result thereof, become and remain liable with respect to Contingent
Obligations that are (x) guaranties of Development Investments
described in clause (a) of the term "Development Investments" or (y)
commitments by Company or any of its Subsidiaries to make a Development
Investment; provided that, with respect to both clause (x) and clause
(y) above, (1) no such Contingent Obligations shall be permitted
unless, at the time of becoming liable with respect to such Contingent
Obligations, the Development Site and the store located or to be
located at the Development Site have been leased or irrevocably
committed by the Developer to be leased to Company or one of its
Subsidiaries, (2) neither Company nor any of its Subsidiaries may be or
become a general partner of any Developer or otherwise be liable in any
manner for any Indebtedness or any other obligations of any Developer
(other than pursuant to customary provisions contained in any lease
pertaining to a Development Site or a store leased to Company or one of
its Subsidiaries) and (3) the maximum aggregate liability, contingent
or otherwise, of Company and its Subsidiaries in respect of all
Contingent Obligations under this subsection 7.4(ix), together with the
aggregate Development Investments under subsection 7.3(vii), shall not
exceed $35,000,000 at any time outstanding; and
(x) Company and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such Contingent Obligations shall at
no time exceed $8,000,000.
145
<PAGE> 146
7.5 RESTRICTED JUNIOR PAYMENTS; OTHER RESTRICTED PAYMENTS.
A. Each of Holdings and Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Junior Payment; provided that, so
long as no Event of Default or Potential Event of Default shall have occurred
and be continuing or occurs as a result thereof, (i) Company may make cash
dividends to Holdings to enable Holdings to pay (a) up to $100,000,000 in cash
consideration, which, together with the issuance of Seller Debentures and the
Holdings Discount Debentures, will enable Holdings to acquire 48% of the
capital stock of Ralphs Supermarkets, (b) premium, fees and expenses related to
the Acquisition and all other transactions related thereto and all interest
accrued on or prior to the Closing Date with respect to any Indebtedness of any
Loan Party in an aggregate amount of not more than $173,000,000 minus the
amount of premium, fees and expenses related to the Acquisition and all other
transactions related thereto and all interest accrued on or prior to the
Closing Date with respect to any Indebtedness of any Loan Party, in each case
paid or payable, without duplication, by the other Loan Parties, and (c) to RGC
Partners, L.P. costs, expenses and indemnity payments, in each case to the
extent required under the Subscription Agreement, (ii) on the Closing Date,
Company may exchange the New RGC Senior Subordinated Notes for the Old RGC 9%
Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes and make cash
payments to the holders thereof, and purchase for cash the Old RGC 9%
Subordinated Notes and the Old RGC 10-1/4% Subordinated Notes, and may pay
accrued interest on the Old RGC 9% Subordinated Notes and the Old RGC 10-1/4%
Subordinated Notes, in each case pursuant to the Ralphs Grocery Offers, (iii)
on the Closing Date, Company may exchange the New F4L Senior Subordinated Notes
for the Old F4L Senior Subordinated Notes and pay accrued interest thereon and
make cash payments to the holders thereof, in each case pursuant to the Food 4
Less Offers, (iv) Company may purchase, on the Change of Control Purchase Date
using the proceeds of the Revolving Loans, all Old RGC 9% Subordinated Notes
and Old RGC 10-1/4% Subordinated Notes outstanding after the Closing Date
pursuant to the Change of Control Offer, (v) Holdings may make cash interest
payments to the holders of the Seller Debentures to the extent required by the
terms of the Seller Debenture Indenture and to the holders of the Holdings
Discount Debentures to the extent required by the terms of the Holdings
Discount Debenture Indenture, (vi) Company may make cash dividends on the
capital stock of Company to the extent necessary to provide Holdings with funds
to make required cash interest payments with respect to the Holdings Discount
Debentures, the Holdings Discount Notes and the Seller Debentures, (vii)
Company may make payments of regularly scheduled interest and regularly
scheduled payments of principal in respect of the Old RGC 9% Subordinated
Notes, the Old RGC 10-1/4% Subordinated Notes and the Old F4L Senior
Subordinated Notes, and Company may make payments of regularly scheduled
interest in respect of the New RGC Senior Subordinated Notes and the New F4L
Senior Subordinated Notes, in each case in accordance with the terms of, and to
the extent required by, and subject to the subordination provisions contained
in the applicable Subordinated Debt Indenture, (viii) Company may make cash
dividends to
146
<PAGE> 147
Holdings for the purpose of paying Holdings' general operating expenses,
franchise tax obligations, accounting, legal, corporate reporting and
administrative expenses incurred in the ordinary course of their respective
businesses in an amount not to exceed $500,000 in the aggregate in any Fiscal
Year, and to pay Holdings' and its Subsidiaries' income taxes and the costs and
expenses of registration of securities and securities related filings under
applicable laws by Holdings, (ix) Company may redeem, repurchase or retire
Subordinated Indebtedness in the amounts and with the proceeds and to the
extent permitted by the provisions of subsections 2.4B(iii)(c) and
2.4B(iii)(e), (x) Company and its Subsidiaries may purchase shares of common
stock of Holdings from an employee stock ownership plan of any Loan Party or
from participants or former participants in such plan and from employees or
former employees of any Loan Party as required pursuant to the provisions of
agreements and plans permitted under subsection 7.12 in an aggregate amount not
to exceed the amount permitted under subsection 7.3(xiv) in any Fiscal Year,
(xi) Company may make cash dividends to Holdings to enable Holdings to make
payments permitted pursuant to subsection 7.12(iv), (xii) Company and its
Subsidiaries may dividend to Holdings any Holdings Common Stock purchased by
Company or any such Subsidiary from any employee stock ownership plan of
Company or such Subsidiary or from participants or former participants in such
plan or employees or former employees of Company or such Subsidiary as required
pursuant to the provisions of agreements and plans permitted under subsection
7.12 in amounts permitted under subsection 7.3(xiv), (xiii) Holdings may
purchase on the Closing Date the Holdings Discount Notes in accordance with the
terms and provisions of the Holdings Offer and (xiv) on or prior to the 30th
day following the Closing Date, Company may make cash dividends to Holdings not
exceeding $3,700,000 to enable Holdings to purchase common stock of Old
Holdings from holders thereof who have exercised statutory dissenters' rights
in connection with the Parent Merger and Holdings may purchase such common
stock from such holders. Neither Holdings nor Company nor any of their
Subsidiaries will directly or indirectly declare, order, pay or make, or set
apart any sum or property for, any Restricted Junior Payment or agree to do so
except as permitted by this subsection 7.5.
B. Each of Holdings and Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, declare, order, pay, make or set
apart any sum for any payment or prepayment of principal of, premium, if any,
or interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, any Senior Indebtedness; provided that, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or occurs as a
result thereof, (i) on the Closing Date, Company may exchange the New F4L
Senior Notes for the Old F4L Senior Notes and make cash payments to the holders
thereof, in each case pursuant to the Food 4 Less Offers, (ii) Company may make
payments of regularly scheduled interest and regularly scheduled payments of
principal in respect of any Senior Indebtedness in accordance with the terms of
and to the extent required by the applicable Senior Debt Indenture, (iii)
Company may redeem, repurchase or retire Senior Indebtedness (other than the
147
<PAGE> 148
Loans) in the amounts and with the proceeds and to the extent permitted by the
provisions of subsections 2.4B(iii)(c) and 2.4B(iii)(e), (iv) on the Closing
Date, Company may purchase the Holdings Discount Notes and may pay accrued
interest thereon pursuant to the Holdings Offer, and (v) Holdings may make cash
interest payments to the holders of Holdings Discount Notes in accordance with
the terms of and to the extent required by the terms of the Holdings Discount
Note Indenture.
7.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit
the ratio of (i) Consolidated Adjusted EBITDA plus Consolidated Rental Payments
to (ii) Consolidated Fixed Charges (a) for the Fiscal Quarter ending October 8,
1995, to be less than 1.21:1.00, (b) for the two-Fiscal Quarter period ending
January 28, 1996, to be less than 1.24:1.00, (c) for the three-Fiscal Quarter
period ending April 21, 1996, to be less than 1.30:1.00, and (d) thereafter,
for any consecutive four-Fiscal Quarter period ending as of the last day of any
Fiscal Quarter occurring during any of the periods set forth below to be less
than the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
------------------------ ---------------------
<S> <C>
2nd Fiscal Quarter, 1996 1.31:1.00
3rd Fiscal Quarter, 1996 1.32:1.00
4th Fiscal Quarter, 1996 1.37:1.00
1st Fiscal Quarter, 1997 1.39:1.00
2nd Fiscal Quarter, 1997 1.41:1.00
3rd Fiscal Quarter, 1997 1.43:1.00
4th Fiscal Quarter, 1997 1.47:1.00
1st Fiscal Quarter, 1998 1.49:1.00
2nd Fiscal Quarter, 1998 1.51:1.00
3rd Fiscal Quarter, 1998 1.53:1.00
4th Fiscal Quarter, 1998 1.56:1.00
1st Fiscal Quarter, 1999 1.58:1.00
2nd Fiscal Quarter, 1999 1.59:1.00
3rd Fiscal Quarter, 1999 1.60:1.00
4th Fiscal Quarter, 1999 1.60:1.00
1st Fiscal Quarter, 2000 1.60:1.00
2nd Fiscal Quarter, 2000 1.60:1.00
3rd Fiscal Quarter, 2000 1.55:1.00
4th Fiscal Quarter, 2000
and each Fiscal Quarter
thereafter 1.50:1.00
</TABLE>
148
<PAGE> 149
B. MAXIMUM LEVERAGE RATIO. Company shall not at any time permit
the ratio of (i) (A) Consolidated Total Debt as of October 8, 1995, January 28,
1996, and April 21, 1996, respectively, to (B) Consolidated Adjusted EBITDA
multiplied by (a) for the Fiscal Quarter ending October 8, 1995, 4.33, (b) for
the two-Fiscal Quarters ending January 28, 1996, 1.857 and (c) for the
three-Fiscal Quarters ending April 21, 1996, 1.30, (x) for the Fiscal Quarter
ending October 8, 1995, to exceed 6.60:1.00, (y) for the two-Fiscal Quarter
period ending January 28, 1996 to exceed 6.40:1.00, and (z) for the
three-Fiscal Quarter period ending April 21, 1996 to exceed 6.00:1.00, and (ii)
(A) Consolidated Total Debt as of the last day of any Fiscal Quarter occurring
during any of the periods set forth below to (B) Consolidated Adjusted EBITDA
for the consecutive four-Fiscal Quarter period ending on such last day, to
exceed the correlative ratio indicated:
<TABLE>
<CAPTION>
PERIOD MAXIMUM LEVERAGE RATIO
------------------------ ----------------------
<S> <C>
2nd Fiscal Quarter, 1996 5.85:1.00
3rd Fiscal Quarter, 1996 5.65:1.00
4th Fiscal Quarter, 1996 5.40:1.00
1st Fiscal Quarter, 1997 5.20:1.00
2nd Fiscal Quarter, 1997 5.00:1.00
3rd Fiscal Quarter, 1997 4.80:1.00
4th Fiscal Quarter, 1997 4.57:1.00
1st Fiscal Quarter, 1998 4.40:1.00
2nd Fiscal Quarter, 1998 4.23:1.00
3rd Fiscal Quarter, 1998 4.06:1.00
4th Fiscal Quarter, 1998 3.90:1.00
1st Fiscal Quarter, 1999 3.80:1.00
2nd Fiscal Quarter, 1999 3.65:1.00
3rd Fiscal Quarter, 1999 3.55:1.00
4th Fiscal Quarter, 1999 3.45:1.00
1st Fiscal Quarter, 2000 3.35:1.00
2nd Fiscal Quarter, 2000 3.25:1.00
3rd Fiscal Quarter, 2000 3.10:1.00
4th Fiscal Quarter, 2000
and each Fiscal
Quarter thereafter 3.00:1.00
</TABLE>
C. MINIMUM CONSOLIDATED ADJUSTED EBITDA. Company shall not permit
Consolidated Adjusted EBITDA (a) for the Fiscal Quarter ending October 8, 1995,
to be less than $70,000,000, (b) for the two-Fiscal Quarter period ending
January 28, 1996, to be less than $168,000,000, (c) for the three-Fiscal
Quarter period ending April 21, 1996, to be less than $254,000,000, and (d)
thereafter, for any consecutive four-Fiscal Quarter
149
<PAGE> 150
period ending as of the last day of any Fiscal Quarter occurring during any of
the periods set forth below to be less than the correlative amount indicated:
<TABLE>
<CAPTION>
MINIMUM CONSOLIDATED
PERIOD ADJUSTED EBITDA
------------------------ --------------------
<S> <C>
2nd Fiscal Quarter, 1996 $338,000,000
3rd Fiscal Quarter, 1996 $349,000,000
4th Fiscal Quarter, 1996 $370,000,000
1st Fiscal Quarter, 1997 $380,000,000
2nd Fiscal Quarter, 1997 $390,000,000
3rd Fiscal Quarter, 1997 $400,000,000
4th Fiscal Quarter, 1997 $414,000,000
1st Fiscal Quarter, 1998 $423,000,000
2nd Fiscal Quarter, 1998 $431,000,000
3rd Fiscal Quarter, 1998 $440,000,000
4th Fiscal Quarter, 1998 $452,000,000
1st Fiscal Quarter, 1999 $459,000,000
2nd Fiscal Quarter, 1999 $465,000,000
3rd Fiscal Quarter, 1999 $472,000,000
4th Fiscal Quarter, 1999 $481,000,000
1st Fiscal Quarter, 2000 $486,000,000
2nd Fiscal Quarter, 2000 $490,000,000
3rd Fiscal Quarter, 2000 $495,000,000
4th Fiscal Quarter, 2000 $500,000,000
1st Fiscal Quarter, 2001 $505,000,000
2nd Fiscal Quarter, 2001 $510,000,000
3rd Fiscal Quarter, 2001 $515,000,000
4th Fiscal Quarter, 2001 $520,000,000
1st Fiscal Quarter, 2002 $525,000,000
2nd Fiscal Quarter, 2002 $530,000,000
3rd Fiscal Quarter, 2002 $535,000,000
4th Fiscal Quarter, 2002 $540,000,000
1st Fiscal Quarter, 2003 $545,000,000
2nd Fiscal Quarter, 2003 $550,000,000
3rd Fiscal Quarter, 2003 $555,000,000
4th Fiscal Quarter, 2003
and each Fiscal Quarter
thereafter $560,000,000
</TABLE>
D. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit
Consolidated Net Worth at any time during the period commencing on the day
immediately preceding the first day of any of the periods set forth below and
ending on the day
150
<PAGE> 151
immediately preceding the last day of such period set forth below to be less
than the correlative amount indicated below for such period set forth below:
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
PERIOD NET WORTH
---------------------------------------- ------------
<S> <C>
One day after the Closing Date through
the end of 4th Fiscal Quarter, 1995 $220,000,000
1st Fiscal Quarter, 1996 $200,000,000
2nd Fiscal Quarter, 1996 $194,000,000
3rd Fiscal Quarter, 1996 $189,000,000
4th Fiscal Quarter, 1996 $188,000,000
1st Fiscal Quarter, 1997 $188,000,000
2nd Fiscal Quarter, 1997 $188,000,000
3rd Fiscal Quarter, 1997 $188,000,000
4th Fiscal Quarter, 1997 $192,000,000
1st Fiscal Quarter, 1998 $200,000,000
2nd Fiscal Quarter, 1998 $212,000,000
3rd Fiscal Quarter, 1998 $224,000,000
4th Fiscal Quarter, 1998 $236,000,000
1st Fiscal Quarter, 1999 $254,000,000
2nd Fiscal Quarter, 1999 $272,000,000
3rd Fiscal Quarter, 1999 $289,000,000
4th Fiscal Quarter, 1999 $307,000,000
1st Fiscal Quarter, 2000 $333,000,000
2nd Fiscal Quarter, 2000 $350,000,000
3rd Fiscal Quarter, 2000 $366,000,000
4th Fiscal Quarter, 2000 $383,000,000
1st Fiscal Quarter, 2001 $408,000,000
2nd Fiscal Quarter, 2001 $413,000,000
3rd Fiscal Quarter, 2001 $418,000,000
4th Fiscal Quarter, 2001 $423,000,000
1st Fiscal Quarter, 2002 $428,000,000
2nd Fiscal Quarter, 2002 $433,000,000
3rd Fiscal Quarter, 2002 $438,000,000
4th Fiscal Quarter, 2002 $443,000,000
1st Fiscal Quarter, 2003 $448,000,000
2nd Fiscal Quarter, 2003 $453,000,000
3rd Fiscal Quarter, 2003 $458,000,000
4th Fiscal Quarter, 2003 $463,000,000
First day of 1st Fiscal Quarter, 2004
and thereafter $468,000,000
</TABLE>
151
<PAGE> 152
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Holdings shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure of Holdings or
any of its Subsidiaries, including the creation or acquisition of any
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business, property or assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or a substantial portion of the business,
property or assets of, or stock or other evidence of beneficial ownership of,
any Person or any division or line of business of any Person, except:
(i) Food 4 Less and Ralphs Supermarkets may consummate the
Acquisition and the RSI Merger, Ralphs Supermarkets and Ralphs Grocery
may consummate the RGC Merger, Food 4 Less of Southern California, Inc.
may merge into Company with Company being the surviving corporation and
Alpha Beta may merge into Company with Company being the surviving
corporation;
(ii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8 and Development
Investments (to the extent such Development Investments do not
constitute Consolidated Capital Expenditures) permitted under
subsection 7.3(vii);
(iii) Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof;
(iv) Company and its Subsidiaries may sell or otherwise
dispose of damaged, worn-out or obsolete assets that are no longer
necessary for the proper conduct of their respective business for fair
market value in the ordinary course of business;
(v) Company and its Subsidiaries may sell grocery stores
(including equipment therein acquired after the date which precedes the
Closing Date by six months) opened or acquired after the date which
precedes the Closing Date by six months in connection with a concurrent
lease-back of such grocery stores (including such equipment) to the
extent such transactions are permitted under subsection 7.10;
(vi) Company and its Subsidiaries may sell up to eight
grocery stores in any Fiscal Year, plus, in any Fiscal Year after
Fiscal Year 1995, a number of stores equal to the difference between
eight and the number of stores sold under
152
<PAGE> 153
this clause (vi) in the immediately preceding Fiscal Year, which stores
are no longer useful to the businesses of Company and its Subsidiaries;
(vii) Company and its Subsidiaries may make any of the
Planned Dispositions and any of the Required Dispositions; provided
that, in each case, the consideration received for each of such stores
is in an amount at least equal to the fair market value thereof;
provided, further, that all of the Required Dispositions shall be made
on or prior to the first anniversary of the Closing Date;
(viii) Company or any of its Subsidiaries may sell any class
of stock of Certified Grocers of California, Ltd., a California
corporation ("Certified") owned by it pursuant to a redemption of such
stock by Certified;
(ix) Company and its Subsidiaries may lease or sublease any
of their respective real or personal property in the ordinary course of
business;
(x) (A) any wholly-owned Subsidiary of Company (other than
Cala and its Subsidiaries, and Falley's) may be merged or consolidated
with or into Company or any wholly-owned Subsidiary of Company (other
than Bell Markets, Inc.), or all or any part of its business, property
or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of transactions, to Company
or any wholly-owned Subsidiary of Company (other than Bell Markets,
Inc.); provided that, in the case of such a merger or consolidation
involving Company, Company shall be the continuing or surviving
corporation and in the case of such a merger or consolidation involving
two wholly-owned Subsidiaries of Company, the surviving corporation
shall be a party to the Guaranty and its capital stock shall be pledged
to Secured Party (as defined in the Pledge Agreement) pursuant to the
Pledge Agreement; and (B) the corporate existence of those Subsidiaries
of Holdings identified as inactive on Schedule 5.1 annexed hereto may
be terminated to the extent permitted under subsection 6.2; and
(xi) subject to subsection 7.13, Company and its
Subsidiaries may make Asset Sales of assets having an aggregate fair
market value not in excess of $5,000,000 in the aggregate for all such
Asset Sales; provided that the consideration received for such assets
shall be in an amount at least equal to the fair market value thereof.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Holdings shall not make or incur any Consolidated Capital
Expenditures and Company shall not, and shall not permit its Subsidiaries to,
make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated
below, in an aggregate
153
<PAGE> 154
amount in excess of the corresponding amount (the "MAXIMUM CONSOLIDATED CAPITAL
EXPENDITURES AMOUNT") set forth below opposite such Fiscal Year; provided that
the Maximum Consolidated Capital Expenditures Amount for any Fiscal Year shall
be increased (i) for any Fiscal Year other than Fiscal Year 1995, by an amount
equal to the excess, if any, (but in no event, for Fiscal Year 1996, more than
$28,000,000 and for each Fiscal Year following Fiscal Year 1996, more than 15%
of the Maximum Consolidated Capital Expenditures Amount for the immediately
preceding Fiscal Year, as set forth in the table below) of the Maximum
Consolidated Capital Expenditures Amount for the previous Fiscal Year (as
adjusted in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year, (ii) by an
amount up to, but in no event greater than, 5% of the Maximum Consolidated
Capital Expenditures Amount for the immediately following Fiscal Year, as set
forth in the table below, which amount described in this clause (ii) shall
reduce the Maximum Consolidated Capital Expenditures Amount for the immediately
following Fiscal Year, and (iii) by an amount equal to (but in no event greater
than $15,000,000 for any Fiscal Year) the aggregate amount of proceeds (other
than insurance proceeds, condemnation awards and indemnity payments) received
by Company and its Subsidiaries from Asset Sales during such Fiscal Year to the
extent such proceeds have been reinvested in new stores or the construction or
remodeling of stores of Company and its Subsidiaries within 270 days of
receipt; provided, however, that the amount which may be added to the Maximum
Consolidated Capital Expenditures Amount pursuant to clauses (i) and (ii) of
the immediately preceding proviso shall not exceed, (a) for Fiscal Year 1995,
5% of the Maximum Consolidated Capital Expenditures Amount for such Fiscal Year
as set forth in the table below, (b) for Fiscal Year 1996, $28,000,000, and (c)
for any Fiscal Year thereafter, 15% of the Maximum Consolidated Capital
Expenditures Amount for such Fiscal Year as set forth in the table below:
<TABLE>
<CAPTION>
MAXIMUM CONSOLIDATED
FISCAL YEAR EXPENDITURE AMOUNT
----------- --------------------
<S> <C>
Closing Date through
and including January 28, 1996 $116,000,000
Fiscal Year 1996 $105,000,000
Fiscal Year 1997 $100,000,000
Fiscal Year 1998 $100,000,000
Fiscal Year 1999 $110,000,000
Fiscal Year 2000 $120,000,000
Fiscal Year 2001 $125,000,000
Fiscal Year 2002 $130,000,000
Fiscal Year 2003
and each Fiscal Year thereafter $135,000,000
</TABLE>
154
<PAGE> 155
7.9 RESTRICTION ON LEASES.
Holdings shall not become liable in any way, whether directly
or by assignment or as a guarantor or other surety, for the obligations of the
lessee under any lease, whether an Operating Lease or a Capital Lease, and
Company shall not, and shall not permit any of its Subsidiaries to, become
liable in any way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of the lessee under any lease, whether an Operating
Lease or a Capital Lease (other than intercompany leases between Company and
its wholly-owned Subsidiaries), unless, immediately after giving effect to the
incurrence of liability with respect to such lease, all amounts paid or payable
under all Capital Leases and Operating Leases (net of sublease income) at the
time in effect during the then current Fiscal Year (or in the case of Fiscal
Year 1995, during the period commencing on the Closing Date and ending on (and
including) January 28, 1996) shall not exceed the corresponding amount set
forth below opposite such Fiscal Year (or in the case of Fiscal Year 1995,
during such period):
<TABLE>
<CAPTION>
MAXIMUM LEASE
PERIOD PAYMENTS
------ -------------
<S> <C>
Closing Date through
and including January 28, 1996 $ 90,000,000
Fiscal Year 1996 $195,000,000
Fiscal Year 1997 $215,000,000
Fiscal Year 1998 $240,000,000
Fiscal Year 1999 $265,000,000
Fiscal Year 2000 $285,000,000
Fiscal Year 2001 $300,000,000
Fiscal Year 2002 $320,000,000
Fiscal Year 2003
and each Fiscal Year thereafter $340,000,000
</TABLE>
7.10 SALES AND LEASE-BACKS.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which Holdings or any of
its Subsidiaries has sold or transferred or is to sell or transfer to any other
Person (other than Holdings or any of its Subsidiaries) or (ii) which Holdings
or any of its Subsidiaries intends to use for substantially the same purpose as
any other property which has been or is to be sold or transferred by Holdings
or any of its Subsidiaries to any Person (other than Holdings or any of its
Subsidiaries)
155
<PAGE> 156
in connection with such lease; provided that each of Holdings and Company and
its Subsidiaries may become and remain liable as lessee, guarantor or other
surety with respect to any such lease if and to the extent that Holdings,
Company or any of their Subsidiaries would be permitted to enter into, and
remain liable under, such lease under subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes receivable or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Each of Holdings and Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any Affiliate
of such Person, on terms that are less favorable to such Person or that
Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such an Affiliate; provided that the foregoing
restriction shall not apply to (i) any transaction between Company and any of
its wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries;
(ii) reasonable and customary fees paid to members of the Boards of Directors
of Holdings and its Subsidiaries; (iii) issuances of stock, payments of bonuses
and other transactions pursuant to employment or compensation agreements, stock
option agreements, indemnification agreements and other arrangements, in each
case satisfactory in form and substance to Agent and as in effect as of the
Closing Date and unamended, and substantially similar agreements as may
hereafter become effective, in each case with officers or directors who are
Affiliates of Holdings or any of its Subsidiaries; (iv) payment of consulting
and other fees and expenses and the reimbursement of losses, costs and
expenses under the Consulting Agreement, as amended in accordance with
subsection 7.15A, and in form and substance satisfactory to Agent; (v) the
payment of fees and expenses to Yucaipa and Apollo Advisors, L.P. or its
affiliates and designees and other holders of capital stock of Holdings in
connection with the Acquisition, in each case in amounts that are satisfactory
to Agent; (vi) transactions between Company and/or any of its Subsidiaries and
Golden Alliance that are otherwise permitted under this Agreement; (vii) to the
extent permitted under subsection 7.3(xiv), any repurchase of stock of Holdings
from Company's employee stock ownership plan or participants or former
participants in such plan, in each case to the extent such repurchases are
required by the terms of such plan; (viii) payments by Holdings and its
Subsidiaries pursuant to tax sharing agreements in effect from time to time
among Holdings and its Subsidiaries; (ix) the issuance by Holdings of common
stock to Yucaipa pursuant to Yucaipa's exercise of the warrant issued to it on
the Closing Date by Holdings in connection with the Acquisition; (x)
transactions between Company and
156
<PAGE> 157
Holdings entered into pursuant to and in accordance with the Transfer and
Assumption Agreement, (xi) a loan made by Company to RGC Investment Co., on the
Closing Date in the original principal amount of $5,000,000, all of the
proceeds of which loan will immediately be invested by RGC Investment Co. in
RGC Partners, L.P. and (xii) payment of costs, expenses and indemnity payments
by Holdings and Company to RGC Partners, L.P. in accordance with the
Subscription Agreement.
7.13 DISPOSAL ON SUBSIDIARY STOCK; RESTRICTIONS ON SUBSIDIARIES.
A. Except for any sale of 100% of the capital stock or other
equity Securities of any of Company's Subsidiaries in compliance with the
provisions of subsection 7.7(x) and except pursuant to the Collateral
Documents, Holdings shall not and shall not permit any of its Subsidiaries to
directly or indirectly sell, assign, pledge or otherwise encumber or dispose of
any shares of capital stock or other equity Securities of any of its
Subsidiaries, except to qualify directors if required by applicable law, or in
the case of Company's Subsidiaries, to Company or to a wholly-owned Subsidiary
of Company (other than Bell Markets, Inc.).
B. Except as otherwise provided herein or in any other Loan
Document, Holdings will not, and will not permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of
Company to (i) pay dividends or make any other distributions on any of such
Subsidiary's capital stock owned by Company or any other Subsidiary of Company,
(ii) repay or prepay any Indebtedness owed by such Subsidiary to Company or any
other Subsidiary of Company, (iii) make loans or advances to Company or any
other Subsidiary of Company, or (iv) transfer any of its property or assets to
Company or any other Subsidiary of Company.
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (i)
the businesses engaged in by Company and its Subsidiaries on the Closing Date
and similar or related businesses and (ii) such other lines of business as may
be consented to by Requisite Lenders. From and after the Closing Date,
Holdings shall not engage in any business other than owning the capital stock
of Company and entering into and performing its obligations under and in
accordance with the Loan Documents, the Related Financing Documents to which it
is a party and such other documents entered into by Holdings on or prior to the
Closing Date and made available to Agent and shall not own any assets other
than (a) the capital stock of Company and (b) Cash which has been paid to
Holdings for the purpose of allowing Holdings to make the payments described in
clauses (i), (v), (viii) and (xi) of subsection 7.5A; provided that Holdings
shall make such payments immediately upon (and in any event on the date of)
receipt of such Cash.
157
<PAGE> 158
7.15 AMENDMENTS OF CERTAIN DOCUMENTS; NO PREPAYMENTS OF CERTAIN
INDEBTEDNESS.
A. Holdings shall not, and shall not permit any of its
Subsidiaries to, amend, waive any of its rights under, or otherwise change the
terms of any of the Shareholders Agreement, the Indemnification Agreement, the
Reimbursement Agreement, the Merger Agreement, the RGC Merger Certificate, the
Consulting Agreement, the Tax Election Agreement, the Transfer and Assumption
Agreement, the Subscription Agreement or the certificate of designations with
respect to the Holdings Preferred Stock, in each case as in effect on the
Closing Date, without the prior written consent of the Requisite Lenders, if
such amendment, waiver or change would increase materially the obligations of
Holdings or any of its Subsidiaries or confer additional rights on any other
party to any such agreement which would be adverse to Holdings or any of its
Subsidiaries.
B. Holdings shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any of the Senior
Indebtedness, the Subordinated Indebtedness, the Senior Debt Indentures, the
Subordinated Debt Indentures, the Golden Alliance Agreement or any of the
guarantees entered into by any Subsidiary of Company permitted under subsection
7.4(vi) (collectively, "RESTRICTED AGREEMENTS"), or make any payment consistent
with an amendment thereof or change thereto, if the effect of such amendment or
change is to increase the interest rate on any such Restricted Agreements,
change any dates upon which payments of principal or interest are due thereon,
change any of the covenants with respect thereto in a manner which is more
restrictive to Holdings or any of its Subsidiaries, change any event of default
or condition to an event of default with respect thereto, change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions (if any) thereof (or of any guaranty thereof), or
change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made, is to increase the obligations of the obligor thereunder or to
confer any additional rights on the holders of any such Restricted Agreements
(or a trustee or other representative on their behalf) which would be adverse
to any Loan Party or Lenders.
7.16 FISCAL YEAR
Company shall not change its Fiscal Year-end from the Sunday
closest to January 31 of the following calendar year.
158
<PAGE> 159
SECTION 8. EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of
Default") shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay any interest on
any Loan or any fee or any other amount due under this Agreement within five
days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Holdings or any of its Subsidiaries to pay
when due (a) any principal of or interest on any Indebtedness (other than
Indebtedness referred to in subsection 8.1) in an individual principal amount
of $5,000,000 or more or any items of Indebtedness with an aggregate principal
amount of $10,000,000 or more or (b) any Contingent Obligation in an individual
principal amount of $5,000,000 or more or any Contingent Obligations with an
aggregate principal amount of $10,000,000 or more, in each case beyond the end
of any grace period provided therefor; or (ii) breach or default by Holdings or
any of its Subsidiaries with respect to any other material term of (a) any
evidence of any Indebtedness in an individual principal amount of $5,000,000 or
more or any items of Indebtedness with an aggregate principal amount of
$10,000,000 or more or any Contingent Obligation in an individual principal
amount of $5,000,000 or more or any Contingent Obligations with an aggregate
principal amount of $10,000,000 or more or (b) any loan agreement, mortgage,
indenture or other agreement relating to such Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to
permit the holder or holders of that Indebtedness or Contingent Obligation(s)
(or a trustee on behalf of such holder or holders) to cause, that Indebtedness
or Contingent Obligation(s) to become or be declared due and payable prior to
its stated maturity or the stated maturity of any underlying obligation, as the
case may be (upon the giving or receiving of notice, lapse of time, both, or
otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Holdings or Company to perform or comply with any
term or condition contained in subsection 2.5 or 6.2 or Section 7 of this
Agreement; or
159
<PAGE> 160
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement
made by the Loan Parties in any Loan Document or in any statement or
certificate at any time given by any of the Loan Parties in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any
material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or
compliance with any term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the receipt by Company of notice from Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Holdings or any of its
Subsidiaries (other than an inactive Subsidiary identified as such in Schedule
5.1 annexed hereto whose aggregate assets and annual revenues do not exceed
$1,000,000 and $1,000,000, respectively, and whose financial condition does not
adversely affect any other Loan Party ("INSIGNIFICANT SUBSIDIARY")) in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings or any of its Subsidiaries (other than an Insignificant
Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Holdings or any of its Subsidiaries (other than an Insignificant
Subsidiary), or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Holdings or any of its Subsidiaries
(other than an Insignificant Subsidiary) for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Holdings or any of
its Subsidiaries (other than an Insignificant Subsidiary), and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
160
<PAGE> 161
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Holdings or any of its Subsidiaries shall have an
order for relief entered with respect to it or commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Holdings or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or (ii)
Holdings or any of its Subsidiaries shall be unable, or shall fail generally,
or shall admit in writing its inability, to pay its debts as such debts become
due; or the Board of Directors of Holdings or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar
process involving (i) in any individual case an amount in excess of $5,000,000
or (ii) in the aggregate at any time an amount in excess of $10,000,000 (in
either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Holdings or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of
any proposed sale thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Holdings
or any of its Subsidiaries decreeing the dissolution or split up of such Person
and such order shall remain undischarged or unstayed for a period in excess of
30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually
or in the aggregate results in or could reasonably be expected to result in
liability of any of the Loan Parties or any of their respective ERISA
Affiliates (unless no Loan Party shall be jointly and severally liable
therefor) in excess of $5,000,000 during the term of this Agreement; or there
shall exist an Amount of Unfunded Benefit Liabilities, individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation (1)
any Pension Plans which have a negative Amount of Unfunded Benefit Liabilities
and (2) any Pension Plan for which neither Company nor any other Loan Party
would have liability if the Pension Plan then terminated), which exceeds
$10,000,000; or
161
<PAGE> 162
8.11 CHANGE IN CONTROL.
A Change of Control shall have occurred; or
8.12 INVALIDITY OF GUARANTIES.
Either of the Holdings Guaranty or, upon execution and delivery
thereof, the Guaranty for any reason, other than the satisfaction in full of
all Obligations, ceases to be in full force and effect (other than in
accordance with its terms) or is declared to be null and void, or any Loan
Party denies that it has any further liability, including without limitation
with respect to future advances by Lenders, under any Loan Document to which it
is a party, or gives notice to such effect; or
8.13 FAILURE OF SECURITY.
Any Collateral Document shall, at any time, cease to be in full
force and effect (other than by reason of a release of Collateral in accordance
with the terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Agent shall not
have or cease to have a valid and perfected first priority security interest in
any significant part of the Collateral (other than as a direct result of a
breach by Agent of any obligation imposed on Agent under the Collateral
Documents); or
8.14 FAILURE TO CONSUMMATE TRANSACTIONS.
Any of the Mergers, the Acquisition and related transactions
contemplated hereby (including without limitation each of the conditions
described in the last paragraph of subsection 4.1 as being required to be
satisfied immediately after the Acquisition) (i) shall not be consummated in
accordance with the Loan Documents and the other Transaction Documents prior to
or concurrently with or immediately after the making of the initial Loans (and
in any event on the Closing Date) or (ii) shall be unwound, reversed or
otherwise rescinded or modified in whole or in part for any reason; or
8.15 ACTION UNDER RELATED FINANCING DOCUMENTS.
Any holder of any Indebtedness evidenced by the Related
Financing Documents shall file an action seeking the rescission thereof or
damages or injunctive relief relating thereto; or any event shall occur which,
under the terms of any Related Financing Documents, shall require Holdings or
any of its Subsidiaries to purchase, redeem or otherwise acquire or offer to
purchase, redeem or otherwise acquire all or any portion of any Indebtedness
evidenced by the Related Financing Documents; or Holdings or any of its
Subsidiaries shall for any other reason purchase, redeem or otherwise acquire
or offer to purchase, redeem or otherwise acquire, or make any other
162
<PAGE> 163
payments in respect of, all or any portion of any Indebtedness evidenced by the
Related Financing Documents, except to the extent expressly permitted by
subsection 7.5:
THEN (i) upon the occurrence of any Event of Default described in subsection
8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on
the Loans, (b) an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Holdings and Company, and the obligation of each Lender to
make any Loan (including the obligation of Swing Line Lender to make any Swing
Line Loan), the obligation of Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any
other Event of Default, Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan (including the obligation of Swing
Line Lender to make any Swing Line Loan), the obligation of Agent to issue any
Letter of Credit and the right of any Lender to issue any Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way the obligations of Revolving Lenders to purchase
participations in Letters of Credit as provided in subsection 3.3C or the
obligations of Lenders to purchase participations in any unpaid Swing Line
Loans as provided in subsection 2.1A(vi).
Any amounts described in clause (b) above, when received by
Agent, shall be held by Agent pursuant to the terms of the Collateral Account
Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as
a result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Loans, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to subsection 11.6, then Requisite Lenders, by
written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to
bind Lenders to a decision which may be made at the election of Requisite
Lenders and are
163
<PAGE> 164
not intended to benefit Company and do not grant Company the right to require
Lenders to rescind or annul any acceleration hereunder, even if the conditions
set forth herein are met.
SECTION 9. HOLDINGS GUARANTY
Holdings hereby consents to and confirms its guaranty of all
Obligations of Company and all obligations of Company under Interest Rate
Agreements permitted under subsection 7.4(ii) to which a Lender or an Affiliate
of such Lender is a counterparty. In furtherance of the foregoing, Holdings
hereby agrees as follows:
9.1 GUARANTIED OBLIGATIONS.
As consideration for Lenders agreeing to enter into this
Agreement and extend the Commitments, make the Loans hereunder and issue the
Letters of Credit, Holdings hereby unconditionally and irrevocably guaranties,
as a primary obligor and not merely as a surety, the due and punctual payment
when due (whether at stated maturity, by required prepayment, declaration,
demand or otherwise) (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a)) of all Obligations of Company (including, without
limitation, interest which, but for the filing of a petition in bankruptcy with
respect to Company would accrue on such Obligations, whether or not allowable
as a claim) and all obligations of Company under Interest Rate Agreements
(collectively, the "LENDER INTEREST RATE AGREEMENTS") permitted under
subsection 7.4(ii) to which a Lender or an Affiliate of such Lender (in such
capacity, collectively, "INTEREST RATE EXCHANGERS") is a counterparty (the
"GUARANTIED OBLIGATIONS"). For purposes of this Section 9, Holdings is
referred to as a "GUARANTOR". Lenders and Interest Rate Exchangers are each
referred to herein as a "GUARANTIED PARTY" and collectively as the "GUARANTIED
PARTIES".
9.2 TERMS OF HOLDINGS GUARANTY.
Guarantor agrees that the Guarantied Obligations may be
extended or renewed, and the Loans repaid and reborrowed in whole or in part,
without notice or further assent from it, and that it will remain bound upon
this Holdings Guaranty notwithstanding any extension, renewal or other
alteration of any such Guarantied Obligation or repayment and reborrowing of
the Loans.
Guarantor waives presentation of, demand of, payment from and
protest of any Guarantied Obligation and also waives notice of protest for
nonpayment. The obligations of Guarantor under this Holdings Guaranty shall
not be affected by, and Guarantor hereby waives its rights (to the extent
permitted by law) in connection with:
164
<PAGE> 165
(a) the failure of Agent or any Guarantied Party to assert
any claim or demand or to enforce any right or remedy against Company
under the provisions of this Agreement, any Loan Documents or the
Lender Interest Rate Agreements or any other agreement or otherwise,
(b) any extension or renewal of any provision thereof,
(c) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement or any instrument
executed pursuant hereto or the Lender Interest Rate Agreements,
(d) the release of any of the security held by Agent for
any of the Guarantied Obligations,
(e) the failure of Agent or any Guarantied Party to
exercise any right or remedy against any other guarantor of any of the
Guarantied Obligations,
(f) Agent or any Guarantied Party taking and holding
security or collateral for the payment of this Holdings Guaranty, any
other guaranties of the Guarantied Obligations or other liabilities of
Company, and exchanging, enforcing, waiving and releasing any such
security or collateral,
(g) Agent or any Guarantied Party applying any such
security or collateral and directing the order or manner of sale
thereof as Agent in its discretion may determine, or
(h) Agent or any Guarantied Party settling, releasing,
compromising, collecting or otherwise liquidating the Guarantied
Obligations and any security or collateral therefor in any manner
determined by Agent or such Guarantied Party.
Guarantor further agrees that this Holdings Guaranty
constitutes a guaranty of payment when due and not of collection and waives any
right to require that any resort be had by Agent or any other Person to any
security held for payment of the Guarantied Obligations or to any balance of
any deposit account or credit on the books of Agent or any other Person in
favor of Company or any other Person.
The obligations of Guarantor under this Holdings Guaranty shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Guarantied Obligations, discharge of
Company from such Guarantied Obligations in a bankruptcy or similar proceeding
or otherwise. Without limiting the generality of the foregoing, the
obligations of Guarantor under this Holdings Guaranty shall not be discharged
or
165
<PAGE> 166
impaired or otherwise affected by the failure of Agent or any Guarantied Party
to assert any claim or demand or to enforce any remedy under this Agreement or
any other agreement, by any waiver or modification of any provision thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
Guarantied Obligations, or by any other act or thing or omission or delay to do
any other act or thing that may or might in any manner or to any extent vary
the risk of Guarantor or would otherwise operate as a discharge of Guarantor as
a matter of law or equity.
Agent may, at its election, foreclose on any security held by
Agent by one or more judicial or nonjudicial sales, or exercise any other right
or remedy Agent may have against Company or any security without affecting or
impairing in any way the liability of Guarantor hereunder except to the extent
the Guarantied Obligations have been paid. Guarantor waives any defense
arising out of such election by Agent, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right
or remedy of Guarantor against Company or any security, so long as Agent has
acted in a commercially reasonable manner.
Guarantor further agrees that this Holdings Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Guarantied
Obligation is rescinded or must otherwise be restored by Agent upon the
bankruptcy or reorganization of Company or otherwise.
Guarantor further agrees, in furtherance of the foregoing and
not in limitation of any other right that Agent may have at law or in equity
against Guarantor by virtue hereof, upon the failure of Company to pay any of
its Guarantied Obligations when and as the same shall become due (whether by
required prepayment, declaration, demand or otherwise), Guarantor will
forthwith pay, or cause to be paid, in cash, to Agent an amount equal to the
sum of the unpaid principal amount of such Guarantied Obligations, accrued and
unpaid interest on such Guarantied Obligations and all other Obligations of
Company to Agent.
Guarantor further agrees as follows:
(i) Guarantor hereby waives (i) any claim, right or
remedy, direct or indirect, that Guarantor now has or may hereafter
have against Company or any of its assets in connection with this
Holdings Guaranty or the performance by Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in
equity, under contract, by statute (including without limitation under
California Civil Code Section 2847, 2848 or 2849), under common law or
otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that Guarantor now has or
may hereafter have against Company, (b) any right to enforce, or to
participate in, any claim, right or remedy that Agent or any Guarantied
Party now has or may hereafter have
166
<PAGE> 167
against Company, and (c) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by Agent or any
Guarantied Party, and (ii) any right of contribution Guarantor may have
against any other guarantor of any of the Guarantied Obligations
(including without limitation any such right of contribution under
California Civil Code Section 2848);
(ii) In accordance with Section 2856 of the California
Civil Code, Guarantor waives any and all other rights and defenses
available to Guarantor by reason of Sections 2787 to 2855, inclusive,
2899 and 3433 of the California Civil Code, including without
limitation any and all rights or defenses Guarantor may have by reason
of protection afforded to the principal with respect to any of the
Guarantied Obligations, or to any other guarantor (including any other
guarantor under the Guaranty) of any of the Guarantied Obligations with
respect to any of such guarantor's obligations under its guaranty, in
either case pursuant to the antideficiency or other laws of the State
of California limiting or discharging the principal's indebtedness or
such guarantor's obligations, including without limitation Section
580a, 580b, 580d, or 726 of the California Code of Civil Procedure; and
(iii) In accordance with Section 2856 of the California
Civil Code, Guarantor waives all rights and defenses arising out of an
election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for a Guarantied Obligation, has destroyed Guarantor's rights of
subrogation and reimbursement against the principal by the operation of
Section 580d of the Code of Civil Procedure or otherwise; and even
though that election of remedies by the creditor, such as nonjudicial
foreclosure with respect to security for an obligation of any other
guarantor (including any other guarantor under the Guaranty) of any of
the Guarantied Obligations, has destroyed Guarantor's rights of
contribution against such other guarantor.
The foregoing California waivers are included solely out of an
abundance of caution, and shall not be construed to mean that any of the
above-referenced provisions of California law are in any way applicable to this
Guaranty or to any of the Guarantied Obligations. As used in the foregoing
paragraph, any reference to "the principal" includes Company, and any reference
to "the creditor" includes Agent, each Lender and each Interest Rate Exchanger.
Guarantor hereby waives and relinquishes any duty on the part
of Agent or any Lender to disclose any matter, fact or thing relating to the
business, operations or conditions of Company or any of its Subsidiaries now
known or hereafter known by Agent or any Lender.
Guarantor further agrees that, to the extent the agreement to
waive its rights of subrogation, reimbursement, indemnification and
contribution as set forth
167
<PAGE> 168
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights or subrogation, reimbursement or indemnification
Guarantor may have against Company or against any collateral or security, and
any rights of contribution Guarantor may have against any such other guarantor,
shall be junior and subordinate to any rights Agent or Guarantied Parties may
have against Company, to all rights, title and interest Agent or Guarantied
Parties may have in any such collateral or security, and to any right Agent or
Guarantied Parties may have against such other guarantor. Agent, on behalf of
Guarantied Parties, may use, sell or dispose of any item of collateral or
security as it sees fit without regard to any subrogation rights Guarantor may
have, and upon any such disposition or sale any rights of subrogation Guarantor
may have shall terminate. If any amount shall be paid to Guarantor on account
of any such subrogation, reimbursement or indemnification rights at any time
when all Guarantied Obligations (other than Guarantied Obligations which are
contingent and unliquidated and not due and owing on such date and which
pursuant to the provisions of the Credit Agreement survive the termination of
the Credit Agreement, the repayment of the Guarantied Obligations, the
termination of the Commitments and the expiration or cancellation of all
Letters of Credit) shall not have been paid in full, such amount shall be held
in trust for Agent on behalf of Guarantied Parties and shall forthwith be paid
over to Agent for the benefit of Guarantied Parties to be credited and applied
against the Guarantied Obligations, whether matured or unmatured, in accordance
with the terms hereof.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon failure of
Company to pay its Guarantied Obligations when due (whether by required
prepayment, declaration, demand or otherwise) and consequent acceleration of
the Obligations pursuant to Section 8, Agent is hereby authorized by Guarantor
at any time or from time to time, without notice to Guarantor or to any other
Person, any such notice being hereby expressly waived to the extent permitted
by applicable law, to set off and to appropriate and to apply any and all
deposits (general or special, including, not limited to, Indebtedness evidenced
by certificates of deposit, whether matured or unmatured, but not including
trust accounts) and any other Indebtedness at any time owing by Agent to or for
the credit or the account of Guarantor against and on account of the
obligations and liabilities of Guarantor to Agent under this Holdings Guaranty,
including, but not limited to, all such obligations and liabilities with
respect to all claims of any nature or description arising out of or connected
with this Agreement, this Holdings Guaranty or the Letters of Credit or any of
the other Loan Documents, irrespective of whether or not Agent, with respect to
any Obligation owed under the Letters of Credit or this Agreement, shall have
made any demand hereunder. Agent agrees promptly to notify Guarantor after any
such set-off and application is made by Agent.
Notwithstanding anything contained in this Section 9 to the
contrary, this Holdings Guaranty shall not be effective or in full force and
effect until the Closing Date.
168
<PAGE> 169
SECTION 10. AGENT
10.1 APPOINTMENT.
Each Lender hereby appoints, and each Interest Rate Exchanger,
by its acceptance of the benefits of this Agreement and the other Loan
Documents, shall be deemed to have appointed, Bankers as Agent hereunder and
under the other Loan Documents and each Lender hereby authorizes, and each
Interest Rate Exchanger, by its acceptance of the benefits of this Agreement
and the other Loan Documents, shall be deemed to have authorized, Agent to act
as its agent in accordance with the terms of this Agreement and the other Loan
Documents, and each Interest Rate Exchanger is considered to be a "Lender" for
purposes of this Section 10. Each Lender hereby appoints Banque Indosuez,
Banque Paribas, Barclays Bank PLC and Credit Lyonnais Cayman Island Branch, as
Co-Agents and Bank of America National Trust & Savings Association, The Chase
Manhattan Bank, N.A., Compagnie Financiere de CIC et de L'Union Europeenne,
Credit Suisse, The Mitsubishi Trust and Banking Corporation, NatWest Bank N.A.,
Union Bank, United States National Bank of Oregon and Wells Fargo Bank, N.A.,
as Co-Arrangers hereunder. Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 10 are solely for the benefit of Agent, Co-Agents,
Co-Arrangers and Lenders and no Loan Party shall have any rights as a third
party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement and other than as expressly provided
for in subsection 2.1D(v), Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation towards
or relationship of agency or trust with or for any Loan Party. Each Lender
named as a Co-Agent or as a Co-Arranger hereunder shall have no duties or
responsibilities under this Agreement or any other Loan Document to any Person,
other than as a Lender hereunder and thereunder.
10.2 POWERS; GENERAL IMMUNITY.
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers hereunder
and under the other Loan Documents as are specifically delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan Documents and
it may perform such duties by or through its agents or employees. Agent shall
not have, by reason of this Agreement or any of the other Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
169
<PAGE> 170
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
any Loan Party to Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or
business affairs of any Loan Party or any other Person liable for the payment
of any Obligations, nor shall Agent be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan Documents or as to the use
of the proceeds of the Loans or the use of the Letters of Credit or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Agent shall not have any liability arising from confirmations of the
amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents
except to the extent caused by Agent's gross negligence or willful misconduct.
If Agent shall request instructions from Lenders with respect to any act or
action (including the failure to take an action) in connection with this
Agreement or any of the other Loan Documents, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders. Without prejudice to the
generality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Loan Parties), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders. Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under this Agreement
or any of the other Loan Documents unless and until it has obtained the
instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term
170
<PAGE> 171
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Agent in its individual capacity. Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with Holdings or
any of its Affiliates as if it were not performing the duties specified herein,
and may accept fees and other consideration from any Loan Party for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
10.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Loan
Parties in connection with the making of the Loans and the issuance of Letters
of Credit hereunder and that it has made and shall continue to make its own
appraisal of the creditworthiness of the Loan Parties. Agent shall not have
any duty or responsibility, either initially or on a continuing basis, to make
any such investigation or any such appraisal on behalf of Lenders or to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter, and Agent shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.
10.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally
agrees to indemnify Agent, to the extent that Agent shall not have been
reimbursed by any Loan Party, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against Agent in performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity as Agent in any way
relating to or arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross negligence or willful
misconduct. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
10.5 SUCCESSOR AGENT AND SWING LINE LENDER.
A. SUCCESSOR AGENT. Agent may resign at any time by
giving 30 days' prior written notice thereof to Lenders and Company, and Agent
may be removed at any time with or without cause by an instrument or concurrent
instruments in writing
171
<PAGE> 172
delivered to Company and Agent and signed by Requisite Lenders. Upon any such
notice of resignation or any such removal, Requisite Lenders shall have the
right, upon five Business Days' notice to Company, to appoint a successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, that successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent and the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 10 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or
removal of Agent pursuant to subsection 10.5A shall also constitute the
resignation or removal of Bankers or its successor as Swing Line Lender, and
any successor Agent appointed pursuant to subsection 10.5A shall, upon its
acceptance of such appointment, become the successor Swing Line Lender for all
purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Agent in its capacity as Swing
Line Lender, (ii) upon such prepayment, the retiring or removed Agent and Swing
Line Lender shall surrender the Swing Line Note held by it to Company for
cancellation, and (iii) Company shall issue a new Swing Line Note to the
successor Agent and Swing Line Lender substantially in the form of Exhibit IX
annexed hereto, in the principal amount of the Swing Line Loan Commitment then
in effect and with other appropriate insertions.
10.6 GUARANTIES AND COLLATERAL DOCUMENTS.
Each Lender hereby further authorizes Agent to enter into the
Collateral Documents as secured party on behalf of and for the benefit of
Lenders and agrees to be bound by the terms of the Collateral Documents;
provided that, except as otherwise provided in subsection 11.6, Agent shall not
enter into or consent to any amendment, modification, termination or waiver of
any provision contained in the Collateral Documents without the prior consent
of Requisite Lenders. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any
right individually to realize upon any of the Holdings Guaranty, the Guaranty
or any of the Collateral under the Collateral Documents, it being understood
and agreed that all rights and remedies under the Collateral Documents may be
exercised solely by Agent for the benefit of Lenders and the other beneficially
interested parties under the Collateral Documents and the other Loan Documents
in accordance with the terms thereof.
172
<PAGE> 173
SECTION 11. MISCELLANEOUS
11.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Each Lender shall have the right at any time to (i)
sell, assign or transfer to any Eligible Assignee, or (ii) sell participations
to any Person in, all or any part of its Commitments or any Loan or Loans made
by it or its Letters of Credit or participations therein or any other interest
herein or in any other Obligations owed to it; provided that no such sale,
assignment, transfer or participation shall, without the consent of Company,
require Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Agent and recorded in the
Register as provided in subsection 11.1B(ii); provided, further that no such
sale, assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment, transfer
or participation; and provided, further that, anything contained herein to the
contrary notwithstanding, the Swing Line Loan Commitment and the Swing Line
Loans of Swing Line Lender may not be sold, assigned or transferred as
described in clause (i) above to any Person other than a successor Agent and
Swing Line Lender to the extent contemplated by subsection 10.5. Except as
otherwise provided in this subsection 11.1, no Lender shall, as between Company
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of, or any granting of participations in, all
or any part of its Commitments or the Loans, the Letters of Credit or
participations therein, or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment,
Loan, Letter of Credit or participation in any Letter of Credit or in
any Swing Line Loan, or other Obligation may (a) be assigned in any
amount to another Lender, or to an Affiliate of the assigning Lender or
another Lender, with the giving of notice to Company and Agent or (b)
be assigned in an aggregate amount of not less than $5,000,000 (or such
lesser amount as shall constitute the aggregate amount of the
Commitments, Loans, Letters of Credit and participations in any Letter
of Credit or in any Swing Line Loan, and other Obligations of the
assigning Lender) to any other Eligible Assignee with the giving of
notice to Company and with the consent of Company and Agent (which
consent of Company and Agent shall not be unreasonably withheld or
delayed). To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its
173
<PAGE> 174
Commitments, Loans, Letters of Credit or participations therein, or
other Obligations or the portion thereof so assigned. The parties to
each such assignment shall execute and deliver to Agent, for its
acceptance and recording in the Register, an Assignment Agreement,
together with a processing and recordation fee of, in the case of
assignments to a Lender or an Affiliate of a Lender, $1,500 and, in the
case of assignments to any other Eligible Assignee, $3,500 and such
forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under
such Assignment Agreement may be required to deliver to Agent pursuant
to subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance
and recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a
party hereto); provided that the assigning Lender shall retain its
rights (concurrently with assignee) under subsections 2.6D, 2.7, 3.5A,
3.6, 11.2, 11.3 and 11.4. The Commitments hereunder shall be modified
to reflect the Commitment of such assignee and any remaining Commitment
of such assigning Lender and, if any such assignment occurs after the
issuance of the Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes to Agent for cancellation,
and thereupon new Notes shall be issued to the assignee and to the
assigning Lender, substantially in the form of Exhibit IV, Exhibit V,
Exhibit VI, Exhibit VII or Exhibit VIII annexed hereto, as the case may
be, with appropriate insertions, to reflect the new Commitments and/or
outstanding Term Loans, as the case may be, of the assignee and/or the
assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together
with the processing and recordation fee referred to in subsection
11.1B(i) and any forms, certificates or other evidence with respect to
United States federal income tax withholding matters that such assignee
may be required to deliver to Agent pursuant to subsection
2.7B(iii)(a), Agent shall, if such Assignment Agreement has been
completed and is in substantially the form of Exhibit XXII hereto and
if Agent and Company have consented to the assignment evidenced thereby
(in each case to the extent such consent is required pursuant to
subsection 11.1B(i)), (a) accept such Assignment Agreement by executing
a counterpart thereof as provided
174
<PAGE> 175
therein (which acceptance shall evidence any required consent of Agent
to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company. Agent
shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 11.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of
any Loan allocated to such participation, (ii) a reduction of the principal
amount of or the rate of interest payable on any Loan allocated to such
participation, (iii) the release of the Liens held by Agent on behalf of
Lenders with respect to all or substantially all of the Collateral or (iv) a
reduction of the amount of any fees payable hereunder to the extent subject to
such participation, and all amounts payable by Company hereunder (including
without limitation amounts payable to such Lender pursuant to subsections 2.6D,
2.7 and 3.6) shall be determined as if such Lender had not sold such
participation. Holdings, Company and each Lender hereby acknowledge and agree
that, solely for purposes of subsections 11.4 and 11.5, (a) any participation
will give rise to a direct obligation of Holdings or Company, as applicable, to
the participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 11.1, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank; provided that (i) no Lender shall, as between
Company and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such
Federal Reserve Bank be considered to be a "Lender" or be entitled to require
the assigning Lender to take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information
concerning Holdings and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 11.19.
11.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, each of Holdings and Company agrees to pay promptly (i) all the
actual and reasonable costs and expenses of preparation of the Loan Documents;
(ii) all the costs of furnishing all opinions by counsel for Holdings and its
Subsidiaries (including
175
<PAGE> 176
without limitation any opinions requested by Lenders as to any legal matters
arising hereunder) and of each Loan Party's performance of and compliance with
all agreements and conditions on its part to be performed or complied with
under this Agreement and the other Loan Documents including, without
limitation, with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements
of counsel to Agent (including internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents
and the Loans and any consents, amendments, waivers or other modifications
hereto or thereto and any other documents or matters requested by any Loan
Party; (iv) all the reasonable costs and expenses of creating and perfecting
Liens in favor of Agent on behalf of Lenders pursuant to any Loan Document,
including filing and recording fees and expenses, title insurance, and
reasonable fees and expenses of counsel for providing such opinions as Agent or
Requisite Lenders may reasonably request and reasonable fees and expenses of
legal counsel to Agent; (v) all the reasonable costs and expenses of obtaining
and reviewing any appraisals provided for under subsection 4.1N or 6.11 and any
environmental audits or reports provided for under subsection 4.1R or 6.11;
(vi) all other actual and reasonable costs and expenses incurred by Agent in
connection with the syndication of the Commitments and the negotiation,
preparation and execution of the Loan Documents and the transactions
contemplated hereby and thereby; and (vii) after the occurrence of an Event of
Default, all reasonable costs and expenses, including reasonable attorneys'
fees (including internal counsel) and costs of settlement, incurred by Agent
and Lenders in enforcing any Obligations of or in collecting any payments due
from any Loan Party hereunder or under the other Loan Documents by reason of
such Event of Default or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy proceedings.
11.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection
11.2, whether or not the transactions contemplated hereby shall be consummated,
each of Holdings and Company agrees to defend, indemnify, pay and hold harmless
Agent and Lenders, and the officers, directors, trustees, employees, agents and
affiliates of Agent and Lenders (collectively called the "INDEMNITEES") from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including without limitation the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise,
176
<PAGE> 177
that may be imposed on, incurred by, or asserted against any such Indemnitee,
in any manner relating to or arising out of this Agreement or the other Loan
Documents or any other Transaction Documents or the transactions contemplated
hereby or thereby (including without limitation Lenders' agreement to make the
Loans hereunder or the use or intended use of the proceeds of any of the Loans
or the issuance of Letters of Credit hereunder or the use or intended use of
any of the Letters of Credit) or the statements contained in the commitment
letter delivered by any Lender to any Loan Party with respect thereto
(collectively called the "INDEMNIFIED LIABILITIES"); provided that each of
Holdings and Company shall not have any obligation to any Indemnitee hereunder
with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities are directly attributable to the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction. To the extent that the undertaking to defend,
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, each of
Holdings and Company shall contribute the maximum portion that it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
11.4 SET-OFF.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default and consultation with Agent each Lender is
hereby authorized by each of Holdings and Company at any time or from time to
time, without notice to Holdings or Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts) and any other Indebtedness at any
time held or owing by that Lender to or for the credit or the account of
Holdings or Company against and on account of the obligations and liabilities
of Holdings or Company to that Lender under this Agreement, the Notes, the
Letters of Credit and participations therein and the other Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement, the Notes, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether or
not (i) that Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become due and payable
pursuant to Section 8 and although said obligations and liabilities, or any of
them, may be contingent or unmatured. Company hereby further grants to Agent
and each Lender a security interest in all deposits and accounts maintained
with Agent or such Lender as security for the Obligations.
177
<PAGE> 178
11.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment, by realization upon security, through the
exercise of any right of set-off or banker's lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts (excluding amounts due and owing pursuant to
subsections 2.6D, 2.7, 3.2(i)(a) and 3.2(ii)(a)) then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the
"AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion
received by any other Lender in respect of the Aggregate Amounts Due to such
other Lender, then the Lender receiving such proportionately greater payment
shall (i) notify Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the
Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is
thereafter recovered from such Lender upon the bankruptcy or reorganization of
Holdings or any of its Subsidiaries or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Each of Holdings and Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Holdings or any of its
Subsidiaries to that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that holder.
11.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, or consent to any departure by
Holdings or Company therefrom, shall in any event be effective without the
written concurrence of Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases the amount of any
of the Commitments or reduces the principal amount of any of the Loans; changes
any Lender's Pro Rata Share; changes in any manner the definitions of
"Requisite Lenders" or "Requisite Class Lenders"; changes in any manner any
provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; postpones the date of final maturity of
any of the Loans or reduces the amount of principal owing in respect of any of
the Loans; postpones the date on which any interest or any fees are payable;
decreases the interest rate borne by any of the Loans (other than any waiver of
any increase in the interest rate
178
<PAGE> 179
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of
any fees payable hereunder; provides for the release of the Liens held by Agent
on behalf of Lenders with respect to all or substantially all of the
Collateral; provides for the release or termination of the Guaranty or the
Holdings Guaranty other than pursuant to the terms thereof; increases the
maximum duration of Interest Periods permitted hereunder; reduces the amount
payable in respect of any Letter of Credit or postpones the due date of any
amount payable in respect of, or extends the date described in subsection
3.1A(iii)(a) which prescribes the required expiration date of, any Letter of
Credit; or changes in any manner the provisions contained in subsection 8.1 or
this subsection 11.6 shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders affected thereby. In addition, (i) no
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the Lender which is the
holder of that Note, (ii) no amendment, modification, termination or waiver of
any provision of subsection 2.1A(vi) or any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line Loans shall be
effective without the written concurrence of Swing Line Lender, (iii) no
amendment, modification, termination or waiver of any provision of subsection
2.4 which has the effect of changing any interim scheduled payments, voluntary
or mandatory prepayments or Commitment reductions applicable to any Class (an
"AFFECTED CLASS") in a manner that disproportionately disadvantages such Class
relative to the other Class shall be effective without the written concurrence
of the Requisite Class Lenders of the Affected Class (it being understood and
agreed that any amendment, modification, termination or waiver of any provision
which only postpones or reduces any interim scheduled payment, voluntary or
mandatory prepayment or Commitment reduction from those set forth in subsection
2.4 with respect to only one Class shall be deemed to not disproportionately
disadvantage the other Class and, therefore, shall not require the consent of
Requisite Class Lenders of such other Class), (iv) no amendment, modification,
termination or waiver relating to the obligations of Lenders relating to the
purchase of participation in Letters of Credit shall be effective without the
written concurrence of each Issuing Lender having a Letter of Credit then
outstanding or which has not been reimbursed for a drawing under a Letter of
Credit issued by it and of Agent, and (v) no amendment, modification,
termination or waiver of any provision of Section 10 or of any other provision
of this Agreement which, by its terms, expressly requires the approval or
concurrence of Agent shall be effective without the written concurrence of
Agent. Agent may, but shall have no obligation to, with the concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf of
that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Holdings or Company in any case shall entitle Holdings or Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 11.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Holdings and Company, on
Holdings and Company.
179
<PAGE> 180
11.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
11.8 NOTICES.
Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in
writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile
or telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed; provided that notices to Agent
shall not be effective until received. For the purposes hereof, the address of
each party hereto shall be as set forth under such party's name on the
signature pages hereof or (i) as to Holdings, Company and Agent, such other
address as shall be designated by such Person in a written notice delivered to
the other parties hereto and (ii) as to each other party, such other address as
shall be designated by such party in a written notice delivered to Agent.
11.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the
making of the Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of Holdings and Company set forth in
subsections 2.6D, 2.7, 3.5A, 3.6, 11.2, 11.3 and 11.4 and the agreements of
Lenders set forth in subsections 10.2C, 10.4 and 11.5 shall survive the payment
of the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.
11.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan
180
<PAGE> 181
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
11.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Agent nor any Lender shall be under any obligation to
marshal any assets in favor of Holdings, Company or any other party or against
or in payment of any or all of the Obligations. To the extent that any Loan
Party makes a payment or payments to Agent or Lenders (or to Agent for the
benefit of Lenders), or Agent or Lenders enforce any security interests or
exercise their rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
11.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or
the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
11.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender
shall be responsible for the obligations or Commitments of any other Lender
hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not
be necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
11.14 HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
181
<PAGE> 182
11.15 APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
11.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders (it being understood
that Lenders' rights of assignment are subject to subsection 11.1). The terms
and provisions of this Agreement shall enure to the benefit of any assignee or
transferee of any of the Loans, and in the event of any such transfer or
assignment the rights and privileges herein conferred upon Lenders shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. Neither Holdings' or Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Holdings or Company without the prior written consent of all
Lenders.
11.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS OR COMPANY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY
OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH OF HOLDINGS AND COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION.
Each of Holdings and Company hereby agrees that service of all process in any
such proceeding in any such court may be made by registered or certified mail,
return receipt requested, to Holdings or Company, as the case may be, at its
address provided in subsection 11.8, such service being hereby acknowledged by
Holdings or Company, as the case may be, to be sufficient for personal
jurisdiction in any action against Holdings or Company, as the case may be, in
any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of any Lender to bring
proceedings against Holdings or Company in the courts of any other
jurisdiction.
182
<PAGE> 183
11.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all- encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. Each party
hereto acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
11.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained
pursuant to the requirements of or in connection with this Agreement which has
been identified as confidential by Company in accordance with such Lender's
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices, it being understood and
agreed by Holdings and Company that in any event a Lender may make disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participation therein or as required or requested by any
governmental agency or representative thereof or the NAIC or pursuant to legal
process; provided that, unless specifically prohibited by applicable law or
court order, each Lender shall notify Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and provided, further that in no event
shall any Lender be obligated or required to return any materials furnished by
Holdings or any of its Subsidiaries.
183
<PAGE> 184
11.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company and Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
184
<PAGE> 185
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
LOAN PARTIES:
FOOD 4 LESS HOLDINGS, INC.
By: /s/ George G. Golleher
-------------------------------------------
George G. Golleher
Title: Vice Chairman of the Board
Notice Address: Food 4 Less Holdings, Inc.
777 South Harbor Boulevard
La Habra, CA 90631
S-1
<PAGE> 186
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
-------------------------------------------
Mark A. Resnik
Title: Vice President/Secretary
Notice Address: Food 4 Less Supermarkets, Inc.
777 South Harbor Boulevard
La Habra, CA 90631
S-2
<PAGE> 187
The undersigned, Ralphs Grocery Company, hereby acknowledges
and confirms that, as a result of the consummation of the RSI Merger and the
RGC Merger (and its subsequent name change from Ralphs Supermarkets, Inc.), it
is the legal successor to Food 4 Less and it has assumed all of the obligations
of Food 4 Less set forth herein, and it is "Company" for all purposes hereunder
and under each of the other Loan Documents.
RALPHS GROCERY COMPANY
By: /s/ Jan Charles Gray
-------------------------------------------
Jan Charles Gray
Title: Senior Vice President, General Counsel
and Secretary
By: /s/ George G. Golleher
-------------------------------------------
George G. Golleher
Title: Vice Chairman of the Board
Notice Address: Ralphs Grocery Company
777 South Harbor Boulevard
La Habra, CA 90631
S-3
<PAGE> 188
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By: /s/ Mary Jo Jolly
-------------------------------------------
Mary Jo Jolly
Title: Assistant Vice President
Notice Address: Bankers Trust Company
130 Liberty Street
14th Floor
New York, NY 10006
Attention: Mary Jo Jolly
With a copy to: Bankers Trust Company
300 South Grand Avenue
41st Floor
Los Angeles, CA 90071
Attention: Eric S. Swanson
S-4
<PAGE> 189
THE CHASE MANHATTAN BANK, N.S.,
individually and as Co-Arranger
By: /s/ Michael T. McLaughlin
-------------------------------------------
Michael T. McLaughlin
Title: Vice President
Notice Address: The Chase Manhattan Bank, N.A.
One Chase Plaza
8th Floor
New York, NY 10081
Attention: Michael McLaughlin
With a copy to: The Chase Manhattan Bank, N.A.
One Chase Plaza
5th Floor
New York, NY 10081
Attention: Ellen Gertzog
S-5
<PAGE> 190
BANK OF AMERICA, NT&SA,
By: /s/ Linda A. Carper
-------------------------------------------
Linda A. Carper
Title: Managing Director
Notice Address: Bank of America NT&SA
231 South La Salle Street
8th Floor
Chicago, IL 60697
Attention: Linda Carper
S-6
<PAGE> 191
THE MITSUBISHI TRUST AND BANKING CORPORATION,
individually and as Co-Arranger
By: /s/ Patricia Loret De Mola
-------------------------------------------
Patricia Loret De Mola
Title: Senior Vice President
Notice Address: The Mitsubishi Trust and Banking
Corporation
520 Madison Avenue
25th Floor
New York, NY 10022
Attention: Anthony Rock
S-7
<PAGE> 192
NATWEST BANK N.A.,
Individually and as Co-Arranger
By: /s/ George Triebenbacher
-------------------------------------------
George Triebenbacher
Title: Vice President
Notice Address: Natwest Bank N.A.
175 Water Street, 27th Floor
New York, NY 10038
Attention: George Triebenbacher
S-8
<PAGE> 193
UNION BANK,
individually and as Co-Arranger
By: /s/ Cecilia M. Valente
-------------------------------------------
Cecilia M. Valente
Title: Vice President
Notice Address: Union Bank
Retailing Industries Department
350 California Street
11th Floor
San Francisco, CA 94104-1408
Attention: Cecilia Valente
S-9
<PAGE> 194
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
individually and as Co-Arranger
By: /s/ Brian O'Leary
-------------------------------------------
Brian O'Leary
Title: Vice President
By: /s/ Marcus Edward
-------------------------------------------
Marcus Edward
Title: Vice President
Notice Address: Compagnie Financiere de Cic
et de L'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
S-10
<PAGE> 195
CREDIT SUISSE,
individually and as Co-Arranger
By: /s/ Marilou Palenzuela
-------------------------------------------
Marilou Palenzuela
Title: Member of Senior Management
By: /s/ Maria N. Gaspara
-------------------------------------------
Maria N. Gaspara
Title: Associate
Notice Address: Credit Suisse
633 West 5th Street
64th Floor
Los Angeles, CA 90017
Attention: Rita Asa
S-11
<PAGE> 196
WELLS FARGO BANK, N.A.,
individually and as Co-Arranger
By: /s/ Craig T. Ingram
-------------------------------------------
Craig T. Ingram
Title: Vice President
Notice Address:
Fundings:
Attention: Ms. Gail Landers
Vice President _ Wells Fargo Bank
420 Montgomery Street
San Francisco, CA 94163
Corporate Banking Group
MAC # 0101-091
Phone 415-396-4915
Fax 415-989-4319
Relationship Management
Craig T. Ingram
333 South Grand Avenue
Suite 800
MAC #2064-080
Los Angeles, CA 90071
Phone 213-253-6156
Fax 213-617-7620
S-12
<PAGE> 197
UNITED STATES NATIONAL BANK OF OREGON
individually and as Co-Arranger
By: /s/ Janet E. Jordan
-----------------------------------------
Janet E. Jordan
Title: Vice President
Notice Address: U.S. National Bank of Oregon
555 S.W. Oak Street
Portland, OR 97204
Attention: Janet Jordan
S-13
<PAGE> 198
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
individually and as Co-Arranger
By: /s/ Raymond Whiteman
-----------------------------------------
Raymond Whiteman
Title: Authorized Signature
Notice Address: Credit Lyonnais
Credit Lyonnais Building
18th Floor
Leverage Financial Department
1301 Avenue of the Americas
New York, NY 10019
Attention: Raymond Whiteman
With a copy to: Credit Lyonnais Los Angeles
515 South Flower Street
Suite 2200
Los Angeles, CA 90071
Attention: Francois Coussot
S-14
<PAGE> 199
BARCLAYS BANK PLC,
individually and as Co-Arranger
By: /s/ Philip S.A. Capparis
-------------------------------------------
Philip S.A. Capparis
Title: Associate Director
Notice Address: Barclays Bank PLC
222 Broadway, 11th Floor
New York, NY 10038
Attention: Philip Capparis
S-15
<PAGE> 200
BANQUE INDOSUEZ
individually and as Co-Arranger
By: /s/ Jim Gryp
-------------------------------------------
Title: First Vice President
By: /s/ J. F. Satre
-------------------------------------------
First Vice President
Title: Vice President
Notice Address: Banque Indosuez
1211 Avenue of the Americas
7th Floor
New York, NY 10036-8701
Attention: Andrew Marshall
S-16
<PAGE> 201
BANQUE PARIBAS,
individually and as Co-Arranger
By: /s/ Linda Aleshire
-------------------------------------------
Linda Aleshire
Title: Vice President
By: /s/ John Cate
-------------------------------------------
John Cate
Title: Group Vice President
Notice Address: Banque Paribas
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Attention: Linda Aleshire
S-17
<PAGE> 202
CIBC INC.
By: /s/ Brian E. O'Callahan
-------------------------------------------
Brian E. O'Callahan
Title: Authorized Signature
Notice Address: Canadian Imperial Bank
of Commerce
425 Lexington Avenue
New York, NY 10017
Attention: Brian E. O'Callahan
S-18
<PAGE> 203
THE BANK OF NOVA SCOTIA
By: /s/ John A. Quick
-------------------------------------------
John A. Quick
Title: Senior Relationship Officer
Notice Address: The Bank of Nova Scotia
101 California Street
48th Floor
San Francisco, CA 94111
Attention: John Quick
S-19
<PAGE> 204
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY
By: /s/ General Manager
-------------------------------------------
Title: General Manager
Notice Address: The Industrial Bank of Japan, Ltd.
350 South Grand Avenue
Suite 1500
Los Angeles, CA 90071
Attention: Vince Timiraos
Senior Vice President and
Senior Manager
S-20
<PAGE> 205
NIPPON CREDIT BANK, LTD.
Los Angeles Agency
By: /s/ Bernardo E. Correa-Hensonke
-------------------------------------------
Bernardo E. Correa-Hensonke
Title: Vice President & Manager
Notice Address: The Nippon Credit Bank
550 South Hope Street, Suite 2500
Los Angeles, CA 90071
Attention: Philip Capparis
S-21
<PAGE> 206
THE SUMITOMO TRUST & BANKING CO., LTD.
LOS ANGELES AGENCY
By: /s/ Masayuki Imanaka
-------------------------------------------
Masayuki Imanaka
Title: Senior Manager
Notice Address: The Sumitomo Trust &
Banking Co., Ltd.
Los Angeles Agency
333 South Grand Avenue
Suite 5300
Los Angeles, CA 90071
Attention: Loan Administration Department
With a Copy To: The Sumitomo Trust &
Banking Co., Ltd.
Los Angeles Agency
333 South Grand Avenue
Suite 5300
Los Angeles, CA 90071
Attention: Karen Ryan
S-22
<PAGE> 207
DAI-ICHI KANGYO BANK, LIMITED,
Los Angeles Agency
By: /s/ Tomohiro Nozaki
-------------------------------------------
Tomohiro Nozaki
Title: Senior Vice President & Joint General
Manager
Notice Address: Dai-Ichi Kangyo Bank, Limited,
Los Angeles Agency
555 W. Fifth Street
5th Floor
Los Angeles, CA 90013
Attention: David Henry
S-23
<PAGE> 208
THE BANK OF CALIFORNIA, N.A.
By: /s/ Vice President
-------------------------------------------
Title: Vice President
Notice Address: The Bank of California, N.A.
550 South Hope Street
3rd Floor
Los Angeles, CA 90071
S-24
<PAGE> 209
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Peter K. Merrill
-------------------------------------------
Peter K. Merrill
Title: Director
Notice Address:
S-25
<PAGE> 210
FIRSTRUST BANK
By: /s/ Edward A. D'Ancona
-------------------------------------------
Edward A. D'Ancona
Title: Vice President
Notice Address: Firstrust Bank
1931 Cottman Avenue
Philadelphia, PA 19111-3897
Attention: Robert Michaud
S-26
<PAGE> 211
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
individually and as Co-Arranger
By: /s/ Joan M. Chiappe
-------------------------------------------
Joan M. Chiappe
Title: Vice President
Notice Address: Internationale Nederlanden (U.S.)
Capital Corporation
135 East 57th Street
New York, NY 10022-2101
Attention: Joan M. Chiappe
S-27
<PAGE> 212
VAN KAMPEN MERRITT PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-------------------------------------------
Jeffrey W. Maillet
Title: Sr. Vice President - Portfolio Manager
S-28
<PAGE> 213
[Intentionally Omitted]
S-29
<PAGE> 214
[Intentionally Omitted]
S-30
<PAGE> 215
ACADIA PARTNERS, L.P.
By: Acadia FW Partners, L.P. as General;
Partner of Acadia Partners, L.P.
By: Acadia MGP, Inc., as Managing General
Partner of the General Partner
By: /s/ Glenn R. August
-------------------------------------------
Glenn R. August
Title: Vice President
Notice Address: Acadia Partners, L.P.
c/o Jay M. Goffman, Esq.
O'Sullivan, Graev &
Karabell, LLD
30 Rockefeller Plaza
New York, NY 10112
S-31
<PAGE> 216
PILGRIM PRIME RATE TRUST
By: /s/ Michael D. Hatley
-------------------------------------------
Michael D. Hatley
Title: Assistant Portfolio Manager
Notice Address:
S-32
<PAGE> 217
[Intentionally Omitted]
S-33
<PAGE> 218
CONTINENTAL CASUALTY COMPANY
By: /s/ Vice President
-------------------------------------------
Title: Vice President
Notice Address: Continental Casualty Company
c/o Loews Corporation
667 Madison Avenue
New York, NY 10021-8087
Attention: High Yield
7th Floor
S-34
<PAGE> 219
POLAR & CO.
By: /s/ Polar & Company
-------------------------------------------
Title:
Notice Address: Kemper Financial Services
Legal Dept., 22nd Floor
120 South LaSalle
Chicago, IL 60603
Attention: William P. Kovacs, Esq.
S-35
<PAGE> 220
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES, FOR THE
ANNUITY HIGH INCOME ACCOUNT
By: /s/ Sheryl Rothman
-------------------------------------------
Sheryl Rothman
Title: Investment Officer
Notice Address: Alliance Capital Management L.P.
1345 Avenue of the Americas
38th Floor
New York, NY 10105
Attention: High Yield Group
S-36
<PAGE> 221
PRIME INCOME TRUST
By: /s/ Rafael Scolari
-------------------------------------------
Rafael Scolari
Title: Vice President Portfolio Manager
Notice Address: Prime Income Trust
Two World Trade Center
72nd Floor
New York, NY 10048
Attention: Rafael Scolari
S-37
<PAGE> 222
USL CAPITAL CORPORATION
By: /s/ Craig F. Bruzzone
-------------------------------------------
Craig F. Bruzzone
Title: Vice President,
Municipal and Corporate Financing
Notice Address: USL Capital Corporation
733 Front Street, MS 520
San Francisco, CA 94111
Attention: V.P. Capital Markets
S-38
<PAGE> 223
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Bruce E. Gaudette
-------------------------------------------
Bruce E. Gaudette
Title:
MASSACHUSETTS MUTUAL CORPORATE VALUE PARTNERS
LIMITED
By: /s/ Bruce E. Gaudette
-------------------------------------------
Bruce E. Gaudette
Title: Vice President
Massachusetts Mutual Life
Insurance Company
Its Investment Manager
Notice Address: Massachusetts Mutual Life
Insurance Company
1295 State Street
Springfield, MA 01111
Attention: John Wheeler, Securities
Investment Division
S-39
<PAGE> 224
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES, FOR THE
NUTMEG ACCOUNT
By: /s/ Sheryl Rothman
-------------------------------------------
Sheryl Rothman
Title: Investment Officer
Notice Address: Alliance Capital Management L.P.
1345 Avenue of the Americas
38th Floor
New York, NY 10105
Attention: High Yield Group
S-40
<PAGE> 225
[Intentionally Omitted]
S-41
<PAGE> 226
CRESCENT CAPITAL CORPORATION
By: /s/ Justin L. Driscoll
-------------------------------------------
Justin L. Driscoll
Title: Vice President
Notice Address: Crescent Capital Corporation
1325 Avenue of the Americas,
25th Floor
New York, NY 10019
PENNSYLVANIA LIFE INSURANCE COMPANY
By: Crescent Capital Corporation
its attorney-in-fact
By: /s/ Justin L. Driscoll
-------------------------------------------
Justin L. Driscoll
Title: Vice President
Notice Address: Crescent Capital Corporation
1325 Avenue of the Americas,
25 Floor
New York, NY 10019
S-42
<PAGE> 227
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By: /s/ A. Kipp Koester
-------------------------------------------
A. Kipp Koester
Title: Vice President - Securities
Notice Address: The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Jeff Lueken
S-43
<PAGE> 228
JACKSON NATIONAL LIFE INSURANCE COMPANY
By: /s/ Brion Johnson
-------------------------------------------
Brion Johnson
Title: Vice President,
Notice Address: PPM America, Inc.
225 West Wacker, Suite 1200
Chicago, IL 60606-1228
Attention: Michael DiRe
Private Placement
With a Copy To: Jackson National Life Insurance
Company
5901 Executive Drive
Lansing, MI 48909
Attention: Brion Johnson
S-44
<PAGE> 229
JACKSON NATIONAL LIFE INSURANCE COMPANY
OF MICHIGAN
By: /s/ Brion Johnson
-------------------------------------------
Brion Johnson
Title: Vice President,
Notice Address: PPM America, Inc.
225 West Wacker, Suite 1200
Chicago, IL 60606-1228
Attention: Michael DiRe
Private Placement
With a Copy To: Jackson National Life Insurance
Company
5901 Executive Drive
Lansing, MI 48909
Attention: Brion Johnson
S-45
<PAGE> 230
THE TRAVELERS INSURANCE COMPANY
By: /s/ Robert M. Mills
-------------------------------------------
Robert M. Mills
Title: Assistant Investment Officer
Notice Address: Investment Group - Securities
Travelers Insurance
One Tower Square 9 PB
Hartford, CT 06183
Attention: Robert Mills
S-46
<PAGE> 231
================================================================================
$925,000,000
CREDIT AGREEMENT
DATED AS OF JUNE 14, 1995
AMONG
FOOD 4 LESS HOLDINGS, INC.,
AS GUARANTOR,
FOOD 4 LESS SUPERMARKETS, INC.,
AS BORROWER,
THE LENDERS, CO-AGENTS AND CO-ARRANGERS LISTED HEREIN,
AS LENDERS, CO-AGENTS AND CO-ARRANGERS,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
================================================================================
<PAGE> 232
FOOD 4 LESS HOLDINGS, INC.
AND
FOOD 4 LESS SUPERMARKETS, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . . . . . . 46
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.1 Commitments; Making of Loans; the Register; Notes . . . . . . . . . . . . . . . . . . . . . . 47
2.2 Interest on the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments; General Provisions
Regarding Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
2.6 Special Provisions Governing Eurodollar Rate Loans . . . . . . . . . . . . . . . . . . . . . . 76
2.7 Increased Costs; Taxes; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
2.8 Obligation of Lenders and Issuing Lenders to Mitigate; Replacement of Lender . . . . . . . . . 84
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein . . . . . . . . 85
3.2 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit. . . . . . . . . . . . . . 90
3.4 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
3.5 Indemnification; Nature of Issuing Lenders' Duties . . . . . . . . . . . . . . . . . . . . . . 94
3.6 Increased Costs and Taxes Relating to Letters of Credit . . . . . . . . . . . . . . . . . . . 95
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.1 Conditions to Term Loans and Initial Revolving Loans and Swing Line Loans . . . . . . . . . . 97
4.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
4.3 Conditions to Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
</TABLE>
(i)
<PAGE> 233
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries . . . . . . . . 111
5.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
5.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
5.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
5.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
5.6 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.8 Performance of Agreements; Materially Adverse Agreements . . . . . . . . . . . . . . . . . . . 116
5.9 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
5.10 Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
5.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
5.12 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.13 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
5.14 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5.18 Representations and Warranties Incorporated From Merger Agreement . . . . . . . . . . . . . . 121
5.19 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.20 Transaction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
5.21 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
6.2 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
6.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . . . 130
6.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
6.5 Inspection; Lender Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
6.6 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
6.7 Environmental Disclosure and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
6.8 Loan Parties' Remedial Action Regarding Hazardous Materials . . . . . . . . . . . . . . . . . 134
6.9 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
6.10 Execution of Guaranty and Collateral Documents by Future Subsidiaries . . . . . . . . . . . . 135
6.11 Additional Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
6.12 Notice Regarding Change of Control Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
7.2 Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
7.3 Investments; Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
</TABLE>
(ii)
<PAGE> 234
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
7.5 Restricted Junior Payments; Other Restricted Payments . . . . . . . . . . . . . . . . . . . . 149
7.6 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions . . . . . . . . . . . . . . . 156
7.8 Consolidated Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
7.9 Restriction on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
7.10 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
7.11 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
7.12 Transactions with Shareholders and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 160
7.13 Disposal on Subsidiary Stock; Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . 161
7.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
7.15 Amendments of Certain Documents; No Prepayments of Certain Indebtedness . . . . . . . . . . . 162
7.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
8.1 Failure to Make Payments When Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
8.2 Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
8.3 Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
8.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
8.5 Other Defaults Under Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . . 164
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . . . . . . 165
8.8 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8.9 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
8.11 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
8.12 Invalidity of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
8.13 Failure of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
8.14 Failure to Consummate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
8.15 Action Under Related Financing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . 166
SECTION 9. HOLDINGS GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
9.1 Guarantied Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
9.2 Terms of Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
SECTION 10. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
10.2 Powers; General Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
10.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness . . . . . 175
10.4 Right to Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
10.5 Successor Agent and Swing Line Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
10.6 Guaranties and Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
</TABLE>
(iii)
<PAGE> 235
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
11.1 Assignments and Participations in Loans and Letters of Credit . . . . . . . . . . . . . . . . 177
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
11.3 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
11.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
11.5 Ratable Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
11.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
11.7 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
11.9 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . 185
11.10 Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . 185
11.11 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
11.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
11.13 Obligations Several; Independent Nature of Lenders' Rights . . . . . . . . . . . . . . . . . . 186
11.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
11.15 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
11.16 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
11.17 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 187
11.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
11.19 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
11.20 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Signature pages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
</TABLE>
(iv)
<PAGE> 236
EXHIBITS
<TABLE>
<S> <C>
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF TRANCHE A TERM NOTE
V FORM OF TRANCHE B TERM NOTE
VI FORM OF TRANCHE C TERM NOTE
VII FORM OF TRANCHE D TERM NOTE
VIII FORM OF REVOLVING NOTE
IX FORM OF SWING LINE NOTE
X FORM OF COMPLIANCE CERTIFICATE
XI FORM OF GUARANTY
XII FORM OF PLEDGE AGREEMENT
XIII FORM OF SECURITY AGREEMENT
XIV FORM OF TRADEMARK SECURITY AGREEMENT
XV FORM OF HOLDINGS PLEDGE AGREEMENT
XVI FORM OF DEED OF TRUST
XVII FORM OF ENVIRONMENTAL INDEMNITY
XVIII FORM OF DEPOSIT ACCOUNTS SECURITY AGREEMENT
XIX FORM OF F4L GM SECURITY AGREEMENT
XX-A FORM OF OPINION OF LATHAM & WATKINS
XX-B FORM OF OPINION OF JAN CHARLES GRAY, ESQ.
XX-C FORM OF OPINION OF KANSAS COUNSEL
XXI FORM OF OPINION OF O'MELVENY & MYERS
XXII FORM OF ASSIGNMENT AGREEMENT
XXIII-A FORM OF AUDITOR'S LETTER (ARTHUR ANDERSEN LLP)
XXIII-B FORM OF AUDITOR'S LETTER (KPMG PEAT MARWICK)
XXIV FORM OF FINANCIAL CONDITION CERTIFICATE
XXV FORM OF COLLATERAL ACCOUNT AGREEMENT
</TABLE>
(v)
<PAGE> 237
SCHEDULES
<TABLE>
<S> <C>
1.1A EXISTING LETTERS OF CREDIT
1.1B PLANNED DISPOSITIONS
1.1C REQUIRED DISPOSITIONS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1N REAL PROPERTY ASSETS
5.1 HOLDINGS AND SUBSIDIARIES OF HOLDINGS
5.2C GOVERNMENTAL CONSENTS
5.2E HOLDINGS CAPITAL STOCK
5.3 CERTAIN ACCOUNTING MATTERS
5.11 ERISA MATTERS
5.12 BROKER'S OR FINDER'S FEES
5.13 ENVIRONMENTAL MATTERS
5.17 INTELLECTUAL PROPERTY
5.19 CERTAIN MATTERS RELATING TO PERMITS
7.1 EXISTING INDEBTEDNESS
7.2 EXISTING LIENS
7.3 EXISTING INVESTMENTS
7.4 EXISTING CONTINGENT OBLIGATIONS
</TABLE>
(vi)
<PAGE> 1
Exhibit 4.2
--------------------------------------------------------------------------------
FOOD 4 LESS HOLDINGS, INC.
AND
UNITED STATES TRUST COMPANY OF NEW YORK
AS TRUSTEE
-------------
INDENTURE
Dated as of June 1, 1995
-------------
13-5/8% Senior Discount Debentures due 2005
--------------------------------------------------------------------------------
<PAGE> 2
INDENTURE dated as of June 1, 1995, between FOOD 4 LESS HOLDINGS, INC., a
Delaware corporation ("Holdings"), and United States Trust Company of New York,
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 13-5/8% Senior Discount
Debentures due 2005:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acceleration Notice" shall have the meaning provided in
Section 6.2.
"Accreted Value" means, per $1,000 principal amount (at
maturity) of Securities, (i) as of any date of determination prior to June 15,
2000, the sum of (A) $517.16, representing the initial purchase price of each
Security and (B) the portion of the excess of the principal amount of each
Security over such initial purchase price which shall have been accreted
through such date, such amount to be so accreted on a daily basis and
compounded semi-annually on each June 15 and December 15 at the rate of 13-5/8%
per annum from the date of issuance of the Securities through the date of
determination, computed on the basis of a 360-day year of twelve 30-day months
and (ii) from and after June 15, 2000, $1,000.
"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.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any 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 this Indenture, neither BT
Securities Corporation nor any of its Affiliates shall be deemed to be an
Affiliate of Holdings or any of its Subsidiaries.
"Affiliate Transaction" shall have the meaning provided in
Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means, with respect to 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
1
<PAGE> 3
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 a directly or
indirectly 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, in each case,
outside of the ordinary course of business, excluding, however, any sale,
transfer or other disposition, or series of related sales, transfers or other
dispositions, (i) involving only Excluded Assets, (ii) resulting in Net
Proceeds to Holdings and the Subsidiaries of $500,000 or less, (iii) pursuant
to any foreclosure of assets or other remedy provided by applicable law to a
creditor of Holdings or any Subsidiary with a Lien on such assets, which Lien
is permitted under this Indenture, provided that such foreclosure or other
remedy is conducted in a commercially reasonable manner or in accordance with
any Bankruptcy Law, (iv) involving only Cash Equivalents or inventory in the
ordinary course of business or obsolete equipment in the ordinary course of
business consistent with past practices of Holdings or its Subsidiaries, (v)
involving only the lease or sub-lease of any real or personal property in the
ordinary course of business, or (vi) the proceeds of such Asset Sale which are
not applied as contemplated in Section 4.15 hereof and which, together with all
other such Asset Sale proceeds, do not exceed $20 million.
"Average Life" means, as of the date of determination, with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payments of such debt security
multiplied by the amount of each such principal payment by (ii) the sum of all
such principal payments.
"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.
2
<PAGE> 4
"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 Ratings Group 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), (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii)
above, (b) has net assets of not less than $500 million, and (c) has the
highest rating obtainable from either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. and (vi) 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 Ratings Group.
"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
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 the 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);
provided, 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 to elect a majority of the Board
of Directors of the Company (other than in connection with a merger of Holdings
and 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, and its successors, including, without limitation, Ralphs
Supermarkets (to be renamed Ralphs Grocery Company) following the Merger.
3
<PAGE> 5
"Consolidated Net Income" means, with respect to any person,
for any period, 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 any other person in
which such person or any of its subsidiaries has an interest (which interest
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 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 the Company and its wholly-owned
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 so long as the Company continues to be a
wholly-owned subsidiary of Holdings; 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, (vii) (A) all non-cash charges, (B) up to $10
million of severance costs and (C) any other restructuring reserves or charges
(provided, however, that any cash payments actually made with respect to the
liabilities for which such restructuring reserves or charges were created shall
be deducted from Consolidated Net Income in the period when made), in each
case, incurred by Holdings or any of its Subsidiaries in connection with the
Merger, including, without limitation, the divestiture of the Excluded Assets,
(viii) losses incurred by Holdings and its Subsidiaries resulting from
earthquakes and (ix) 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.
"Consolidated Net Worth" means, with respect to any person,
the total stockholders' equity (exclusive of any Disqualified Capital Stock) of
such person and its subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consulting Agreement" means that certain Consulting
Agreement, dated as of the Issue Date, between Holdings, the Company and The
Yucaipa Companies, as such Consulting Agreement may be amended or replaced, so
long as any amounts paid under any amended or replacement agreement do not
exceed the amounts payable under such Consulting Agreement as in effect on the
Issue Date.
4
<PAGE> 6
"Covenant Defeasance" shall have the meaning provided in
Section 8.3.
"Credit Agent" means, at any time, the then-acting
Administrative Agent as defined in and under the Credit Agreement, which
initially shall be Bankers Trust Company. Holdings shall promptly notify the
Trustee of any change in the Credit Agent.
"Credit Agreement" means the Credit Agreement, dated as of the
Issue Date, by and among the Company as borrower, Holdings as guarantor,
certain of the Company's subsidiaries, the Lenders referred to therein and
Bankers Trust Company, as administrative agent, as the same may be amended,
extended, renewed, restated, supplemented or otherwise modified (in each case,
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, replace or refinance any borrowings and
commitments then outstanding or permitted to be outstanding under such Credit
Agreement or any such prior agreement as the same may be amended, extended,
renewed, restated, supplemented or otherwise modified (in each case, in whole
or in part, and without limitation as to amount, terms, conditions, covenants
and other provisions). The term "Credit Agreement" shall include all related
or ancillary documents, including, without limitation, any guarantee agreements
and security documents. 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.
"Default Amount" means (i) if the Date of Declaration (as
defined below) is prior to June 15, 2000, the unpaid Accreted Value of the
Securities then outstanding as of the date on which the Securities are declared
to be due and payable (the "Date of Declaration"), and (ii) if the Date of
Declaration is on or after June 15, 2000, the aggregate principal amount of the
Securities then outstanding as of the Date of Declaration, plus accrued and
unpaid interest thereon to the Date of Declaration.
"Disqualified Capital Stock" means, (i) 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, putable 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; and (ii) with respect to any Subsidiary
5
<PAGE> 7
of Holdings, any Preferred Stock issued by a Subsidiary of Holdings other than
Preferred Stock issued to Holdings.
"EBDIT" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period, plus, in each case to
the extent deducted in computing Consolidated Net Income of such person for
such period (without duplication) (i) provisions for income taxes or similar
charges recognized by such person and its consolidated subsidiaries accrued
during such period, (ii) depreciation and amortization expense of such person
and its consolidated subsidiaries accrued during such period (but only to the
extent not included in Fixed Charges), (iii) Fixed Charges of such person and
its consolidated subsidiaries for such period, (iv) LIFO charges (credits) of
such person and its consolidated subsidiaries for such period, (v) the amount
of any restructuring reserve or charge recorded during such period in
accordance with GAAP, including any such reserve or charge related to the
Merger, and (vi) any other non-cash charges reducing Consolidated Net Income
for such period (excluding any such charge which requires an accrual of or a
cash reserve for cash charges for any future period), less, without
duplication, (i) non-cash items increasing Consolidated Net Income of such
person for such period (excluding any such items which represent the reversal
of any accrual of, or cash reserve for, anticipated cash charges in any prior
period) in each case determined in accordance with GAAP and (ii) the amount of
all cash payments made by such person or its subsidiaries during such period to
the extent that such cash payment has been provided for in a restructuring
reserve or charge referred to in clause (v) above (and was not otherwise
deducted in the computation of Consolidated Net Income of such person for such
period).
"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.
"Excluded Assets" means assets of Holdings or any Subsidiary
required to be disposed of by applicable regulatory authorities in connection
with the Merger.
"Existing Indebtedness" means the following indebtedness of
the Company to the extent outstanding on the Issue Date after giving effect to
the Merger: (a) the 10.45% Senior Notes due 2004 issued pursuant to an
indenture dated as of the date hereof; (b) the 10.45% Senior Notes due 2000
issued pursuant to an indenture dated as of April 15, 1992; (c) the 11% Senior
Subordinated Notes due 2005 issued pursuant to an indenture dated as of the
date hereof; (d) the 9% Senior Subordinated Notes due 2003 issued pursuant to
an indenture dated as of March 30, 1993; (e) the 10 1/4% Senior Subordinated
Notes due 2002 issued pursuant to an indenture dated as of July 29, 1992; (f)
the 13.75% Senior Subordinated Notes due 2005 issued pursuant to an indenture
dated as of the date hereof; and (g) the 13.75% Senior Subordinated Notes due
2001 issued pursuant to an indenture dated as of June 15, 1991.
"FFL" means Food 4 Less, Inc., a Delaware corporation and its
successors, including, without limitation, Old Holdings following the FFL
Merger and Holdings following the Reincorporation Merger.
6
<PAGE> 8
Merger, of FFL and Old Holdings.
"Final Accretion Date" means June 15, 2000.
"Fixed Charges" means, with respect to any person, for any
period, the aggregate amount of (i) interest, whether expensed or capitalized,
paid, accrued or scheduled to be paid or accrued during such period (except to
the extent accrued in a prior period) in respect of all Indebtedness of such
person and its consolidated subsidiaries (including (a) original issue discount
on any Indebtedness (including (without duplication), in the case of Holdings,
any original issue discount on the Seller Debentures, the Senior Discount Notes
and the Securities but excluding amortization of debt issuance costs and (b)
the interest portion of all deferred payment obligations, calculated in
accordance with the effective interest method, in each case to the extent
attributable to such period, but excluding the amortization of debt issuance
costs) and (ii) dividend requirements on Preferred Stock of such person and its
consolidated subsidiaries (whether in cash or otherwise (except dividends
payable in shares of Qualified Capital Stock)) declared or paid or required to
be declared or paid, during such period (except to the extent accrued in a
prior period), and excluding items eliminated in consolidation. For purposes
of this definition, (a) interest on a Capitalized Lease Obligation shall be
deemed to accrue at an interest rate reasonably determined by the Board of
Directors of such person (as evidenced by a Board Resolution) to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP,
(b) interest on Indebtedness that is determined on a fluctuating basis shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
of such Indebtedness in effect on the date Fixed Charges are being calculated,
(c) interest on Indebtedness that may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rate, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional rate chosen as
Holdings may designate, and (d) Fixed Charges shall be increased or reduced by
the net cost (including amortization of discount) or benefit associated with
Interest Swap Obligations attributable to such period. For purposes of clause
(ii) above, dividend requirements shall be increased to an amount representing
the pretax earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to a fraction, the numerator
of which is the amount of such dividend requirements and the denominator of
which is one (1) minus the applicable actual combined federal, state, local and
foreign income tax rate of such person and its subsidiaries (expressed as a
decimal), on a consolidated basis, for the fiscal year immediately preceding
the date of the transaction giving rise to the need to calculate Fixed Charges.
"Foreign Exchange Agreement" means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect against fluctuations in currency values.
"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 Issue Date.
7
<PAGE> 9
"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.
"incur" shall have the meaning set forth in Section 4.12.
"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; (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 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
8
<PAGE> 10
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 nationally recognized investment banking or consulting 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.
"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, whether by 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 Holdings or any of its Subsidiaries
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.
"Issue Date" means the date of original issuance of the
Securities pursuant to this Indenture.
"Legal Defeasance" shall have the meaning provided in Section
8.2.
"Legal Holiday" shall have the meaning provided in Section
12.7.
"Letter of Credit Obligations" means Indebtedness of
Subsidiaries with respect to letters of credit issued pursuant to the Credit
Agreement, and for purposes of Section 4.12, the aggregate principal amount of
Indebtedness outstanding at any time with respect thereto, shall be deemed to
consist of (a) the aggregate maximum amount then available to be drawn under
all such letters of credit (the determination of such maximum amount to assume
compliance with all conditions for drawing), and (b) the aggregate amount that
has then been paid by, and not reimbursed to, the issuers under such letters of
credit.
9
<PAGE> 11
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance against real or
personal property, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell which is intended to constitute
or create a security interest, mortgage, pledge or lien, and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction); provided that in no event shall an
operating lease be deemed to constitute a Lien hereunder.
"Maturity Date" means July 15, 2005.
"Merger" means (i) the merger of the Company into Ralphs
Supermarkets (with Ralphs Supermarkets surviving such merger) pursuant to the
Merger Agreement and (ii) immediately following the merger described in clause
(i) of this definition, the merger of RGC into Ralphs Supermarkets (with Ralphs
Supermarkets surviving such merger and changing its name to "Ralphs Grocery
Company" in connection with such merger).
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of September 14, 1994, by and among Food 4 Less, Inc., a Delaware
corporation, Old Holdings, Ralphs Supermarkets, the Company and the
stockholders of Ralphs Supermarkets, as such agreement is in effect on the
Issue Date.
"Net Cash Proceeds" means Net Proceeds of any Asset Sale
received 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, (and, in the case of any Asset
Sale, net of the amount of cash applied to repay Indebtedness secured by the
asset involved in such Asset Sale) whether such proceeds are in cash or in
property (valued at the fair market value thereof at the time of receipt as
determined with respect to any Asset Sale resulting in Net Proceeds in excess
of $5 million in good faith by the Board of Directors of such person, which
determination shall be evidenced by a Board Resolution) 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.
"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.
10
<PAGE> 12
"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.
"Old Holdings" means Food 4 Less Holdings, Inc., a California
corporation, and its successors, including, without limitation, Holdings,
following the Reincorporation Merger.
"Old RGC Notes" means the 9% Senior Subordinated Notes due
2003 and the 10-1/4% Senior Subordinated Notes due 2002 of Ralphs Grocery
Company.
"Operating Coverage Ratio" means with respect to any person,
the ratio of (1) EBDIT of such person for the period (the "Pro Forma Period")
consisting of the most recent four full fiscal quarters for which financial
information in respect thereof is available immediately prior to the date of
the transaction giving rise to the need to calculate the Operating Coverage
Ratio (the "Transaction Date") to (2) the aggregate Fixed Charges of such
person for the fiscal quarter in which the Transaction Date occurs and the
three fiscal quarters immediately subsequent to such fiscal quarter (the
"Forward Period") reasonably anticipated by the Board of Directors of such
person to become due from time to time during such period. For purposes of
this definition, if the Transaction Date occurs prior to the first anniversary
of the Merger, "EBDIT" for the Pro Forma Period shall be calculated, in the
case of Holdings, after giving effect on a pro forma basis to the Merger as if
it had occurred on the first day of the Pro Forma Period. In addition to, but
without duplication of, the foregoing, for purposes of this definition, "EBDIT"
shall be calculated after giving effect (without duplication), on a pro forma
basis for the Pro Forma Period (but no longer), to (a) any Investment, during
the period commencing on the first day of the Pro Forma Period to and including
the Transaction Date (the "Reference Period"), in any other person that, as a
result of such Investment, becomes a subsidiary of such person, (b) the
acquisition, during the Reference Period (by merger, consolidation or purchase
of stock or assets) of any business or assets, which acquisition is not
prohibited by this Indenture, and (c) any sales or other dispositions of assets
(other than sales of inventory in the ordinary course of business) occurring
during the Reference Period, in each case as if such incurrence, Investment,
repayment, acquisition or asset sale had occurred on the first day of the
Reference Period. In addition, for purposes of this definition, "Fixed
Charges" shall be calculated after giving effect (without duplication), on a
pro forma basis for the Forward Period, to any Indebtedness incurred or repaid
on or after the first day of the Forward Period and prior to the Transaction
Date. If such person or any of its subsidiaries directly or indirectly
guarantees any Indebtedness of a third person, the Operating Coverage Ratio
shall give effect to the incurrence of such Indebtedness as if such person or
subsidiary had directly incurred such guaranteed Indebtedness.
"operating lease" means any lease the obligations under which
do not constitute Capitalized Lease Obligations.
"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.
11
<PAGE> 13
"Pari Passu Indebtedness" means, with respect to Holdings,
Indebtedness that ranks pari passu in right of payment to the Securities
(whether or not secured by any Lien) including the Senior Discount Notes, to
the extent any remain outstanding following the Merger.
"Paying Agent" shall have the meaning provided in Section 2.3,
except that, for the purposes of Articles Three and Eight and Sections 4.14 and
4.15, the Paying Agent shall not be Holdings or an Affiliate of Holdings.
"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 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 Holder" means (i) Food 4 Less Equity Partners,
L.P., The Yucaipa Companies or any entity controlled thereby or any of the
partners thereof, (ii) Apollo Advisors, L.P., Lion Advisors, L.P., or any
entity controlled thereby or any of the partners thereof, (iii) an employee
benefit plan of Holdings or any Subsidiary, or any participant therein, (iv) 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 Indebtedness" means (a) Indebtedness of the Company
and its subsidiaries (and the Company and each subsidiary (to the extent it is
not an obligor) may guarantee such Indebtedness) pursuant to (i) the Term Loans
in an aggregate principal amount at any time outstanding not to exceed $600
million less the aggregate amount of all principal repayments thereunder
pursuant to and in accordance with the provisions of Section 4.15 subsequent to
the Issue Date, (ii) the revolving credit facility under the Credit Agreement
(including the Letter of Credit Obligations) in an aggregate principal amount
at any time outstanding not to exceed $325 million, less all permanent
reductions thereunder pursuant to and in accordance with the provisions of
Section 4.15, and (iii) any Indebtedness incurred under the Credit Agreement
pursuant to and in compliance with (A) clause (o) of this definition and (B)
Section 4.12 (other than Permitted Indebtedness that is not incurred pursuant
to clause (o) or this clause (a) of this definition); (b) any guarantee by
Holdings of the Indebtedness referred to in the foregoing clause (a); (c)
Indebtedness of Holdings or a Subsidiary owed to and held by Holdings or a
Subsidiary; (d) Indebtedness incurred by Holdings or any Subsidiary in
connection with the purchase or improvement of property (real or personal) or
equipment or other capital expenditures in the ordinary course of business
(including for the purchase of assets or stock of any retail grocery store or
business) or consisting of Capitalized Lease Obligations, provided that (i) at
the time of the incurrence thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four fiscal quarter
period in reliance upon this clause (d) does not exceed, in the aggregate, 3%
of net sales of Holdings and its Subsidiaries
12
<PAGE> 14
during the most recently completed four fiscal quarter period on a consolidated
basis (calculated on a pro forma basis if the date of incurrence is prior to
the end of the fourth fiscal quarter following the Merger) and (ii) such
Indebtedness, together with all then outstanding Indebtedness incurred in
reliance upon this clause (d) does not exceed, in the aggregate, 3% of the
aggregate net sales of Holdings and its Subsidiaries during the most recently
completed twelve fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end of the twelfth
fiscal quarter following the Merger); (e) Indebtedness incurred by Holdings or
any Subsidiary in connection with capital expenditures in an aggregate
principal amount not exceeding $150 million, provided that such capital
expenditures relate solely to the integration of the operations of Ralphs
Supermarkets, the Company, and their respective subsidiaries as described in
that certain Registration Statement of Holdings dated June 2, 1995; (f)
Indebtedness of Holdings or any Subsidiary incurred under Foreign Exchange
Agreements and Interest Swap Obligations entered into with respect to
Indebtedness otherwise permitted to be outstanding pursuant to Section 4.12 or
this definition of "Permitted Indebtedness" in a notional amount not exceeding
the aggregate principal amount of such Indebtedness; (g) guarantees incurred in
the ordinary course of business by Holdings or a Subsidiary of Indebtedness of
any other person in the aggregate not to exceed $25 million at any time
outstanding; (h) guarantees by Holdings or a Subsidiary of Indebtedness
incurred by a wholly-owned Subsidiary so long as the incurrence of such
Indebtedness incurred by such wholly-owned Subsidiary is permitted under the
terms of this Indenture; (i) Refinancing Indebtedness; (j) Indebtedness for
letters of credit relating to workers' compensation claims and self- insurance
or similar requirements in the ordinary course of business; (k) Existing
Indebtedness and other Indebtedness outstanding on the Issue Date (after giving
effect to the Merger); (l) Indebtedness arising from guarantees of Indebtedness
of Holdings or any Subsidiary or other agreements of Holdings or a Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or Subsidiary, other than guarantees of
Indebtedness incurred by any person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received by
Holdings and its Subsidiaries in connection with such disposition; (m)
obligations in respect of performance bonds and completion guarantees provided
by Holdings or any Subsidiary in the ordinary course of business; (n)
Indebtedness of Holdings with respect to the Senior Discount Notes, if any, the
Securities (including the accretion of the Senior Discount Notes and the
Securities up to their respective stated principal amount at maturity) and the
Seller Debentures (including the issuance of secondary securities in lieu of
cash interest payments pursuant to the terms of the Seller Debenture
Indenture); and (o) additional Indebtedness of Holdings or any Subsidiary in an
amount not to exceed $175 million at any time outstanding.
"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 made pursuant to
Section 4.15 or any other disposition of assets not constituting an Asset Sale
by reason of the $500,000 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 Section 4.11,
(vi)
13
<PAGE> 15
Investments in any Subsidiary or by any Subsidiary in Holdings or by any
Subsidiary in other Subsidiaries, and (vii) additional Investments in an
aggregate amount not exceeding $15 million.
"Permitted Liens" means (i) Liens for taxes, assessments and
governmental charges or claims not yet due or which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made therefor; (ii) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other like Liens arising in the ordinary course of business,
deposits made to obtain the release of such Liens, and with respect to amounts
not yet delinquent for a period of more than 60 days or being contested in good
faith by an appropriate process of law, and for which a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made; (iii) Liens incurred or pledges or deposits made in the ordinary course
of business to secure obligations under workers' compensation, unemployment
insurance and other types of social security or similar legislation; (iv) Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (v) easements, rights-of-way, zoning or other
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect with the
business of Holdings or any of its Subsidiaries incurred in the ordinary course
of business; (vi) Liens upon specific items of inventory or other goods and
proceeds of any person securing such person's obligations in respect of
bankers' acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other goods
in the ordinary course of business; (vii) Liens securing reimbursement
obligations with respect to letters of credit which encumber documents and
other property relating to such letters of credit and the products and proceeds
thereof; (viii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of nondelinquent customs duties in connection
with the importation of goods; (ix) judgement and attachment Liens not giving
rise to a Default or Event of Default; (x) leases or subleases granted to
others not interfering in any material respect with the business of Holdings or
any Subsidiary; (xi) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of business that are
within the general parameters customary in the industry, in each case securing
Indebtedness under Interest Swap Obligations and Foreign Exchange Agreements
and forward contracts, option futures contracts, futures options or similar
agreements or arrangements designed to protect Holdings or any Subsidiary from
fluctuations in the price of commodities; (xii) Liens encumbering deposits made
in the ordinary course of business to secure nondelinquent obligations arising
from statutory, regulatory, contractual or warranty requirements of Holdings or
its Subsidiaries for which a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made; (xiii) Liens arising out of
consignment or similar arrangements for the sale of goods entered into by
Holdings or any Subsidiary in the ordinary course of business in accordance
with past practices; (xiv) any interest or title of a lessor in the property
subject to any lease, whether characterized as capitalized or operating other
than any such interest or title resulting from or arising out of a default by
Holdings or any Subsidiary of its obligations under such lease; (xv) Liens
arising from filing UCC financial statements for precautionary purposes in
connection with true leases of personal property that are otherwise
14
<PAGE> 16
permitted under this Indenture and under which Holdings or any Subsidiary is
lessee; and (xvi) additional Liens securing Indebtedness of the Company at any
one time outstanding not exceeding the sum of (i) $ 25 million and (ii) 10% of
the aggregate Consolidated Net Income of the Company earned subsequent to the
Issue Date and on or prior to such time.
"Permitted Payments" means (i) any payment by Holdings or any
Subsidiary to The Yucaipa Companies or the principals or any Affiliates thereof
for consulting, management, investment banking or similar services, or for
reimbursement of losses, costs and expenses pursuant to the Consulting
Agreement, (ii) any payment by Holdings or any Subsidiary to Apollo Advisors,
L.P. or the principals or any Affiliates thereof in an aggregate amount not to
exceed $5 million as a commitment fee in connection with the purchase of equity
securities of Holdings on the Issue Date, (iii) any payment by Holdings or any
Subsidiary, (a) in connection with repurchases of outstanding shares of
Holdings' common stock following the death, disability or termination of
employment of management stockholders, and (b) of amounts required to be paid
by Holdings or any Subsidiaries to participants or former 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 any unused amounts may be carried over to any subsequent Yearly Period
subject to a maximum amount of $20 million in any Yearly Period), (iv) the loan
by Holdings or any Subsidiary on the Issue Date to RGC Investment Co. of not
more than $5 million and (v) for so long as the sole business activity of such
partnership is to acquire, hold, sell, exchange, transfer or otherwise dispose
of all or any portion of the Securities and to manage its investment in the
Securities, any payment by Holdings or any of its Subsidiaries to fund ongoing
costs and expenses of RGC Partners, L.P. pursuant to the Subscription Agreement
and the Registration Rights Agreement.
"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, (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 Holdings, (iv)
any investment account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of such person, and
(v) any investment fund or investment entity that is a subsidiary of such
person or a Permitted Transferee of such person.
"Person" or "person" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"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
15
<PAGE> 17
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, Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such person, over
shares of Capital Stock of any other class 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, as
interpreted by Holdings' chief financial officer or 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.
"Public Equity Offering" means an underwritten public offering
of common stock of Holdings or the Company pursuant to a registration statement
filed with the SEC in accordance with the Securities Act which public equity
offering results in gross proceeds to Holdings or the Company of not less than
$20,000,000.
"Public Equity Offering Consummation Date" means the first
date on which Holdings or the Company receives any proceeds from a Public
Equity Offering.
"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 Paragraph 5 of the Securities annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture and Paragraph 5 of the Securities annexed hereto as Exhibit A.
16
<PAGE> 18
"Reference Date" shall have the meaning provided in Section
4.3.
"Reference Period" shall have the meaning provided in the
definition of "Operating Coverage Ratio" contained in this Section 1.1.
"Refinancing Indebtedness" means, with respect to any person,
Indebtedness of such person issued in exchange for, or the proceeds from the
issuance and sale or disbursement of which are used to substantially
concurrently repay, redeem, refund, refinance, discharge or otherwise retire
for value, in whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or renewal of
(collectively, an "amendment"), any Indebtedness of such person existing on the
Issue Date or Indebtedness (other than Permitted Indebtedness, except Permitted
Indebtedness incurred pursuant to clauses (b), (d), (e), (i), (k) and (n) of
the definition thereof) incurred in accordance with this Indenture (a) in a
principal amount (or, if such Refinancing Indebtedness provides for an amount
less than the principal amount thereof to be due and payable upon the
acceleration thereof, with an original issue price) not in excess of (without
duplication) (i) the principal amount or the original issue price, as the case
may be, of the Indebtedness so refinanced (or, if such Refinancing Indebtedness
refinances Indebtedness under a revolving credit facility or other agreement
providing a commitment for subsequent borrowings, with a maximum commitment not
to exceed the maximum commitment under such revolving credit facility or other
agreement) plus (ii) unpaid accrued interest on such Indebtedness plus (iii)
premiums, penalties, fees and expenses actually incurred by such person in
connection with the repayment or amendment thereof and (b) with respect to
Refinancing Indebtedness that repays or constitutes an amendment to
Subordinated Indebtedness, such Refinancing Indebtedness (x) shall not have any
fixed mandatory redemption or sinking fund requirement in an amount greater
than or at a time prior to the amounts and times specified in such repaid or
amended Subordinated Indebtedness, except to the extent that any such
requirement applies on a date after the Maturity Date and (y) shall contain
subordination and default provisions no less favorable in any material respect
to Holders than those contained in such repaid or amended Subordinated
Indebtedness.
"Registrar" shall have the meaning provided in Section 2.3.
"Registration Rights Agreement" means that certain
Registration Rights Agreement by and among Holdings, the Company and RGC
Partners, L.P. as such Registration Rights Agreement may be amended or
replaced, so long as any amounts paid under any amended or replacement
agreement do not exceed the amounts payable under such Registration Rights
Agreement as in effect on the Issue Date.
"Reincorporation Merger" means the merger, prior to the
Merger, of Old Holdings with and into Holdings.
"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 of its Subsidiaries 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
17
<PAGE> 19
or service useful to the business of Holdings and its Subsidiaries 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 its Subsidiaries as it is
conducted as of the Issue Date and as such business may thereafter evolve or
change.
"Restricted Debt Prepayment" means any purchase, redemption,
defeasance (including, but not limited to, in-substance or legal defeasance) or
other acquisition or retirement for value directly or indirectly by Holdings or
a Subsidiary, prior to the scheduled maturity or prior to any scheduled
repayment of principal or any sinking fund payment, as the case may be, in
respect of any Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment or (ii)
Investment (other than a Permitted Investment) or (iii) Restricted Debt
Prepayment.
"RGC" means Ralphs Grocery Company, a Delaware corporation,
until a successor replaces it and thereafter means such successor.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 13-5/8% Senior Discount Debentures due
2005 of Holdings issued pursuant to this Indenture, as the same may be modified
or amended from time to time and refinancings thereof, to the extent such
refinancing indebtedness is permitted to be incurred under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Seller Debentures" means the 13-5/8% Senior Subordinated
Pay-in-Kind Debentures due 2007 of Holdings, including any additional 13 5/8%
Senior Subordinated Pay-in-Kind Debentures due 2007 issued as interest thereon,
in each case, issued pursuant to the Seller Debenture Indenture, as the same
may be modified or amended from time to time and refinancings thereof.
"Seller Debenture Indenture" means the indenture between
Holdings and Norwest Bank Minnesota, National Association, as trustee, dated as
of the Issue Date, pursuant to which the Seller Debentures will be issued, as
amended or supplemented from time to time and refinancings thereof to the
extent such refinancing indebtedness is permitted to be incurred under this
Indenture.
"Senior Discount Notes" means the 15.25% Senior Discount Notes
due 2004 of Old Holdings issued pursuant to the Senior Discount Note Indenture,
as the same may be modified or amended from time to time and refinancings
thereof, to the extent such refinancing indebtedness is permitted to be
incurred under this Indenture.
18
<PAGE> 20
"Senior Discount Note Indenture" means the indenture between
Old Holdings and United States Trust Company of New York, as trustee, dated as
of December 15, 1992, pursuant to which the Senior Discount Notes were issued,
as amended or supplemented from time to time and future refinancings thereof to
the extent such refinancing indebtedness is permitted to be incurred under this
Indenture.
"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 of Holdings
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 Issue Date) or (b) material to the financial
condition or results of operations of Holdings and its Subsidiaries 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 exchangeable or
convertible Indebtedness of such person), 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 payment with respect to its Capital Stock or 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 including
Indebtedness under the Seller Debentures.
"Subscription Agreement" means that certain Subscription
Agreement between RGC Partners, L.P., Holdings, the Company and the partnership
investors listed on Exhibit A thereto, as such Subscription Agreement may be
amended or replaced, so long as any amounts paid under any amended or
replacement agreement do not exceed the amounts payable with such Subscription
Agreement as in effect on the Issue Date.
"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
19
<PAGE> 21
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.
"Subsidiary" means any subsidiary of Holdings.
"Surviving Person" shall have the meaning provided in Section
5.1.
"Term Loans" means the term loan facility under the Credit
Agreement and any agreement governing Indebtedness incurred to refund, replace
or refinance any borrowings outstanding under such facility or under any prior
refunding, replacement or refinancing thereof (in each case, in whole or in
part, and without limitation as to amount, terms, conditions, covenants and
other provisions).
"The Yucaipa Companies" means The Yucaipa Companies, a
California general partnership, or any successor thereto which is an Affiliate
of Ronald W. Burkle or his Permitted Transferees and which has been established
for the sole purpose of changing the form of The Yucaipa Companies from that of
a partnership to that of a limited liability company or any other form of
entity which is not materially adverse to the rights of the Holders under this
Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended, as in effect on the date 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 8.4.
"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.
"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
20
<PAGE> 22
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 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
January 28, 1996.
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.
"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;
21
<PAGE> 23
(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.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, 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, for original issue
in the aggregate principal amount (at maturity) of up to $193,363,570 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 (at maturity) of Securities outstanding at any
time may not exceed
22
<PAGE> 24
$193,363,570, 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.
The Securities shall be issuable only in registered form
without coupons in denominations of $10.00 and any integral multiple thereof.
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 4.14 and 4.15, neither
Holdings nor any Affiliate 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
Holdings 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 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
23
<PAGE> 25
payment. If Holdings or an Affiliate acts as Paying Agent, it shall segregate
such assets and hold them as a separate trust fund. Holdings at any time may
require a Paying Agent to distribute all assets 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 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 Agent,
the Paying Agent shall have no further liability for such assets.
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; provided, however, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to Holdings and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
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 2.2, 2.7, 2.10, 3.6, 4.14, 4.15 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
24
<PAGE> 26
Security, including reasonable 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, 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.
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 and in Article IX, 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,
25
<PAGE> 27
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 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, with a copy to the Credit
Agent, 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. In order to effect a redemption pursuant to Paragraph 5 of
the Securities with the proceeds of a Public Equity Offering, Holdings shall
send the redemption notice not later than 60 days after the consummation of
such Public Equity Offering. 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.
26
<PAGE> 28
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; provided, however, that any redemption pursuant to paragraph 5(b) of the
Securities shall be made on a pro rata basis unless such method is otherwise
legally prohibited.
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 principal amount at maturity or any integral multiple
thereof) of the principal amount of Securities that have denominations larger
than $1,000 principal amount at maturity. 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.
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 and the Credit Agent. In order to effect a
redemption pursuant to Paragraph 5 of the Securities with the proceeds of a
Public Equity Offering, Holdings shall send the redemption notice not later
than 60 days after the consummation of such Public Equity Offering. 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 or accrued interest, 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;
27
<PAGE> 29
(6) if any Security is being redeemed in part, the
portion of the principal amount (in integral multiples of $10.00
principal amount at maturity) of such Security to be redeemed and
that, after the Redemption Date, and upon surrender of such Security,
a new Security or Securities in the principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder
thereof; 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.
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.
28
<PAGE> 30
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 Accreted Value or 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 an Affiliate) holds on that date U.S. Legal Tender 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.
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 proposed Restricted Payment, or after giving effect thereto, (a) a Default
or an Event of Default shall have occurred and be continuing, (b) Holdings or
such Subsidiary could not incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.12, or (c) the
aggregate amount expended for all Restricted Payments, including such proposed
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
aggregate
29
<PAGE> 31
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 of the proposed
Restricted Payment (the "Reference Date") plus (ii) 100% of the aggregate Net
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) 100% of the
aggregate net cash proceeds received by Holdings as capital contributions to
Holdings after the Issue Date, plus (iv) $25,000,000.
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 shall 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 of Holdings or
the repurchase, redemption, or other repayment of any Subordinated Indebtedness
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 of
Holdings, (3) the repurchase, redemption or other repayment of any Subordinated
Indebtedness in exchange for or solely out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary) of Subordinated Indebtedness of
Holdings with an Average Life equal to or greater than the then remaining
Average Life of the Subordinated Indebtedness repurchased, redeemed or repaid,
(4) any payments by Holdings or any Subsidiary required to be made due to the
exercise of statutory dissenters', appraisal or similar rights by holders of
common stock of FFL in connection with the FFL Merger, and (5) Permitted
Payments; provided, however, that (x) the declaration of each dividend paid in
accordance with clause (1) above, each acquisition, repurchase, redemption or
other repayment made in accordance with, or of the type set forth in, clause
(2) above, and each payment described in clause (iii) of the definition of
"Permitted Payments" shall each be counted for purposes of computing amounts
expended pursuant to subclause (c) in the immediately preceding paragraph, and
(y) no amounts paid pursuant to clause (3) or (4) above or pursuant to clause
(i), (ii), (iv) or (v) 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.
30
<PAGE> 32
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 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.
31
<PAGE> 33
(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.
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
32
<PAGE> 34
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.
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 15 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 Section 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.
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 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 of its Subsidiaries shall
(i) sell, lease, transfer or otherwise dispose of any of its properties or
assets, or issue securities (other than equity securities which do not
constitute Disqualified Capital Stock) to, (ii) purchase any property, assets
or securities (other than equity securities which do not constitute
Disqualified Capital
33
<PAGE> 35
Stock) from, (iii) make any Investment in, or (iv) enter into or suffer to
exist any contract or agreement with or for the benefit of, an Affiliate or
Significant Stockholder (or any Affiliate of such Significant Stockholder) of
Holdings or any Subsidiary (an "Affiliate Transaction"), other than (x)
Affiliate Transactions permitted under Section 4.11(b) and (y) Affiliate
Transactions 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;
provided, that (A) with respect to Affiliate Transactions involving aggregate
payments in excess of $1 million and less than $5 million, Holdings or such
Subsidiary, as the case may be, shall have delivered an Officers' Certificate
to the Trustee certifying that such transaction or series of transactions
complies with clause (y) above (other than the requirement set forth in such
clause (y) that such Affiliate Transaction be in the ordinary course of
business), (B) with respect to Affiliate Transactions involving aggregate
payments in excess of $5 million and less than $15 million, Holdings or such
Subsidiary, as the case may be, shall have delivered an Officers' Certificate
to the Trustee certifying that such Affiliate Transaction complies with clause
(y) above (other than the requirement set forth in such clause (y) that such
Affiliate Transaction be in the ordinary course of business) and that such
Affiliate Transaction has received the approval of a majority of the
disinterested members 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 the financial terms of such Affiliate Transaction
are fair to Holdings or such Subsidiary, as the case may be, or that the terms
of such Affiliate Transaction are at least as favorable as might reasonably
have been obtained at such time from an unaffiliated party and that such
Independent Financial Advisor has provided written confirmation of such
determination to the Board of Directors and (C) with respect to Affiliate
Transactions involving aggregate payments in excess of $15 million, Holdings or
such Subsidiary, as the case may be, shall have delivered to the Trustee, a
written opinion from an Independent Financial Advisor to the effect that the
financial terms of such Affiliate Transaction are fair to Holdings or such
Subsidiary, as the case may be, or that the terms of such Affiliate Transaction
are at least as favorable as those that might reasonably have been obtained at
the time from an unaffiliated party.
(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 and any of its 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 of its Subsidiaries of
its obligations under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements which it may
enter into
34
<PAGE> 36
thereafter; provided, however, that the existence of, or the performance by
Holdings or any of its Subsidiaries 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, and (viii)
transactions with suppliers or other purchases or sales of goods or services,
in each case, in the ordinary course of business (including, without
limitation, pursuant to joint venture agreements) and otherwise in compliance
with the terms of this Indenture which are fair to Holdings or any Subsidiary,
in the reasonable determination of the Board of Directors or senior management
of Holdings, or are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party.
Section 4.12. Limitation on Incurrences of Additional Indebtedness.
Holdings shall not, and shall not permit any Subsidiary to,
directly or indirectly, incur, assume, guarantee, become liable, contingently
or otherwise, with respect to, or otherwise become responsible for the payment
of (collectively "incur") any Indebtedness other than Permitted Indebtedness;
provided, however, that if no Default with respect to payment of principal of,
or interest on, the Securities or Event of Default shall have occurred and be
continuing at the time or as a consequence of the incurrence of any such
Indebtedness, (i) Holdings may incur Indebtedness if immediately before and
immediately after giving effect to the incurrence of such Indebtedness the
Operating Coverage Ratio of Holdings would be greater than 2.0 to 1.0 and (ii)
the Company or any subsidiary of the Company may incur Indebtedness if
immediately before and immediately after giving effect to the incurrence of
such Indebtedness the Operating Coverage Ratio of the Company would be greater
than 2.0 to 1.0.
Section 4.13. Limitation on Liens.
Holdings shall not create, incur, assume or suffer to exist
any Liens upon any of its assets unless the Securities are equally and ratably
secured by the Liens covering such assets, except for (i) existing and future
Liens securing Indebtedness and other obligations of Holdings and its
Subsidiaries under the Credit Agreement and related documents or any
refinancing or replacement thereof in whole or in part permitted under this
Indenture, (ii) Permitted Liens, (iii) Liens securing Acquired Indebtedness;
provided that such Liens (x) are not incurred in connection with, or in
contemplation of, the acquisition of the property or assets acquired and (y) do
not extend to or cover any property or assets of Holdings or any Subsidiary
other than the property or assets so acquired, (iv) Liens existing on the Issue
Date (after giving effect to the Merger), (v) Liens to secure Capitalized Lease
Obligations and certain other Indebtedness that is otherwise permitted under
this Indenture; provided that (A) any such Lien is created solely for the
purpose of securing such other Indebtedness representing, or incurred to
finance, refinance or refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of, and other direct
expenses paid or charged in connection therewith) of the purchase (whether
through stock or asset purchase, merger or otherwise) or construction or
improvement of the property subject thereto (whether real or personal,
including fixtures and other equipment), (B) the principal amount of the
Indebtedness secured by such Lien does not
35
<PAGE> 37
exceed 100% of such costs and (C) such Lien does not extend to or cover any
property other than such item of property and any improvement on such item;
(vi) Liens in favor of the Trustee under this Indenture and any substantially
equivalent lien granted to any trustee or similar institution under any
indenture for Indebtedness permitted to be incurred under this Indenture; and
(vii) any replacement, extension or renewal, in whole or in part, of any Lien
described in this or the foregoing clauses, including in connection with any
refinancing of the Indebtedness, in whole or in part, secured by any such Lien;
provided that to the extent any such clause limits the amount secured by or the
assets subject to such Liens, no replacement, extension or renewal shall
increase the amount or the assets subject to such Liens, except to the extent
that the Liens associated with such additional assets are otherwise permitted
hereunder.
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 Accreted Value thereof on the Change of Control Payment Date (if
such date is prior to June 15, 2000) or 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Payment Date
(if such date is on or after June 15, 2000). 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 cause the Company
to either (a) repay in full and terminate all commitments under Indebtedness
under the Credit Agreement to the extent the terms thereof require repayment
upon a Change of Control (or offer to repay in full and terminate all
commitments under all such Indebtedness under the Credit Agreement and repay
the Indebtedness owed to each lender which has accepted such offer), or (b)
obtain the requisite consents under the Credit Agreement, the terms of which
require repayment upon a Change of Control, to permit the repurchase of the
Securities as provided for in this Section 4.14. Holdings shall first comply
with the covenant in the immediately preceding sentence before Holdings shall
be required to repurchase Securities pursuant to this Section 4.14, and any
failure to so comply shall constitute an Event of Default 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 a copy
to the Trustee, which notice shall govern the terms of the Change of Control
Offer. Holdings shall give notice of an event giving rise to a Change of
Control on the same date and in the same manner to all Holders of Securities.
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;
36
<PAGE> 38
(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 of $10.00 or integral multiples thereof;
(8) that each Change of Control Offer is required to
remain open for at least 20 Business Days or such longer period as may
be required by law and until 12:00 Midnight New York City time on the
applicable Change of Control Payment Date; and
(9) 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.
(c) 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 (and
the Trustee shall promptly authenticate and mail to such
37
<PAGE> 39
Holders new Securities equal in principal amount to any unpurchased portion of
the Securities surrendered); provided that each such new Security shall be in
the principal amount of $10.00 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.
(d) Holdings will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer. To the extent
the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.14, Holdings shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.14 by virtue thereof.
Section 4.15. Limitation on Asset Sales.
(a) Neither Holdings nor any of its Subsidiaries shall
consummate 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 and (b) upon consummation of an Asset
Sale, Holdings or the applicable Subsidiary shall, within 365 days of the
receipt of the proceeds therefrom, either: (i) apply or cause its Subsidiary to
apply the Net Cash Proceeds of any Asset Sale to (1) a Related Business
Investment, (2) an investment in properties and assets that replace the
properties and assets that are the subject of such Asset Sale, or (3) an
investment in properties and assets that will be used in the business of
Holdings and its Subsidiaries existing on the Issue Date or in a business
reasonably related thereto; (ii) in the case of a sale of a store or stores,
deem such Net Cash Proceeds to have been applied to the extent of any capital
expenditures made to acquire or construct a replacement store in the general
vicinity of the store sold within 365 days preceding the date of the Asset
Sale; (iii) apply or cause to be applied such Net Cash Proceeds to the
repayment of Pari Passu Indebtedness of Holdings or any Indebtedness of any
Subsidiary; (iv) use such Net Cash Proceeds to secure Letter of Credit
Obligations to the extent the related letters of credit have not been drawn
upon or returned undrawn; or (v) after such time as the accumulated Net Cash
Proceeds equals or exceeds $20 million, apply or cause to be applied such Net
Cash Proceeds to the purchase of Securities tendered to Holdings pursuant to an
offer to purchase made by Holdings as set forth below (a "Net Proceeds Offer")
for purchase at a price equal to 100% of the Accreted Value thereof on the date
of purchase, if such date is prior to June 15, 2000 or 100% of the principal
amount thereof, plus accrued interest to the date of purchase if such date is
on or after June 15, 2000. 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 (b)(i), (ii), (iii) or (iv) above;
provided, however, that Holdings shall have the right to exclude from the
foregoing provisions Asset Sales subsequent to the Issue Date, the proceeds of
which are derived from the sale and substantially concurrent lease-back of one
or more supermarkets and/or related assets or equipment which are acquired or
constructed by Holdings or a Subsidiary subsequent to the date that is six
months prior to the Issue Date, provided that any such sale and substantially
concurrent lease-back occurs within 270 days following such acquisition or the
completion of such construction, as the case may be.
38
<PAGE> 40
(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
325 days nor more than 365 days after the relevant Asset Sale to all Holders at
their last registered addresses, with a copy to the Trustee. 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
$10.00 or multiples thereof shall be purchased);
(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 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;
(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; and
(8) that the Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by
law.
39
<PAGE> 41
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 (and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered).
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.
(c) Holdings shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Securities pursuant to a Net Proceeds Offer. To the
extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.15, Holdings shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.15 by virtue thereof.
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. No Amendment to Subordination Provisions of Seller Debentures.
Holdings shall not amend, modify or alter the Seller Debenture
Indenture in any way that would (i) increase the principal of, advance the
final maturity date of or shorten the Weighted Average Life to Maturity of any
Seller Debentures such that the final maturity date of the Seller Debentures is
earlier than the 91st day following the final maturity date of the Securities
or (ii) amend the provisions of Article Eleven of the Seller Debenture
Indenture (which relates to subordination) or the defined terms used therein in
a manner that would be adverse to the Holders of the Securities; provided,
however, that it is understood that any amendment the purpose of which is to
permit the incurrence of additional Indebtedness under the Seller Debenture
Indenture shall not be construed as adversely affecting the subordination
provisions of any Seller Debentures.
Section 4.17. Limitation on Preferred Stock of Subsidiaries.
Holdings shall 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.
40
<PAGE> 42
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 respect to any of its Subsidiaries,
except for (a) any such restrictions contained in (i) the Credit Agreement as
in effect on the Issue Date, as any such Payment Restriction may apply to any
present or future Subsidiary, (ii) this Indenture, the Senior Discount Note
Indenture, the Seller Debenture Indenture, the indentures with respect to
Existing Indebtedness and any other agreement in effect at or entered into on
the Issue Date, (iii) 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
of any person, other than the person so acquired and (z) such Indebtedness is
otherwise permitted to be incurred pursuant to Section 4.12), (iv) secured
Indebtedness otherwise permitted to be incurred pursuant to Sections 4.12 and
4.13 that limit the right of the debtor to dispose of the assets securing such
Indebtedness; (b) customary non- assignment provisions restricting subletting
or assignment of any lease or other agreement entered into by a 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
joint venture agreements and other similar agreements; (f) restrictions
contained in Indebtedness incurred to refinance, refund, extend or renew
Indebtedness referred to in clause (a) above; provided that the restrictions
contained therein are not materially more restrictive taken as a whole, than
those provided for in such Indebtedness being refinanced, refunded, extended or
renewed, and (g) Payment Restrictions contained in any other Indebtedness
permitted to be incurred subsequent to the Issue Date pursuant to the
provisions of Section 4.12; provided that any such Payment Restrictions are
ordinary and customary with respect to the type of Indebtedness being incurred
(under the relevant circumstances) and, in any event, no more restrictive than
the most restrictive Payment Restrictions in effect on the Issue Date.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1. When Holdings May Merge, Etc.
(a) Holdings, in a single transaction or through a series
of related transactions, shall not (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
41
<PAGE> 43
all or substantially all of the properties and assets of Holdings as
an entirety or 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 supplement, 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 Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of Holdings immediately preceding the transaction and (B) the
Surviving Person could incur at least $1 of additional Indebtedness
other than Permitted Indebtedness pursuant to Section 4.12; and
(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.
(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 direct or indirect 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.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Holdings or any adoption of a Plan of
Liquidation by Holdings in accordance with Section 5.1, the Surviving Person
formed by such consolidation or into which Holdings is merged or to which such
transfer is made, (or, in the case of a Plan of Liquidation, to which assets
are transferred) 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 surviving person had been named as Holdings herein; provided, however,
that solely for purposes of computing amounts described in subclause (c) of
Section 4.3, any such surviving person shall only be deemed to have succeeded
to and be substituted for Holdings with respect to periods subsequent to the
effective time of such merger, consolidation or transfer of assets. 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.
42
<PAGE> 44
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 any
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,
or premium, if any, on the Securities when the same becomes due and
payable whether 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);
(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 in default for failure to pay principal at stated
final maturity or the maturity of which has been so accelerated,
aggregates $25 million or more at any one time outstanding;
(5) Holdings or any Significant Subsidiary (A) commences
a voluntary case or proceeding under any Bankruptcy Law with respect
to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it
or for all or substantially all of its property or (D) makes a general
assignment for the benefit of its creditors;
43
<PAGE> 45
(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 all or any substantial
part of their respective properties or (C) order the winding-up or
liquidation of Holdings' or any Significant Subsidiary's affairs; and
such judgment, decree or order shall remain unstayed and in effect for
a period of 60 consecutive days;
(7) the lenders under the Credit Agreement shall commence
judicial proceedings to foreclose upon any material portion of the
assets of Holdings and its Subsidiaries; or
(8) any final judgment or order for payment of money in
excess of $25 million shall be entered against Holdings or any
Significant Subsidiary by a court of competent jurisdiction and shall
remain undischarged for a period of 60 days after such judgment
becomes final and nonappealable.
A Default under clause (3) above (other than in the case of
any Default under Section 4.3, 4.14, 4.15 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 or the Holders of
at least 25% in aggregate principal amount of the Securities then outstanding
may, and the Trustee upon the request of the Holders of not less than 25% in
aggregate principal amount of the then outstanding Securities shall, declare
the Default Amount to be due and payable by written notice to Holdings (and, if
any Indebtedness is outstanding under the Credit Agreement or the Credit
Agreement is otherwise in effect, to the Credit Agent), and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the Credit Agreement, shall become due and payable upon the first to occur of
an acceleration under the Credit Agreement, or five Business Days after receipt
by Holdings and the Credit Agent of such Acceleration Notice. If an Event of
Default specified in Section 6.1(5) or (6) occurs with respect to Holdings or
any Significant Subsidiary, the Default Amount shall ipso facto become and be
immediately due and
44
<PAGE> 46
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 interest 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.
45
<PAGE> 47
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 including, without limitation, any remedies
provided for in Section 6.3. 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 written 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.
46
<PAGE> 48
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 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.
47
<PAGE> 49
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 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 of which the
Trustee is aware 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 would
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 undertake to 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
against 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 shall have no liability except 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.
48
<PAGE> 50
(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 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. 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 and shall be protected in
acting or refraining from acting upon any document believed by it to
be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may consult with counsel and may require in addition to written
direction from Holdings, 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
attorney or 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
49
<PAGE> 51
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 reasonable 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.
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 or if such Default or Event of Default is not known to
the Trustee during such 90-day period, promptly after such Default or Event of
Default becomes known to the Trustee. 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 or payment when due pursuant
to a Net Proceeds 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 Section 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 Section 313(a). The Trustee also shall
comply with TIA Sections 313(b) and 313(c).
50
<PAGE> 52
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 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 and may appoint a
successor Trustee with Holdings' consent. Holdings may remove the Trustee if:
51
<PAGE> 53
(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 resignation
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.
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
appointment 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 Sections 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
52
<PAGE> 54
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 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 Section 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Holdings.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.
Holdings may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding
Securities upon compliance with the conditions set forth below in this Article
Eight.
Section 8.2. Legal Defeasance.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that Holdings shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on
demand of and at the expense of Holdings, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 8.4 hereof, and as more fully set forth in such Section,
payments in respect of the principal, of, premium, if any, and interest on such
Securities when such payments are due, (b) Holdings' obligations with respect
to such Securities under Article Two and Section 4.2 hereof, and, with respect
to the Trustee, under Section 7.7, (c) the rights, powers, trusts, duties and
immunities of the Trustee and Holdings' obligations in connection therewith,
and (d) this Article Eight. Subject to compliance with this Article Eight,
Holdings may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
53
<PAGE> 55
Section 8.3. Covenant Defeasance.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.3, 4.6 through 4.9 and
4.11 through 4.18 and Article V hereof with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Securities,
Holdings may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. In addition, upon Holdings' exercise under
Section 8.1 hereof of the option applicable to this Section 8.3 hereof, subject
to the satisfaction of the conditions set forth in Section 8.4 hereof, Section
6.1(3) (but only to the extent it relates to a breach of any of the covenants
contained in Sections 4.3, 4.6 through 4.9 and 4.11 through 4.18 and Article V
hereof), hereof shall not constitute an Event of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) Holdings must irrevocably have
deposited with the Trustee, in trust, for the benefit of the
Holders of the Securities, cash in United States dollars or
direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States 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"), or a combination thereof, in such
amounts and at such times as will be 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 a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any,
and interest on the outstanding Securities to redemption or
maturity provided that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
Government Obligations to said payments with respect to the
Securities on the Maturity Date or such redemption date, as
the case may be;
54
<PAGE> 56
(b) in the case of an election under
Section 8.2 hereof, Holdings shall have delivered to the
Trustee an Opinion of Counsel stating that (A) Holdings has
received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the Issue Date, there
has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and Legal
Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such deposit and Legal Defeasance
had not occurred;
(c) in the case of an election under
Section 8.3 hereof, Holdings shall have delivered to the
Trustee an Opinion of Counsel stating that the Holders of the
outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit
and Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if deposit and such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit or
insofar as Section 6.1(5) or 6.1(6) hereof is concerned, at
any time in the period ending on the 91st day after the date
of deposit (it being understood that this condition shall not
be deemed satisfied until after such 91st day);
(e) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which Holdings is a party
or by which Holdings is bound (and in that connection, the
Trustee shall have received a certificate from the
administrative agent under the Credit Agreement to that effect
with respect to such Credit Agreement if then in effect);
(f) Holdings shall have delivered to the
Trustee an Opinion of Counsel to the effect that, assuming
that no Default or Event of Default shall occur and be
continuing under Section 6.1(5) or 6.1(6) during the period
ending on the 91st day after the date of deposit, the trust
funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) Holdings shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was
not made by Holdings with the intent of preferring the Holders
over the other creditors of Holdings or with the intent of
defeating, hindering, delaying or defrauding creditors of
Holdings, or others; and
55
<PAGE> 57
(h) Holdings shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance
have been complied with.
Section 8.5. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee
pursuant to Section 8.4 hereof in respect of the outstanding Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (excluding Holdings or any Affiliate thereof) as
Holdings shall determine and direct in writing, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
Holdings shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities. Holdings' obligation to pay and indemnify the Trustee as set forth
in this paragraph shall survive the termination of this Indenture and the
Securities.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to Holdings from time to time
upon the request of Holdings any money or non-callable U.S. Government
Obligations held by it as provided in Section 8.4 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.4(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
Section 8.6. Repayment to Holdings.
Any money deposited with the Trustee or any Paying Agent in
trust for the payment of the principal of, premium, if any, or interest on any
Security and remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall be paid to
Holdings on its request or shall be discharged from such trust; and the Holder
of such Security shall thereafter, as a creditor, look only to Holdings for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense of Holdings cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to Holdings.
56
<PAGE> 58
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings' obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if Holdings makes any payment of
principal of, premium, if any, or interest on any Security following the
reinstatement of its obligations, Holdings shall be subrogated to the rights of
the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
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 hereunder;
(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 in any material respect; or
(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.
57
<PAGE> 59
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 a majority 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 a majority 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) reduce the Accreted Value of any Security;
(5) 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;
(6) make any changes in the provisions concerning waivers
of Defaults or Events of Default by Holders or the rights of Holders
to recover the principal of, interest on, or redemption payment with
respect to, any Security;
(7) make any changes in Section 6.4, 6.7 or this third
sentence of this Section 9.2; or
(8) make the principal of, or the interest on any
Security payable with anything or in any manner other than as provided
for in this Indenture and the Securities as in effect on the Issue
Date.
Without the consent of the Holder or Holders of not less than 75% of
the aggregate principal amount of the outstanding Securities, no such
amendment, supplement or waiver may change the Change of Control Payment Date
or the purchase price in connection with any repurchase of Securities pursuant
to Section 4.14 hereof in a manner adverse to any Holder or waive a Default or
Event of Default resulting from a failure to comply with Section 4.14 hereof.
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.
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,
58
<PAGE> 60
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.
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.
59
<PAGE> 61
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
Indenture. 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.
60
<PAGE> 62
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 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,
61
<PAGE> 63
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 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.
62
<PAGE> 64
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 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
SATISFACTION AND DISCHARGE
Section 11.1. Satisfaction and Discharge of the Indenture.
This Indenture will be discharged and will cease to be of
further effect as to all outstanding Securities when:
(a) all Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Securities which have been replaced
or paid and Securities for whose payment money has theretofore been deposited
in trust and thereafter repaid to Holdings) have been delivered to the Trustee
for cancellation; or
(b) (1) all Securities not theretofore delivered to
the Trustee for cancellation have become due and payable by reason of
the making of a notice of redemption or otherwise and Holdings has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on the Securities not theretofore
delivered to the Trustee for cancellation for principal, premium, if
any, and accrued interest to the date of maturity or redemption;
(2) Holdings has paid all sums payable by it
under this Indenture; and
(3) Holdings has delivered irrevocable
instructions to the Trustee to apply the deposited money toward the
payment of the Securities at maturity or the redemption date, as the
case may be.
Notwithstanding (a) and (b) above, and any other provisions of
this Indenture, the Obligations of Holdings set forth in Section 7.7 hereof
shall survive the termination of this Indenture and the Securities.
63
<PAGE> 65
Section 11.2. Conditions to Satisfaction and Discharge of the Indenture.
Holdings shall deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been complied with.
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 Section 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:
if to Holdings:
c/o Ralphs Grocery Company
1100 West Artesia Boulevard
Compton, California 90220
Attention: Jan Charles Gray, Esq.
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
if to the Credit Agent:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Jo Jolly
64
<PAGE> 66
with a copy to:
Bankers Trust Company
300 S. Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Eric S. Swanson
Each of Holdings, the Trustee and the Credit Agent 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,
the Trustee and the Credit Agent 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 Section 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 Section 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
(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:
65
<PAGE> 67
(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.
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.
66
<PAGE> 68
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.
Section 12.14. No Violation.
Notwithstanding the provisions of this Indenture, in no event
shall any transaction, agreement, payment or other event to be consummated,
entered into or made in connection with the Merger, the Reincorporation Merger
and the FFL Merger or any financing thereof be considered a violation of any
provision of this Indenture or constitute a Change of Control hereunder.
67
<PAGE> 69
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: June 1, 1995
[SEAL] FOOD 4 LESS HOLDINGS, INC.
Attest: By: /s/ Greg Mays
----------------------------------
Name: Greg Mays
Title: Executive Vice President
/s/ Mark A. Resnik
----------------------------------
Mark A. Resnik
Secretary
Dated: June 1, 1995
[SEAL] UNITED STATES TRUST
COMPANY OF NEW YORK
as Trustee
Attest: By: /s/ Christine C. Collins
----------------------------------
Name: Christine C. Collins
Title: Assistant Vice President
/s/ Christine C. Collins
----------------------------------
S-1
<PAGE> 70
EXHIBIT A
PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986
RELATING TO ORIGINAL ISSUE DISCOUNT AND TREASURY REGULATIONS
PUBLISHED THEREUNDER, THE FOLLOWING INFORMATION IS PROVIDED: (1)
THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT IN THE
AMOUNT OF $1,175.44 PER $1,000 FACE AMOUNT; (2) THE ISSUE PRICE OF THIS
SECURITY IS $517.16 PER $1,000 FACE AMOUNT; (3) THE ISSUE DATE OF THIS
SECURITY IS JULY 14, 1995; AND (4) THE YIELD TO MATURITY OF THIS
SECURITY IS 13.625%.
FOOD 4 LESS HOLDINGS, INC.
13-5/8% Senior Discount Debentures
Due 2005
No. $
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation ("Holdings," which term
includes any successor entity), for value received promises to pay to:
or registered assigns, the principal sum of
Dollars plus accrued interest, on July 15, 2005.
Interest Payment Dates: June 15 and December 15 commencing
December 15, 2000.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, Holdings has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated: June 14, 1995
FOOD 4 LESS HOLDINGS, INC.
By:
----------------------------------
Chief Executive Officer
By:
----------------------------------
Senior Vice President,
General Counsel and Secretary
This is one of the Securities described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
------------------------------------
Authorized Signatory
A-1
<PAGE> 71
FOOD 4 LESS HOLDINGS, INC.
13-5/8% Senior Discount Debenture
Due 2005
1. Interest.
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation
("Holdings"), promises to pay interest on the principal amount of this Security
at the rate per annum shown above. Holdings will pay interest semiannually in
arrears on June 15 and December 15 of each year (the "Interest Payment Date"),
commencing December 15, 2000 and on the final Maturity Date. Interest on this
Security will accrue from June 15, 2000 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.
Commencing on the Issue Date, accretion of the purchase
discount will occur, through and including the Final Accretion Date, in an
amount equal to the Accreted Value. Commencing on December 15, 2000, Holdings
shall pay interest on the Securities (except defaulted interest) on each
Interest Payment Date 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. Holdings will pay accrued
interest on the Securities on July 15, 2005 to the persons that are registered
Holders at the close of business on such 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"). However, Holdings may pay principal and interest by its check
payable in such U.S. Legal Tender or by wire transfer of federal funds.
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, United States Trust Company of New York (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
June 1, 1995 (the "Indenture"), between Holdings and the Trustee. This
Security is one of a duly authorized issue of Securities of Holdings designated
as its 13-5/8% Senior Discount Debentures due 2005. Capitalized terms herein
are used as defined in the Indenture unless otherwise
A-2
<PAGE> 72
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 Sections 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
Securities are general unsecured obligations of Holdings limited in aggregate
principal amount to $193,363,570, except as otherwise provided in the
Indenture.
5. Optional Redemption.
(a) The Securities may not be redeemed at the option of Holdings
prior to June 15, 2000. 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 and unpaid
interest, if any, to the Redemption Date (as defined in the Indenture) if
redeemed during the 12-month period beginning June 15, of the years indicated
below:
<TABLE>
<CAPTION>
Applicable
Year Percentage
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . 106.8125%
2001 . . . . . . . . . . . . . . . . . . . . 105.1094%
2002 . . . . . . . . . . . . . . . . . . . . 103.4063%
2003 . . . . . . . . . . . . . . . . . . . . 101.7031%
2004 and thereafter . . . . . . . . . . . . . 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, prior to June 15, 1998,
Holdings may use the Net Proceeds (as defined in the Indenture) of a Public
Equity Offering (as defined in the Indenture) of Holdings or the Company to
redeem up to 35% of the Securities at a redemption price equal to 110% of the
Accreted Value thereof on 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 60 days
after the Public Equity 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 principal amount at maturity 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
A-3
<PAGE> 73
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 Accreted Value thereof
on the Change of Control Payment Date (if such date is prior to June 15, 2000)
or 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the Change of Control Payment Date (if such date is on or
after June 15, 2000). 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 and certain other
investments or to purchase in a Net Proceeds Offer at a price equal to 100% of
the Accreted Value thereof on the date of purchase, if such date is prior to
June 15, 2000 or 100% of the principal amount thereof, plus accrued interest,
if any, to the date of purchase if such date is on or after June 15, 2000,
which shall in the aggregate equal the net proceeds required to be applied
thereto.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $10.00 and integral multiples of $10.00. 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 2.2, 2.7, 2.10, 3.6, 4.14, 4.15 or 9.5 of the Indenture.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the
owner of it for all purposes.
11. 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.
A-4
<PAGE> 74
After that, all liability of the Trustee and such Paying Agents with respect to
such money shall cease.
12. 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).
13. 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 at least a
majority in aggregate principal amount of the Securities then outstanding.
Without the consent of the Holders of at least 75% in aggregate principal
amount of the Securities then outstanding, no such amendment, supplement or
waiver may change the Change of Control Payment Date or the purchase price in
connection with any repurchase of Securities pursuant to Section 4.14 of the
Indenture in a manner adverse to any Holder or waive a Default or Event of
Default resulting from a failure to comply with Section 4.14 of the Indenture.
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.
14. 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.
15. 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
A-5
<PAGE> 75
Event of Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
16. 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.
17. 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.
18. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of authentication on this
Security.
19. Governing Law.
The Laws of the State of New York shall govern this Security
and the Indenture.
20. 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).
21. 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.
22. 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.
A-6
<PAGE> 76
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 Ralphs Grocery Company, 1100 West Artesia
Boulevard, Compton, California 90220, Attn: Jan Charles Gray, Esq.
23. 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
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.
24. 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.
A-7
<PAGE> 77
[FORM OF ASSIGNMENT]
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
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:____________________________ Signature:____________________________
________________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:____________________________________________________________
A-8
<PAGE> 78
[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, as the case
may be, check the appropriate box below:
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, as the case may be, state the amount you want to be purchased:
$
Date:_____________________ Signature:____________________________________
(Sign exactly as your name
appears on the face of this
Security)
Signature Guarantee:____________________________________________________________
A-9
<PAGE> 79
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
Section Section
------- ---------
<S> <C>
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7; 4.9; 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(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
-----------------------
</TABLE>
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> 80
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.3. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.4. Paying Agent To Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.13. CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE III REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.3. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.4. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.5. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.6. Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.7. Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.8. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.9. SEC Reports and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.10. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.11. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.12. Limitation on Incurrences of Additional Indebtedness . . . . . . . . . . . . . . . . . 35
Section 4.13. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
i
<PAGE> 81
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 4.14. Limitation on Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.15. Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.16. No Amendment to Subordination Provisions of Seller Debentures . . . . . . . . . . . . . 40
Section 4.17. Limitation on Preferred Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . 40
Section 4.18. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . 41
ARTICLE V SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.1. When Holdings May Merge, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.7. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.6. Reports By Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.9. Successor Trustee by Merger, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.11. Preferential Collection of Claims Against Holdings . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . 53
Section 8.2. Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.4. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.5. Deposited Money and U.S. Government Obligations to be Held in Trust; Other
Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.6. Repayment to Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
ii
<PAGE> 82
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.6. Trustee To Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE X MEETINGS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.1. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.2. Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.3. Call of Meetings by Holdings or Holders . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.4. Who May Attend and Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights;
Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.6. Voting at the Meeting and Record To Be Kept . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered or Delayed by Call
of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XI SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.1. Satisfaction and Discharge of the Indenture . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.2. Conditions to Satisfaction and Discharge of the Indenture . . . . . . . . . . . . . . . 64
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.3. Communications by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . 65
Section 12.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . 65
Section 12.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . 65
Section 12.6. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.9. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . 66
Section 12.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.14. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
iii
<PAGE> 1
Exhibit 4.3
-------------------------------------------------------------------------------
FOOD 4 LESS HOLDINGS, INC.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS TRUSTEE
-----------------
INDENTURE
Dated as of June 1, 1995
-----------------
$131,500,000
13-5/8% Senior Subordinated Pay-in-Kind Debentures due 2007
-------------------------------------------------------------------------------
<PAGE> 2
INDENTURE dated as of June 1, 1995, between FOOD 4 LESS HOLDINGS, INC., a
Delaware corporation ("Holdings"), and Norwest Bank Minnesota, National
Association, 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 13-5/8% Senior Subordinated
Pay-in-Kind Debentures due 2007:
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.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any 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 this Indenture, neither BT
Securities Corporation nor any of its Affiliates shall be deemed to be an
Affiliate of Holdings or any of its Subsidiaries.
"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, with respect to 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 a directly or
indirectly 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
1
<PAGE> 3
subsidiaries, and any Capital Stock issued by any subsidiary of such person, in
each case, outside of the ordinary course of business, excluding, however, any
sale, transfer or other disposition, or series of related sales, transfers or
other dispositions, (i) involving only Excluded Assets, (ii) resulting in Net
Proceeds to Holdings and the Subsidiaries of $500,000 or less, (iii) pursuant
to any foreclosure of assets or other remedy provided by applicable law to a
creditor of Holdings or any Subsidiary with a Lien on such assets, which Lien
is permitted under this Indenture, provided that such foreclosure or other
remedy is conducted in a commercially reasonable manner or in accordance with
any Bankruptcy Law, (iv) involving only Cash Equivalents or inventory in the
ordinary course of business or obsolete equipment in the ordinary course of
business consistent with past practices of Holdings or its Subsidiaries, (v)
involving only the lease or sub-lease of any real or personal property in the
ordinary course of business, or (vi) the proceeds of such Asset Sale which are
not applied as contemplated in Section 4.15 hereof and which, together with all
other such Asset Sale proceeds, do not exceed $20 million.
"Average Life" means, as of the date of determination, with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payments of such debt security
multiplied by the amount of each such principal payment by (ii) the sum of all
such principal payments.
"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
2
<PAGE> 4
& Poor's Ratings Group 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), (v) shares of any money market
mutual fund that (a) has at least 95% of its assets invested continuously in
the types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500 million and (c) has the highest rating obtainable
from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.
and (vi) 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 Ratings Group.
"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
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 the 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);
provided, 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 to elect a majority of the Board
of Directors of the Company (other than in connection with a merger of Holdings
and 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, and its successors, including, without limitation, Ralphs
Supermarkets (to be renamed Ralphs Grocery Company) following the Merger.
"Consolidated Net Income" means, with respect to any person,
for any period, the aggregate of the net income (or loss) of such person and
its subsidiaries for such period, on
3
<PAGE> 5
a consolidated basis, determined in accordance with GAAP; provided that (a) the
net income of any other person in which such person or any of its subsidiaries
has an interest (which interest 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 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 the Company and its wholly-owned 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
so long as the Company continues to be a wholly-owned subsidiary of Holdings;
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, (vii) (A) all non-cash charges, (B) up to $10 million of severance
costs and (C) any other restructuring reserves or charges (provided, however,
that any cash payments actually made with respect to the liabilities for which
such restructuring reserves or charges were created shall be deducted from
Consolidated Net Income in the period when made), in each case, incurred by
Holdings or any of its Subsidiaries in connection with the Merger, including,
without limitation, the divestiture of the Excluded Assets, (viii) losses
incurred by Holdings and its Subsidiaries resulting from earthquakes and (ix)
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.
"Consolidated Net Worth" means, with respect to any person,
the total stockholders' equity (exclusive of any Disqualified Capital Stock) of
such person and its subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consulting Agreement" means that certain Consulting
Agreement, dated as of the Issue Date, between Holdings, the Company and The
Yucaipa Companies, as such Consulting Agreement may be amended or replaced, so
long as any amounts paid under any amended or replacement agreement do not
exceed the amounts payable under such Consulting Agreement as in effect on the
Issue Date.
"Covenant Defeasance" shall have the meaning provided in
Section 8.3.
4
<PAGE> 6
"Credit Agent" means, at any time, the then-acting
Administrative Agent as defined in and under the Credit Agreement, which
initially shall be Bankers Trust Company. Holdings shall promptly notify the
Trustee of any change in the Credit Agent.
"Credit Agreement" means the Credit Agreement, dated as of the
Issue Date, by and among the Company as borrower, Holdings as guarantor,
certain of the Company's subsidiaries, the Lenders referred to therein and
Bankers Trust Company, as administrative agent, as the same may be amended,
extended, renewed, restated, supplemented or otherwise modified (in each case,
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, replace or refinance any borrowings and
commitments then outstanding or permitted to be outstanding under such Credit
Agreement or any such prior agreement as the same may be amended, extended,
renewed, restated, supplemented or otherwise modified (in each case, in whole
or in part, and without limitation as to amount, terms, conditions, covenants
and other provisions). The term "Credit Agreement" shall include all related
or ancillary documents, including, without limitation, any guarantee agreements
and security documents. 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.
"Designated Senior Indebtedness" means (i) in the event any
Indebtedness is outstanding under the Credit Agreement, all Senior Indebtedness
under the Credit Agreement and (ii) if no Indebtedness is outstanding under the
Credit Agreement, any other issue of Senior Indebtedness which (a) at the time
of the determination is equal to or greater than $50 million in aggregate
principal amount and (b) is specifically designated in the instrument
evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by
Holdings. For purposes of this definition, the term "Credit Agreement" shall
not include any agreement governing Indebtedness incurred to refund, replace or
refinance borrowings or commitments under the Credit Agreement other than such
agreements incurred to refund, replace or refinance the entirety of the
borrowings and commitments then outstanding or permitted to be outstanding
thereunder.
"Disqualified Capital Stock" means, (i) 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, putable 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
5
<PAGE> 7
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; and (ii) with respect to any Subsidiary of Holdings, any Preferred
Stock issued by a Subsidiary of Holdings other than Preferred Stock issued to
Holdings.
"EBDIT" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period, plus, in each case to
the extent deducted in computing Consolidated Net Income of such person for
such period (without duplication) (i) provisions for income taxes or similar
charges recognized by such person and its consolidated subsidiaries accrued
during such period, (ii) depreciation and amortization expense of such person
and its consolidated subsidiaries accrued during such period (but only to the
extent not included in Fixed Charges), (iii) Fixed Charges of such person and
its consolidated subsidiaries for such period, (iv) LIFO charges (credits) of
such person and its consolidated subsidiaries for such period, (v) the amount
of any restructuring reserve or charge recorded during such period in
accordance with GAAP, including any such reserve or charge related to the
Merger, and (vi) any other non-cash charges reducing Consolidated Net Income
for such period (excluding any such charge which requires an accrual of or a
cash reserve for cash charges for any future period), less, without
duplication, (i) non-cash items increasing Consolidated Net Income of such
person for such period (excluding any such items which represent the reversal
of any accrual of, or cash reserve for, anticipated cash charges in any prior
period) in each case determined in accordance with GAAP and (ii) the amount of
all cash payments made by such person or its subsidiaries during such period to
the extent that such cash payment has been provided for in a restructuring
reserve or charge referred to in clause (v) above (and was not otherwise
deducted in the computation of Consolidated Net Income of such person for such
period).
"EJDC" means The Edward J. DeBartolo Corporation, an Ohio
corporation.
"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.
"Excluded Assets" means assets of Holdings or any Subsidiary
required to be disposed of by applicable regulatory authorities in connection
with the Merger.
"Existing Indebtedness" means the following indebtedness of
the Company to the extent outstanding on the Issue Date after giving effect to
the Merger: (a) the 10.45% Senior Notes due 2004 issued pursuant to an
indenture dated as of the date hereof; (b) the 10.45% Senior Notes due 2000
issued pursuant to an indenture dated as of April 15, 1992; (c) the 11% Senior
Subordinated Notes due 2005 issued pursuant to an indenture dated as of the
date hereof; (d) the 9% Senior Subordinated Notes due 2003 issued pursuant to
an indenture dated as of March 30, 1993; (e) the 10 1/4% Senior Subordinated
Notes due 2002 issued pursuant to an indenture dated as of July 29, 1992; (f)
the 13.75% Senior Subordinated Notes due 2005 issued
6
<PAGE> 8
pursuant to an indenture dated as of the date hereof; and (g) the 13.75% Senior
Subordinated Notes due 2001 issued pursuant to an indenture dated as of June
15, 1991.
"FFL" means Food 4 Less, Inc., a Delaware corporation, and its
successors, including, without limitation, Old Holdings following the FFL
Merger and Holdings following the Reincorporation Merger.
"FFL Merger" means the merger, prior to the Merger and the
Reincorporation Merger, of FFL and Old Holdings.
"Fixed Charges" means, with respect to any person, for any
period, the aggregate amount of (i) interest, whether expensed or capitalized,
paid, accrued or scheduled to be paid or accrued during such period (except to
the extent accrued in a prior period) in respect of all Indebtedness of such
person and its consolidated subsidiaries (including (a) original issue discount
on any Indebtedness (including (without duplication), in the case of Holdings,
any original issue discount on the Senior Discount Debentures, the Senior
Discount Notes and the Securities but excluding amortization of debt issuance
costs and (b) the interest portion of all deferred payment obligations,
calculated in accordance with the effective interest method, in each case to
the extent attributable to such period, but excluding the amortization of debt
issuance costs) and (ii) dividend requirements on Preferred Stock of such
person and its consolidated subsidiaries (whether in cash or otherwise (except
dividends payable in shares of Qualified Capital Stock)) declared or paid or
required to be declared or paid during such period (except to the extent
accrued in a prior period) and excluding items eliminated in consolidation.
For purposes of this definition, (a) interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by the
Board of Directors of such person (as evidenced by a Board Resolution) to be
the rate of interest implicit in such Capitalized Lease Obligation in
accordance with GAAP, (b) interest on Indebtedness that is determined on a
fluctuating basis shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest of such Indebtedness in effect on the date Fixed
Charges are being calculated, (c) interest on Indebtedness that may optionally
be determined at an interest rate based upon a factor of a prime or similar
rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to
have been based upon the rate actually chosen, or, if none, then based upon
such optional rate chosen as Holdings may designate, and (d) Fixed Charges
shall be increased or reduced by the net cost (including amortization of
discount) or benefit associated with Interest Swap Obligations attributable to
such period. For purposes of clause (ii) above, dividend requirements shall be
increased to an amount representing the pretax earnings that would be required
to cover such dividend requirements; accordingly, the increased amount shall be
equal to a fraction, the numerator of which is the amount of such dividend
requirements and the denominator of which is one (1) minus the applicable
actual combined federal, state, local and foreign income tax rate of such
person and its subsidiaries (expressed as a decimal), on a consolidated basis,
for the fiscal year immediately preceding the date of the transaction giving
rise to the need to calculate Fixed Charges.
7
<PAGE> 9
"Foreign Exchange Agreement" means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect against fluctuations in currency values.
"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 Issue Date.
"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.
"incur" shall have the meaning set forth in Section 4.12.
"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; (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
8
<PAGE> 10
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 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 nationally recognized investment banking or consulting firm that
is, in the reasonable judgment of the Board of Directors of Holdings, qualified
to perform the tasks for which such firm has been engaged and disinterested and
independent with respect to Holdings and its Affiliates.
"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, whether by 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 Holdings or any of its Subsidiaries
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.
"Issue Date" means the date of first issuance of the
Securities pursuant to this Indenture.
"Legal Defeasance" shall have the meaning provided in Section
8.2.
9
<PAGE> 11
"Legal Holiday" shall have the meaning provided in Section
13.7.
"Letter of Credit Obligations" means Indebtedness of
Subsidiaries with respect to letters of credit issued pursuant to the Credit
Agreement, and for purposes of Section 4.12, the aggregate principal amount of
Indebtedness outstanding at any time with respect thereto, shall be deemed to
consist of (a) the aggregate maximum amount then available to be drawn under
all such letters of credit (the determination of such maximum amount to assume
compliance with all conditions for drawing), and (b) the aggregate amount that
has then been paid by, and not reimbursed to, the issuers under such letters of
credit.
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in an encumbrance against real or
personal property, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell which is intended to constitute
or create a security interest, mortgage, pledge or lien, and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction); provided that in no event shall an
operating lease be deemed to constitute a Lien hereunder.
"Maturity Date" means June 15, 2007.
"Merger" means (i) the merger of the Company into Ralphs
Supermarkets (with Ralphs Supermarkets surviving such merger) pursuant to the
Merger Agreement and (ii) immediately following the merger described in clause
(i) of this definition, the merger of RGC into Ralphs Supermarkets (with Ralphs
Supermarkets surviving such merger and changing its name to "Ralphs Grocery
Company" in connection with such merger).
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of September 14, 1994, by and among Food 4 Less, Inc., a Delaware
corporation, Old Holdings, Ralphs Supermarkets, the Company and the
stockholders of Ralphs Supermarkets, as such agreement is in effect on the
Issue Date.
"Net Cash Proceeds" means Net Proceeds of any Asset Sale
received 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, (and, in the case of any Asset
Sale, net of the amount of cash applied to repay Indebtedness secured by the
asset involved in such Asset Sale) whether such proceeds are in cash or in
property (valued at the fair market value thereof at the time of receipt as
determined with respect to any Asset Sale resulting in Net Proceeds in excess
of $5 million in good faith by the Board of Directors of such person, which
determination shall be evidenced by a Board Resolution) 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
10
<PAGE> 12
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.
"Non-Payment Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more persons to act to
accelerate the maturity of any Designated Senior Indebtedness.
"Obligations" means all obligations of every nature whether
for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance) under the documentation
governing any Indebtedness.
"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 13.4 and 13.5.
"Old Holdings" means Food 4 Less Holdings, Inc., a California
corporation, and its successors, including, without limitation, Holdings
following the Reincorporation Merger.
"Old RGC Notes" means the 9% Senior Subordinated Notes due
2003 and the 10-1/4% Senior Subordinated Notes due 2002 of Ralphs Grocery
Company.
"Operating Coverage Ratio" means with respect to any person,
the ratio of (1) EBDIT of such person for the period (the "Pro Forma Period")
consisting of the most recent four full fiscal quarters for which financial
information in respect thereof is available immediately prior to the date of
the transaction giving rise to the need to calculate the Operating Coverage
Ratio (the "Transaction Date") to (2) the aggregate Fixed Charges of such
person for the fiscal quarter in which the Transaction Date occurs and the
three fiscal quarters immediately subsequent to such fiscal quarter (the
"Forward Period") reasonably anticipated by the Board of Directors of such
person to become due from time to time during such period. For purposes of
this definition, if the Transaction Date occurs prior to the first anniversary
of the Merger, "EBDIT" for the Pro Forma Period shall be calculated, in the
case of Holdings, after giving effect on a pro forma basis to the Merger as if
it had occurred on the first day of the Pro Forma Period. In addition to, but
without duplication of, the foregoing, for purposes of this definition, "EBDIT"
shall be calculated after giving effect (without duplication), on a pro forma
basis for the Pro Forma Period (but no longer), to (a) any Investment, during
the period commencing on the first day of the Pro Forma Period to and including
the Transaction Date (the "Reference Period"), in any other person that, as a
result of such Investment, becomes a subsidiary of such person, (b) the
acquisition, during the Reference Period (by merger, consolidation or purchase
of stock or assets) of any business or assets, which acquisition is not
prohibited by this
11
<PAGE> 13
Indenture, and (c) any sales or other dispositions of assets (other than sales
of inventory in the ordinary course of business) occurring during the Reference
Period, in each case as if such incurrence, Investment, repayment, acquisition
or asset sale had occurred on the first day of the Reference Period. In
addition, for purposes of this definition, "Fixed Charges" shall be calculated
after giving effect (without duplication), on a pro forma basis for the Forward
Period, to any Indebtedness incurred or repaid on or after the first day of the
Forward Period and prior to the Transaction Date. If such person or any of its
subsidiaries directly or indirectly guarantees any Indebtedness of a third
person, the Operating Coverage Ratio shall give effect to the incurrence of
such Indebtedness as if such person or subsidiary had directly incurred such
guaranteed Indebtedness.
"operating lease" means any lease the obligations under which
do not constitute Capitalized Lease Obligations.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee complying with the
requirements of Sections 13.4 and 13.5. Unless otherwise required by the
Trustee, the legal counsel may be an employee of or counsel to Holdings or the
Trustee.
"Pari Passu Indebtedness" means, with respect to Holdings,
Indebtedness that ranks pari passu in right of payment to the Securities
(whether or not secured by any Lien).
"Paying Agent" shall have the meaning provided in Section 2.3,
except that, for the purposes of Articles Three and Eight and Sections 4.14 and
4.15, the Paying Agent shall not be Holdings or an Affiliate of Holdings.
"Payment Default" means any default in the payment of all or
any portion of principal of, premium, if any, or interest on any Designated
Senior Indebtedness or Significant Senior Indebtedness beyond any applicable
grace period with respect thereto.
"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 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 Holder" means (i) Food 4 Less Equity Partners,
L.P., The Yucaipa Companies or any entity controlled thereby or any of the
partners thereof, (ii) Apollo Advisors, L.P., Lion Advisors, L.P., or any
entity controlled thereby or any of the partners thereof, (iii) an employee
benefit plan of Holdings or any Subsidiary, or any participant therein, (iv) a
12
<PAGE> 14
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 Indebtedness" means (a) Indebtedness of the Company
and its subsidiaries (and the Company and each subsidiary (to the extent it is
not an obligor) may guarantee such Indebtedness) pursuant to (i) the Term Loans
in an aggregate principal amount at any time outstanding not to exceed $600
million less the aggregate amount of all principal repayments thereunder
pursuant to and in accordance with the provisions of Section 4.15 subsequent to
the Issue Date, (ii) the revolving credit facility under the Credit Agreement
(including the Letter of Credit Obligations) in an aggregate principal amount
at any time outstanding not to exceed $325 million, less all permanent
reductions thereunder pursuant to and in accordance with the provisions of
Section 4.15 and (iii) any Indebtedness incurred under the Credit Agreement
pursuant to and in compliance with (A) clause (o) of this definition and (B)
Section 4.12 (other than Permitted Indebtedness that is not incurred pursuant
to clause (o) or this clause (a) of this definition); (b) any guarantee by
Holdings of the Indebtedness referred to in the foregoing clause (a); (c)
Indebtedness of Holdings or a Subsidiary owed to and held by Holdings or a
Subsidiary; (d) Indebtedness incurred by Holdings or any Subsidiary in
connection with the purchase or improvement of property (real or personal) or
equipment or other capital expenditures in the ordinary course of business
(including for the purchase of assets or stock of any retail grocery store or
business) or consisting of Capitalized Lease Obligations, provided that (i) at
the time of the incurrence thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four fiscal quarter
period in reliance upon this clause (d) does not exceed, in the aggregate, 3%
of net sales of Holdings and its Subsidiaries during the most recently
completed four fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end of the fourth
fiscal quarter following the Merger) and (ii) such Indebtedness, together with
all then outstanding Indebtedness incurred in reliance upon this clause (d)
does not exceed, in the aggregate, 3% of the aggregate net sales of Holdings
and its Subsidiaries during the most recently completed twelve fiscal quarter
period on a consolidated basis (calculated on a pro forma basis if the date of
incurrence is prior to the end of the twelfth fiscal quarter following the
Merger); (e) Indebtedness incurred by Holdings or any Subsidiary in connection
with capital expenditures in an aggregate principal amount not exceeding $150
million, provided that such capital expenditures relate solely to the
integration of the operations of Ralphs Supermarkets, the Company, and their
respective subsidiaries as described in that certain Registration Statement of
Holdings dated June 2, 1995; (f) Indebtedness of Holdings or any Subsidiary
incurred under Foreign Exchange Agreements and Interest Swap Obligations
entered into with respect to Indebtedness otherwise permitted to be outstanding
pursuant to Section 4.12 or this definition of "Permitted Indebtedness" in a
notional amount not exceeding the aggregate principal amount of such
Indebtedness; (g) guarantees incurred in the ordinary course of business by
Holdings or a Subsidiary of Indebtedness of any other person in the aggregate
not to exceed $25 million at any time outstanding; (h) guarantees by Holdings
or a Subsidiary of Indebtedness incurred by a wholly-owned Subsidiary so long
as the incurrence of such Indebtedness incurred by such wholly-owned Subsidiary
is permitted under the terms of this Indenture; (i) Refinancing Indebtedness;
(j) Indebtedness for letters of credit relating to workers' compensation claims
and self-insurance or similar requirements in the ordinary course of business;
(k) Existing Indebtedness and other
13
<PAGE> 15
Indebtedness outstanding on the Issue Date (after giving effect to the Merger);
(l) Indebtedness arising from guarantees of Indebtedness of Holdings or any
Subsidiary or other agreements of Holdings or a Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or Subsidiary, other than guarantees of Indebtedness incurred by any
person acquiring all or any portion of such business, assets or Subsidiary for
the purpose of financing such acquisition; provided that the maximum aggregate
liability in respect of all such Indebtedness shall at no time exceed the gross
proceeds actually received by Holdings and its Subsidiaries in connection with
such disposition; (m) obligations in respect of performance bonds and
completion guarantees provided by Holdings or any Subsidiary in the ordinary
course of business; (n) Indebtedness of Holdings with respect to the Senior
Discount Notes, if any, the Senior Discount Debentures (including the accretion
of the Senior Discount Notes and the Senior Discount Debentures up to their
respective stated principal amount at maturity) and the Securities (including
the issuance of additional Secondary Securities in lieu of cash interest
payments pursuant to the terms of this Indenture); and (o) additional
Indebtedness of Holdings or any Subsidiary in an amount not to exceed $175
million at any time outstanding.
"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 made pursuant to
Section 4.15 or any other disposition of assets not constituting an Asset Sale
by reason of the $500,000 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 Section 4.11,
(vi) Investments in any Subsidiary or by any Subsidiary in Holdings or by any
Subsidiary in other Subsidiaries, and (vii) additional Investments in an
aggregate amount not exceeding $15 million.
"Permitted Payments" means (i) any payment by Holdings or any
Subsidiary to The Yucaipa Companies or the principals or any Affiliates thereof
for consulting, management, investment banking or similar services, or for
reimbursement of losses, costs and expenses pursuant to the Consulting
Agreement, (ii) any payment by Holdings or any Subsidiary to Apollo Advisors,
L.P. or the principals or any Affiliates thereof in an aggregate amount not to
exceed $5 million as a commitment fee in connection with the purchase of equity
securities of Holdings on the Issue Date, (iii) any payment by Holdings or any
Subsidiary, (a) in connection with repurchases of outstanding shares of
Holdings' common stock following the death, disability or termination of
employment of management stockholders, and (b) of amounts required to be paid
by Holdings or any Subsidiaries to participants or former 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 any unused amounts may be carried over to any subsequent Yearly Period
subject to a maximum amount of $20 million in any Yearly Period), (iv) the loan
by Holdings or any Subsidiary on the Issue Date to RGC Investment Co. of not
more than $5 million and (v) for so long as the sole business activity of such
partnership is to acquire, hold, sell, exchange, transfer or otherwise dispose
of all or any portion of the Senior Discount Debentures and to manage its
investment in the Senior Discount Debentures, any payment by Holdings or any of
its Subsidiaries to fund ongoing costs and expenses of RGC Partners, L.P.
14
<PAGE> 16
pursuant to the Subscription Agreement and the Senior Discount Debenture
Registration Rights Agreement.
"Permitted Subordinated Reorganization Securities" means
securities of Holdings issued in a plan of reorganization in a case under the
Bankruptcy Law relating to Holdings which constitute either (y) Capital Stock
(other than Disqualified Capital Stock with the reference to "Maturity Date" in
the definition of such term modified to relate to the final stated maturity of
any debt securities issued in such plan of reorganization to the holders of
Designated Senior Indebtedness ("Senior Reorganization Securities")) and (z)
debt securities of Holdings which are (i) unsecured, (ii) have no scheduled
mandatory amortization thereon prior to the final stated maturity of the Senior
Reorganization Securities and (iii) are subordinated in right of payment to the
Senior Reorganization Securities to at least the same extent as the Securities
are subordinated to Designated Senior Indebtedness.
"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, (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 Holdings, (iv)
any investment account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of such person, and
(v) any investment fund or investment entity that is a subsidiary of such
person or a Permitted Transferee of such person.
"Person" or "person" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"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, Capital
Stock of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such person, over
shares of Capital Stock of any other class of such person.
"principal" of any Indebtedness (including the Securities)
means the principal of such Indebtedness plus the premium, if any, on such
Indebtedness.
15
<PAGE> 17
"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, as
interpreted by Holdings' chief financial officer or 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.
"Public Equity Offering" means an underwritten public offering
of common stock of Holdings or the Company pursuant to a registration statement
filed with the SEC in accordance with the Securities Act which public equity
offering results in gross proceeds to Holdings or the Company of not less than
$20,000,000.
"Public Equity Offering Consummation Date" means the first
date on which Holdings or the Company receives any proceeds from a Public
Equity Offering.
"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 Paragraph 5 of the Securities annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price fixed for such redemption pursuant to this
Indenture and Paragraph 5 of the Securities annexed hereto as Exhibit A.
"Reference Date" shall have the meaning provided in Section
4.3.
"Reference Period" shall have the meaning provided in the
definition of "Operating Coverage Ratio" contained in this Section 1.1.
"Refinancing Indebtedness" means, with respect to any person,
Indebtedness of such person issued in exchange for, or the proceeds from the
issuance and sale or disbursement of which are used to substantially
concurrently repay, redeem, refund, refinance, discharge or otherwise retire
for value, in whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or renewal of
(collectively, an "amendment"), any Indebtedness of such person existing on the
Issue Date or Indebtedness
16
<PAGE> 18
(other than Permitted Indebtedness, except Permitted Indebtedness incurred
pursuant to clauses (b), (d), (e), (i), (k) and (n) of the definition thereof)
incurred in accordance with this Indenture (a) in a principal amount (or, if
such Refinancing Indebtedness provides for an amount less than the principal
amount thereof to be due and payable upon the acceleration thereof, with an
original issue price) not in excess of (without duplication) (i) the principal
amount or the original issue price, as the case may be, of the Indebtedness so
refinanced (or, if such Refinancing Indebtedness refinances Indebtedness under
a revolving credit facility or other agreement providing a commitment for
subsequent borrowings, with a maximum commitment not to exceed the maximum
commitment under such revolving credit facility or other agreement) plus (ii)
unpaid accrued interest on such Indebtedness plus (iii) premiums, penalties,
fees and expenses actually incurred by such person in connection with the
repayment or amendment thereof and (b) with respect to Refinancing Indebtedness
that repays or constitutes an amendment to Subordinated Indebtedness, such
Refinancing Indebtedness (x) shall not have any fixed mandatory redemption or
sinking fund requirement in an amount greater than or at a time prior to the
amounts and times specified in such repaid or amended Subordinated
Indebtedness, except to the extent that any such requirement applies on a date
after the Maturity Date and (y) shall contain subordination and default
provisions no less favorable in any material respect to Holders than those
contained in such repaid or amended Subordinated Indebtedness.
"Registrar" shall have the meaning provided in Section 2.3.
"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.
"Reincorporation Merger" means the merger, prior to the
Merger, of Old Holdings with and into Holdings.
"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 of its Subsidiaries 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 its
Subsidiaries 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 its
Subsidiaries as it is conducted as of the Issue Date and as such business may
thereafter evolve or change.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
"Restricted Debt Prepayment" means any purchase, redemption,
defeasance (including, but not limited to, in-substance or legal defeasance)
or other acquisition or retirement for value directly or indirectly by Holdings
or Subsidiary, prior to the scheduled maturity or
17
<PAGE> 19
prior to any scheduled repayment of principal or any sinking fund payment, as
the case may be, in respect of any Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment or (ii)
Investment (other than a Permitted Investment) or (iii) Restricted Debt
Prepayment.
"RGC" means Ralphs Grocery Company, a Delaware corporation,
until a successor replaces it and thereafter means such successor.
"SEC" means the Securities and Exchange Commission.
"Secondary Securities" has the meaning set forth in Section
2.2.
"Securities" means the 13-5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 of Holdings, including any Secondary Securities issued as
interest thereon, in each case, issued pursuant to this Indenture, as the same
may be modified or amended from time to time and refinancings thereof, to the
extent such refinancing indebtedness is permitted to be incurred under the
Senior Discount Debenture Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Senior Discount Debentures" means the 13-5/8% Senior Discount
Debentures due 2005 of Holdings, issued pursuant to the Senior Discount
Debenture Indenture, as the same may be modified or amended from time to time
and refinancings thereof, to the extent such refinancing indebtedness is
permitted to be incurred under this Indenture.
"Senior Discount Debenture Indenture" means the indenture
between Holdings and United States Trust Company of New York, as trustee, dated
as of the Issue Date, pursuant to which the Senior Discount Debentures were
issued, as amended or supplemented from time to time and refinancings thereof
to the extent such refinancing indebtedness is permitted to be incurred under
this Indenture.
"Senior Discount Debenture Registration Rights Agreement"
means that certain Registration Rights Agreement by and among Holdings, the
Company and RGC Partners, L.P. as such Registration Rights Agreement may be
amended or replaced, so long as any amounts paid under any amended or
replacement agreement do not exceed the amounts payable under such Registration
Rights Agreement as in effect on the Issue Date.
"Senior Discount Notes" means the 15.25% Senior Discount Notes
due 2004 of Old Holdings, issued pursuant to the Senior Discount Note
Indenture, as the same may be modified or amended from time to time and
refinancings thereof, to the extent such refinancing indebtedness is permitted
to be incurred under this Indenture.
18
<PAGE> 20
"Senior Discount Note Indenture" means the indenture between
Old Holdings and United States Trust Company of New York, as trustee, dated as
of December 15, 1992, pursuant to which the Senior Discount Notes were issued,
as amended or supplemented from time to time and refinancings thereof to the
extent such refinancing indebtedness is permitted to be incurred under this
Indenture.
"Senior Indebtedness" means the principal of, premium, if any,
and interest on (such Senior Indebtedness being deemed to include for all
purposes of Article Eleven of this Indenture the amount required to fully
secure in cash undrawn Letter of Credit Obligations under the Credit Agreement
and such interest on Senior Indebtedness being deemed to include for all
purposes of Article Eleven interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law in accordance with and
at the rate (including any rate applicable upon any default, 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), and all other Obligations with
respect to, any Indebtedness of Holdings (and, in the case of the Credit
Agreement, 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 Credit Agreement), 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, the Senior
Discount Debentures and the Senior Discount Notes, if any. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) any Pari Passu
Indebtedness or any Subordinated Indebtedness, including, but not necessarily
limited to (a) the 13.75% Senior Subordinated Notes due 2005 of the Company
issued pursuant to an Indenture dated as of June 14, 1995, (b) the 13.75%
Senior Subordinated Notes due 2001 of the Company issued pursuant to an
Indenture dated as of June 15, 1991, (c) the 10.25% Senior Subordinated Notes
due 2002 of the Company issued pursuant to an Indenture dated as of July 29,
1992 and (d) the 9% Senior Subordinated Notes due 2003 of the Company issued
pursuant to an Indenture dated as of March 30, 1993, each of (a) through (d)
above shall rank pari passu with the Securities; (ii) any Indebtedness
constituting Disqualified Capital Stock, (iii) Indebtedness of Holdings to any
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 Senior Indebtedness" means Senior Indebtedness
which, at the time of determination, is equal to or greater than $50 million in
aggregate principal amount.
19
<PAGE> 21
"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 of Holdings
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 Issue Date) or (b) material to the financial
condition or results of operations of Holdings and its Subsidiaries 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 exchangeable or
convertible Indebtedness of such person), 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 payment with respect to its Capital Stock or 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.
"Subscription Agreement" means that certain Subscription
Agreement between RGC Partners, L.P., Holdings, the Company and the partnership
investors listed on Exhibit A thereto, as such Subscription Agreement may be
amended or replaced, so long as any amounts paid under any amended or
replacement agreement do not exceed the amounts payable with such Subscription
Agreement as in effect on the Issue Date.
"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
20
<PAGE> 22
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.
"Subsidiary" means any subsidiary of Holdings.
"Surviving Person" shall have the meaning provided in Section
5.1.
"Term Loans" means the term loan facility under the Credit
Agreement and any agreement governing Indebtedness incurred to refund, replace
or refinance any borrowings outstanding under such facility or under any prior
refunding, replacement or refinancing thereof (in each case, in whole or in
part, and without limitation as to amount, terms, conditions, covenants and
other provisions).
"The Yucaipa Companies" means The Yucaipa Companies, a
California general partnership, or any successor thereto which is an Affiliate
of Ronald W. Burkle or his Permitted Transferees and which has been established
for the sole purpose of changing the form of The Yucaipa Companies from that of
a partnership to that of a limited liability company or any other form of
entity which is not materially adverse to the rights of the Holders under this
Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 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 8.4.
"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.
"wholly-owned Subsidiary" means any Subsidiary all of the
shares of Capital Stock of which (other than 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
January 28, 1996.
21
<PAGE> 23
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.
"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.
22
<PAGE> 24
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.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall in each case, have been duly authorized by all requisite
corporate actions) shall attest to, 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
$131,500,000 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 $131,500,000, 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) June 15, 2000, 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
23
<PAGE> 25
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 $10.00 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
$10.00; provided that Holdings may at its option pay cash in lieu of issuing
Secondary Securities in any denominations of less than $10.00.
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 4.14 and 4.15, neither
Holdings nor any Affiliate 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
24
<PAGE> 26
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
Holdings 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 an Affiliate 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 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; provided, however, that the Securities surrendered for transfer or
exchange shall be duly-endorsed or accompanied by a written instrument of
transfer in form satisfactory to Holdings and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
The Registrar need not transfer or exchange any Securities selected for
redemption. Also, it need not transfer or exchange any Securities for a
25
<PAGE> 27
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 2.2, 2.7, 2.10, 3.6, 4.14, 4.15 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
reasonable 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.
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
26
<PAGE> 28
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 and in Article IX, 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 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
27
<PAGE> 29
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, with a copy to the Credit
Agent, 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. In order to effect a redemption pursuant to Paragraph 5 of
the Securities with the proceeds of a Public Equity Offering, Holdings shall
send the redemption notice not later than 60 days after the consummation of
such Public Equity Offering. 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; provided, however, that any redemption pursuant to paragraph 5(b) of the
Securities shall be made on a pro rata basis unless such method is otherwise
legally prohibited.
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.
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 and the Credit Agent.
28
<PAGE> 30
In order to effect a redemption pursuant to Paragraph 5 of the Securities with
the proceeds of a Public Equity Offering, Holdings shall send the redemption
notice not later than 60 days after the consummation of such Public Equity
Offering. 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 or accrued interest, 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 (in integral multiples of
$10.00 principal amount at maturity) 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
29
<PAGE> 31
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.
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 an
Affiliate) 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.
30
<PAGE> 32
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 13.2.
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 proposed Restricted Payment, or after giving effect thereto, (a) a Default
or an Event of Default shall have occurred and be continuing, (b) Holdings or
such Subsidiary could not incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.12, or (c) the
aggregate amount expended for all Restricted Payments, including such proposed
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
aggregate 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 of the
proposed Restricted Payment (the "Reference Date") plus (ii) 100% of the
aggregate Net 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) 100% of the
aggregate net cash proceeds received by Holdings as capital contributions to
Holdings after the Issue Date, plus (iv) $25,000,000.
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 shall 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 of Holdings or
the repurchase, redemption, or other repayment of any Subordinated Indebtedness
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 of
Holdings, (3) the repurchase, redemption or other repayment of any Subordinated
Indebtedness in exchange for or solely out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary) of Subordinated Indebtedness of
Holdings with an Average Life equal to or greater than the then remaining
Average Life of the Subordinated Indebtedness repurchased, redeemed or repaid,
(4) any payments by Holdings or any Subsidiary required to
31
<PAGE> 33
be made due to the exercise of statutory dissenters', appraisal or similar
rights by holders of common stock of FFL in connection with the FFL Merger, and
(5) Permitted Payments; provided, however, that (x) the declaration of each
dividend paid in accordance with clause (1) above, each acquisition,
repurchase, redemption or other repayment made in accordance with, or of the
type set forth in, clause (2) above, and each payment described in clause (iii)
of the definition of "Permitted Payments" shall each be counted for purposes of
computing amounts expended pursuant to subclause (c) in the immediately
preceding paragraph, and (y) no amounts paid pursuant to clause (3) or (4)
above or pursuant to clause (i), (ii), (iv) or (v) 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.
32
<PAGE> 34
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 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.
33
<PAGE> 35
(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.
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.
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 15 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 Section 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,
34
<PAGE> 36
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.
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 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 of its Subsidiaries shall
(i) sell, lease, transfer or otherwise dispose of any of its properties or
assets, or issue securities (other than equity securities which do not
constitute Disqualified Capital Stock) to, (ii) purchase any property, assets
or securities (other than equity securities which do not constitute
Disqualified Capital Stock) from, (iii) make any Investment in, or (iv) enter
into or suffer to exist any contract or agreement with or for the benefit of,
an Affiliate or Significant Stockholder (or any Affiliate of such Significant
Stockholder) of Holdings or any Subsidiary (an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under Section 4.11(b) and (y)
Affiliate Transactions 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; provided, that (A) with respect to Affiliate Transactions
involving aggregate payments in excess of $1 million and less than $5 million,
Holdings or such Subsidiary, as the case may be, shall have delivered an
Officers' Certificate to the Trustee certifying that such transaction or series
of transactions complies with clause (y) above (other than the requirement set
forth in such clause (y) that such Affiliate Transaction be in the ordinary
course of business), (B) with respect to Affiliate Transactions involving
aggregate payments in excess of $5 million and less than $15 million, Holdings
or such Subsidiary, as the case may be, shall have delivered an Officers'
Certificate to the Trustee certifying that such Affiliate Transaction complies
with clause (y) above (other than the requirement set forth in such clause (y)
that such Affiliate Transaction be in the ordinary course of business) and that
such Affiliate Transaction has received the approval of a majority of the
disinterested members 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 the financial terms of such Affiliate Transaction
are fair to Holdings or such Subsidiary, as the case may be, or that the terms
of such Affiliate Transaction are at least as favorable as might reasonably
have been obtained at such time from an unaffiliated party
35
<PAGE> 37
and that such Independent Financial Advisor has provided written confirmation
of such determination to the Board of Directors and (C) with respect to
Affiliate Transactions involving aggregate payments in excess of $15 million,
Holdings or such Subsidiary, as the case may be, shall have delivered to the
Trustee, a written opinion from an Independent Financial Advisor to the effect
that the financial terms of such Affiliate Transaction are fair to Holdings or
such Subsidiary, as the case may be, or that the terms of such Affiliate
Transaction are at least as favorable as those that might reasonably have been
obtained at the time from an unaffiliated party.
(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 and any of its 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 of its Subsidiaries of
its obligations under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the
performance by Holdings or any of its Subsidiaries 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,
and (viii) transactions with suppliers or other purchases or sales of goods or
services, in each case, in the ordinary course of business (including, without
limitation, pursuant to joint venture agreements) and otherwise in compliance
with the terms of this Indenture which are fair to Holdings or any Subsidiary,
in the reasonable determination of the Board of Directors or senior management
of Holdings, or are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party.
Section 4.12. Limitation on Incurrences of Additional Indebtedness.
Holdings shall not, and shall not permit any Subsidiary to,
directly or indirectly, incur, assume, guarantee, become liable, contingently
or otherwise, with respect to, or otherwise become responsible for the payment
of (collectively "incur") any Indebtedness other than Permitted Indebtedness;
provided, however, that if no Default with respect to payment of principal of,
or interest on, the Securities or Event of Default shall have occurred and be
continuing at the time or as a consequence of the incurrence of any such
Indebtedness, (i) Holdings may incur Indebtedness if immediately before and
immediately after giving effect to
36
<PAGE> 38
the incurrence of such Indebtedness the Operating Coverage Ratio of Holdings
would be greater than 2.0 to 1.0 and (ii) the Company or any subsidiary of the
Company may incur Indebtedness if immediately before and immediately after
giving effect to the incurrence of such Indebtedness the Operating Coverage
Ratio of the Company would be greater than 2.0 to 1.0.
Section 4.13. Limitation on Liens.
Holdings shall not create, incur, assume 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) 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 and unpaid
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 cause the Company to
either (a) repay in full and terminate all commitments under Indebtedness under
the Credit Agreement to the extent the terms thereof require repayment upon a
Change of Control (or offer to repay in full and terminate all commitments
under all such Indebtedness under the Credit Agreement and repay the
Indebtedness owed to each lender which has accepted such offer), or (b) obtain
the requisite consents under the Credit Agreement, the terms of which require
repayment upon a Change of Control, to permit the repurchase of the Securities
as provided for in this Section 4.14. Holdings shall first comply with the
covenant in the immediately preceding sentence before Holdings shall be
required to repurchase Securities pursuant to this Section 4.14, and any
failure to so comply shall constitute an Event of Default 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.
In addition, prior to purchasing Securities tendered into a
Change of Control Offer, Holdings shall purchase all Senior Discount Debentures
(or permitted refinancings thereof) which it is required to purchase by reason
of such Change of Control pursuant to the provisions of the Senior Discount
Debenture Indenture.
(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
37
<PAGE> 39
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 a copy to the Trustee, which notice shall govern
the terms of the Change of Control Offer. Holdings shall give notice of an
event giving rise to a Change of Control on the same date and in the same
manner to all Holders of Securities. 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 of $10.00 or integral multiples thereof (except for Secondary
Securities that were issued in denominations other than $10.00);
(8) that each Change of Control Offer is required to
remain open for at least 20 Business Days or such longer period as may
be required by law and until 12:00 Midnight New York City time of the
applicable Change of Control Payment Date; and
(9) the circumstances and relevant facts regarding such
Change of Control,
38
<PAGE> 40
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.
(c) 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 (and
the Trustee shall promptly authenticate and mail to such Holders new Securities
equal in principal amount to any unpurchased portion of the Securities
surrendered); provided that each such new Security shall be in the principal
amount of $10.00 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.
(d) Holdings will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to a Change of Control Offer. To the extent
the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.14, Holdings shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.14 by virtue thereof.
Section 4.15. Limitation on Asset Sales.
(a) Neither Holdings nor any of its Subsidiaries shall
consummate an 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 and (b) upon consummation of an Asset
Sale, Holdings or the applicable Subsidiary shall, within 365 days of the
receipt of the proceeds therefrom, either: (i) apply or cause its Subsidiary to
apply the Net Cash Proceeds of any Asset Sale to (1) a Related Business
Investment, (2) an investment in properties and assets that replace the
properties and assets that are the subject of such Asset Sale, or (3) an
investment in properties and assets that will be used in the business of
Holdings and its Subsidiaries existing on the Issue Date or in a business
reasonably related thereto; (ii) in the case of a sale of a store or stores,
deem such Net Cash Proceeds to have been applied to the extent of any capital
expenditures made to acquire or construct a replacement store in the general
vicinity of the store sold within 365 days preceding the date of the Asset
Sale; (iii) apply or cause to be applied such Net Cash Proceeds to the
repayment of Senior Indebtedness or Pari Passu Indebtedness of Holdings or any
Indebtedness of any Subsidiary; (iv) use such Net Cash Proceeds to secure
Letter of Credit Obligations to the extent the related letters of credit have
not been drawn upon or returned undrawn; or (v) after such time as the
accumulated Net Cash Proceeds equals or exceeds $20 million, apply or cause to
be applied such Net Cash Proceeds to the purchase of Securities tendered to
Holdings for purchase at a price equal to 100% of the aggregate principal
39
<PAGE> 41
amount thereof, plus accrued interest to the date of purchase pursuant to an
offer to purchase made by Holdings as set forth below (a "Net Proceeds Offer").
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 (b)(i), (ii), (iii) or (iv) above; provided, however, that
Holdings shall have the right to exclude from the foregoing provisions Asset
Sales subsequent to the Issue Date, the proceeds of which are derived from the
sale and substantially concurrent lease-back of one or more supermarkets and/or
related assets or equipment which are acquired or constructed by Holdings or a
Subsidiary subsequent to the date that is six months prior to the Issue Date,
provided that any such sale and substantially concurrent lease-back occurs
within 270 days following such acquisition or the completion of such
construction, as the case may be.
(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
325 days nor more than 365 days after the relevant Asset Sale to all Holders at
their last registered addresses, with a copy to the Trustee. 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
$10.00 or multiples thereof shall be purchased, except for Secondary
Securities that were issued in denominations other than $10.00);
(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 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;
40
<PAGE> 42
(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;
(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; and
(8) that the Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by
law.
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 (and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered).
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.
(c) Holdings shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Securities pursuant to a Net Proceeds Offer. To the
extent the provisions of any securities laws or regulations conflict with the
provisions under this Section 4.15, Holdings shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section 4.15 by virtue thereof.
Any amounts remaining after the purchase of Securities
pursuant to a Net Proceeds Offer shall be returned by the Trustee to Holdings.
41
<PAGE> 43
Section 4.16. Limitation on Senior Subordinated Indebtedness.
Holdings shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that by its terms 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 shall 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.
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 respect to any of its Subsidiaries,
except for (a) any such restrictions contained in (i) the Credit Agreement as
in effect on the Issue Date, as any such Payment Restriction may apply to any
present or future Subsidiary, (ii) this Indenture, the Senior Discount Note
Indenture, the Senior Discount Debenture Indenture, the indentures with respect
to Existing Indebtedness and any other agreement in effect at or entered into
on the Issue Date, (iii) 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 of any person, other than the person so acquired and (z)
such Indebtedness is otherwise permitted to be incurred pursuant to Section
4.12), (iv) secured Indebtedness otherwise permitted to be incurred pursuant to
Sections 4.12 and 4.13 that limit the right of the debtor to dispose of the
assets securing such Indebtedness; (b) customary non-assignment provisions
restricting subletting or assignment of any lease or other agreement entered
into by a 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 joint venture agreements and other similar agreements;
(f) restrictions contained in Indebtedness incurred to refinance, refund,
extend or renew Indebtedness referred to in clause (a) above; provided that the
restrictions contained therein are not materially more restrictive taken as a
whole, than those provided for in such Indebtedness being refinanced, refunded,
extended or renewed, and (g) Payment Restrictions contained in any other
Indebtedness permitted to be incurred subsequent to the Issue Date pursuant to
the provisions of Section 4.12; provided that any such Payment Restrictions are
ordinary and customary with respect to the type of Indebtedness being incurred
(under the
42
<PAGE> 44
relevant circumstances) and, in any event, no more restrictive than the most
restrictive Payment Restrictions in effect on the Issue Date.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1. When Holdings May Merge, Etc.
(a) Holdings, in a single transaction or through a series
of related transactions, shall not (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 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 supplement, 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 Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of Holdings immediately preceding the transaction and (B) the
Surviving Person could incur at least $1 of additional Indebtedness
other than Permitted Indebtedness pursuant to Section 4.12; and
(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.
(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 direct or indirect 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.
43
<PAGE> 45
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Holdings or any adoption of a Plan of
Liquidation by Holdings in accordance with Section 5.1, the Surviving Person
formed by such consolidation or into which Holdings is merged or to which such
transfer is made, (or, in the case of a Plan of Liquidation, to which assets
are transferred) 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 surviving person had been named as Holdings herein; provided, however,
that solely for purposes of computing amounts described in subclause (c) of
Section 4.3, any such surviving person shall only be deemed to have succeeded
to and be substituted for Holdings with respect to periods subsequent to the
effective time of such merger, consolidation or transfer of assets. 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 any
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
44
<PAGE> 46
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 in default for failure to pay
principal at stated final maturity or the maturity of which has been
so accelerated, aggregates $25 million or more at any one time
outstanding;
(5) Holdings or any Significant Subsidiary (A) commences
a voluntary case or proceeding under any Bankruptcy Law with respect
to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it
or for all or substantially all of its property or (D) makes a general
assignment for the benefit of its creditors;
(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 all or any substantial
part of their respective properties or (C) order the winding-up or
liquidation of Holdings' or any Significant Subsidiary's affairs; and
such judgment, decree or order shall remain unstayed and in effect for
a period of 60 consecutive days;
(7) the lenders under the Credit Agreement shall commence
judicial proceedings to foreclose upon any material portion of the
assets of Holdings and its Subsidiaries; or
(8) any final judgment or order for payment of money in
excess of $25 million shall be entered against Holdings or any
Significant Subsidiary by a court of competent jurisdiction and shall
remain undischarged for a period of 60 days after such judgment
becomes final and nonappealable.
A Default under clause (3) above (other than in the case of
any Default under Section 4.3, 4.14, 4.15 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.
45
<PAGE> 47
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
the Credit Agreement 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 the Credit Agreement 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 and only if upon such fifth Business Day such
Event of Default shall be continuing or (b) the acceleration 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 interest 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.
46
<PAGE> 48
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 fifty
four percent (54%) in aggregate principal amount of the outstanding Securities
(or at least a majority in aggregate principal amount of the outstanding
Securities in the event that EJDC shall cease to beneficially own 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.
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 including, without limitation, any remedies
provided for in Section 6.3. 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 written 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;
47
<PAGE> 49
(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 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,
48
<PAGE> 50
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 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.
49
<PAGE> 51
Section 7.1. Duties of Trustee.
(a) If a Default or an Event of Default of which the
Trustee is aware 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 would
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 undertake to 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
against 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 shall have no liability except 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 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. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by law.
50
<PAGE> 52
Section 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may consult with counsel and may require in addition to written
direction from Holdings, an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 13.4 and 13.5. 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
attorney or 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 reasonable 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.
51
<PAGE> 53
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 or if such Default or Event of Default is not known to
the Trustee during such 90-day period, promptly after such Default or Event of
Default becomes known to the Trustee. 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 or payment when due pursuant
to a Net Proceeds 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 Section 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 Section 313(a). The Trustee also shall
comply with TIA Section 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.
52
<PAGE> 54
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 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 and 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.
53
<PAGE> 55
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 resignation
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.
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
appointment 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 Section 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 Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 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 Section 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Holdings.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
54
<PAGE> 56
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.
Holdings may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.2 or 8.3 hereof be applied to all outstanding
Securities upon compliance with the conditions set forth below in this Article
Eight.
Section 8.2. Legal Defeasance.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that Holdings shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on
demand of and at the expense of Holdings, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 8.4 hereof, and as more fully set forth in such Section,
payments in respect of the principal, of, premium, if any, and interest on such
Securities when such payments are due, (b) Holdings' obligations with respect
to such Securities under Article Two and Section 4.2 hereof, and, with respect
to the Trustee, under Section 7.7, (c) the rights, powers, trusts, duties and
immunities of the Trustee and Holdings' obligations in connection therewith,
and (d) this Article Eight. Subject to compliance with this Article Eight,
Holdings may exercise its option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
Section 8.3. Covenant Defeasance.
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Holdings shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.3, 4.6 through 4.9 and
4.11 through 4.18 and Article V hereof with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Securities
shall not
55
<PAGE> 57
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Securities, Holdings may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1 hereof, but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby. In addition, upon Holdings' exercise under Section 8.1
hereof of the option applicable to this Section 8.3 hereof, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Section 6.1(3)
(but only to the extent it relates to a breach of any of the covenants
contained in Sections 4.3, 4.6 through 4.9 and 4.11 through 4.18 and Article V
hereof), shall not constitute an Event of Default.
Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) Holdings must have irrevocably
deposited with the Trustee, in trust, for the benefit of the
Holders of the Securities, cash in United States dollars, or
direct non-callable obligations of, or non- callable
obligations guaranteed by, the United States 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"), or a combination thereof, in such
amounts and at such times as will be 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 a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any,
and interest on the outstanding Securities to redemption or
maturity provided that the Trustee shall have been irrevocably
instructed to apply such money or the proceeds of such U.S.
Government Obligations to said payments with respect to the
Securities on the Maturity Date or such redemption date, as
the case may be;
(b) in the case of an election under
Section 8.2 hereof, Holdings shall have delivered to the
Trustee an Opinion of Counsel stating that (A) Holdings has
received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the Issue Date, there
has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the outstanding
Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and Legal
Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same
56
<PAGE> 58
times as would have been the case if such deposit and Legal
Defeasance had not occurred;
(c) in the case of an election under
Section 8.3 hereof, Holdings shall have delivered to the
Trustee an Opinion of Counsel stating that the Holders of the
outstanding Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit
and Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same
times as would have been the case if deposit and such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall
have occurred and be continuing on the date of such deposit or
insofar as Section 6.1(5) or 6.1(6) hereof is concerned, at
any time in the period ending on the 91st day after the date
of deposit (it being understood that this condition shall not
be deemed satisfied until after such 91st day);
(e) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which Holdings is a party
or by which Holdings is bound (and in that connection, the
Trustee shall have received a certificate from the
administrative agent under the Credit Agreement to that effect
with respect to such Credit Agreement if then in effect);
(f) Holdings shall have delivered to the
Trustee an Opinion of Counsel to the effect that, assuming
that no Default or Event of Default shall occur and be
continuing under Section 6.1(5) or 6.1(6) during the period
ending on the 91st day after the date of deposit, the trust
funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) Holdings shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was
not made by Holdings with the intent of preferring the Holders
over the other creditors of Holdings or with the intent of
defeating, hindering, delaying or defrauding creditors of
Holdings, or others; and
(h) Holdings shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for
relating to the Legal Defeasance or the Covenant Defeasance
have been complied with.
57
<PAGE> 59
Section 8.5. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee
pursuant to Section 8.4 hereof in respect of the outstanding Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (excluding Holdings or any Affiliate thereof) as
Holdings shall determine and direct in writing, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
Holdings shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities. Holdings' obligation to pay and indemnify the Trustee as set forth
in this paragraph shall survive the termination of this Indenture and the
Securities.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to Holdings from time to time
upon the request of Holdings any money or non-callable U.S. Government
Obligations held by it as provided in Section 8.4 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.4(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
Section 8.6. Repayment to Holdings.
Any money deposited with the Trustee or any Paying Agent in
trust for the payment of the principal of, premium, if any, or interest on any
Security and remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall be paid to
Holdings on its request or shall be discharged from such trust; and the Holder
of such Security shall thereafter, as a creditor, look only to Holdings for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense of Holdings cause to be published once, in The New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to Holdings.
58
<PAGE> 60
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings' obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if Holdings makes any payment of
principal of, premium, if any, or interest on any Security following the
reinstatement of its obligations, Holdings shall be subrogated to the rights of
the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
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 hereunder;
(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
(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.
59
<PAGE> 61
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 four percent (54%) in aggregate principal amount
of the outstanding Securities (or at least a majority in aggregate principal
amount of the outstanding Securities in the event that EJDC shall cease to
beneficially own at least a majority 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 four percent (54%) in aggregate principal
amount of the outstanding Securities (or at least a majority in aggregate
principal amount of the outstanding Securities in the event that EJDC shall
cease to beneficially own at least a majority 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 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 this Indenture and the Securities as in effect on the Issue
Date.
Without the consent of the Holder or Holders of at least 75% of the
aggregate principal amount of the outstanding Securities, no such amendment,
supplement or waiver may change the Change of Control Payment Date or the
purchase price in connection with any repurchase of Securities pursuant to
Section 4.14 hereof in a manner adverse to any Holder or waive a Default or
Event of Default resulting from a failure to comply with Section 4.14 hereof.
60
<PAGE> 62
Without the consent of the Holder or Holders of at least
66-2/3% 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.
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
61
<PAGE> 63
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.
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
Indenture. 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;
62
<PAGE> 64
(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 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.
63
<PAGE> 65
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 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.
64
<PAGE> 66
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 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 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 or Cash Equivalents 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
65
<PAGE> 67
one or more of them may enforce such provisions. Holders of Senior
Indebtedness need not prove reliance on the subordination provisions hereof.
The obligations of Holdings to the Trustee under Section 7.7
shall not be subject to the provisions of this Article Eleven.
Section 11.2. No Payment on Securities in Certain Circumstances.
(a) Unless Section 11.3 shall be applicable, upon (1) the
occurrence of a Payment Default and (2) receipt by the Trustee from the
Representatives of written notice of such occurrence, then no direct or
indirect payments (other than payments previously made pursuant to the
provisions described under Articles Eight and Twelve of this Indenture or
payments in Secondary Securities) or distribution of any assets of Holdings of
any kind or character shall be made by or on behalf of Holdings on account of
the Obligations on the Securities or on account of the purchase or redemption
or other acquisition of the Securities whether pursuant to the terms of the
Securities or upon acceleration or otherwise unless and until such Payment
Default shall have been cured or waived or shall have ceased to exist, or such
Designated Senior Indebtedness or Significant Senior Indebtedness, as the case
may be, as to which such Payment Default relates shall have been discharged or
paid in full in cash or Cash Equivalents, after which Holdings shall resume
making any and all required payments in respect of the Securities, including
any missed payments.
(b) Unless Section 11.3 shall be applicable, upon (1) the
occurrence of a Non-Payment Default, and (2) the earlier to occur of (i)
receipt by the Trustee from the Representative of written notice of such
occurrence stating that such notice is a "Payment Blockage Notice" pursuant to
Section 11.2(b) of this Indenture, or (ii) if such Non-Payment Default results
from the acceleration of the Securities, the date of such acceleration, no such
payment (other than payments previously made pursuant to the provisions
described under Articles Eight or Twelve of this Indenture or payments in
Secondary Securities) or distribution of any assets of Holdings of any kind of
character shall be made by Holdings on account of any principal of, premium, if
any, or interest on the Securities or on account of the purchase or redemption
or other acquisition of Securities for a period (the "Payment Blockage Period")
commencing on the earlier of the date of receipt by the Trustee of the written
notice of a Non- Payment Default from the Representative or the date of the
acceleration referred to in clause (ii) above, as the case may be, unless and
until the earlier to occur of the following events: (w) 179 days shall have
elapsed since receipt of such notice or the date of acceleration of the
Securities, as the case may be (provided such Designated Senior Indebtedness
shall theretofore not have been accelerated), (x) such Non-Payment Default
shall have been cured or waived or shall have ceased to exist, (y) such
Designated Senior Indebtedness shall have been discharged or paid in full in
cash or Cash Equivalents or (z) such Payment Blockage Period shall have been
terminated by written notice to Holdings or the Trustee from the Representative
initiating such Payment Blockage Period or the holders of at least a majority
in principal amount of such issuance of, Designated Senior Indebtedness
initiating such Payment Blockage Period, after which, in the case of clauses
(w), (x), (y) or (z), Holdings shall resume making any and all required
payments in respect of the Securities, including any missed payments.
Notwithstanding anything herein
66
<PAGE> 68
to the contrary, in no event will a Payment Blockage Period extend beyond 179
days from the date on which such Payment Blockage Period was commenced. Not
more than one Payment Blockage Period may be commenced with respect to the
Securities during any period of 365 consecutive days. No Non-Payment Default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to Designated Senior Indebtedness shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period
whether or not within a period of 365 consecutive days unless such default
shall have been cured or waived for a period of not less than 90 consecutive
days.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Security shall have received any payment
prohibited by the foregoing provisions of this Section 11.2, then and in such
event such payment shall be paid over and delivered forthwith to the
Representatives or as a court of competent jurisdiction shall direct.
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 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 or Cash Equivalents of
all amounts payable under Senior Indebtedness (including, with respect
to Designated Senior Indebtedness, any interest accruing after the
commencement of any such proceeding at the rate specified in the
applicable Designated Senior Indebtedness whether or not interest is
an allowed claim enforceable against Holdings in any such proceeding)
before the Holders are entitled to receive any payment with respect to
the Securities (excluding Permitted Subordinated Reorganization
Securities) and until all Obligations with respect to the Senior
Indebtedness are paid in full in cash or Cash Equivalents, any
distribution to which the Holders would be entitled (excluding
Permitted Subordinated Reorganization Securities) shall be made to the
holders of Senior Indebtedness;
(b) any payment or distribution of assets 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 (excluding Permitted Subordinated Reorganization Securities)
except for the provisions of this Article Eleven, 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 or
Cash
67
<PAGE> 69
Equivalents, after giving effect to any concurrent payment or
distribution to 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 on account
of principal of, premium, if any, or interest on the Securities
(excluding Permitted Subordinated Reorganization Securities) before
all Senior Indebtedness is paid in full in cash or Cash Equivalents,
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 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 or Cash Equivalents, after giving effect to any
concurrent payment or distribution 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 Representative.
The consolidation of Holdings with, or the merger of Holdings
with or into, another person or the liquidation or dissolution of Holdings
following the conveyance or lease of its properties and assets substantially as
an entirety to another person upon the terms and conditions set forth in
Article Five shall not be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of Holdings for the purposes of this Article Eleven if
the person formed by such consolidation or the surviving entity of such merger
of the person which acquires by conveyance, transfer or lease such properties
and assets substantially as an entirety, as the case may be, shall, as a part
of such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in such Article Five.
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 (including, without limitation, in bankruptcy,
insolvency, or receivership proceedings or upon any assignment for the benefit
of creditors or any other marshalling of Holdings' assets and liabilities).
Section 11.4. Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of
all Senior Indebtedness, the Holders of 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
68
<PAGE> 70
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 or Cash
Equivalents.
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 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 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
69
<PAGE> 71
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 8.4 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 any Securities 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.
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. Without limiting the generality of the
foregoing, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Eleven or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, Senior Indebtedness or any instrument evidencing the same or
any agreement under which Senior Indebtedness is outstanding; (2) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any person liable in any
manner for the collection or payment of Senior Indebtedness; and (4) exercise
or refrain from exercising any rights against Holdings or any other person;
provided, however, that in no event shall any such actions limit the right of
the Holders of the Securities to take any action to accelerate the maturity of
the Securities pursuant to Article Six hereof or to pursue any rights or
remedies
70
<PAGE> 72
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
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 Sections 2808, 2809, 2810, 2819, 2845, 2849 or 2850, or
California Code of Civil Procedure Sections 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.
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.
71
<PAGE> 73
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.
Nothing contained in this Article XI shall limit the right of
the Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article VI or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any,
under this Article XI of the holders, from time to time, of Senior
Indebtedness.
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
SATISFACTION AND DISCHARGE
Section 12.1. Satisfaction and Discharge of the Indenture.
This Indenture will be discharged and will cease to be of
further effect as to all outstanding Securities when either:
(a) all Securities theretofore authenticated and
delivered (except lost, stolen or destroyed Securities which have been replaced
or paid and Securities for whose payment money has theretofore been deposited
in trust and thereafter repaid to Holdings) have been delivered to the Trustee
for cancellation; or
(b) (1) all Securities not theretofore delivered to
the Trustee for cancellation have become due and payable by reason of
the making of a notice of redemption or otherwise and Holdings has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on the Securities not theretofore
delivered to the Trustee for cancellation for principal, premium, if
any, and accrued interest to the date of maturity or redemption;
(2) Holdings has paid all sums payable by it
under this Indenture; and
72
<PAGE> 74
(3) Holdings has delivered irrevocable
instructions to the Trustee to apply the deposited money toward the
payment of the Securities at maturity or the redemption date, as the
case may be.
Notwithstanding (a) and (b) above, and any other provisions of
this Indenture, the Obligations of Holdings set forth in Section 7.7 hereof
shall survive the termination of this Indenture and the Securities.
Section 12.2. Conditions to Satisfaction and Discharge of the Indenture.
Holdings shall deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all conditions precedent to satisfaction
and discharge have been complied with.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of Section 3.18(c) of the TIA,
the imposed duties shall control.
Section 13.2. 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:
if to Holdings:
c/o Ralphs Grocery Company
1100 West Artesia Boulevard
Compton, California 90220
Attention: Jan Charles Gray, Esq.
if to the Trustee:
Norwest Bank Minnesota, N.A.
Sixth and Marquette
Minneapolis, Minnesota 55479-0113
Attention: Corporate Trust Administration
73
<PAGE> 75
if to the Credit Agent:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Eric S. Swanson
Each of Holdings, the Trustee and the Credit Agent, 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,
the Trustee and the Credit Agent 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 13.3. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 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 Section 312(c).
Section 13.4. 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:
74
<PAGE> 76
(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
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
Section 13.5. 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 13.6. 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 13.7. 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.
75
<PAGE> 77
Section 13.8. 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.
Section 13.9. 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 13.10. 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 13.11. 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 13.12. 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 13.13. 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.
76
<PAGE> 78
Section 13.14. No Violation.
Notwithstanding the provisions of this Indenture, in no event
shall any transaction, agreement, payment or other event to be consummated,
entered into or made in connection with the Merger, the Reincorporation Merger
and the FFL Merger or any financing thereof be considered a violation of any
provision of this Indenture or constitute a Change of Control hereunder.
77
<PAGE> 79
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: June 1, 1995
[SEAL] FOOD 4 LESS HOLDINGS, INC.
Attest: By: /s/Greg Mays
-------------------------------
Name: Greg Mays
Title: Executive Vice President
/s/Mark A. Resnik, Secretary
Dated: June 1, 1995
[SEAL]
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Trustee
Attest: By: /s/ Raymond S. Haverstock
-------------------------------
Name: Raymond S. Haverstock
Title: Assistant Vice President
/s/Raymond S. Haverstock
S-1
<PAGE> 80
EXHIBIT A
PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986 RELATING TO
ORIGINAL ISSUE DISCOUNT AND TREASURY REGULATIONS PUBLISHED
THEREUNDER, THE FOLLOWING INFORMATION IS PROVIDED: (1) THIS SECURITY IS BEING
ISSUED WITH ORIGINAL ISSUE DISCOUNT IN THE AMOUNT OF
$2,777.84 PER $1,000 FACE AMOUNT; (2) THE ISSUE PRICE OF THIS SECURITY IS
$1,000 PER $1,000 FACE AMOUNT; (3) THE ISSUE DATE OF THIS
SECURITY IS JUNE 14, 1995; AND (4) THE YIELD TO MATURITY OF THIS SECURITY IS
13.625%.
FOOD 4 LESS HOLDINGS, INC.
13-5/8% Senior Subordinated Pay-in-Kind Debenture
Due 2007
No. $
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation ("Holdings," which term
includes any successor entity), for value received promises to pay
to: or registered assigns, the principal sum of Dollars,
on June 15, 2007.
Interest Payment Dates: June 15 and December 15 commencing
December 15, 1995.
Record Dates: June 1 and December 1.
Reference is made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, Holdings has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Dated: June 14, 1995
FOOD 4 LESS HOLDINGS, INC.
By:
---------------------------------
Chief Executive Officer
By:
---------------------------------
Senior Vice President, General
Counsel and Secretary
This is one of the Securities described in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Trustee
-------------------------------------
Authorized Signatory
A-1
<PAGE> 81
FOOD 4 LESS HOLDINGS, INC.
13-5/8% Senior Subordinated Pay-in-Kind Debenture
Due 2007
1. Interest.
FOOD 4 LESS HOLDINGS, INC., a Delaware 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 June 15, 2000. 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 June 15, 2000, 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 June 15
and December 15 of each year (the "Interest Payment Date"), commencing December
15, 1995. 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 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
A-2
<PAGE> 82
(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, Norwest Bank Minnesota, National Association (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
June 1, 1995 (the "Indenture"), between Holdings and the Trustee. This
Security is one of a duly authorized issue of Securities of Holdings designated
as its 13-5/8% Senior Subordinated Pay-in-Kind Debentures due 2007.
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 Sections 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
Securities are general unsecured obligations of Holdings limited in aggregate
principal amount to $131,500,000, except for Secondary Securities and except as
otherwise provided in the Indenture.
5. Optional Redemption.
(a) The Securities may not be redeemed at the option of Holdings
prior to June 15, 2000. 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 June 15 of the years indicated below:
<TABLE>
<CAPTION>
Applicable
Year Percentage
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.8125%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.1094%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.4063%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.7031%
2004 and thereafter . . . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, prior to June 15, 1998,
Holdings may use the Net Proceeds (as defined in the Indenture) of a Public
Equity Offering (as defined in the Indenture) of Holdings or the Company 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.
A-3
<PAGE> 83
In order to effect the foregoing redemption, Holdings shall
send the notice required by Section 3.3 of the Indenture not later than 60 days
after the Public Equity 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 and certain other
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.
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 Issue Date
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.
A-4
<PAGE> 84
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $10.00 and integral multiples of $10.00 (other than Secondary
Securities which may be in denominations of less than $10.00). 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 2.2, 2.7, 2.10, 3.6, 4.14, 4.15 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 fifty four percent (and, in some cases, 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 fifty four percent (and, in some cases, a majority)
in aggregate principal amount, as the case may be, of the Securities then
outstanding. Without the consent of the Holders of at least 75% in aggregate
principal amount of the Securities then outstanding, no such amendment,
supplement or waiver may change the Change of Control Payment Date or the
purchase price in connection with any repurchase of Securities pursuant to
Section 4.14 of the Indenture in a manner adverse to any Holder or waive a
Default or Event of Default resulting from a failure to comply with Section
4.14 of the
A-5
<PAGE> 85
Indenture. Without the consent of the Holders of at least 66-2/3% in aggregate
principal amount of the Securities then outstanding, no change may be made to
the provisions of Article Eleven of the Indenture that adversely affects the
rights of any Holder under Article Eleven. 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 Eleven 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.
A-6
<PAGE> 86
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 Ralphs Grocery Company, 1100 West Artesia
Boulevard, Compton, California 90220, Attn: Jan Charles Gray, Esq.
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
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.
A-7
<PAGE> 87
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.
A-8
<PAGE> 88
[FORM OF ASSIGNMENT]
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
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:____________________________ Signature:____________________________
________________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
Signature Guarantee:____________________________________________________________
A-9
<PAGE> 89
[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, as the case
may be, check the appropriate box below:
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, as the case may be, state the amount you want to be purchased:
$
Date:____________________________ Signature:________________________
(Sign exactly as your
name appears on the face
of this Security)
Signature Guarantee:________________________________________________________
A-10
<PAGE> 90
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
Section Section
------- -------
<S> <C>
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; 13.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 13.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7; 4.9; 13.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2; 13.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2; 13.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 13.2
(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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
</TABLE>
-----------------------
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> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . 22
Section 1.3. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.4. Paying Agent To Hold Assets in Trust . . . . . . . . . . . . . . . . . . 25
Section 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.13. CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE III REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . 28
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 29
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . 31
Section 4.3. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . 31
Section 4.4. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.5. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . 32
Section 4.6. Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . 33
Section 4.7. Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . 33
Section 4.8. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.9. SEC Reports and Other Information . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 92
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.10. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . 35
Section 4.11. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . 35
Section 4.12. Limitation on Incurrences of Additional Indebtedness . . . . . . . . . . 36
Section 4.13. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.14. Limitation on Change of Control . . . . . . . . . . . . . . . . . . . . 37
Section 4.15. Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.16. Limitation on Senior Subordinated Indebtedness . . . . . . . . . . . . . 42
Section 4.17. Limitation on Preferred Stock of Subsidiaries . . . . . . . . . . . . . 42
Section 4.18. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE V SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.1. When Holdings May Merge, Etc . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.7. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . 48
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . 48
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.6. Reports By Trustee to Holders . . . . . . . . . . . . . . . . . . . . . 52
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . 52
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 7.9. Successor Trustee by Merger, Etc . . . . . . . . . . . . . . . . . . . . 54
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . 54
Section 7.11. Preferential Collection of Claims Against Holdings . . . . . . . . . . . 54
</TABLE>
ii
<PAGE> 93
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . 55
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance . . . . . . . . 55
Section 8.2. Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 8.4. Conditions to Legal or Covenant Defeasance . . . . . . . . . . . . . . . 56
Section 8.5. Deposited Money and U.S. Government Obligations to be Held in Trust;
Other Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . 58
Section 8.6. Repayment to Holdings . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . 61
Section 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . 62
Section 9.6. Trustee To Sign Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X MEETINGS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.1. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . 62
Section 10.2. Manner of Calling Meetings . . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.3. Call of Meetings by Holdings or Holders . . . . . . . . . . . . . . . . 63
Section 10.4. Who May Attend and Vote at Meetings . . . . . . . . . . . . . . . . . . 64
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting; Voting
Rights; Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.6. Voting at the Meeting and Record To Be Kept . . . . . . . . . . . . . . 65
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered or
Delayed by Call of Meeting . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XI SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 11.1. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . 65
Section 11.2. No Payment on Securities in Certain Circumstances . . . . . . . . . . . 66
Section 11.3. Securities Subordinated to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Holdings . . . . . . . . . 67
Section 11.4. Holders to Be Subrogated to Rights of Holders of Senior Indebtedness . . 68
Section 11.5. Obligations of Holdings Unconditional . . . . . . . . . . . . . . . . . 69
Section 11.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.7. Application by Trustee of Assets Deposited with It . . . . . . . . . . . 70
Section 11.8. Subordination Rights Not Impaired by Acts or Omissions of Holdings or
Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
iii
<PAGE> 94
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.9. Holders Authorize Trustee to Effectuate Subordination of Securities . . . 71
Section 11.10. Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . 71
Section 11.11. Article Eleven Not to Prevent Events of Default . . . . . . . . . . . . . 72
Section 11.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness . . . . . 72
ARTICLE XII SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.1. Satisfaction and Discharge of the Indenture . . . . . . . . . . . . . . 72
Section 12.2. Conditions to Satisfaction and Discharge of the Indenture . . . . . . . 73
ARTICLE XIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 13.3. Communications by Holders with Other Holders . . . . . . . . . . . . . . 74
Section 13.4. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . 74
Section 13.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . 75
Section 13.6. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . 75
Section 13.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 13.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.9. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . 76
Section 13.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.12. Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 13.14. No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
iv
<PAGE> 1
Exhibit 4.4.1
FOOD 4 LESS SUPERMARKETS, INC.
TO BE MERGED WITH AND INTO RALPHS GROCERY COMPANY
AND
SUBSIDIARY GUARANTORS
AND
NORWEST BANK MINNESOTA, National Association,
TRUSTEE
_________________
INDENTURE
Dated as of June 1, 1995
________________
$520,326,000
10.45% Senior Notes
due 2004
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1)........................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A
(a)(5).......................................... 7.10; 7.11
(b)............................................. 7.08; 7.10; 11.02
(c)............................................. N.A.
311(a).............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a).............................................. 2.05
(b)............................................. 11.03
(c)............................................. 11.03
313(a).............................................. 7.06
(b)(1).......................................... N.A
(b)(2).......................................... 7.06
(c)............................................. 7.06; 11.02
(d)............................................. 7.06
314(a).............................................. 4.07; 4.09; 11.02
(b)............................................. N.A.
(c)(1).......................................... 7.02; 11.04
(c)(2).......................................... 7.02; 11.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 11.05
(f)............................................. N.A
315(a).............................................. 7.01(b)
(b)............................................. 7.05; 11.02
(c)............................................. 7.01(a)
(d)............................................. 7.01(c)
(e)............................................. 6.11
316(a)(last sentence)............................... 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
317(a)(1)........................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318(a).............................................. 11.01
(c)............................................. 11.01
</TABLE>
<PAGE> 3
________________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
-i-
<PAGE> 4
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1.01 Definitions..................................... 1
Section 1.02 Incorporation by Reference of TIA............... 31
Section 1.03 Rules of Construction........................... 31
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating................................. 32
Section 2.02 Execution and Authentication.................... 32
Section 2.03 Registrar and Paying Agent...................... 34
Section 2.04 Paying Agent To Hold Assets in
Trust........................................ 34
Section 2.05 Securityholder Lists............................ 35
Section 2.06 Transfer and Exchange........................... 35
Section 2.07 Replacement Securities.......................... 36
Section 2.08 Outstanding Securities.......................... 36
Section 2.09 Treasury Securities............................. 37
Section 2.10 Temporary Securities............................ 37
Section 2.11 Cancellation.................................... 37
Section 2.12 Defaulted Interest.............................. 38
Section 2.13 CUSIP Number.................................... 38
</TABLE>
<PAGE> 5
ARTICLE THREE
REDEMPTION
<TABLE>
<S> <C> <C>
Section 3.01 Notices to Trustee.............................. 38
Section 3.02 Selection of Securities To Be
Redeemed..................................... 39
Section 3.03 Notice of Redemption............................ 39
Section 3.04 Effect of Notice of Redemption.................. 40
Section 3.05 Deposit of Redemption Price..................... 40
Section 3.06 Securities Redeemed in Part..................... 41
</TABLE>
-ii-
<PAGE> 6
ARTICLE FOUR
COVENANTS
<TABLE>
<S> <C> <C>
Section 4.01 Payment of Securities........................... 41
Section 4.02 Maintenance of Office or Agency................. 41
Section 4.03 Limitation on Restricted Payments............... 42
Section 4.04 Corporate Existence............................. 44
Section 4.05 Payment of Taxes and Other Claims............... 44
Section 4.06 Maintenance of Properties and
Insurance.................................... 44
Section 4.07 Compliance Certificate; Notice of
Default...................................... 45
Section 4.08 Compliance with Laws............................ 46
Section 4.09 SEC Reports..................................... 47
Section 4.10 Waiver of Stay, Extension or Usury
Laws......................................... 47
Section 4.11 Limitation on Transactions with
Affiliates................................... 47
Section 4.12 Limitation on Incurrences of
Additional Indebtedness...................... 50
Section 4.13 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries................................. 50
Section 4.14 Limitation on Liens............................. 51
Section 4.15 Limitation on Change of Control................. 52
Section 4.16 Limitation on Asset Sales....................... 55
Section 4.17 Guarantees of Certain Indebtedness.............. 58
Section 4.18 Limitation on Preferred Stock of
Subsidiaries................................. 58
ARTICLE FIVE
SUCCESSOR CORPORATION
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Section 5.01 Limitation on Mergers and Certain
Other Transactions........................... 58
Section 5.02 Successor Corporation Substituted............... 60
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01 Events of Default............................... 61
Section 6.02 Acceleration.................................... 63
Section 6.03 Other Remedies.................................. 64
Section 6.04 Waiver of Past Defaults......................... 64
Section 6.05 Control by Majority............................. 65
</TABLE>
-iii-
<PAGE> 8
<TABLE>
<S> <C> <C>
Section 6.06 Limitation on Suits............................. 65
Section 6.07 Rights of Holders To Receive
Payment...................................... 66
Section 6.08 Collection Suit by Trustee...................... 66
Section 6.09 Trustee May File Proofs of Claim................ 66
Section 6.10 Priorities...................................... 67
Section 6.11 Right and Remedies Cumulative................... 67
Section 6.12 Delay or Omission Not Waiver.................... 68
Section 6.13 Undertaking for Costs........................... 68
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee............................... 68
Section 7.02 Rights of Trustee............................... 70
Section 7.03 Individual Rights of Trustee.................... 71
Section 7.04 Trustee's Disclaimer............................ 71
Section 7.05 Notice of Default............................... 71
Section 7.06 Reports by Trustee to Holders................... 71
Section 7.07 Compensation and Indemnity...................... 72
Section 7.08 Replacement of Trustee.......................... 73
Section 7.09 Successor Trustee by Merger, Etc................ 74
Section 7.10 Eligibility; Disqualification................... 74
Section 7.11 Preferential Collection of Claims
Against Company.............................. 74
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Termination of the Company's
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
Obligations.................................. 75
Section 8.02 Legal Defeasance and Covenant
Defeasance................................... 76
Section 8.03 Application of Trust Money...................... 81
Section 8.04 Repayment to Company or Subsidiary
Guarantors................................... 81
Section 8.05 Reinstatement................................... 82
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders...................... 82
Section 9.02 With Consent of Holders......................... 83
</TABLE>
-iv-
<PAGE> 10
<TABLE>
<S> <C> <C>
Section 9.03 Compliance with TIA............................. 84
Section 9.04 Revocation and Effect of Consents............... 85
Section 9.05 Notation on or Exchange of
Securities................................... 85
Section 9.06 Trustee To Sign Amendments, Etc................. 86
ARTICLE TEN
GUARANTEE
Section 10.01 Unconditional Guarantee......................... 86
Section 10.02 Severability.................................... 87
Section 10.03 Release of a Subsidiary Guarantor............... 88
Section 10.04 Limitation of Subsidiary
Guarantor's Liability........................ 88
Section 10.05 Subsidiary Guarantors May
Consolidate, etc., on Certain
Terms........................................ 89
Section 10.06 Contribution.................................... 90
Section 10.07 Waiver of Subrogation........................... 91
Section 10.08 Execution of Guarantee.......................... 91
Section 10.09 Waiver of Stay, Extension or Usury
Laws......................................... 92
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 TIA Controls.................................... 92
Section 11.02 Notices......................................... 93
Section 11.03 Communications by Holders with
Other Holders................................ 94
Section 11.04 Certificate and Opinion as to
Conditions Precedent......................... 94
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C>
Section 11.05 Statements Required in Certificate
or Opinion................................... 94
Section 11.06 Rules by Trustee, Paying Agent,
Registrar.................................... 95
Section 11.07 Legal Holidays.................................. 95
Section 11.08 Governing Law................................... 95
Section 11.09 No Adverse Interpretation of Other
Agreements................................... 96
Section 11.10 No Recourse Against Others...................... 96
Section 11.11 Successors...................................... 96
Section 11.12 Duplicate Originals............................. 96
Section 11.13 Severability.................................... 96
Section 11.14 No Violation.................................... 96
</TABLE>
-v-
<PAGE> 12
<TABLE>
<S> <C>
Signatures........................................................ S-1
</TABLE>
Exhibit A - Form of Note
Note: This Table of Contents shall not, for any purpose, be
deemed to be part of the Indenture.
-vi-
<PAGE> 13
INDENTURE dated as of June 1, 1995, among FOOD 4 LESS
SUPERMARKETS, INC., a Delaware corporation (the "Company"), the
SUBSIDIARY GUARANTORS, and NORWEST BANK MINNESOTA, National
Association, 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 Company's 10.45% Senior Notes due 2004:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means (i) with respect to any
person that becomes a Subsidiary of the Company (or is merged
into the Company or any of its Subsidiaries) after the Issue
Date, Indebtedness of such person or any of its Subsidiaries
existing at the time such person becomes a Subsidiary of the
Company (or is merged into the Company or any of its
Subsidiaries) and which was not incurred in connection with, or
in contemplation of, such person becoming a Subsidiary of the
Company (or being merged into the Company or any of its
Subsidiaries) and (ii) with respect to the Company or any of
its Subsidiaries, any Indebtedness assumed by the Company or
any of its Subsidiaries in connection with the acquisition of
any assets from another person (other than the Company or any
of its Subsidiaries), and which was not incurred by such other
person in connection with, or in contemplation of, such
acquisition.
"Adjusted Net Assets" shall have the meaning provided
in Section 10.06.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such
specified person. For the purposes of this definition,
"control" when used with respect to any 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. Notwithstanding the foregoing,
<PAGE> 14
the term "Affiliate," with respect to the Company and its
Subsidiaries, shall not include BT Securities Corporation or
any of its Affiliates.
"Affiliate Transaction" shall have the meaning
provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or
co-Registrar.
"Apollo Advisors, L.P." means Apollo Advisors, L.P.,
a Delaware limited partnership.
"Asset Sale" means, with respect to 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 the Company or a directly or indirectly 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, in each case, outside of the
ordinary course of business, excluding, however, any sale,
transfer or other disposition, or series of related sales,
transfers or other dispositions (i) involving only Excluded
Assets, (ii) resulting in Net Proceeds to the Company and the
Subsidiaries of $500,000 or less, (iii) pursuant to any
foreclosure of assets or other remedy provided by applicable
law to a creditor of the Company or any Subsidiary with a Lien
on such assets, which Lien is permitted under this Indenture,
provided that such foreclosure or other remedy is conducted in
a commercially reasonable manner or in accordance with any
Bankruptcy Law, (iv) involving only Cash Equivalents or
inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with
past practices of the Company, (v) involving only the lease or
sub-lease of any real or personal property in the ordinary
course of business or (vi) the proceeds of such Asset Sale
which are not applied as contemplated in Section 4.16 and which
together with all other such Asset Sale Proceeds do not exceed
$20 million.
"Average Life" means, as of the date of
determination, with respect to any debt security, the quotient
obtained by dividing (i) the sum of the products of the number
<PAGE> 15
of years from the date of determination to the dates of each
successive scheduled principal payments of such debt security
multiplied by the amount of each such principal payment by
(ii) the sum of all such principal payments.
"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 of a
subsidiary of such person or any duly authorized committee of
the Board of Directors.
"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, participation or other
equivalents (however designated) of corporate stock, including
each class of common stock and preferred stock of such person.
"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 Ratings Group 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), (v) shares of any
money market mutual fund that (a) has at least 95% of its
assets invested continuously in the types of investments
<PAGE> 16
referred to in clauses (i) and (ii) above, (b) has net assets
of not less than $500 million, and (c) has the highest rating
obtainable from either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. and (vi) 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 Ratings Group.
"Change of Control" means 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 New Holdings or the Company 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 the then
outstanding voting securities entitled to vote on a regular
basis for a majority of the Board of Directors of the Company
(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); provided, 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 the Company's Board of Directors.
"Change of Control Date" shall have the meaning
provided in Section 4.15.
"Change of Control Offer" shall have the meaning
provided in Section 4.15.
"Change of Control Payment Date" shall have the
meaning provided in Section 4.15.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means, with respect to any person, any
and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or
nonvoting) of, such person's common stock, whether outstanding
at the Issue Date or issued after the Issue Date, and includes,
<PAGE> 17
without limitation, all series and classes of such common
stock.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.
"Consolidated Net Income," means, with respect to any
person, for any period, 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 any other person in which
such person or any of its subsidiaries has an interest (which
interest 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 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; 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, (vii)
(A) all non-cash charges, (B) up to $10 million of severance
costs and (C) any other restructuring reserves or charges
(provided, however, that any cash payments actually made with
respect to the liabilities for which such restructuring
reserves or charges were created shall be deducted from
Consolidated Net Income in the period when made), in each case,
incurred by the Company or any of its Subsidiaries in
connection with the Merger, including, without limitation, the
divestiture of the Excluded Assets, (viii) losses incurred by
the Company and its Subsidiaries resulting from earthquakes and
(ix) with respect to the Company, all deferred financing costs
written off in connection with the early extinguishment of any
<PAGE> 18
Indebtedness, shall each be excluded; provided further that
solely for the purpose of computing amounts described in
subclause (c) of the first paragraph of Section 4.03,
"Consolidated Net Income" of the Company for any period shall
be reduced by the aggregate amount of dividends paid by the
Company or a Subsidiary to New Holdings pursuant to clauses
(v), (vi) and (xiv) of the definition of "Permitted Payments"
during such period.
"Consolidated Net Worth" means, with respect to any
person, the total stockholders' equity (exclusive of any
Disqualified Capital Stock) of such person and its subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consulting Agreement" means that certain Consulting
Agreement dated as of the Issue Date, between Food 4 Less, New
Holdings and The Yucaipa Companies (as such Consulting
Agreement may be amended or replaced, so long as any amounts
paid under any amended or replacement agreement do not exceed
the amounts payable under such Consulting Agreement as in
effect on the Issue Date).
"Credit Agent" means, at any time, the then-acting
Administrative Agent as defined in and under the Credit
Agreement, which initially shall be Bankers Trust Company. The
Company shall promptly notify the Trustee of any change in the
Credit Agent.
"Credit Agreement" means the Credit Agreement, dated
as of the Issue Date, by and among Food 4 Less, as borrower,
certain of its subsidiaries, New Holdings, as guarantor, the
Lenders referred to therein and Bankers Trust Company, as
administrative agent, as the same may be amended, extended,
renewed, restated, supplemented or otherwise modified (in each
case, 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, replace or refinance any borrowings and commitments
then outstanding or permitted to be outstanding under such
Credit Agreement or any such prior agreement as the same may be
amended, extended, renewed, restated, supplemented or otherwise
modified (in each case, in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other
provisions). The term "Credit Agreement" shall include all
related or ancillary documents, including, without limitation,
any guarantee agreements and security documents. The Company
shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement.
<PAGE> 19
"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.
"Discount Notes" means the 15.25% Senior Discount
Notes due 2004 of Holdings issued pursuant to the Discount Note
Indenture, as the same may be modified or amended from time to
time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Discount Note Indenture" means the indenture dated
as of December 15, 1992 under which the 15.25% Senior Discount
Notes due 2004 of Holdings were issued, as the same may be
modified or amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"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 thereof, 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 of the Securities 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 (i) redeemable or repurchasable solely at the option
of such person or (ii) issued to employees of the Company 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, with respect to any person, for any
period, the Consolidated Net Income of such person for such
period, plus, in each case to the extent deducted in computing
Consolidated Net Income of such person for such period (without
duplication) (i) provisions for income taxes or similar charges
recognized by such person and its consolidated subsidiaries
accrued during such period, (ii) depreciation and amortization
expense of such person and its consolidated subsidiaries
accrued during such period (but only to the extent not included
in Fixed Charges), (iii) Fixed Charges of such person and its
<PAGE> 20
consolidated subsidiaries for such period, (iv) LIFO charges
(credits) of such person and its consolidated subsidiaries for
such period, (v) the amount of any restructuring reserve or
charge recorded during such period in accordance with GAAP,
including any such reserve or charge related to the Merger, and
(vi) any other non-cash charges reducing Consolidated Net
Income for such period (excluding any such charge which
requires an accrual of or a cash reserve for cash charges for
any future period), less, without duplication, (i) non-cash
items increasing Consolidated Net Income of such person for
such period (excluding any such items which represent the
reversal of any accrual of, or cash reserve for, anticipated
cash charges in any prior period) in each case determined in
accordance with GAAP and (ii) the amount of all cash payments
made by such person or its subsidiaries during such period to
the extent that such cash payment has been provided for in a
restructuring reserve or charge referred to in clause (v) above
(and was not otherwise deducted in the computation of
Consolidated Net Income of such person for such period).
"Event of Default" shall have the meaning provided in
Section 6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by
the Commission thereunder.
"Excluded Assets" means assets of the Company or any
Subsidiary required to be disposed of by applicable regulatory
authorities in connection with the Merger.
"Existing Indebtedness" means the following
indebtedness of the Company to the extent outstanding on the
Issue Date after giving effect to the Merger; (a) the 10.45%
Senior Notes due 2004 issued pursuant to an indenture dated as
of the date hereof; (b) the 10.45% Senior Notes due 2000 issued
pursuant to an indenture dated as of April 15, 1992; (c) the
11% Senior Subordinated Notes due 2005 issued pursuant to an
indenture dated as of the Issue Date; (d) the 9% Senior
Subordinated Notes due 2003 issued pursuant to an indenture
dated as of March 30, 1993; (e) the 10<% Senior Subordinated
Notes due 2002 issued pursuant to an indenture dated as of
July 29, 1992; (f) the 13.75% Senior Subordinated Notes due
2005 issued pursuant to an indenture dated as of the Issue
Date, and (g) the 13.75% Senior Subordinated Notes due 2001
issued pursuant to an indenture dated as of June 15, 1991.
"Fixed Charges" means, with respect to any person,
for any period, the aggregate amount of (i) interest, whether
expensed or capitalized, paid, accrued or scheduled to be paid
<PAGE> 21
or accrued during such period (except to the extent accrued in
a prior period) in respect of all Indebtedness of such person
and its consolidated subsidiaries (including (a) original issue
discount on any Indebtedness (including, (without duplication)
in the case of the Company, any original issue discount on the
Securities but excluding amortization of debt issuance costs)
and (b) the interest portion of all deferred payment
obligations, calculated in accordance with the effective
interest method, in each case to the extent attributable to
such period but excluding the amortization of debt issuance
costs), (ii) dividend requirements on Preferred Stock of such
person and its consolidated subsidiaries (whether in cash or
otherwise (except dividends payable in shares of Qualified
Capital Stock)) declared or paid or required to be declared or
paid during such period (except to the extent accrued in a
prior period) and excluding items eliminated in consolidation
and (iii) dividends declared or paid or scheduled or required
to be declared or paid to New Holdings which are permitted to
be paid pursuant to clauses (v) and (vi) of the definitiion of
"Permitted Payments." For purposes of this definition,
(a) interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by the
Board of Directors of such person (as evidenced by a Board
Resolution) to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP,
(b) interest on Indebtedness that is determined on a
fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such
Indebtedness in effect on the date Fixed Charges are being
calculated, (c) interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate, and (d) Fixed Charges
shall be increased or reduced by the net cost (including
amortization of discount) or benefit associated with Interest
Swap Obligations attributable to such period. For purposes of
clause (ii) above, dividend requirements shall be increased to
an amount representing the pre-tax earnings that would be
required to cover such dividend requirements; accordingly, the
increased amount shall be equal to a fraction, the numerator of
which is the amount of such dividend requirements and the
denominator of which is one (1) minus the applicable actual
combined federal, state, local and foreign income tax rate of
such person and its subsidiaries (expressed as a decimal), on a
consolidated basis, for the fiscal year immediately preceding
the date of the transaction giving rise to the need to
calculate Fixed Charges.
<PAGE> 22
"FFL" means Food 4 Less, Inc., a Delaware
corporation, and its successors, including, without limitation,
Holdings following the FFL Merger and New Holdings following
the Reincorporation Merger.
"F4L Exchange Offers" means, the offer by the Company
as described in the Amended and Restated Prospectus and
Solicitation Statement dated May 12, 1995 (as supplemented) to
holders of Old F4L Senior Subordinated Notes to exchange such
notes for New F4L Senior Subordinated Notes.
"FFL Merger" means the merger, prior to the Merger
and the Reincorporation Merger, of FFL and Holdings.
"Food 4 Less" means Food 4 Less Supermarkets, Inc., a
Delaware corporation, and its successors, including, without
limitation, Ralphs Supermarkets, Inc. (to be renamed Ralphs
Grocery Company following the Merger).
"Foreign Exchange Agreement" means any foreign
exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect against
fluctuations in currency values.
"Forward Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"GAAP" means generally accepted accounting principles
as in effect in the United States of America as of the date of
this Indenture.
"Guarantee" means the guarantee of each Subsidiary
Guarantor set forth in Article Ten and any additional guarantee
of the Securities executed by any Subsidiary of the Company.
"Holder" or "Securityholder" means the person in
whose name a Security is registered on the Registrar's books.
"Holdings" means Food 4 Less Holdings, Inc., a
California corporation, and its successors, including, without
limitation, New Holdings following the Reincorporation Merger.
"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
<PAGE> 23
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 exended 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; (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 of this Indenture, Indebtedness incurred by any person
that is a general partnership (other than non-recourse
Indebtedness) shall be deemed to 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
<PAGE> 24
reasonable determination of the Board of Directors of the
Company, 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 nationally recognized investment
banking or consulting firm that is, in the reasonable judgment
of the Board of Directors of the Company, qualified to perform
the tasks for which such firm has been engaged and
disinterested and independent with respect to the Company and
its Affiliates.
"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, whether by
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 New Holdings or any of its
Subsidiaries 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.
"Issue Date" means the date of original issuance of
the Securities under this Indenture.
<PAGE> 25
"Legal Holiday" shall have the meaning provided in
Section 11.07.
"Letter of Credit Obligations" means Indebtedness of
the Company or any of its Subsidiaries with respect to letters
of credit issued pursuant to the Credit Agreement, and for
purposes of the definition of the term "Permitted
Indebtedness," the aggregate principal amount of Indebtedness
outstanding at any time with respect thereto shall be deemed to
consist of (a) the aggregate maximum amount then available to
be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions
for drawing), and (b) the aggregate amount that has then been
paid by, and not reimbursed to, the issuers under such letters
of credit.
"Lien" means any mortgage, pledge, lien, encumbrance,
charge or adverse claim affecting title or resulting in an
encumbrance against real or personal property, or a security
interest of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any
option or other agreement to sell which is intended to
constitute or create a security interest, mortgage, pledge or
lien, and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction); provided that in no event shall
an operating lease be deemed to constitute a Lien under this
Indenture.
"Maturity Date" means June 15, 2004.
"Merger" means (i) the merger of Food 4 Less into RSI
(with RSI surviving such merger) pursuant to the Merger
Agreement and (ii) immediately following the merger described
in clause (i) of this definition, the merger of Ralphs Grocery
Company into RSI (with RSI surviving such merger and changing
its name to "Ralphs Grocery Company" in connection with such
merger).
"Merger Agreement" means the Agreement and Plan of
Merger, dated September 14, 1994, by and among Holdings, FFL,
Food 4 Less, RSI and the stockholders of RSI, as such agreement
is in effect on the Issue Date.
"Net Cash Proceeds" means the Net Proceeds of any
Asset Sale received 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
<PAGE> 26
person after payment of expenses, taxes, commissions and the
like incurred in connection therewith (and, in the case of any
Asset Sale, net of the amount of cash applied to repay
Indebtedness secured by the asset involved in such Asset Sale),
whether such proceeds are in cash or in property (valued at the
fair market value thereof at the time of receipt, as determined
with respect to any Asset Sale resulting in Net Proceeds in
excess of $5 million in good faith by the Board of Directors of
such person, which determination shall be evidenced by a Board
Resolution) 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
the Company, the sum of (i) the fair market value of the
proceeds received by the Company 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 the Company upon such conversion or exchange.
"New Discount Debenture Indenture" means the
indenture dated as of the Issue Date under which the 13 5/8%
Senior Discount Debentures due 2005 of New Holdings were
issued, as the same may be modified and amended from time to
time and refinancings thereof to the extent such refinancings
are permitted under this Indenture.
"New Discount Debentures" means the 13 5/8% Senior
Discount Debentures due 2005 of New Holdings issued pursuant to
the New Discount Debenture Indenture, as the same may be
modified and amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"New F4L Senior Subordinated Notes" means the 13.75%
senior subordinated notes due 2005 issued pursuant to the
Senior Subordinated Note Indenture dated as of June 1, 1995
that are issued in exchange for Old F4L Senior Subordinated
Notes.
"New Holdings" means Food 4 Less Holdings, Inc., a
Delaware corporation, and its successors.
"New RGC Notes" means the up to $450,000,000
aggregate principal amount of 11% senior subordinated notes due
2005 issued pursuant to the Senior Subordinated Note Indenture
dated as of June 1, 1995 which are issued in exchange for Old
RGC Notes.
"Officer" means, with respect to any person, the
Chairman of the Board, the President, any Vice President, the
<PAGE> 27
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 11.04 and 11.05.
"Old F4L Senior Subordinated Notes" means the 13.75%
senior subordinated notes due 2001 issued pursuant to an
indenture dated as of June 15, 1991.
"Old RGC Indentures" means the indentures between
Ralphs Grocery Company, as issuer, and United States Trust
Company of New York, as trustee, pursuant to which the Old RGC
Notes were issued.
"Old RGC Notes" means the 9% Senior Subordinated
Notes due 2003 of Ralphs Grocery Company and the 10 <% Senior
Subordinated Notes due 2002 of Ralphs Grocery Company.
"Operating Coverage Ratio" means, with respect to any
person, the ratio of (1) EBDIT of such person for the period
(the "Pro Forma Period") consisting of the most recent four
full fiscal quarters for which financial information in respect
thereof is available immediately prior to the date of the
transaction giving rise to the need to calculate the Operating
Coverage Ratio (the "Transaction Date") to (2) the aggregate
Fixed Charges of such person for the fiscal quarter in which
the Transaction Date occurs and the three fiscal quarters
immediately subsequent to such fiscal quarter (the "Forward
Period") reasonably anticipated by the Board of Directors of
such person to become due from time to time during such period.
For purposes of this definition, if the Transaction Date occurs
prior to the first anniversary of the Merger, "EBDIT" for the
Pro Forma Period shall be calculated, in the case of the
Company, after giving effect on a pro forma basis to the Merger
as if it had occurred on the first day of the Pro Forma Period.
In addition to, but without duplication of, the foregoing, for
purposes of this definition, "EBDIT" shall be calculated after
giving effect (without duplication), on a pro forma basis for
the Pro Forma Period (but no longer), to (a) any Investment,
during the period commencing on the first day of the Pro Forma
Period to and including the Transaction Date (the "Reference
Period"), in any other person that, as a result of such
Investment, becomes a subsidiary of such person, (b) the
acquisition, during the Reference Period (by merger,
consolidation or purchase of stock or assets) of any business
or assets, which acquisition is not prohibited by this
<PAGE> 28
Indenture, and (c) any sales or other dispositions of assets
(other than sales of inventory in the ordinary course of
business) occurring during the Reference Period, in each case
as if such incurrence, Investment, repayment, acquisition or
asset sale had occurred on the first day of the Reference
Period. In addition, for purposes of this definition, "Fixed
Charges" shall be calculated after giving effect (without
duplication), on a pro forma basis for the Forward Period, to
any Indebtedness incurred or repaid on or after the first day
of the Forward Period and prior to the Transaction Date. If
such person or any of its subsidiaries directly or indirectly
guarantees any Indebtedness of a third person, the Operating
Coverage Ratio shall give effect to the incurrence of such
Indebtedness as if such person or subsidiary had directly
incurred such guaranteed Indebtedness.
"operating lease" means any lease the obligations
under which do not constitute Capitalized Lease Obligations.
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee
complying with the requirements of Sections 11.04 and 11.05.
Unless otherwise required by the Trustee, the legal counsel may
be an employee of or counsel to the Company or the Trustee.
"Pari Passu Indebtedness" means, with respect to the
Company or any Subsidiary Guarantor, Indebtedness of such
person which ranks pari passu in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be (in each case, whether or not secured by any
Lien).
"Paying Agent" shall have the meaning provided in
Section 2.03, except that, for the purposes of Articles Three
and Eight and Sections 4.15 and 4.16, the Paying Agent shall
not be the Company or an Affiliate of the Company.
"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
any other subsidiary of such person, or (ii) such person or any
other subsidiary of such person to receive or retain any such
<PAGE> 29
(a) dividends, distributions or payments, (b) loans or
advances, or (c) transfer of properties or assets.
"Permitted Holder" means (i) Food 4 Less Equity
Partners, L.P., The Yucaipa Companies or any entity controlled
thereby or any of the partners thereof, (ii) Apollo Advisors,
L.P., Lion Advisors, L.P. or any entity controlled thereby or
any of the partners thereof, (iii) an employee benefit plan of
the Company, or any of its subsidiaries or any participant
therein, (iv) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
subsidiaries or (v) any Permitted Transferee of any of the
foregoing persons.
"Permitted Indebtedness" means (a) Indebtedness of
the Company and its Subsidiaries (and the Company and each
Subsidiary (to the extent it is not an obligor) may guarantee
such Indebtedness) pursuant to (i) the Term Loans in an
aggregate principal amount at any time outstanding not to
exceed $600 million less the aggregate amount of all principal
repayments thereunder pursuant to and in accordance with the
requirements of Section 4.16 subsequent to the Issue Date,
(ii) the revolving credit facility under the Credit Agreement
(including the Letter of Credit Obligations) in an aggregate
principal amount at any time outstanding not to exceed $325
million, less all permanent reductions thereunder pursuant to
and in accordance with the requirements of Section 4.16, and
(iii) any Indebtedness incurred under the Credit Agreement
pursuant to and in accordance with (A) clause (m) of this
definition and (B) Section 4.12 (other than Permitted
Indebtedness that is not incurred pursuant to clause (m) or
this clause (a) of this definition); (b) Indebtedness of the
Company or a Subsidiary Guarantor owed to and held by the
Company or a Subsidiary Guarantor; (c) Indebtedness incurred by
the Company or any Subsidiary in connection with the purchase
or improvement of property (real or personal) or equipment or
other capital expenditures in the ordinary course of business
(including for the purchase of assets or stock of any retail
grocery store or business) or consisting of Capitalized Lease
Obligations, provided that (i) at the time of the incurrence
thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (c) does not
exceed, in the aggregate, 3% of net sales of the Company and
its Subsidiaries during the most recently completed four fiscal
quarter period on a consolidated basis (calculated on a pro
forma basis if the date of incurrence is prior to the end of
the fourth fiscal quarter following the Merger) and (ii) such
Indebtedness, together with all then outstanding Indebtedness
incurred in reliance upon this clause (c) does not exceed, in
<PAGE> 30
the aggregate, 3% of the aggregate net sales of the Company and
its Subsidiaries during the most recently completed twelve
fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end
of the twelfth fiscal quarter following the Merger);
(d) Indebtedness incurred by the Company or any Subsidiary in
connection with capital expenditures in an aggregate principal
amount not exceeding $150 million, provided that such capital
expenditures relate solely to the integration of the operations
of RSI, Food 4 Less and their respective subsidiaries as
described in the Prospectus of Food 4 Less relating to the
Securities dated May 31, 1995; (e) Indebtedness of the Company
or any Subsidiary incurred under Foreign Exchange Agreements
and Interest Swap Obligations entered into with respect to
Indebtedness otherwise permitted to be outstanding pursuant to
Section 4.12 or this definition of Permitted Indebtedness in a
notional amount not exceeding the aggregate principal amount of
such Indebtedness; (f) guarantees incurred in the ordinary
course of business by the Company or a Subsidiary of
Indebtedness of any other person in the aggregate not to exceed
$25 million at any time outstanding; (g) guarantees by the
Company or a Subsidiary Guarantor of Indebtedness incurred by a
wholly-owned Subsidiary Guarantor so long as the incurrence of
such Indebtedness incurred by such wholly-owned Subsidiary
Guarantor is permitted under the terms of this Indenture;
(h) Refinancing Indebtedness; (i) Indebtedness for letters of
credit relating to workers' compensation claims and
self-insurance or similar requirements in the ordinary course
of business; (j) Existing Indebtedness and other Indebtedness
outstanding on the Issue Date (after giving effect to the
Merger); (k) Indebtedness arising from guarantees of
Indebtedness of the Company or any Subsidiary or other
agreements of the Company or a Subsidiary providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or Subsidiary,
other than guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in
connection with such disposition; (l) obligations in respect of
performance bonds and completion guarantees provided by the
Company or any Subsidiary in the ordinary course of business;
and (m) additional Indebtedness of the Company and the
Subsidiary Guarantors in an amount not to exceed $175 million
at any time outstanding.
<PAGE> 31
"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 made pursuant to Section 4.16 or
any other disposition of assets not constituting an Asset Sale
by reason of the $500,000 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 Section 4.11,
(vi) Investments by Subsidiary Guarantors in other Subsidiary
Guarantors or the Company and Investments by the Company in a
Subsidiary Guarantor in the form of Indebtedness owed to the
Company by such Subsidiary Guarantor and Investments by
Subsidiaries which are not Subsidiary Guarantors in other
Subsidiaries which are not Subsidiary Guarantors and
(vii) additional Investments in an aggregate amount not
exceeding $15 million.
"Permitted Liens" means (i) Liens for taxes,
assessments and governmental charges or claims not yet due or
which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as shall be
required in conformity wity GAAP shall have been made thereof;
(ii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen, or other like
Liens arising in the ordinary course of business, deposits made
to obtain the release of such Liens, and with respect to
amounts not yet delinquent for a period of more than 60 days or
being contested in good faith by appropriate process of law,
and for which a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made; (iii) Liens
incurred or pledges or deposits made in the ordinary course of
business to secure obligations under workers' compensation,
unemployment insurance and other types of social security or
similar legislation; (iv) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of
a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, zoning or other restrictions,
minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect
with the business of the Company or any of its Subsidiaries
incurred in the ordinary course of business; (vi) Liens upon
specific items of inventory or other goods and proceeds of any
person securing such person's obligations in respect of
bankers' acceptances issued or created for the account of such
person to facilitate the purchase, shipment or storage of such
<PAGE> 32
inventory or other goods in the ordinary course of business;
(vii) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other property
relating to such letters of credit and the products and
proceeds thereof; (viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
nondelinquent customs duties in connection with the importation
of goods; (ix) judgment and attachment Liens not giving rise to
a Default or Event of Default; (x) leases or subleases granted
to others not interfering in any material respect with the
business of the Company or any Subsidiary; (xi) Liens
encumbering customary initial deposits and margin deposits, and
other Liens incurred in the ordinary course of business that
are within the general parameters customary in the industry, in
each case securing Indebtedness under Interest Swap Obligations
and Foreign Exchange Agreements and forward contracts, option
futures contracts, futures options or similar agreements or
arrangements designed to protect the Company or any Subsidiary
from fluctuations in the price of commodities; (xii) Liens
encumbering deposits made in the ordinary course of business to
secure nondelinquent obligations arising from statutory,
regulatory, contractual or warranty requirements of the Company
or its Subsidiaries for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been
made; (xiii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company
or any Subsidiary in the ordinary course of business in
accordance with past practices; (xiv) any interest or title of
a lessor in the property subject to any lease, whether
characterized as capitalized or operating other than any such
interest or title resulting from or arising out of a default by
the Company or any Subsidiary of its obligations under such
lease; (xv) Liens arising from filing UCC financing statements
for precautionary purposes in connection with true leases of
personal property that are otherwise permitted under this
Indenture and under which the Company or any Subsidiary is
lessee; and (xvi) additional Liens securing Indebtedness in an
aggregate principal amount at any one time outstanding not
exceeding the sum of (i) $25 million and (ii) 10% of the
aggregate Consolidated Net Income of the Company earned
subsequent to the Issue Date and on or prior to such time.
"Permitted Payments" means (i) any payment by the
Company or any Subsidiary, or any dividend by the Company or
any Subsidiary to New Holdings the proceeds of which are
utilized by New Holdings to make payments, to The Yucaipa
Companies or the principals or any Affiliates thereof for
consulting, management, investment banking or similar services,
or for reimbursement of losses, costs and expenses pursuant to
the Consulting Agreement, (ii) any payment by the Company or
<PAGE> 33
any Subsidiary pursuant to the Second Amended and Restated Tax
Sharing Agreement, dated as of the Issue Date, by and among
Food 4 Less, all direct and indirect Subsidiaries, and New
Holdings, as such Tax Sharing Agreement may be amended from
time to time, so long as the payment thereunder by the Company
and its Subsidiaries shall not exceed the amount of taxes the
Company would be required to pay if it were the filing person
for all applicable taxes, (iii) any payment by the Company or
any Subsidiary pursuant to the Transfer and Assumption
Agreement, dated as of June 23, 1989, between Food 4 Less and
Holdings, as in effect on the Issue Date, (iv) any payment by
the Company or any Subsidiary, or any dividend by the Company
or any Subsidiary to New Holdings the proceeds of which are
used by New Holdings to make payments (a) in connection with
repurchases of outstanding shares of the Company's or New
Holding's Common Stock following the death, disability or
termination of employment of management stockholders, and
(b) of amounts required to be paid by New Holdings, the Company
or any of its Subsidiaries to participants or former
participants in employee benefit plans upon 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 any unused amounts may be carried over to any
subsequent Yearly Period subject to a maximum amount of
$20 million in any Yearly Period), (v) from and after June 30,
1998, payments of cash dividends or loans to New Holdings in an
amount sufficient to enable New Holdings to make payments of
interest required to be made in respect of the Discount Notes
in an amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vi) from and after June 15, 2000, payments of cash dividends
to New Holdings in an amount sufficient to enable New Holdings
to make payments of interest required to be made in respect of
the Seller Debentures and the New Discount Debentures in an
amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vii) dividends or other payments to New Holdings sufficient to
enable New Holdings to perform accounting, legal, corporate
reporting and administrative functions in the ordinary course
of business or to pay required fees and expenses in connection
with the Merger, the FFL Merger, the Reincorporation Merger and
the registration under applicable laws and regulations of its
debt or equity securities, (viii) dividends or other
distributions by the Company to New Holdings on the Issue Date
of shares of New Holdings common stock owned by the Company,
(ix) dividends by the Company to New Holdings of the Net Cash
Proceeds of an Asset Sale to the extent that (a) the Company or
any of the Subsidiaries is required pursuant to this Indenture
to utilize such Net Cash Proceeds to repay the Securities (and
<PAGE> 34
has complied with all such requirements), (b) such Net Cash
Proceeds are not required to be and have not been utilized to
repay outstanding Indebtedness of the Company or any of the
Subsidiaries and (c) New Holdings is required pursuant to the
documents governing any outstanding Indebtedness of New
Holdings to utilize such Net Cash Proceeds to repay such
Indebtedness (it being understood that only the amounts not
utilized as described in clauses (a) and (b) of this clause
(ix) shall be permitted to be distributed to New Holdings
pursuant to this clause (ix)), (x) the exchange by the Company
of Old RGC Notes for New RGC Notes, or the purchase for cash of
up to $27 million aggregate principal amount of Old RGC Notes,
in each case, in accordance with the terms of the RGC Offers,
(xi) the exchange by the Company of Old F4L Senior Subordinated
Notes for New F4L Senior Subordinated Notes in accordance with
the terms of the F4L Exchange Offers, (xii) the repurchase by
the Company of up to $10 million aggregate principal amount of
Old RGC Notes, at a repurchase price of 101% of the principal
amount thereof plus accrued interest to the repurchase date,
pursuant to the "change of control purchase offer" provisions
set forth in section 1014 of the Old RGC Indentures as in
effect on the Issue Date, (xiii) the loan by the Company on the
Issue Date to RGC Investment Co. of not more than $5 million
and (xiv) for so long as the sole business activity of such
partnership is to acquire, hold, sell, exchange, transfer or
otherwise dispose of all or any portion of the New Discount
Debentures and to manage its investment in the New Discount
Debentures, any payment by the Company or any Subsidiary, or
any dividend or loan to New Holdings, the proceeds of which are
utilized by New Holdings to fund ongoing costs and expenses of
RGC Partners, L.P. pursuant to the Subscription Agreement and
the Registration Rights Agreement.
"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, (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 the Company, (iv) any investment
account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of
such person and (v) any investment fund or investment entity
that is a subsidiary of such person or a Permitted Transferee
of such person.
"person" means any individual, corporation,
partnership, limited liability company, joint venture,
<PAGE> 35
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"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,
Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
person, over shares of Capital Stock of any other class 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 the Company's chief financial officer or Board
of Directors in consultation with its independent certified
public accountants.
"Public Equity Offering" means an undewritten public
offering of Common Stock of the Company or New Holdings
pursuant to a registration statement filed with the Commission
in accordance with the Securities Act which public equity
offering results in gross proceeds to the Company or New
Holdings, as the case may be, of not less than $20,000,000;
provided, however, that in the case of a Public Equity Offering
by New Holdings, New Holdings contributes to the capital of the
Company net cash proceeds in an amount sufficient to redeem the
Securities called for redemption in accordance with the terms
thereof.
<PAGE> 36
"Qualified Capital Stock" means, with respect to any
person, any Capital Stock of such person that is not
Disqualified Capital Stock.
"Ralphs Grocery Company" means Ralphs Grocery
Company, Inc., a Delaware corporation, and its successors.
"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 Paragraph 5 of the
Securities annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any
Security to be redeemed, means the price fixed for such
redemption pursuant to this Indenture and Paragraph 5 of the
Securities annexed hereto as Exhibit A.
"Reference Date" shall have the meaning provided in
Section 4.03.
"Reference Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"Refinancing Indebtedness" means, with respect to any
person, Indebtedness of such person issued in exchange for, or
the proceeds from the issuance and sale or disbursement of
which are used to substantially concurrently repay, redeem,
refund, refinance, discharge or otherwise retire for value, in
whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or
renewal of (collectively, an "amendment"), any Indebtedness of
such person existing on the Issue Date or Indebtedness (other
than Permitted Indebtedness, except Permitted Indebtedness
incurred pursuant to clauses (c), (d), (h) and (j) of the
definition thereof) incurred in accordance with this Indenture
(a) in a principal amount (or, if such Refinancing Indebtedness
provides for an amount less than the principal amount thereof
to be due and payable upon the acceleration thereof, with an
original issue price) not in excess of (without duplication)
(i) the principal amount or the original issue price, as the
case may be, of the Indebtedness so refinanced (or, if such
Refinancing Indebtedness refinances Indebtedness under a
revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment
<PAGE> 37
not to exceed the maximum commitment under such revolving
credit facility or other agreement) plus (ii) unpaid accrued
interest on such Indebtedness plus (iii) premiums, penalties,
fees and expenses actually incurred by such person in
connection with the repayment or amendment thereof and (b) with
respect to Refinancing Indebtedness that repays or constitutes
an amendment to Subordinated Indebtedness, such Refinancing
Indebtedness (x) shall not have any fixed mandatory redemption
or sinking fund requirement in an amount greater than or at a
time prior to the amounts and times specified in such repaid or
amended Subordinated Indebtedness, except to the extent that
any such requirement applies on a date after the Maturity Date
and (y) shall contain subordination and default provisions no
less favorable in any material respect to Holders than those
contained in such repaid or amended Subordinated Indebtedness.
"Registrar" shall have the meaning provided in
Section 2.03.
"Registration Rights Agreement" means that certain
Registration Rights Agreement by and between RGC Partners,
L.P., New Holdings and Food 4 Less, as such Registration Rights
Agreement may be amended or replaced, so long as any amounts
paid by New Holdings and the Company under any amended or
replacement agreement do not exceed the amounts payable by New
Holdings and the Company under such Registration Rights
Agreement as in effect on the Issue Date.
"Reincorporation Merger" means the merger, prior to
the Merger, of Holdings with and into New Holdings.
"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 the Company or any of its Subsidiaries 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 the Company and its
Subsidiaries 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 the Company and its Subsidiaries as
it is conducted as of the Issue Date and as such business may
thereafter evolve or change.
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness;
provided that in no event shall United States Trust Company of
<PAGE> 38
New York, in its capacities as Trustee, Registrar, co-Registrar
or Paying Agent, serve as Representative.
"Restricted Debt Prepayment" means any purchase,
redemption, defeasance (including, but not limited to,
in-substance or legal defeasance) or other acquisition or
retirement for value, directly or indirectly, by the Company or
a Subsidiary, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking fund payment, as
the case may be, in respect of Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment,
(ii) Investment (other than a Permitted Investment) or
(iii) Restricted Debt Prepayment.
"RGC Offers" means, the offer by the Company as
described in the Amended and Restated Prospectus and
Solicitation Statement dated May 12, 1995 (as supplemented) to
holders of Old RGC Notes to exchange such notes for New RGC
Notes.
"RSI" means Ralphs Supermarkets Inc., a Delaware
corporation.
"Securities" means the Company's 11% Senior Notes due
2004, 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 Commission
promulgated thereunder.
"Seller Debentures" means the 13 5/8% Senior
Subordinated Pay-in-Kind Debentures due 2007 of New Holdings
issued pursuant to the Seller Debenture Indenture, including
any additional 13 5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 issued as interest thereon, in each case,
as such Seller Debentures may be modified or amended from time
to time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Seller Debenture Indenture" means the indenture
between New Holdings and Norwest Bank, Minnesota, National
Association, as trustee, dated as of the Issue Date under which
the 13 5/8% Senior Subordinated Pay-in-Kind Debentures due 2007
of New Holdings were issued, as the same may be modified and
amended from time to time and refinancings thereof to the
extent such refinancings are pemitted under this Indenture.
<PAGE> 39
"Senior Subordinated Note Indentures" means,
together, (i) the indenture dated as of the Issue Date between
the Company, the Subsidiary Guarantors and the United States
Trust Company of New York, as trustee, pursuant to which the
Company issued $ of 11% Senior Subordinated Notes due
2005, and (ii) the indenture dated as of the Issue Date between
the Company, the Subsidiary Guarantors and the United States
Trust Company of New York, as trustee, pursuant to which the
Company issued $ of 13.75% Senior Subordinated Notes
due 2005.
"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 of the
Company 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 Issue Date) or (b) material to the financial condition or
results of operations of the Company and its Subsidiaries 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 the
Company, dividends payable solely in Qualified Capital Stock of
the Company), 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 exchangeable or convertible
Indebtedness of such person), 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 the Company) 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 the Company, through the issuance in exchange therefor
solely of Qualified Capital Stock of the Company; provided,
however, that in the case of a Subsidiary, the term "Stock
Payment" shall not include any such payment with respect to its
Capital Stock or warrants, rights or options to purchase or
acquire shares of any class of its Capital Stock that are owned
solely by the Company or a wholly owned Subsidiary.
<PAGE> 40
"Subordinated Indebtedness" means, with respect to
the Company or any Subsidiary Guarantor, Indebtedness of such
person which is subordinated in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be.
"Subscription Agreement" means that certain
Subscription Agreement, between RGC Partners, L.P., New
Holdings, Food 4 Less and the partnership investors listed on
Exhibit A thereto, as such Subscription Agreement may be
amended or replaced, so long as any amounts paid by New
Holdings and the Company under any amended or replacement
agreement do not exceed the amounts payable by New Holdings and
the Company under such Subscription Agreement as in effect on
the Issue Date.
"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 fifty percent 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.
"Subsidiary" means any subsidiary of the Company.
"Subsidiary Guarantor" means (i) each of Alpha Beta
Company, Bay Area Warehouse Stores, Inc., Bell Markets, Inc.,
Cala Co., Cala Foods, Inc., Falley's Inc., Food 4 Less of
California, Inc., Food 4 Less Merchandising, Inc., Food 4 Less
GM, Inc. and Food 4 Less of Southern California, Inc., (ii)
upon consummation of the Merger, Crawford Stores, Inc., (iii)
each of the Company's Subsidiaries which becomes a guarantor of
the Securities in compliance with the provisions set forth in
Section 4.17, and (iv) each of the Company's Subsidiaries
executing a supplemental indenture in which such Subsidiary
agrees to be bound by the terms of this Indenture.
<PAGE> 41
"Term Loans" means the term loan facility under the
Credit Agreement and any agreement governing Indebtedness
incurred to refund, replace or refinance any borrowings
outstanding under such facility or under any prior refunding,
replacement or refinancing thereof (in each case, in whole or
in part, and without limitation as to amount, terms conditions,
covenants and other provisions).
"The Yucaipa Companies" means The Yucaipa Companies,
a California general partnership, or any successor thereto
which is an affiliate of Ronald W. Burkle or his Permitted
Transferees and which has been established for the sole purpose
of changing the form of The Yucaipa Companies from that of a
partnership to that of a limited liability company or any other
form of entity which is not materially adverse to the rights of
the Holders under this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code {{ 77aaa-77bbbb), as amended, as in effect on the date
this Indenture is qualified under the TIA, except as otherwise
provided in Section 9.03.
"Transaction Date" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"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 8.02.
"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.
"Yearly Period" means each fiscal year of the
Company; provided that the first Yearly Period shall begin on
the Issue Date and shall end on January 28, 1996.
SECTION 1.02. 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
<PAGE> 42
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 or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the
Company, any Subsidiary Guarantor, or any other obligor on the
Securities or the Guarantees.
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 1.03. 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.
<PAGE> 43
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Securities, the notation thereon relating to the
Guarantee 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. The Company 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
and the Guarantee shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions
and to be bound thereby.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant
Secretary, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by
manual or facsimile signature. Each Subsidiary Guarantor shall
execute the Guarantee in the manner set forth in Section 10.08.
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 for
original issue in the aggregate principal amount of up to
$525,000,000 (or such lesser amount (but not less than
$520,326,000 aggregate principal amount) as is authenticated by
the Trustee and issued by the Company on the Issue Date) upon a
written order of the Company in the form of an Officers'
<PAGE> 44
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 $525,000,000 (or such lesser amount (but not less than
$520,326,000 aggregate principal amount) as is authenticated by
the Trustee and issued by the Company on the Issue Date),
except as provided in Section 2.07. Upon the written order of
the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent
reasonably acceptable to the Company 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 the Company and Affiliates of the Company.
The Securities shall be issuable only in registered
form without coupons in denominations of $1,000 and integral
multiples thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where (a) Secu-
rities 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 the Company in respect of
the Securities and this Indenture may be served. The Company
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 the
Company of its obligation to maintain an office or agency in
the Borough of Manhattan, The City of New York, for such
purposes. The Company may act as its own Registrar or Paying
Agent except that for the purposes of Articles Three and Eight
and Sections 4.15 and 4.16, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon notice to the
Trustee, may have one or more co-Registrars and one or more
additional paying agents reasonably acceptable to the Trustee.
<PAGE> 45
The term "Paying Agent" includes any additional paying agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a
successor has been appointed.
The Company 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. The Company shall notify the Trustee, in
advance, of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company 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 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 the Company or any other
obligor on the Securities), and shall notify the Trustee of any
Default by the Company (or any other obligor on the Securities)
in making any such payment. If the Company or a Subsidiary
acts as Paying Agent, it shall segregate such assets and hold
them as a separate trust fund. The Company at any time may
require a Paying Agent to distribute all assets 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 held by it to the Trustee
and to account for any assets distributed. Upon distribution
to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent shall have no
further liability for such assets.
SECTION 2.05. 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, the Company 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.
<PAGE> 46
SECTION 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer of such
Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transaction are met; provided, however, that the
Securities surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations
of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or
co-Registrar's request. No service charge shall be made for
any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Sections
2.02, 2.07, 2.10, 3.06, 4.15, 4.16 or 9.05). The Registrar or
co-Registrar shall not be required to register the transfer of
or exchange of any Security (i) during a period beginning at
the opening of business 15 days before the mailing of a notice
of redemption of Securities and ending at the close of business
on the day of such mailing and (ii) selected for redemption in
whole or in part pursuant to Article Three, except the
unredeemed portion of any Security being redeemed in part.
SECTION 2.07. 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, the Company shall
issue and the Trustee shall authenticate a replacement Security
if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or
any Agent from any loss which any of them may suffer if a
Security is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional
obligation of the Company.
<PAGE> 47
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the
Securities that have been authenticated by the Trustee 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 the Company,
the Subsidiary Guarantors or any of their respective Affiliates
holds the Security.
If a Security is replaced pursuant to Section 2.07
(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 2.07.
If on a Redemption Date or the Maturity Date the
Paying Agent (other than the Company or a 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 2.09. Treasury Securities.
In determining whether the Holders of the required
principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company, the
Subsidiary Guarantors or any of their respective 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.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery,
the Company 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 the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
<PAGE> 48
SECTION 2.11. Cancellation.
The Company 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 the Company or a Subsidiary), and no one else,
shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07,
the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation.
If the Company or any Subsidiary Guarantor 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 the Company 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 on a
subsequent special record date, which date shall be the
fifteenth day next preceding the date fixed by the Company 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, the Company
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.
The Company 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.
<PAGE> 49
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant
to Paragraph 5 of the Securities, it shall notify the Trustee,
with a copy to the Credit Agent, of the Redemption Date and the
principal amount of Securities to be redeemed and whether it
wants the Trustee to give notice of redemption to the Holders
at least 30 days (unless a shorter notice shall be satisfactory
to the Trustee) but not more than 60 days before the Redemption
Date. In order to effect a redemption pursuant to Paragraph 5
of the Securities with the proceeds of a Public Equity
Offering, the Company shall send the redemption notice not
later than 60 days after the consummation of such Public Equity
Offering. Any such notice 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 3.02. 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 any other method that the
Trustee considers fair and appropriate and, if such Securities
are listed on any securities exchange, by a method that
complies with the requirements of such exchange; provided,
however, that any redemption pursuant to Paragraph 5 of the
Securities with the proceeds of a Public Equity Offering shall
be made on a pro rata basis unless such method is otherwise
legally prohibited.
The Trustee shall make the selection from the
Securities outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000
may be redeemed only in whole. The Trustee may select for
redemption portions (equal to $1,000 or integral multiples
thereof) of the principal amount 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.
<PAGE> 50
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company 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 and the Credit Agent. In order to effect a
redemption pursuant to Paragraph 5 of the Securities with the
proceeds of a Public Equity Offering, the Company shall send
the redemption notice not later than 60 days after the
consummation of such Public Equity Offering. At the Company's
request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's 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 the Company 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 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.
<PAGE> 51
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance
with Section 3.03, 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.
Securities that are redeemed by the Company or that are
purchased by the Company pursuant to a Net Proceeds Offer as
described in Section 4.16 or pursuant to a Change of Control
Offer as described in Section 4.15 or that are otherwise
acquired by the Company will be surrendered to the Trustee for
cancellation.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company 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 the
Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any U.S. Legal Tender so
deposited which is not required for that purpose upon the
written request of the Company, except with respect to monies
owed as obligations to the Trustee pursuant to Article Seven
hereof.
If the Company complies with the preceding paragraph
then, unless the Company 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.
SECTION 3.06. 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.
<PAGE> 52
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest
on the Securities on the dates and in the manner provided in
the Securities. An installment of principal of or interest on
the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent (other than the Company or a
Subsidiary) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment.
The Company shall pay interest on overdue principal
at the rate borne by the Securities and it shall pay interest
on overdue installments of interest at the same rate, to the
extent lawful.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of
Manhattan, The City of New York, the office or agency required
under Section 2.03 hereof. The Company 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 the Company shall
fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section
11.02.
SECTION 4.03. Limitation on Restricted Payments.
The Company shall not, and shall cause each of its
Subsidiaries not to, directly or indirectly, make any
Restricted Payment if, at the time of such proposed Restricted
Payment, or after giving effect thereto, (a) a Default or an
Event of Default shall have occurred and be continuing, (b) the
Company could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.12 or
(c) the aggregate amount expended for all Restricted Payments,
including such proposed 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 the Company), subsequent to
the Issue Date, shall exceed the sum of (i) 50% of the
aggregate Consolidated Net Income (or if such aggregate
Consolidated Net Income is a loss, minus 100% of such loss) of
<PAGE> 53
the Company earned subsequent to the Issue Date and on or prior
to the date of the proposed Restricted Payment (the "Reference
Date"), plus (ii) 100% of the aggregate Net Proceeds received
by the Company from any person (other than a Subsidiary of the
Company) from the issuance and sale (including upon exchange or
conversion for other securities of the Company) 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 the
Company or any Subsidiary, until and to the extent such
borrowing is repaid), plus (iii) 100% of the aggregate net cash
proceeds received by the Company as capital contributions to
the Company after the Issue Date, plus (iv) $25 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 of the Company or the repurchase, redemption or
other repayment of any Subordinated Indebtedness 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 of the Company, (3) the repurchase,
redemption or other repayment of any Subordinated Indebtedness
in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of
Subordinated Indebtedness of the Company with an Average Life
equal to or greater than the then remaining Average Life of the
Subordinated Indebtedness repurchased, redeemed or repaid,
(4) any payments by the Company or any Subsidiary, or any
dividend by the Company or any Subsidiary to New Holdings the
proceeds of which are used by New Holdings to make payments, in
each case, required to be made due to the exercise of statutory
dissenters', appraisal or similar rights by holders of common
stock of FFL in connection with the FFL Merger and (5) Permit-
ted Payments; provided, however, that the declaration of each
dividend paid in accordance with clause (1) above, each
acquisition, repurchase, redemption or other repayment made in
accordance with, or of the type set forth in, clause (2) above,
and each payment described in clause (iii), (iv), (vii), and
(ix) of the definition of the term "Permitted Payments" shall
each be counted for purposes of computing amounts expended
pursuant to subclause (c) in the immediately preceding
paragraph, and no amounts expended pursuant to clause (3) or
(4) above or pursuant to clauses (i), (ii), (v), (vi), (viii),
<PAGE> 54
(x), (xi), (xii), (xiii) and (xiv) of the definition of the
term "Permitted Payments" shall be so counted; provided further
that to the extent any payments made pursuant to clause (vii)
of the definition of the term "Permitted Payments" are deducted
for purposes of computing the Consolidated Net Income of the
Company, such payments shall not be counted for purposes of
computing amounts expended as Restricted Payments pursuant to
subclause (c) in the immediately preceding paragraph.
Prior to making any Restricted Payment under the
first paragraph of this Section 4.03, the Company 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 4.04. Corporate Existence.
Except as otherwise permitted by Article Five, the
Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and 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 the
Company and each such Significant Subsidiary; provided,
however, that the Company 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 the
Company 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 the Company or any
such Significant Subsidiary.
SECTION 4.05. Payment of Taxes and Other Claims.
The Company 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 the Company 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
<PAGE> 55
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 the Company and its Subsidiaries taken as a
whole.
SECTION 4.06. Maintenance of Properties and Insurance.
(a) The Company shall cause all properties used or
useful to the conduct of its business or the business of any of
its 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 properties (together with all other such
failures) would not have a material adverse effect on the
financial condition or results of operations of the Company and
its Subsidiaries taken as a whole; provided, however, that
nothing in this Section 4.06 shall prevent the Company 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 the Company or the Subsidiary concerned, or of the
senior officers of the Company or such Subsidiary, as the case
may be, desirable in the conduct of the business of the Company
or such Subsidiary, as the case may be, or (iii) is otherwise
permitted by this Indenture.
(b) The Company 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 the
Company are adequate and appropriate for the conduct of the
business of the Company 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 the Company or the applicable Subsidiary or (ii) customary,
in the reasonable, good faith opinion of the Company, 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
<PAGE> 56
financial condition or results of operations of the Company and
its Subsidiaries, taken as a whole.
SECTION 4.07. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within
120 days after the end of the Company's 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 the Company
during such preceding fiscal year has kept, observed, performed
and fulfilled each and every such covenant and no event of
default in respect of any payment obligation under the Credit
Agreement, Default or Event of Default occurred during such
year or, if such signers do know of such an event of default,
Default or Event of Default, the certificate shall describe the
event of default, Default or Event of Default and its status
with particularity. The Officers' Certificate shall also
notify the Trustee should the Company 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, the Company shall deliver to the Trustee within
120 days after the end of each fiscal year a written statement
by the Company's 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) The Company shall deliver to the Trustee,
forthwith upon becoming aware, and in any event within 5 days
after the occurrence, of (i) any Default or Event of Default in
the performance of any covenant, agreement or condition
contained in this Indenture; (ii) any event of default in
respect of any payment obligation under the Credit Agreement or
any event of default under any other bond, debenture, note, or
other evidence of Indebtedness of the Company or any of its
Subsidiaries, or under any mortgage, indenture or other
instrument if such event of default related to Indebtedness at
any time in an aggregate principal amount exceeding $20
million, an Officers' Certificate specifying with particularity
such event.
<PAGE> 57
SECTION 4.08. Compliance with Laws.
The Company 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 the Company and its
Subsidiaries taken as a whole.
SECTION 4.09. SEC Reports.
The Company will deliver to the Trustee within 15
days after the filing of the same with the Commission, copies
of the quarterly and annual report and of the information
documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the
Trustee and Holders of Securities with such annual reports and
such information, documents and other reports specified in
Section 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of TIA Section 314(a).
SECTION 4.10. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
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 the Company 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
covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company 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.
<PAGE> 58
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) Neither the Company nor any of its Subsidiaries
shall (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities (other than
equity securities which do not constitute Disqualified Capital
Stock) to, (ii) purchase any property, assets or securities
(other than equity securities which do not constitute
Disqualified Capital Stock) from, (iii) make any Investment in,
or (iv) enter into or suffer to exist any contract or agreement
with or for the benefit of, an Affiliate or Significant
Stockholder (or any Affiliate of such Significant Stockholder)
of the Company or any Subsidiary (an "Affiliate Transaction"),
other than (x) Affiliate Transactions permitted under Section
4.11(b) and (y) Affiliate Transactions in the ordinary course
of business that are fair to the Company 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; provided that (A) with respect to Affiliate
Transactions involving aggregate payments in excess of $1
million and less than $5 million, the Company or such
Subsidiary, as the case may be, shall have delivered an
Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (y)
above (other than the requirements set forth in such clause (y)
that such Affiliate Transaction be in the ordinary course of
business), (B) with respect to Affiliate Transactions involving
aggregate payments in excess of $5 million and less than $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered an Officers' Certificate to the Trustee
certifying that such Affiliate Transaction complies with clause
(y) above (other than the requirements set forth in such clause
(y) that such Affiliate Transaction be in the ordinary course
of business) and that such Affiliate Transaction has received
the approval of a majority of the disinterested members of the
Board of Directors of the Company 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 the Company
or the Subsidiary, as the case may be, that an Independent
Financial Advisor has reasonably and in good faith determined
that the financial terms of such Affiliate Transaction are fair
to the Company or such Subsidiary, as the case may be, or that
the terms of such Affiliate Transaction are at least as
favorable as might reasonably have been obtained at such time
from an unaffiliated party and that such Independent Financial
Advisor has provided written confirmation of such determination
to the Board of Directors and (C) with respect to Affiliate
Transactions involving aggregate payments in excess of $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered to the Trustee a written opinion from an
<PAGE> 59
Independent Financial Advisor to the effect that the financial
terms of such Affiliate Transaction are fair to the Company or
such Subsidiary, as the case may be, or that the terms of such
Affiliate Transaction are at least as favorable as those that
might reasonably have been obtained at the time from an
unaffiliated party.
(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 4.03,
(iii) reasonable and customary fees and compensation paid to,
and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary, as
determined by the Board of Directors of the Company or any
Subsidiary or the senior management thereof in good faith,
(iv) transactions exclusively between or among the Company and
any of its 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 Securityholders in
any material respect, (vi) the existence of, or the performance
by the Company or any of its Subsidiaries of its obligations
under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related
thereto) to which it (or New Holdings) is a party as of the
Issue Date and any similar agreements which it (or New
Holdings) may enter into thereafter; provided, however, that
the existence of, or the performance by the Company or any
Subsidiaries 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
Securityholders in any material respect, (vii) transactions
permitted by, and complying with, the provisions of
Section 5.01 and (viii) transactions with suppliers or other
purchases or sales of goods or services, in each case in the
ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in
compliance with the terms of this Indenture which are fair to
the Company, in the reasonable determination of the Board of
Directors of the Company or the senior management thereof, or
are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party.
<PAGE> 60
SECTION 4.12. Limitation on Incurrences of
Additional Indebtedness.
The Company shall not, and shall not permit any of
its Subsidiaries, directly or indirectly, to incur, assume,
guarantee, become liable, contingently or otherwise, with
respect to, or otherwise become responsible for the payment of
(collectively "incur") any Indebtedness other than Permitted
Indebtedness; provided, however, that if no Default with
respect to payment of principal of, or interest on, the
Securities or Event of Default under this Indenture shall have
occurred and be continuing at the time of or as a consequence
of the incurrence of any such Indebtedness, the Company may
incur Indebtedness if immediately before and immediately after
giving effect to the incurrence of such Indebtedness the
Operating Coverage Ratio of the Company would be greater than
2.0 to 1.0; provided further a Subsidiary may incur Acquired
Indebtedness to the extent such Indebtedness could have been
incurred by the Company pursuant to the immediately preceding
proviso.
In addition, neither the Company nor any Subsidiary
Guarantor will, directly or indirectly, in any event incur any
Indebtedness that by its terms (or by the terms of any
agreement governing such Indebtedness) is subordinated to any
other Indebtedness of the Company or such Subsidiary Guarantor,
as the case may be, unless such Indebtedness is also by its
terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinate to the Securities or
the Guarantee of such Subsidiary Guarantor, as the case may be,
to the same extent and in the same manner as such Indebtedness
is subordinated pursuant to subordination provisions that are
most favorable to the holders of any other Indebtedness of the
Company or such Subsidiary Guarantor, as the case may be.
SECTION 4.13. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries._____
The Company 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 respect to any of its Subsidiaries, except for
(a) any such restrictions contained in (i) the Credit Agreement
in effect on the Issue Date, as any such Payment Restriction
may apply to any present or future Subsidiary, (ii) this
Indenture and any agreement in effect at or entered into on the
Issue Date, (iii) 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
<PAGE> 61
restriction is not applicable to any person, or the properties
or assets of any person, other than the person so acquired and
(z) such Indebtedness is otherwise permitted to be incurred
pursuant to Section 4.12), (iv) secured Indebtedness otherwise
permitted to be incurred pursuant to Sections 4.12 and 4.14
that limit the right of the debtor to dispose of the assets
securing such Indebtedness; (b) customary non-assignment
provisions restricting subletting or assignment of any lease or
other agreement entered into by a 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 joint venture agreements and other similar
agreements; (f) restrictions contained in Indebtedness incurred
to refinance, refund, extend or renew Indebtedness referred to
in clause (a) above; provided that the restrictions contained
therein are not materially more restrictive taken as a whole
than those provided for in such Indebtedness being refinanced,
refunded, extended or renewed and (g) Payment Restrictions
contained in any other Indebtedness permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of
Section 4.12; provided that any such Payment Restrictions are
ordinary and customary with respect to the type of Indebtedness
being incurred (under the relevant circumstances) and, in any
event, no more restrictive than the most restrictive Payment
Restrictions in effect on the Issue Date.
SECTION 4.14. Limitation on Liens.
The Company shall not and shall not permit any
Subsidiary to create, incur, assume or suffer to exist any
Liens upon any of their respective assets unless the Securities
are equally and ratably secured by the Liens covering such
assets, except for (i) existing and future Liens securing
Indebtedness and other obligations of the Company and its
Subsidiaries under the Credit Agreement and related documents
or any refinancing or replacement thereof in whole or in part
permitted under this Indenture, (ii) Permitted Liens,
(iii) Liens securing Acquired Indebtedness, provided that such
Liens (x) are not incurred in connection with, or in
contemplation of, the acquisition of the property or assets
acquired and (y) do not extend to or cover any property or
assets of the Company or any Subsidiary other than the property
or assets so acquired, (iv) Liens to secure Capitalized Lease
Obligations and certain other Indebtedness that is otherwise
permitted under this Indenture, provided that (A) any such Lien
is created solely for the purpose of securing such other
<PAGE> 62
Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of,
and other direct expenses paid or charged in connection
therewith) of the purchase (whether through stock or asset
purchase, merger or otherwise) or construction or improvement
of the property subject thereto (whether real or personal,
including fixtures and other equipment), (B) the principal
amount of the Indebtedness secured by such Lien does not exceed
100% of such costs and (C) such Lien does not extend to or
cover any other property other than such item of property and
any improvements on such item, (v) Liens existing on the Issue
Date (after giving effect to the Merger), (vi) Liens in favor
of the Trustee under this Indenture and any substantially
equivalent Lien granted to any trustee or similar institution
under any indenture for Indebtedness permitted to be incurred
under this Indenture, and (vii) any replacement, extension or
renewal, in whole or in part, of any Lien described in this or
the foregoing clauses including in connection with any
refinancing of the Indebtedness, in whole or in part, secured
by any such Lien; provided that to the extent any such clause
limits the amount secured or the assets subject to such Liens,
no replacement, extension or renewal shall increase the amount
or the assets subject to such Liens, except to the extent that
the Liens associated with such additional assets are otherwise
permitted hereunder.
SECTION 4.15. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, 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 principal amount thereof
plus accrued and unpaid interest to the date of repurchase.
The Company shall purchase all Securities tendered
into a Change of Control Offer before it shall redeem or
otherwise purchase any Subordinated Indebtedness which the
Company is required to redeem or purchase in connection with a
Change of Control.
(b) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), the
Company must send, by first class mail, a notice to each Holder
of Securities, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. 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. The Company shall give notice
<PAGE> 63
of an event giving rise to a Change of Control on the same date
and in the same manner to all Holders of Securities. Such
notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.15 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"); provided,
however, that the Change of Control Payment Date for the
Securities shall be one Business Day prior to the Change
of Control Payment Date with respect to the Change of
Control Payment Date under the Senior Subordinated Note
Indentures with respect to such Change of Control;
(3) that any Security not tendered will continue to
accrue interest if interest is then accruing;
(4) that, unless the Company 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 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 purchased only
in part will be issued new Securities equal in principal
amount to the unpurchased portions of the Securities
surrendered; provided that each Security purchased and
<PAGE> 64
each Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof;
(8) that each Change of Control Offer is required to
remain open for at least 20 Business Days or such longer
period as may be required by law and until 12:00 Midnight
New York City time on the applicable Change of Control
Payment Date; and
(9) the circumstances and relevant facts regarding
such Change of Control.
On or before the Change of Control Payment Date, the
Company 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 the Company. The Paying
Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price (and
the Trustee shall promptly authenticate and mail to such
Holders new Securities equal in principal amount to any
unpurchased portion of the Securities surrendered provided that
each such new Security shall be in the principal amount of
$1,000 or integral multiples thereof). The Company 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 4.15, the Trustee shall act
as the Paying Agent.
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
Securities pursuant to a Change of Control Offer. To the
extent the provisions of any securities laws or regulations
conflict with the provisions under this Section 4.15, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales.
Neither the Company nor any of its Subsidiaries shall
consummate an Asset Sale unless (a) the Company 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 and (b) upon consummation of an Asset Sale, the
<PAGE> 65
Company will within 365 days of the receipt of the proceeds
therefrom, either: (i) apply or cause its Subsidiary to apply
the Net Cash Proceeds of any Asset Sale to (A) a Related
Business Investment, (B) an investment in properties and assets
that replace the properties and assets that are the subject of
such Asset Sale or (C) an investment in properties and assets
that will be used in the business of the Company and its
Subsidiaries existing on the Issue Date or in a business
reasonably related thereto; (ii) in the case of a sale of a
store or stores, deem such Net Cash Proceeds to have been
applied to the extent of any capital expenditures made to
acquire or construct a replacement store in the general
vicinity of the store sold within 365 days preceding the date
of the Asset Sale; (iii) apply or cause to be applied such Net
Cash Proceeds to the permanent repayment of Pari Passu
Indebtedness; provided, however, that the repayment of any
revolving loan (under the Credit Agreement or otherwise) shall
result in a permanent reduction in the commitment thereunder;
(iv) use such Net Cash Proceeds to secure Letter of Credit
Obligations to the extent related letters of credit have not
been drawn upon or returned undrawn; or (v) after such time as
the accumulated Net Cash Proceeds equal or exceed $20 million,
apply or cause to be applied such Net Cash Proceeds to the
purchase of Securities tendered to the Company for purchase at
a price equal to 100% of the principal amount thereof plus
accrued interest thereon to the date of purchase pursuant to an
offer to purchase made by the Company as set forth below (a
"Net Proceeds Offer"); provided, however, that the Company
shall have the right to exclude from the foregoing provisions
Asset Sales subsequent to the Issue Date, the proceeds of which
are derived from the sale and substantially concurrent lease-
back of a supermarket and/or related assets or equipment which
are acquired or constructed by the Company or a Subsidiary
subsequent to the date that is six months prior to the Issue
Date, provided that such sale and substantially concurrent
lease-back occurs within 270 days following such acquisition or
the completion of such construction, as the case may be.
Pending the utilization of any Net Cash Proceeds in the manner
(and within the time period) described above, the Company may
use any such Net Cash Proceeds to repay revolving loans (under
the Credit Agreement or otherwise) without a permanent
reduction of the commitment thereunder.
Notice of a Net Proceeds Offer pursuant to this
Section 4.16 will be mailed to record Holders of Securities as
shown on the register of Holders not less than 325 days nor
more than 365 days after the relevant Asset Sale, with a copy
to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Securities
<PAGE> 66
pursuant to the Net Proceeds Offer and shall state the
following terms:
(1) that the Net Proceeds Offer is being made
pursuant to Section 4.16 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, the Company shall select the Securities to
be purchased on a pro rata basis (based on amounts
tendered) (with such adjustments as may be deemed
appropriate by the Company so that only Securities in
denominations of $1,000 or multiples thereof shall be
purchased);
(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 the Company 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 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;
(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
<PAGE> 67
Securities surrendered; provided that each Security
purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples
thereof; and
(8) that the Net Proceeds Offer shall remain open
for a period of 20 Business Days or such longer period as
may be required by law.
On or before the Proceeds Purchase Date, the Company
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)(1) 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 the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment
in an amount equal to the purchase price (and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion
of the Security surrendered provided that each such new
Security shall be in the principal amount of $1,000 or integral
multiples thereof). The Company 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
4.16, 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 the Company.
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of
Securities pursuant to a Net Proceeds Offer. To the extent the
provisions of any securities laws or regulations conflict with
the provisions under this Section 4.16, the Company shall
comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this
Section 4.16 by virtue thereof.
SECTION 4.17. Guarantees of Certain Indebtedness.
The Company will not permit any of its Subsidiaries
to (a) incur, guarantee or secure through the granting of Liens
the payment of any Indebtedness under the term portion of the
Credit Agreement or refinancings thereof or (b) pledge any
<PAGE> 68
intercompany notes representing obligations of any of its
Subsidiaries, to secure the payment of any Indebtedness under
the term portion of the Credit Agreement or refinancings
thereof, in each case unless such Subsidiary, the Company and
the Trustee execute and deliver a supplemental indenture
evidencing such Subsidiary's Guarantee.
SECTION 4.18. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries
to issue any Preferred Stock (other than to the Company or to a
wholly-owned Subsidiary) or permit any person (other than the
Company or a wholly-owned Subsidiary) to own any Preferred
Stock of any Subsidiary.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Limitations on Mergers and Certain Other
Transactions.
(a) The Company 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 the Company shall be the continuing
person, or the person (if other than the Company) formed
by such consolidation or into which the Company is merged
or to which all or substantially all of the properties and
assets of the Company as an entirety or substantially as
an entirety are transferred (or, in the case of a Plan of
Liquidation, any person to which assets are transferred)
(the Company 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
supplement, all the obligations of the Company 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
<PAGE> 69
any Indebtedness to be incurred in connection therewith,
(A) the Surviving Person shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and
(B) the Surviving Person could incur at least $1 of
additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.12;
(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) each Subsidiary Guarantor, unless it is the
other party to the transaction, shall have by supplemental
indenture confirmed that its Guarantee of the obligations
of the Company under the Securities and this Indenture
shall apply, without alteration or amendment as such
Guarantee applies on the date it was granted under this
Indenture to the obligations of the Company under this
Indenture and the Securities to the obligations of the
Company or such Person as the case may be, under this
Indenture and the Securities, after consummation of such
transaction.
(b) Notwithstanding the foregoing, the consummation
of the Merger on the Issue Date need only comply with clauses
(1) and (3) of the foregoing paragraph.
(c) 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 direct or indirect
Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
SECTION 5.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Company or any
adoption of a Plan of Liquidation by the Company in accordance
with Section 5.01, the Surviving Person formed by such
consolidation or into which the Company is merged or to which
such transfer is made (or in the case of a Plan of Liquidation,
<PAGE> 70
to which assets are transferred) shall succeed to, and be
substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such
Surviving Person had been named as the Company herein;
provided, however, that solely for purposes of computing
amounts described in subclause (c) of the first paragraph of
Section 4.03, any such Surviving Person shall only be deemed to
have succeeded to and be substituted for the Company with
respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets. When a successor
corporation assumes all of the obligations of the Company
hereunder and under the Securities and agrees to be bound
hereby and thereby, the predecessor shall be released from such
obligations.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest
on any Securities when the same becomes due and payable
and the Default continues for a period of 30 days;
(ii) the Company defaults in the payment of the
principal of, or premium, if any, on the Securities when
due whether at maturity, upon acceleration, redemption,
required repurchase or otherwise;
(iii) the Company fails to comply with any of its
agreements contained in the Securities or this Indenture
(other than a default specified in clause (i) or (ii)
above), if such failure continues for the period and after
the notice specified below;
(iv) there shall be a default under any Indebtedness
of the Company or any of its Subsidiaries, whether such
Indebtedness now exists or shall hereafter be created, if
both (A) such default either (1) results from the failure
to pay any such Indebtedness at its stated final maturity
or (2) relates to an obligation other than the obligation
to pay 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
<PAGE> 71
Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay
principal at stated final maturity or the maturity of
which has been so accelerated, aggregates $20 million or
more at any one time outstanding;
(v) one or more judgments, orders or decrees of any
court or regulatory or administrative agency of competent
jurisdiction for the payment of money in excess of $20
million, either individually or in the aggregate, shall be
entered against the Company or any Subsidiary of the
Company or any of their respective properties and shall
not be discharged and there shall have been a period of 60
days after the date on which any period for appeal has
expired and during which a stay of enforcement of such
judgment, order or decree shall not be in effect;
(vi) either the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding; (b) consents
to the entry of a Bankruptcy Order for relief against it
in an involuntary case or proceeding or the commencement
of any case or proceeding against it; (c) consents to the
appointment of a custodian of it or for substantially all
of its property; or (d) makes a general assignment for the
benefit of its creditors;
(vii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (a) is for
relief against the Company or any Significant Subsidiary,
in an involuntary case or proceeding; (b) appoints a
custodian of the Company or any Significant Subsidiary, or
for all or any substantial part of their respective
properties; or (c) orders the liquidation of the Company
or any Significant Subsidiary and in each case the order
or decree remains unstayed and in effect for 60 days;
(viii) the lenders under the Credit Agreement shall
commence judicial proceedings to foreclose upon any
material portion of the assets of the Company and its
Subsidiaries or shall have exercised any right under
applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; or
(ix) any of the Guarantees shall be declared or
adjudged invalid in a final judgment or order issued by
any court or governmental authority.
A Default under clause (iii) above (other than in the
case of any Default under Section 4.03, 4.15, 4.16 or 5.01,
<PAGE> 72
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 the Company, or the Holders of at least
25% in principal amount of the outstanding Securities notify
the Company and the Trustee of the Default, and the Company
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 principal amount of the
Securities then outstanding. When a Default is cured, it
ceases.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of
Default specified in Section 6.01(vi) or (vii) with respect to
the Company or a Subsidiary Guarantor) occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Securities may, and
the Trustee upon the request of the Holders of not less than
25% in aggregate principal amount of the then outstanding
Securities shall, declare due and payable all unpaid principal
and interest accrued and unpaid on the then outstanding
Securities by written notice to the Company (and, if any
Indebtedness is outstanding under the Credit Agreement or the
Credit Agreement is otherwise in effect, to the Credit Agent)
and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the
Credit Agreement, shall become due and payable upon the first
to occur of an acceleration under the Credit Agreement, or five
business days after receipt by the Company and the Credit Agent
of such Acceleration Notice. If an Event of Default specified
in Section 6.01(vi) or (vii) occurs with respect to the Company
or a Subsidiary Guarantor that is a Significant Subsidiary, all
unpaid principal of and accrued interest on all then
outstanding Securities shall be immediately due and payable
without any declaration or other act on the part of the Trustee
or any of the Holders. Upon payment of such principal amount,
interest, and premium, if any, all of the Company's obligations
under the Securities and this Indenture, other than obligations
under Section 7.07, shall terminate. After a declaration of
acceleration, the Holders of a majority in 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 of the Securities which has become due solely by such
<PAGE> 73
declaration of acceleration, have been cured or waived, (ii) to
the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which
has become due otherwise than by such declaration of
acceleration, has been paid, (iii) the rescission would not
conflict with any judgment or decree of a court of competent
jurisdiction and (iv) the Company has paid or deposited with
the Trustee a sum sufficient to pay all sums paid or advanced
by the Trustee under this Indenture and the compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.
(b) In the event of a declaration of acceleration
under this Indenture because an Event of Default set forth in
Section 6.01(iv) 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 6.03. 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 Securityholder 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.
<PAGE> 74
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a
majority in 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 (i) and (ii) of Section 6.01. When a Default or Event
of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
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, including, without limitation, any
remedies provided for in Section 6.03. Subject to
Section 7.01, 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 Securityholder, 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 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with
respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
(2) the Holder or Holders of at least 25% in
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 a majority in principal amount of the outstanding
Securities do not give the Trustee a direction which, in
<PAGE> 75
the opinion of the Trustee, is inconsistent with the
request.
A Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a
preference or priority over such other Securityholder.
SECTION 6.07. 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 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or
interest specified in clause (i) or (ii) of Section 6.01 occurs
and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company 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 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 6.09. 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 Securityholders
allowed in any judicial proceedings relating to the Company 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 Securityholder 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
Securityholders, to pay to the Trustee any amount due to it for
<PAGE> 76
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Security
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 Securityholder 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 7.07;
Second: to Holders for interest accrued on the
Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Securities for interest;
Third: to Holders for principal amounts due and
unpaid on the Securities, ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Securities for principal; and
Fourth: to the Company or the Subsidiary Guarantors,
as their respective interests may appear.
The Trustee, upon prior notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
SECTION 6.11. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
<PAGE> 77
SECTION 6.12. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 6.13. 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 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 6.13 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.07, or a suit by a
Holder or Holders of more than 10% in principal amount of the
outstanding Securities.
ARTICLE SEVEN
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 7.01. Duties of Trustee.
(a) If a Default or an Event of Default of which the
Trustee is aware 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 would 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:
<PAGE> 78
(1) The Trustee need undertake to perform only those
duties as are specifically set forth in this Indenture and
no covenants or obligations shall be implied in this
Indenture against 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 shall have no liability except 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 7.01.
(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 6.05.
(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
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 7.01.
(f) The Trustee shall not be liable for interest on
any assets received by it. Assets held in trust by the Trustee
need not be segregated from other assets except to the extent
required by law.
<PAGE> 79
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely on and shall be protected
in acting or refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may consult with counsel and may require in addition to
written direction from the Company an Officers'
Certificate or an Opinion of Counsel, which shall conform
to Sections 11.04 and 11.05. 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 attorney or 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
reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or
thereby.
SECTION 7.03. 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 the Company, its Subsidiaries, or their respective
<PAGE> 80
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.
SECTION 7.04. 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 the Company's 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 7.05. 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 of Securities notice of the Default or
Event of Default within 90 days after such Default or Event of
Default occurs or if such Default or Event of Default is known
to the Trustee during such 90-day period, promptly after such
Default or Event of Default becomes known to the Trustee;
provided, however, that, except in the case of a Default or
Event of Default in the payment of the principal of or interest
on any Security, including the failure to make payment on a
Change of Control Payment Date pursuant to a Change of Control
Offer or payment when due pursuant to a Net Proceeds Offer the
Trustee may withhold such notice if it in good faith determines
that withholding such notice is in the interest of the Holders.
SECTION 7.06. 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 Securityholder 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
Securityholders shall be mailed to the Company and filed with
the Commission and each stock exchange, if any, on which the
Securities are listed.
The Company shall notify the Trustee if the
Securities become listed on any stock exchange.
<PAGE> 81
SECTION 7.07. Compensation and Indemnity.
The Company 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. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall
include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company 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 the Company promptly of
any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and
expenses of such counsel; provided that the Company 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
the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay
for any settlement made without its written consent. The
Company 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 the Company's payment obligations in this
Section 7.07, 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 or interest on particular Securities.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(vi) or
(vii) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company.
The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee and appoint a
successor trustee with the Company's consent, by so notifying
<PAGE> 82
the Company and the Trustee. The Company 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, the Company
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
principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. 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 7.07, the resignation 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 Securityholder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder 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 7.08, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring
Trustee.
<PAGE> 83
SECTION 7.09. 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 requirement 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 the Company 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
Company._________________________________
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
{ 311(a) to the extent indicated.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's
Obligations.________________
The Company may terminate its obligations under the
Securities and this Indenture, and the obligations of any
Subsidiary Guarantor shall terminate, except those obligations
referred to in the penultimate paragraph of this Section 8.01,
if all Securities previously authenticated and delivered (other
than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money has
theretofore been deposited with the Trustee or the Paying Agent
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company, as provided in Section 8.04)
<PAGE> 84
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
(1) either (i) pursuant to Article Three, the
Company shall have given notice to the Trustee and mailed
a notice of redemption to each Holder of the redemption of
all of the Securities under arrangements satisfactory to
the Trustee for the giving of such notice or (ii) all
Securities have otherwise become due and payable
hereunder;
(2) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee or a trustee
satisfactory to the Trustee, under the terms of an
irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust
solely for the benefit of the Holders for that purpose,
money in such amount as is sufficient without
consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the
outstanding Securities to maturity or redemption; provided
that the Trustee shall have been irrevocably instructed to
apply such money to the payment of said principal,
premium, if any, and interest with respect to the
Securities;
(3) no Default or Event of Default with respect to
this Indenture or the Securities shall have occurred and
be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a
default under, any other instrument to which the Company
is a party or by which it is bound;
(4) the Company shall have paid all other sums
payable by it hereunder; and
(5) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent providing for the
termination of the Company's and any Subsidiary
Guarantor's obligation under the Securities and this
Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit
Agreement (if then in effect) or any other agreement or
instrument then known to such counsel that binds or
affects the Company.
<PAGE> 85
Notwithstanding the foregoing paragraph, the
Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01,
4.02 and 7.07 and any Subsidiary Guarantor's obligations in
respect thereof shall survive until the Securities are no
longer outstanding pursuant to the last paragraph of
Section 2.08. After the Securities are no longer outstanding,
the Company's obligations in Sections 7.07, 8.04 and 8.05 and
any Subsidiary Guarantor's obligations in respect thereof shall
survive.
After such delivery or irrevocable deposit the
Trustee upon request shall acknowledge in writing the discharge
of the Company's and any Subsidiary Guarantor's obligations
under the Securities and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. Legal Defeasance and Covenant
Defeasance.__________________
(a) The Company may, at its option by Board
Resolution of the Board of Directors of the Company, at any
time, with respect to the Securities, elect to have either
paragraph (b) or paragraph (c) below be applied to the
outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (b), the Company and
any Subsidiary Guarantor shall be deemed to have been released
and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth
below are satisfied (hereinafter, "legal defeasance"). For
this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which
shall thereafter be deemed to be "outstanding" only for the
purposes of paragraph (e) below and the other Sections of and
matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same) except
for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders
of outstanding Securities to receive solely from the funds held
by the Trustee in the trust fund described in paragraph (d)
below and as more fully set forth in such paragraph, payments
in respect of the principal of, premium, if any, and interest
on such Securities when such payments are due, (ii) the
Company's obligations with respect to such Securities under
<PAGE> 86
Sections 2.06, 2.07 and 4.02, and, with respect to the Trustee,
under Section 7.07 and any Subsidiary Guarantor's obligations
in respect thereof, (iii) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (iv) this
Section 8.02 and Section 8.05. Subject to compliance with this
Section 8.02, the Company may exercise its option under this
paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (c), the Company
shall be released and discharged from its obligations under any
covenant contained in Article five and in Sections 4.03, 4.05
through 4.09 and 4.11 through 4.18 with respect to the
outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"),
and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue
to be deemed "outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with
respect to the outstanding Securities, the Company and any
Subsidiary Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default
under Section 6.01(iii), but, except as specified above, the
remainder of this Indenture and such Securities shall be
unaffected thereby.
(d) The following shall be the conditions to
application of either paragraph (b) or paragraph (c) above to
the outstanding Securities:
(i) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 7.10 who
shall agree to comply with the provisions of this
Section 8.02 applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, (x) money in an
amount or (y) direct non-callable obligations of, or non-
callable obligations guaranteed by, the United States of
America for the payment of which guarantee or obligation
the full faith and credit of the United States is pledged
<PAGE> 87
("U.S. Government Obligations") maturing as to principal,
premium, if any, and interest in such amounts of money and
at such times as are sufficient without consideration of
any reinvestment of such interest, to pay principal of and
interest on the outstanding Securities not later than one
day before the due date of any payment, or (z) a
combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which
shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge principal of, premium, if
any, and interest on the outstanding Securities on the
Maturity Date or otherwise in accordance with the terms of
this Indenture and of such Securities; provided, however,
that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to
apply such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the
Securities;
(ii) no Default or Event of Default or event which
with notice or lapse of time or both would become a
Default or an Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit or, insofar as Section 6.01(vi) or
(vii) is concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed
satisfied until the expiration of such period);
(iii) such legal defeasance or covenant defeasance
shall not cause the Trustee to have a conflicting interest
with respect to any Securities of the Company or any
Subsidiary Guarantor;
(iv) such legal defeasance or covenant defeasance
shall not result in a breach or violation of, or
constitute a Default or Event of Default under, this
Indenture or any other material agreement or instrument to
which the Company or any Subsidiary Guarantor is a party
or by which it is bound (and in that connection, the
Trustee shall have received a certificate from the Credit
Agent to that effect with respect to such Credit Agreement
if then in effect);
(v) in the case of an election under paragraph (b)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has
<PAGE> 88
received from, or there has been published by, the
Internal Revenue Service a ruling or (y) since the Issue
Date, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders
of the outstanding Securities will not recognize income,
gain or loss for Federal income tax purposes as a result
of such legal defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at
the same times as would have been the case if such legal
defeasance had not occurred;
(vi) in the case of an election under paragraph (c)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant
defeasance had not occurred;
(vii) in the case of an election under either
paragraph (b) or (c) above, an Opinion of Counsel to the
effect that, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any
applicable Bankruptcy Law;
(viii) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under
paragraph (c) above, as the case may be, have been
complied with; and
(ix) the Company shall have delivered to the Trustee
an Officer's Certificate stating that the deposit was not
made by the Company with the intent of preferring the
Holders of the Securities over other creditors of the
Company or any Subsidiary Guarantor or with the intent of
defeating, hindering, delaying or defrauding creditors of
the Company, any Subsidiary Guarantor or others.
(e) All money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
paragraph (e), the "Trustee") pursuant to paragraph (d) above
in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions
<PAGE> 89
of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (other than the Company or
any Affiliate of the Company), to the Holders of such
Securities of all sums due and to become due thereon in respect
of principal, premium and interest, but such money need not be
segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to
paragraph (d) above or the principal, premium, if any, and
interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the
Holders of the outstanding Securities. The Company's
obligations to pay and indemnify the Trustee as set forth in
this paragraph shall survive the termination of this Indenture
and the Securities.
Anything in this Section 8.02 to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon the request, in writing, by the
Company any money or U.S. Government Obligations held by it as
provided in paragraph (d) above which, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal
defeasance or covenant defeasance.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Sections
8.01 and 8.02, and shall apply the deposited money and the
money from U.S. Government Obligations in accordance with this
Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION 8.04. Repayment to Company or Subsidiary
Guarantors._______________________
Subject to Sections 7.07, 8.01 and 8.02, the Trustee
shall promptly pay to the Company, or if deposited with the
Trustee by any Subsidiary Guarantor, to such Guarantor, upon
receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Section 8.02, held by it
at any time. The Trustee and the Paying Agent shall pay to the
Company or any Subsidiary Guarantor, as the case may be, upon
receipt by the Trustee or the Paying Agent, as the case may be,
<PAGE> 90
of an Officers' Certificate, any money held by it for the
payment of principal, premium, if any, or interest that remains
unclaimed for two years after payment to the Holders is
required; provided, however, that the Trustee and the Paying
Agent before being required to make any payment may, but need
not, at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York
or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining will be repaid to the Company. After payment to
the Company or any Subsidiary Guarantor, as the case may be,
Securityholders entitled to money must look solely to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person, and all
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 8.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with this
Indenture 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, then and only then the Company's and each
Subsidiary Guarantor's, if any, obligations under this
Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture
until such time as the Trustee is permitted to apply all such
money or U.S. Government Obligations in accordance with this
Indenture; provided, however, that if the Company or the
Subsidiary Guarantors, as the case may be, has made any payment
of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company or
the Subsidiary Guarantors, as the case may be, shall be,
subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
<PAGE> 91
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company and the Subsidiary Guarantors, 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 Securityholder:
(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 and Section 10.05;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(4) to make any other change that does not adversely
affect the rights of any Securityholder in any material
respect; or
(5) to comply with any requirements of the
Commission in connection with the qualification of this
Indenture under the TIA;
provided that the Company has delivered to the Trustee an
Opinion of Counsel stating that such amendment or supplement
complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and each
Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together with the written consent of the
Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Securities, may amend or supplement,
or waive compliance with any provision of, this Indenture, the
Securities or any Guarantee without notice to any other
Securityholders; provided that without the consent of Holders
of not less than two thirds in aggregate principal amount of
Securities then outstanding, no such amendment, supplement or
waiver may release any Subsidiary Guarantor from any of its
obligations under its Guarantee or this Indenture other than in
accordance with the terms of such Guarantee and this Indenture;
provided, further, that without the consent of Holders of not
less than 75% in aggregate principal amount of the Securities
<PAGE> 92
then outstanding, no such amendment, supplement or waiver may
change the Change of Control Payment Date or the purchase price
in connection with any repurchase of Securities pursuant to
Section 5.15 in a manner adverse to any Holder or waive a
Default or Event of Default resulting from a failure to comply
with Section 4.15. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may:
(1) change the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver
of any provision of this Indenture, the Securities or the
Guarantees;
(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 in this Indenture or 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 6.04, 6.07 or this
Section 9.02; 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 this Indenture, the Securities and the
Guarantees as in effect on the date hereof.
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.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental
indenture.
<PAGE> 93
In connection with any amendment, supplement or
waiver under this Article Nine, the Company 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.
SECTION 9.03. Compliance with TIA.
From the date on which the Indenture is qualified
under the TIA, every amendment, waiver or supplement of this
Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. 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 the Company
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.
The Company 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 Securityholder, unless it makes
a change described in any of clauses (1) through (7) of Section
9.02, 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
<PAGE> 94
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.
SECTION 9.05. 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 the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.
SECTION 9.06. 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
Indenture. 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 TEN
GUARANTEE
SECTION 10.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally,
jointly and severally, guarantees (such guarantee to be
referred to herein as the "Guarantee") to each Holder of a
Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, the Securities or the
obligations of the Company hereunder or thereunder, that: (i)
the principal of and interest on the Securities will be
promptly paid in full when due, subject to any applicable grace
period, whether at maturity, by acceleration or otherwise and
interest on the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Securities and all other
<PAGE> 95
obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal
of any Securities or of any such other obligations, the same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject
to any applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of
clauses (i) and (ii) above, to the limitations set forth in
Section 10.04. Each Subsidiary Guarantor hereby agrees that
its obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Securities
or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities
with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor. Each
Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and in
this Guarantee. If any Securityholder or the Trustee is
required by any court or otherwise to return to the Company,
any Subsidiary Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to the Company or
any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Securityholder,
this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor
further agrees that, as between each Subsidiary Guarantor, on
the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article Six for the purposes of
this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall
forthwith become due and payable by each Subsidiary Guarantor
for the purpose of this Guarantee.
SECTION 10.02. Severability.
In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
<PAGE> 96
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 10.03. Release of a Subsidiary Guarantor.
Upon (i) the release by the lenders under the Term
Loans, related documents and future refinancings thereof of all
guarantees of a Subsidiary Guarantor and all Liens on the
property and assets of such Subsidiary Guarantor relating to
such Indebtedness, or (ii) the sale or disposition (whether by
merger, stock purchase, asset sale or otherwise) of a
Subsidiary Guarantor (or all or substantially all its assets)
to an entity which is not a Subsidiary of the Company and which
sale or disposition is otherwise in compliance with the terms
of this Indenture, such Subsidiary Guarantor shall be deemed
released from all obligations under this Article Ten without
any further action required on the part of the Trustee or any
Holder; provided, however, that any such termination shall
occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under
all of its pledges of assets or other security interests which
secure, such Indebtedness of the Company shall also terminate
upon such release, sale or transfer.
The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as
to the compliance with this Section 10.03. Any Subsidiary
Guarantor not so released remains liable for the full amount of
principal of and interest on the Securities as provided in this
Article Ten.
SECTION 10.04. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance
hereof each Holder hereby confirms that it is the intention of
all such parties that the guarantee by such Subsidiary
Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such
Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Guarantee or pursuant to Section
<PAGE> 97
11.06, result in the obligations of such Subsidiary Guarantor
under the Guarantee not constituting such fraudulent transfer
or conveyance.
SECTION 10.05. Subsidiary Guarantors May Consolidate,
etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale or conveyance of
the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to the Company or another
Subsidiary Guarantor. Upon any such consolidation, merger,
sale or conveyance, the Guarantee given by such Subsidiary
Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article Four and Article
Five hereof, nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into a corporation or corporations
other than the Company or another Subsidiary Guarantor (whether
or not affiliated with the Subsidiary Guarantor); provided,
however, that, subject to Sections 10.03 and 10.05(a), (i) such
transaction does not violate any covenants set forth in this
Indenture and immediately after such transaction, and giving
effect thereto, no Default or Event of Default shall have
occurred as a result of such transaction and be continuing, and
(ii) upon any such consolidation, merger, sale or conveyance,
the Subsidiary Guarantee set forth in this Article Ten, and the
due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by
such Subsidiary Guarantor, shall be expressly assumed (in the
event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to
the Trustee, by the corporation formed by such consolidation,
or into which the Subsidiary Guarantor shall have merged, or by
the corporation that shall have acquired such property. In the
case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee
and satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had been
named herein as a Subsidiary Guarantor; provided, however, that
solely for purposes of computing amounts described in subclause
(c) of the first paragraph of Section 4.03, any such successor
<PAGE> 98
corporation shall only be deemed to have succeeded to and be
substituted for any Subsidiary Guarantor with respect to
periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
SECTION 10.06. Contribution.
In order to provide for just and equitable
contribution among the Subsidiary Guarantors, the Subsidiary
Guarantors agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Guarantor (a "Funding
Guarantor") under the Guarantee, such Funding Guarantor shall
be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net
Assets of each Subsidiary Guarantor (including the Funding
Guarantor) for all payments, damages and expenses incurred by
that Funding Guarantor in discharging the Company's obligations
with respect to the Securities or any other Subsidiary
Guarantor's obligations with respect to the Guarantee.
"Adjusted Net Assets" of such Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value
of the property of such Subsidiary Guarantor exceeds the total
amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed
and contingent liabilities incurred or assumed on such date
(other than liabilities of such Subsidiary Guarantor under
Indebtedness which constitutes Subordinated Indebtedness with
respect to such Guarantee)), but excluding liabilities under
the Guarantee of such Subsidiary Guarantor at such date and (y)
the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required
to pay the probable liability of such Subsidiary Guarantor on
its debts (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date (other
than liabilities of such Subsidiary Guarantor under
Indebtedness which constitutes Subordinated Indebtedness with
respect to such Guarantee) and after giving effect to any
collection from any Subsidiary of such Subsidiary Guarantor in
respect of the obligations of such Subsidiary under the
Guarantee), excluding debt in respect of the Guarantee of such
Subsidiary Guarantor, as they become absolute and matured.
SECTION 10.07. Waiver of Subrogation.
Each Subsidiary Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment,
performance or enforcement of such Subsidiary Guarantor's
obligations under the Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement,
<PAGE> 99
exoneration, indemnification, and any right to participate in
any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be
paid to any Subsidiary Guarantor in violation of the preceding
sentence and the Securities shall not have been paid in full,
such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for
the benefit of, the Holders of the Securities, and shall
forthwith be paid to the Trustee for the benefit of such
Holders to be credited and applied upon the Securities, whether
matured or unmatured, in accordance with the terms of this
Indenture. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing
arrangements contemplated by this Indenture and that the waiver
set forth in this Section 10.07 is knowingly made in
contemplation of such benefits.
SECTION 10.08. Execution of Guarantee.
To evidence their guarantee to the Securityholders
set forth in this Article Ten, the Subsidiary Guarantors hereby
agree to execute the Guarantee in substantially the form
included in Exhibit A, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each
Subsidiary Guarantor hereby agrees that its Guarantee set forth
in this Article Ten shall remain in full force and effect
notwithstanding any failure to endorse on each Security a
notation of such Guarantee. Each such Guarantee shall be
signed on behalf of each Subsidiary Guarantor by two Officers,
or an Officer and an Assistant Secretary or one Officer shall
sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to such Guarantee prior to the
authentication of the Security on which it is endorsed, and the
delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of such Guarantee on behalf of such Subsidiary Guarantor. Such
signatures upon the Guarantee may be by manual or facsimile
signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee, and in case any such officer who
shall have signed the Guarantee shall cease to be such officer
before the Security on which such Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or
disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person
<PAGE> 100
who signed the Guarantee had not ceased to be such officer of
the Subsidiary Guarantor.
SECTION 10.09. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor 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 each such
Subsidiary Guarantor from performing its Guarantee as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) each such Subsidiary Guarantor 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.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with the duties imposed by operation of Section
3.18(c) of the TIA, the imposed duties shall control.
SECTION 11.02. 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:
if to the Company or any Subsidiary Guarantor:
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mark A. Resnik
<PAGE> 101
if to the Trustee:
NorWest Bank Minnesota, National Association
Sixth and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Division
if to the Credit Agent:
Bankers Trust Company
130 Liberty Street, 14th Floor
New York, New York 10006
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 S. Grand Avenue, 41st Floor
Los Angeles, CA 90071
Attention: Eric S. Swanson
Each of the Company, the Trustee, the Subsidiary
Guarantors and the Credit Agent by written notice to each other
such person may designate additional or different addresses for
notices to such person. Any notice or communication to the
Company, the Trustee, the Subsidiary Guarantors and the Credit
Agent 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 Security-
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
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA
{ 312(b) with other Securityholders with respect to their
<PAGE> 102
rights under this Indenture or the Securities. The Company,
the Subsidiary Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA { 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent.______________________________
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
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
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
SECTION 11.05. 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 4.07, 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 convenant 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.
<PAGE> 103
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by
or at a meeting of Securityholders. The Paying Agent or
Registrar may make reasonable rules for its functions.
SECTION 11.07. 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 11.08. 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.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of any of the Company or any
of its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any
liability for any obligations of the Company 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 Securityholder 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 11.11. Successors.
All agreements of the Company and each Subsidiary
Guarantor in this Indenture and the Securities shall bind their
<PAGE> 104
respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 11.12. 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 11.13. 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.
SECTION 11.14. No Violation.
Notwithstanding the provisions of this Indenture, in
no event shall any transaction, agreement, payment or other
event to be consummated, entered into or made in connection
with the Merger or any financing thereof be considered a
violation of any provision of this Indenture or constitute a
Change of Control hereunder.
<PAGE> 105
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.
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
------------------------
Name:
Title:
Attest: /s/ George G. Golleher
-----------------------
NORWEST BANK, MINNESOTA,
National Association,
as Trustee
By: /s/ Raymond S. Haverstock
-------------------------
Name: Raymond S. Haverstock
Title: Assistant Vice President
Attest: /s/ Raymond S. Haverstock
-------------------------
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
<PAGE> 106
By: /s/ Mark A. Resnik
---------------------
Name:
(for each of the above-
listed Subsidiary Guarantors)
Attest: /s/ George G. Golleher
---------------------------
(for each of the
above-listed
Subsidiary Guarantors)
<PAGE> 107
EXHIBIT A
[FORM OF NOTE]
FOOD 4 LESS SUPERMARKETS, INC.
10.45% Senior Note
due 2004
No. $
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company", which term includes any successor
corporation), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on
June 15, 2004.
Interest Payment Dates: June 15 and December 15
commencing on December 15, 1995.
Record Dates: June 1 and December 1.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
<PAGE> 108
IN WITNESS WHEREOF, the Company has caused this
Security to be signed manually or by facsimile by its duly
authorized officers.
Dated:
FOOD 4 LESS SUPERMARKETS, INC.
By:
Name:
Title:
By:
Name:
Title:
A-2
<PAGE> 109
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA,
National Association,
as Trustee
By
Authorized Signatory
A-3
<PAGE> 110
FOOD 4 LESS SUPERMARKETS, INC.
10.45% Senior Note
due 2004
1. Interest.
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on each
June 15 and December 15 of each year (the "Interest Payment
Date"), commencing December 15, 1995, to the Holders of record
on the immediately preceding June 1 and December 1. Interest
on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid,
from the date of issuance of the Securities. Interest will be
computed on the basis of a 360-day year comprised of twelve
30-day months.
The Company shall pay interest on overdue principal
and interest on overdue installments of interest, to the extent
lawful, at a rate equal to the rate of interest otherwise
payable on the Securities.
2. Method of Payment.
The Company 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. The Company 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"). However, the Company may pay principal and interest
by wire transfer of Federal funds, or interest by its check
payable in such U.S. Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. Notwithstanding the foregoing,
the Company shall pay or cause to be paid all amounts payable
with respect to non-DTC eligible Securities by wire transfer of
Federal funds to the account of the Holders of such Securities.
A-4
<PAGE> 111
3. Paying Agent and Registrar.
Initially, Norwest Bank Minnesota, National
Association (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or
any of its Subsidiaries may, subject to certain exceptions, act
as Paying Agent, Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture,
dated as of June 1, 1995 (the "Indenture"), among the Company,
the Subsidiary Guarantors and the Trustee. 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 Securities are
general unsecured obligations of the Company limited in
aggregate principal amount to $525,000,000. Payment on each
Security is guaranteed on a senior basis, jointly and
severally, by the Subsidiary Guarantors pursuant to Article Ten
of the Indenture.
5. Optional Redemption.
On or after June 15, 2000 the Securities may be
redeemed in whole at any time or in part from time to time, at
the option of the Company, at a redemption price equal to the
applicable percentage of the principal amount thereof set forth
below, together with accrued and unpaid interest to the
Redemption Date, if redeemed during the 12 months commencing on
June 15 in the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2000 ...................... 105.225%
2001 ...................... 103.483%
2002 ...................... 101.742%
2003 and thereafter ....... 100.000%
</TABLE>
A-5
<PAGE> 112
In addition, on or prior to June 15, 1998, the
Company may, at its option, use the net cash proceeds of one or
more Public Equity Offerings to redeem up to an aggregate of
35% of the principal amount of the Securities originally
issued, at a redemption price equal to 110.450% of the
principal amount thereof if redeemed during the 12 months
commencing on June 15, 1995, 108.957% of the principal amount
thereof if redeemed during the 12 months commencing on June 15,
1996 and 107.464% of the principal amount thereof if redeemed
during the 12 months commencing on June 15, 1997, in each case
plus accrued and unpaid interest, if any, to the redemption
date.
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. In order to effect a redemption with the proceeds of
a Public Equity Offering, the Company shall send the redemption
notice not later than 60 days after the consummation of such
Public Equity Offering. 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 the Company 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.
Upon the occurrence of a Change of Control, each
Holder shall have the right to require the repurchase of such
Holder's Securities pursuant to a Change of Control Offer at a
purchase price equal to 101% of the principal amount thereof
plus accrued interest, if any, to the date of purchase.
8. Limitation on Asset Sales.
Under certain circumstances the Company is required
to apply the net proceeds from Asset Sales to the repayment of
Pari Passu Indebtedness, to make Related Business Investments,
an investment in properties and assets that replace the
properties and assets that are the subject of such Asset Sale,
an investment in properties and assets that will be used in the
A-6
<PAGE> 113
business of the Company and its Subsidiaries existing on the
Issue Date or in a business reasonably related thereto or to
purchase in a Net Proceeds Offer (at a price equal to 100% of
the aggregate principal amount thereof, plus accrued interest
to the date of purchase) such aggregate principal amount of
Securities which, when added to the accrued interest thereon,
shall be equal to the net proceeds required to be applied
thereto.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without
coupons, in denominations of $1,000 and integral multiples of
$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.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated
as the owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying
Agents will pay the money back to the Company at its request.
After that, all liability of the Trustee and such Paying Agents
with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company 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, the Company 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).
A-7
<PAGE> 114
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the
Securities and the Guarantees 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 a majority in aggregate principal amount 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 or Section 10.05 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.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments
in respect of its Capital Stock and merge or consolidate with
any other person and sell, lease, transfer or otherwise dispose
of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications
and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
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 immediately in the manner 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 may require
indemnity satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of
A-8
<PAGE> 115
a majority in aggregate principal amount of the Securities then
outstanding may 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 Company.
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 the Company, 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 the Company shall have any liability
for any obligation of the Company 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.
19. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of
authentication on this Security.
20. 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).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the
Company 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
A-9
<PAGE> 116
such numbers as printed on the Securities and reliance may be
placed only on the other identification numbers printed hereon.
The Company 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 Supermarkets,
Inc., c/o The Yucaipa Companies, 10000 Santa Monica Boulevard,
Fifth Floor, Los Angeles, California 90067, Attn: Mark Resnik.
A-10
<PAGE> 117
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the
Indenture (the "Indenture") referred to in the Security upon
which this notation is endorsed and each hereinafter referred
to as a "Subsidiary Guarantor," which term includes any
successor person under the Indenture) have unconditionally
guaranteed on a senior unsecured basis (such guarantee by each
Subsidiary Guarantor being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal
of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the
Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms set
forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or
any of such other obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the
Holders of Securities and to the Trustee pursuant to the
Guarantee and the Indenture are expressly set forth and are
senior unsecured obligations of each such Subsidiary Guarantor,
to the extent and in the manner provided, in Article Ten of the
Indenture, and reference is hereby made to such Indenture for
the precise terms of the Guarantee therein made.
No stockholder, officer, director or incorporator, as
such, past, present or future, of any Subsidiary Guarantor
shall have any liability under the Guarantee by reason of his
or its status as such stockholder, officer, director or
incorporator.
A-11
<PAGE> 118
The Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the
Securities upon which the Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS MERCHANDISING, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS GM, INC.
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
A-12
<PAGE> 119
[FORM OF ASSIGNMENT]
To assign this Security fill in the form below:
I or we assign and transfer this Security to
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type assignee's name, address and zip code)
Please insert Social Security or other
identifying number of assignee
_______________________________________
and irrevocably appoint _______________________ agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated:_______________ Signature:____________________________
______________________________________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:__________________________________________
A-13
<PAGE> 120
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the
Indenture, as the case may be, check the appropriate box below:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.15 or
Section 4.16 of the Indenture, as the case may be, state the
amount you want to be purchased:
$
<TABLE>
<S> <C>
Date:__________ Signature:____________________________
(Sign exactly as your name
appears on the face of
this Security)
</TABLE>
Signature Guarantee:______________________________________
A-14
<PAGE> 1
Exhibit 4.4.2
10.45% Senior Notes
due 2004
______________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
to
INDENTURE
Dated as of June 1, 1995
______________________
RALPHS GROCERY COMPANY,
as successor by merger to Food 4 Less Supermarkets, Inc.
and
SUBSIDIARY GUARANTORS
and
CRAWFORD STORES, INC.,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
<PAGE> 2
This FIRST SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "First Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation ("Ralphs"),
as successor by merger to Food 4 Less Supermarkets, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors, Crawford Stores, Inc.,
a California corporation ("Crawford") and a wholly-owned subsidiary of Ralphs,
and Norwest Bank Minnesota, National Association (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of June 1, 1995
(the "Indenture"), between the Company, the Subsidiary Guarantors and the
Trustee, the Company issued $520,326,000 principal amount of its 10.45% Senior
Notes due 2004 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, the Company, Ralphs Supermarkets, Inc., a
Delaware corporation ("RSI"), and the stockholders of RSI, the Company merged
with and into RSI, and immediately thereafter Ralphs Grocery Company, a
Delaware corporation, which was a wholly-owned subsidiary of RSI, merged with
and into RSI and RSI changed its name to Ralphs Grocery Company (together, the
"Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 5.01 of the Indenture. Section 5.02 of the Indenture
provides that upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.01 thereof, the successor person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to and be substituted for, and may exercise every right and
power of the Company under the Indenture with the same effect as if such
successor person had been named as the Company therein. Section 5.02 also
provides that when a successor corporation assumes all of the obligations of
the Company under the Indenture and under the Securities, and agrees to be
bound thereby, the predecessor shall be released from such obligations.
E. Crawford has guaranteed payment of the Indebtedness
under the term portion of the Credit Agreement. Section 4.17 of the
Indenture provides that Ralphs, as successor to the Company under the
Indenture, may not permit any of its Subsidiaries to guarantee the payment of
any Indebtedness under the term portion of the Credit Agreement unless such
Subsidiary, Ralphs and the Trustee execute and deliver a supplemental
2
<PAGE> 3
indenture evidencing such Subsidiary's Guarantee under the Indenture.
F. The purposes of this First Supplemental Indenture are
to (i) allow Ralphs, as the successor person to the Company in the Merger, to
assume the obligations of the Company under the Indenture, (ii) release the
Company from such obligations and (iii) add Crawford as a Subsidiary Guarantor
under the Indenture.
G. Section 9.01 of the Indenture provides that Ralphs,
as successor to the Company, and each Subsidiary Guarantor, when authorized by
a Board Resolution, and the Trustee, together, without notice to or consent of
any Holder, may amend or supplement the Securities and the Indenture, as set
forth below.
H. Ralphs, the Subsidiary Guarantors and Crawford, each
having been duly authorized by a Board Resolution, and the Trustee, having
received an Opinion of Counsel pursuant to Section 9.01 of the Indenture
stating that the execution of this First Supplemental Indenture is authorized
or permitted by the Indenture, are authorized to execute and deliver this First
Supplemental Indenture.
I. All of the conditions and requirements necessary to
make this First Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 5.02 of the Indenture, Ralphs, as
the successor person into which the Company has been merged in the Merger in
accordance with Section 5.01 of the Indenture, hereby succeeds to and is
substituted for, and may exercise every right and power of the Company under
the Indenture with the same effect as if Ralphs had been named as the Company
therein.
2. Pursuant to Section 5.02 of the Indenture, Ralphs
hereby assumes all of the obligations of the Company under the Indenture and
under the Securities and agrees to be bound thereby.
3. Pursuant to Section 5.02 of the Indenture, the
Company is released from all of the obligations of it under the Indenture and
under the Securities.
4. Pursuant to Section 4.17 of the Indenture, this First
Supplemental Indenture shall evidence Crawford's Guarantee of the Securities.
5. Crawford shall become a party to the Indenture as a
Subsidiary Guarantor thereunder and shall be bound by the terms
3
<PAGE> 4
of Article Ten and all other applicable provisions thereof, all in accordance
with the terms of the Indenture.
6. This First Supplemental Indenture shall be effective
as of the date hereof.
7. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this First
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as
successor by merger to the
Company
[Seal]
Attest:
/s/ Jan Charles Gray
---------------------------- ------------------------------
By: Jan Charles Gray
Its:
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE
STORES, INC.
[Seal]
Attest:
/s/ Mark A. Resnik
---------------------------- ------------------------------
By: Mark A. Resnik
Its:
CRAWFORD STORES, INC.
[Seal]
Attest:
/s/ Jan Charles Gray
---------------------------- ------------------------------
By: Jan Charles Gray
Its:
5
<PAGE> 6
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
[Seal]
Attest:
/s/ Raymond S. Haverstock
------------------------- -----------------------------------
By: Raymond S. Haverstock
Its: Assistant Vice President
6
<PAGE> 1
Exhibit 4.5.1
FOOD 4 LESS SUPERMARKETS, INC.
TO BE MERGED WITH AND INTO RALPHS GROCERY COMPANY
AND
SUBSIDIARY GUARANTORS
AND
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
_________________
INDENTURE
Dated as of June 1, 1995
$140,184,000
13.75% Senior Subordinated Notes
due 2005
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1)........................................... 8.10
(a)(2).......................................... 8.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A
(a)(5).......................................... 8.10; 8.11
(b)............................................. 8.08; 8.10; 13.02
(c)............................................. N.A.
311(a).............................................. 8.11
(b)............................................. 8.11
(c)............................................. N.A.
312(a).............................................. 2.05
(b)............................................. 13.03
(c)............................................. 13.03
313(a).............................................. 8.06
(b)(1).......................................... N.A
(b)(2).......................................... 8.06
(c)............................................. 8.06; 13.02
(d)............................................. 8.06
314(a).............................................. 5.07; 5.09; 13.02
(b)............................................. N.A.
(c)(1).......................................... 8.02; 13.04
(c)(2).......................................... 8.02; 13.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 13.05
(f)............................................. N.A
315(a).............................................. 8.01(b)
(b)............................................. 8.05; 13.02
(c)............................................. 8.01(a)
(d)............................................. 8.01(c)
(e)............................................. 7.11
316(a)(last sentence)............................... 2.09
(a)(1)(A)....................................... 7.05
(a)(1)(B)....................................... 7.04
(a)(2).......................................... N.A.
(b)............................................. 7.07
317(a)(1)........................................... 7.08
(a)(2).......................................... 7.09
(b)............................................. 2.04
318(a).............................................. 13.01
(c)............................................. 13.01
</TABLE>
<PAGE> 3
_____________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
-i-
<PAGE> 4
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1.01 Definitions..................................... 1
Section 1.02 Incorporation by Reference of TIA............... 33
Section 1.03 Rules of Construction........................... 34
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating................................. 34
Section 2.02 Execution and Authentication.................... 35
Section 2.03 Registrar and Paying Agent...................... 36
Section 2.04 Paying Agent To Hold Assets in
Trust........................................ 37
Section 2.05 Securityholder Lists............................ 37
Section 2.06 Transfer and Exchange........................... 37
Section 2.07 Replacement Securities.......................... 38
Section 2.08 Outstanding Securities.......................... 38
Section 2.09 Treasury Securities............................. 39
Section 2.10 Temporary Securities............................ 39
Section 2.11 Cancellation.................................... 39
Section 2.12 Defaulted Interest.............................. 40
Section 2.13 CUSIP Number.................................... 40
</TABLE>
<PAGE> 5
ARTICLE THREE
REDEMPTION
<TABLE>
<S> <C> <C>
Section 3.01 Notices to Trustee.............................. 41
Section 3.02 Selection of Securities To Be
Redeemed..................................... 41
Section 3.03 Notice of Redemption............................ 41
Section 3.04 Effect of Notice of Redemption.................. 42
Section 3.05 Deposit of Redemption Price..................... 43
Section 3.06 Securities Redeemed in Part..................... 43
</TABLE>
-ii-
<PAGE> 6
ARTICLE FOUR
SUBORDINATION
<TABLE>
<S> <C> <C>
Section 4.01 Securities Subordinated to Senior
Indebtedness................................. 43
Section 4.02 Suspension of Payment When Senior
Indebtedness in Default...................... 44
Section 4.03 Securities Subordinated to Prior
Payment of All Senior
Indebtedness on Dissolution,
Liquidation or Reorganization of
Company...................................... 46
Section 4.04 Securityholders To Be Subrogated
to Rights of Holders of Senior
Indebtedness................................. 48
Section 4.05 Obligations of the Company
Unconditional................................ 48
Section 4.06 Trustee Entitled To Assume
Payments Not Prohibited in
Absence of Notice............................ 49
Section 4.07 Application by Trustee of Assets
Deposited with It............................ 49
Section 4.08 No Waiver of Subordination
Provisions................................... 50
Section 4.09 Securityholders Authorize Trustee
To Effectuate Subordination of
Securities................................... 51
Section 4.10 Right of Trustee To Hold Senior
Indebtedness................................. 52
Section 4.11 No Suspension of Remedies....................... 52
Section 4.12 No Fiduciary Duty of Trustee to
Holders of Senior Indebtedness............... 53
ARTICLE FIVE
COVENANTS
Section 5.01 Payment of Securities........................... 53
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Section 5.02 Maintenance of Office or Agency................. 53
Section 5.03 Limitation on Restricted Payments............... 54
Section 5.04 Corporate Existence............................. 56
Section 5.05 Payment of Taxes and Other Claims............... 56
Section 5.06 Maintenance of Properties and
Insurance.................................... 56
Section 5.07 Compliance Certificate; Notice of
Default...................................... 57
Section 5.08 Compliance with Laws............................ 58
</TABLE>
-iii-
<PAGE> 8
<TABLE>
<S> <C> <C>
Section 5.09 SEC Reports..................................... 59
Section 5.10 Waiver of Stay, Extension or Usury
Laws......................................... 59
Section 5.11 Limitation on Transactions with
Affiliates................................... 59
Section 5.12 Limitation on Incurrences of
Additional Indebtedness...................... 62
Section 5.13 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries................................. 62
Section 5.14 Limitation on Liens............................. 63
Section 5.15 Limitation on Change of Control................. 64
Section 5.16 Limitation on Asset Sales....................... 67
Section 5.17 Guarantees of Certain Indebtedness.............. 70
Section 5.18 Limitation on Preferred Stock of
Subsidiaries................................. 70
Section 5.19 Limitation on Other Senior
Subordinated Indebtedness.................... 70
ARTICLE SIX
SUCCESSOR CORPORATION
Section 6.01 Limitation on Mergers and Certain
Other Transactions........................... 71
Section 6.02 Successor Corporation Substituted............... 73
ARTICLE SEVEN
DEFAULT AND REMEDIES
Section 7.01 Events of Default............................... 73
Section 7.02 Acceleration.................................... 75
Section 7.03 Other Remedies.................................. 77
Section 7.04 Waiver of Past Defaults......................... 77
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
Section 7.05 Control by Majority............................. 77
Section 7.06 Limitation on Suits............................. 78
Section 7.07 Rights of Holders To Receive
Payment...................................... 78
Section 7.08 Collection Suit by Trustee...................... 78
Section 7.09 Trustee May File Proofs of Claim................ 79
Section 7.10 Priorities...................................... 79
Section 7.11 Right and Remedies Cumulative................... 80
Section 7.12 Delay or Omission Not Waiver.................... 80
Section 7.13 Undertaking for Costs........................... 80
</TABLE>
-iv-
<PAGE> 10
ARTICLE EIGHT
TRUSTEE
<TABLE>
<S> <C> <C>
Section 8.01 Duties of Trustee............................... 81
Section 8.02 Rights of Trustee............................... 82
Section 8.03 Individual Rights of Trustee.................... 83
Section 8.04 Trustee's Disclaimer............................ 83
Section 8.05 Notice of Default............................... 84
Section 8.06 Reports by Trustee to Holders................... 84
Section 8.07 Compensation and Indemnity...................... 84
Section 8.08 Replacement of Trustee.......................... 85
Section 8.09 Successor Trustee by Merger, Etc................ 86
Section 8.10 Eligibility; Disqualification................... 87
Section 8.11 Preferential Collection of Claims
Against Company.............................. 87
ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.01 Termination of the Company's
Obligations.................................. 87
Section 9.02 Legal Defeasance and Covenant
Defeasance................................... 89
Section 9.03 Application of Trust Money...................... 94
Section 9.04 Repayment to Company or Subsidiary
Guarantors................................... 94
Section 9.05 Reinstatement................................... 94
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 10.01 Without Consent of Holders...................... 95
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C>
Section 10.02 With Consent of Holders......................... 95
Section 10.03 Compliance with TIA............................. 98
Section 10.04 Revocation and Effect of Consents............... 98
Section 10.05 Notation on or Exchange of
Securities................................... 99
Section 10.06 Trustee To Sign Amendments, Etc................. 99
</TABLE>
-v-
<PAGE> 12
ARTICLE ELEVEN
GUARANTEE
<TABLE>
<S> <C> <C>
Section 11.01 Unconditional Guarantee......................... 99
Section 11.02 Subordination of Guarantee...................... 101
Section 11.03 Severability.................................... 101
Section 11.04 Release of a Subsidiary Guarantor............... 101
Section 11.05 Limitation of Subsidiary
Guarantor's Liability........................ 102
Section 11.06 Subsidiary Guarantors May
Consolidate, etc., on Certain
Terms........................................ 102
Section 11.07 Contribution.................................... 103
Section 11.08 Waiver of Subrogation........................... 104
Section 11.09 Execution of Guarantee.......................... 105
Section 11.10 Waiver of Stay, Extension or Usury
Laws......................................... 105
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
Section 12.01 Guarantee Obligations Subordinated
to Guarantor Senior Indebtedness............. 106
Section 12.02 Suspension of Guarantee
Obligations When Guarantor
Senior Indebtedness in Default............... 106
Section 12.03 Guarantee Obligations Subordinated
to Prior Payment of All
Guarantor Senior Indebtedness on
Dissolution, Liquidation or
Reorganization of Such
Subsidiary Guarantor......................... 108
Section 12.04 Holders of Guarantee Obligations
To Be Subrogated to Rights of
Holders of Guarantor Senior
Indebtedness................................. 110
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C>
Section 12.05 Obligations of the Subsidiary
Guarantors Unconditional..................... 111
Section 12.06 Trustee Entitled To Assume
Payments Not Prohibited in
Absence of Notice............................ 112
Section 12.07 Application by Trustee of Assets
Deposited with It............................ 112
Section 12.08 No Waiver of Subordination
Provisions................................... 113
</TABLE>
-vi-
<PAGE> 14
<TABLE>
<S> <C> <C>
Section 12.09 Holders Authorize Trustee To
Effectuate Subordination of
Guarantee Obligations........................ 114
Section 12.10 Right of Trustee To Hold Guarantor
Senior Indebtedness.......................... 115
Section 12.11 No Suspension of Remedies....................... 115
Section 12.12 No Fiduciary Duty of Trustee to
Holders of Guarantor Senior
Indebtedness................................. 115
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.01 TIA Controls.................................... 116
Section 13.02 Notices......................................... 116
Section 13.03 Communications by Holders with
Other Holders................................ 117
Section 13.04 Certificate and Opinion as to
Conditions Precedent......................... 117
Section 13.05 Statements Required in Certificate
or Opinion................................... 118
Section 13.06 Rules by Trustee, Paying Agent,
Registrar.................................... 118
Section 13.07 Legal Holidays.................................. 118
Section 13.08 Governing Law................................... 119
Section 13.09 No Adverse Interpretation of Other
Agreements................................... 119
Section 13.10 No Recourse Against Others...................... 119
Section 13.11 Successors...................................... 119
Section 13.12 Duplicate Originals............................. 119
Section 13.13 Severability.................................... 120
Section 13.14 No Violation.................................... 120
</TABLE>
<PAGE> 15
<TABLE>
<S> <C>
Signatures........................................................ S-1
Exhibit A - Form of Note.......................................... A-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be
deemed to be part of the Indenture.
-vii-
<PAGE> 16
INDENTURE dated as of June 1, 1995, among FOOD 4 LESS
SUPERMARKETS, INC., a Delaware corporation (the "Company"), the
SUBSIDIARY GUARANTORS, and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York 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 Company's 13.75% Senior Subordinated Notes
due 2005:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means (i) with respect to any
person that becomes a Subsidiary of the Company (or is merged
into the Company or any of its Subsidiaries) after the Issue
Date, Indebtedness of such person or any of its Subsidiaries
existing at the time such person becomes a Subsidiary of the
Company (or is merged into the Company or any of its
Subsidiaries) and which was not incurred in connection with, or
in contemplation of, such person becoming a Subsidiary of the
Company (or being merged into the Company or any of its
Subsidiaries) and (ii) with respect to the Company or any of
its Subsidiaries, any Indebtedness assumed by the Company or
any of its Subsidiaries in connection with the acquisition of
any assets from another person (other than the Company or any
of its Subsidiaries), and which was not incurred by such other
person in connection with, or in contemplation of, such
acquisition.
"Adjusted Net Assets" shall have the meaning provided
in Section 11.07.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such
specified person. For the purposes of this definition,
"control" when used with respect to any 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
<PAGE> 17
correlative to the foregoing. Notwithstanding the foregoing,
for purposes of this Indenture, neither BT Securities
Corporation nor any of its Affiliates shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries.
"Affiliate Transaction" shall have the meaning
provided in Section 5.11.
"Agent" means any Registrar, Paying Agent or
co-Registrar.
"Apollo Advisors, L.P." means, Apollo Advisors, L.P.,
a Delaware limited partnership.
"Asset Sale" means, with respect to 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 the Company or a directly or indirectly 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, in each case, outside of the
ordinary course of business, excluding, however, any sale,
transfer or other disposition, or series of related sales,
transfers or other dispositions (i) involving only Excluded
Assets, (ii) resulting in Net Proceeds to the Company and the
Subsidiaries of $500,000 or less, (iii) pursuant to any
foreclosure of assets or other remedy provided by applicable
law to a creditor of the Company or any Subsidiary with a Lien
on such assets, which Lien is permitted under this Indenture,
provided that such foreclosure or other remedy is conducted in
a commercially reasonable manner or in accordance with any
Bankruptcy Law, (iv) involving only Cash Equivalents or
inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with
past practices of the Company, (v) involving only the lease or
sub-lease of any real or personal property in the ordinary
course of business, or (vi) the proceeds of such Asset Sale
which are not applied as contemplated in Section 5.16 and which
together with all other such Asset Sale Proceeds do not exceed
$20 million.
"Average Life" means, as of the date of
determination, with respect to any debt security, the quotient
<PAGE> 18
obtained by dividing (i) the sum of the products of the number
of years from the date of determination to the dates of each
successive scheduled principal payments of such debt security
multiplied by the amount of each such principal payment by
(ii) the sum of all such principal payments.
"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 of a
subsidiary of such person or any duly authorized committee of
the Board of Directors.
"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, participation or other
equivalents (however designated) of corporate stock, including
each class of common stock and preferred stock of such person.
"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 Ratings Group 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), (v) shares of any
money market mutual fund that (a) has at least 95% of its
<PAGE> 19
assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets
of not less than $500 million, and (c) has the highest rating
obtainable from either Standard & Poors Ratings Group or
Moody's Investors Service, Inc. and (vi) 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 Ratings Group.
"Change of Control" means 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 New Holdings or the Company 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 the then
outstanding voting securities entitled to vote on a regular
basis for a majority of the Board of Directors of the Company
(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); provided, 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 the Company's Board of Directors.
"Change of Control Date" shall have the meaning
provided in Section 5.15.
"Change of Control Offer" shall have the meaning
provided in Section 5.15.
"Change of Control Payment Date" shall have the
meaning provided in Section 5.15.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means, with respect to any person, any
and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or
nonvoting) of, such person's common stock, whether outstanding
<PAGE> 20
at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common
stock.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.
"Consolidated Net Income," means, with respect to any
person, for any period, 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 any other person in which
such person or any of its subsidiaries has an interest (which
interest 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 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; 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, (vii)
(A) all non-cash charges, (B) up to $10 million of severance
costs and (C) any other restructuring reserves or charges
(provided, however, that any cash payments actually made with
respect to the liabilities for which such restructuring
reserves or charges were created shall be deducted from
Consolidated Net Income in the period when made), in each case,
incurred by the Company or any of its Subsidiaries in
connection with the Merger, including, without limitation, the
divestiture of the Excluded Assets, (viii) losses incurred by
the Company and its Subsidiaries resulting from earthquakes and
(ix) with respect to the Company, all deferred financing costs
<PAGE> 21
written off in connection with the early extinguishment of any
Indebtedness, shall each be excluded; provided further that
solely for the purpose of computing amounts described in
subclause(c) of the first paragraph of Section 5.03,
"Consolidated Net Income" of the Company for any period shall
be reduced by the aggregate amount of dividends paid by the
Company or a Subsidiary to New Holdings pursuant to clauses
(v), (vi) and (xi) of the definition of "Permitted Payments"
during such period.
"Consolidated Net Worth" means, with respect to any
person, the total stockholders' equity (exclusive of any
Disqualified Capital Stock) of such person and its subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consulting Agreement" means that certain Consulting
Agreement dated as of the Issue Date, between Food 4 Less, New
Holdings and The Yucaipa Companies (as such Consulting
Agreement may be amended or replaced, so long as any amounts
paid under any amended or replacement agreement do not exceed
the amounts payable under such Consulting Agreement as in
effect on the Issue Date).
"Credit Agent" means, at any time, the then-acting
Administrative Agent as defined in and under the Credit
Agreement, which initially shall be Bankers Trust Company. The
Company shall promptly notify the Trustee of any change in the
Credit Agent.
"Credit Agreement" means the Credit Agreement, dated
as of the Issue Date, by and among Food 4 Less, as borrower,
certain of its subsidiaries, New Holdings, as guarantor, the
Lenders referred to therein and Bankers Trust Company, as
administrative agent, as the same may be amended, extended,
renewed, restated, supplemented or otherwise modified (in each
case, 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, replace or refinance any borrowings and commitments
then outstanding or permitted to be outstanding under such
Credit Agreement or any such prior agreement as the same may be
amended, extended, renewed, restated, supplemented or otherwise
modified (in each case in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other
provisions). The term "Credit Agreement" shall include all
related or ancillary documents, including, without limitation,
any guarantee agreements and security documents. The Company
shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement.
<PAGE> 22
"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.
"Designated Senior Indebtedness" means (i) in the
event any Indebtedness is outstanding under the Credit
Agreement, all Senior Indebtedness under the Credit Agreement
and (ii) if no Indebtedness is outstanding under the Credit
Agreement, any other issue of Senior Indebtedness which (a) at
the time of determination is equal to or greater than
$50 million in aggregate principal amount and (b) is
specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" by the
Company. For purposes of this definition, the term "Credit
Agreement" shall not include any agreement governing
Indebtedness incurred to refund, replace or refinance
borrowings or commitments under the Credit Agreement other than
any such agreements incurred to refund, replace or refinance
the entirety of the borrowings and commitments then outstanding
or permitted to be outstanding thereunder.
"Discount Notes" means the 15.25% Senior Discount
Notes due 2004 of Holdings issued pursuant to the Discount Note
Indenture, as the same may be modified or amended from time to
time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Discount Note Indenture" means the indenture dated
as of December 15, 1992 under which the 15.25% Senior Discount
Notes due 2004 of Holdings were issued, as the same may be
modified or amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"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 thereof, 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 of the Securities or any
other Capital Stock of such person or its subsidiaries
designated as Disqualified Capital Stock by such person at the
<PAGE> 23
time of issuance; provided, however, that if such Capital Stock
is either (i) redeemable or repurchasable solely at the option
of such person or (ii) issued to employees of the Company 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, with respect to any person, for any
period, the Consolidated Net Income of such person for such
period, plus, in each case to the extent deducted in computing
Consolidated Net Income of such person for such period (without
duplication) (i) provisions for income taxes or similar charges
recognized by such person and its consolidated subsidiaries
accrued during such period, (ii) depreciation and amortization
expense of such person and its consolidated subsidiaries
accrued during such period (but only to the extent not included
in Fixed Charges), (iii) Fixed Charges of such person and its
consolidated subsidiaries for such period, (iv) LIFO charges
(credits) of such person and its consolidated subsidiaries for
such period, (v) the amount of any restructuring reserve or
charge recorded during such period in accordance with GAAP,
including any such reserve or charge related to the Merger, and
(vi) any other non-cash charges reducing Consolidated Net
Income for such period (excluding any such charge which
requires an accrual of or a cash reserve for cash charges for
any future period), less, without duplication, (i) non-cash
items increasing Consolidated Net Income of such person for
such period (excluding any such items which represent the
reversal of any accrual of, or cash reserve for, anticipated
cash charges in any prior period) in each case determined in
accordance with GAAP and (ii) the amount of all cash payments
made by such person or its subsidiaries during such period to
the extent that such cash payment has been provided for in a
restructuring reserve or charge referred to in clause (v) above
(and was not otherwise deducted in the computation of
Consolidated Net Income of such person for such period).
"Event of Default" shall have the meaning provided in
Section 7.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by
the Commission thereunder.
"Excluded Assets" means assets of the Company or any
Subsidiary required to be disposed of by applicable regulatory
authorities in connection with the Merger.
"Existing Indebtedness" means the following
indebtedness of the Company to the extent outstanding on the
<PAGE> 24
Issue Date after giving effect to the Merger; (a) the 10.45%
Senior Notes due 2004 issued pursuant to an indenture dated as
of the date hereof; (b) the 10.45% Senior Notes due 2000 issued
pursuant to an indenture dated as of April 15, 1992; (c) the
11% Senior Subordinated Notes due 2005 issued pursuant to an
indenture dated as of the date hereof; (d) the 9% Senior
Subordinated Notes due 2003 issued pursuant to an indenture
dated as of March 30, 1993; (e) the 10<% Senior Subordinated
Notes due 2002 issued pursuant to an indenture dated as of
July 29, 1992; (f) the 13.75% Senior Subordinated Notes due
2005 issued pursuant to an indenture dated as of the date
hereof; and (g) the 13.75% Senior Subordinated Notes due 2001
issued pursuant to an indenture dated as of June 15, 1991.
"Fixed Charges" means, with respect to any person,
for any period, the aggregate amount of (i) interest, whether
expensed or capitalized, paid, accrued or scheduled to be paid
or accrued during such period (except to the extent accrued in
a prior period) in respect of all Indebtedness of such person
and its consolidated subsidiaries (including (a) original issue
discount on any Indebtedness (including, (without duplication)
in the case of the Company, any original issue discount on the
Securities but excluding amortization of debt issuance costs)
and (b) the interest portion of all deferred payment
obligations, calculated in accordance with the effective
interest method, in each case to the extent attributable to
such period but excluding the amortization of debt issuance
costs), (ii) dividend requirements on Preferred Stock of such
person and its consolidated subsidiaries (whether in cash or
otherwise (except dividends payable in shares of Qualified
Capital Stock)) declared or paid or required to be declared or
paid during such period (except to the extent accrued in a
prior period) and excluding items eliminated in consolidation
and (iii) dividends declared or paid or scheduled or required
to be declared or paid to New Holdings which are permitted to
be paid pursuant to clauses (v) and (vi) of the definition of
"Permitted Payments". For purposes of this definition,
(a) interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by the
Board of Directors of such person (as evidenced by a Board
Resolution) to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP,
(b) interest on Indebtedness that is determined on a
fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such
Indebtedness in effect on the date Fixed Charges are being
calculated, (c) interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate
<PAGE> 25
actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate, and (d) Fixed Charges
shall be increased or reduced by the net cost (including
amortization of discount) or benefit associated with Interest
Swap Obligations attributable to such period. For purposes of
clause (ii) above, dividend requirements shall be increased to
an amount representing the pre-tax earnings that would be
required to cover such dividend requirements; accordingly, the
increased amount shall be equal to a fraction, the numerator of
which is the amount of such dividend requirements and the
denominator of which is one (1) minus the applicable actual
combined federal, state, local and foreign income tax rate of
such person and its subsidiaries (expressed as a decimal), on a
consolidated basis, for the fiscal year immediately preceding
the date of the transaction giving rise to the need to
calculate Fixed Charges.
"FFL" means Food 4 Less, Inc., a Delaware
corporation, and its successors, including, without limitation,
Holdings following the FFL Merger and New Holdings following
the Reincorporation Merger.
"FFL Merger" means the merger, prior to the Merger
and the Reincorporation Merger, of FFL and Holdings.
"Food 4 Less" means Food 4 Less Supermarkets, Inc. a
Delaware corporation, and its successors, including, without
limitation, Ralphs Supermarkets, Inc. (to be renamed Ralphs
Grocery Company) following the Merger.
"Foreign Exchange Agreement" means any foreign
exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect against
fluctuations in currency values.
"Forward Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"GAAP" means generally accepted accounting principles
as in effect in the United States of America as of the date of
this Indenture.
"Guarantee" means the guarantee of each Subsidiary
Guarantor set forth in Article Eleven and any additional
guarantee of the Securities executed by any Subsidiary of the
Company.
"Guarantee obligations" shall have the meaning
provided in Section 12.01.
<PAGE> 26
"Guarantor Payment Blockage Period" shall have the
meaning provided in Section 12.02.
"Guarantor Senior Indebtedness" means, with respect
to any Subsidiary Guarantor, the principal of, premium, if any,
and interest on and all other Obligations with respect to any
Indebtedness of such Subsidiary Guarantor, whether outstanding
on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which
the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Guarantee of such Subsidiary Guarantor. Without limiting the
generality of the foregoing, "Guarantor Senior Indebtedness"
shall include the principal of, premium, if any, and interest
on all Obligations of every nature of such Subsidiary Guarantor
from time to time owed to the lenders under the Credit
Agreement, including, without limitation, the Letter of Credit
Obligations and principal of and interest on, and all fees,
indemnities and expenses payable under the Credit Agreement.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness"
shall not include (a) Indebtedness evidenced by the Guarantee
of such Subsidiary Guarantor, (b) Indebtedness that is
expressly subordinate or junior in right of payment to any
Indebtedness of such Subsidiary Guarantor, (c) Indebtedness
which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without
recourse to such Subsidiary Guarantor (other than Capitalized
Lease Obligations), (d) Indebtedness which is represented by
Disqualified Capital Stock, (e) obligations for goods,
materials or services purchased in the ordinary course of
business or obligations consisting of trade payables, (f)
Indebtedness of or amounts owed by such Subsidiary Guarantors
for compensation to employees or for services rendered to such
Subsidiary Guarantors, (g) any liability for federal, state,
local or other taxes owed or owing by such Subsidiary
Guarantor, (h) Indebtedness of such Subsidiary Guarantor
representing a guarantee of Subordinated Indebtedness or Pari
Passu Indebtedness (in each case, with respect to the
Securities or any Guarantee) of the Company or any other
Subsidiary Guarantor, (i) Indebtedness of such Subsidiary
Guarantor to a Subsidiary of the Company and (j) that portion
of any Indebtedness which is incurred by such Subsidiary
Guarantor in violation of this Indenture.
"Holder" or "Securityholder" means the person in
whose name a Security is registered on the Registrar's books.
<PAGE> 27
"Holdings" means Food 4 Less Holdings, Inc., a
California corporation, and its successors including, without
limitation, New Holdings following the Reincorporation Merger.
"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 exended 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; (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
<PAGE> 28
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 of this Indenture, Indebtedness incurred by any person
that is a general partnership (other than non-recourse
Indebtedness) shall be deemed to 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 the
Company, 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 nationally recognized investment
banking or consulting firm that is, in the reasonable judgment
of the Board of Directors of the Company, qualified to perform
the tasks for which such firm has been engaged and
disinterested and independent with respect to the Company and
its Affiliates.
"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, whether by
share purchase, capital contribution, loan, advance (other than
reasonable loans and advances to employees for moving and
<PAGE> 29
travel expenses, as salary advances, or to permit the purchase
of Qualified Capital Stock of New Holdings or any of its
Subsidiaries 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.
"Issue Date" means the date of original issuance of
the Securities under this Indenture.
"Legal Holiday" shall have the meaning provided in
Section 13.07.
"Letter of Credit Obligations" means Indebtedness of
the Company or any of its Subsidiaries with respect to letters
of credit issued pursuant to the Credit Agreement, and for
purposes of the definition of the term "Permitted
Indebtedness," the aggregate principal amount of Indebtedness
outstanding at any time with respect thereto shall be deemed to
consist of (a) the aggregate maximum amount then available to
be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions
for drawing), and (b) the aggregate amount that has then been
paid by, and not reimbursed to, the issuers under such letters
of credit.
"Lien" means any mortgage, pledge, lien, encumbrance,
charge or adverse claim affecting title or resulting in an
encumbrance against real or personal property, or a security
interest of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any
option or other agreement to sell which is intended to
constitute or create a security interest, mortgage, pledge or
lien, and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction); provided that in no event shall
an operating lease be deemed to constitute a Lien under this
Indenture.
"Maturity Date" means June 15, 2005.
"Merger" means (i) the merger of Food 4 Less into RSI
(with RSI surviving such merger) pursuant to the Merger
Agreement and (ii) immediately following the merger described
in clause (i) of this definition, the merger of Ralphs Grocery
Company into RSI (with RSI surviving such merger and changing
its name to "Ralphs Grocery Company" in connection with such
merger).
<PAGE> 30
"Merger Agreement" means the Agreement and Plan of
Merger, dated September 14, 1994, by and among Holdings, FFL,
Food 4 Less, Ralphs Supermarkets, Inc. and the stockholders of
Ralphs Supermarkets, Inc., as such agreement is in effect on
the Issue Date.
"Net Cash Proceeds" means the Net Proceeds of any
Asset Sale received 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 (and, in the case of any
Asset Sale, net of the amount of cash applied to repay
Indebtedness secured by the asset involved in such Asset Sale),
whether such proceeds are in cash or in property (valued at the
fair market value thereof at the time of receipt, as determined
with respect to any Asset Sale resulting in Net Proceeds in
excess of $5 million in good faith by the Board of Directors of
such person, which determination shall be evidenced by a Board
Resolution) 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
the Company, the sum of (i) the fair market value of the
proceeds received by the Company 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 the Company upon such conversion or exchange.
"New Discount Debenture Indenture" means the
indenture dated as of the Issue Date under which the 13 5/8%
Senior Discount Debentures due 2005 of New Holdings were
issued, as the same may be modified and amended from time to
time and refinancings thereof to the extent such refinancings
are permitted under this Indenture.
"New Discount Debentures" means the 13 5/8% Senior
Discount Debentures due 2005 of New Holdings issued pursuant to
the New Discount Debenture Indenture, as the same may be
modified and amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"New Holdings" means Food 4 Less Holdings, Inc., a
Delaware corporation, and its successors.
"Non-payment Default" means any event (other than a
Payment Default) the occurrence of which entitles one or more
<PAGE> 31
persons to act to accelerate the maturity of any Designated
Senior Indebtedness.
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees,
expenses, indemnities or otherwise, and whether primary,
secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance) under the documentation
governing any Indebtedness; provided that, with respect to the
Securities, the term "Obligations" shall not include the
obligations of the Company to the Trustee under Section 8.07.
"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 13.04 and 13.05.
"Old RGC Indentures" means the indentures between
Ralphs Grocery Company, as issuer, and United States Trust
Company of New York, as trustee, pursuant to which the Old RGC
Notes were issued.
"Old RGC Notes" means to 9% Senior Subordinated Notes
due 2003 of Ralphs Grocery Company and the 10<% Senior
Subordinated Notes due 2002 of Ralphs Grocery Company.
"Operating Coverage Ratio" means, with respect to any
person, the ratio of (1) EBDIT of such person for the period
(the "Pro Forma Period") consisting of the most recent four
full fiscal quarters for which financial information in respect
thereof is available immediately prior to the date of the
transaction giving rise to the need to calculate the Operating
Coverage Ratio (the "Transaction Date") to (2) the aggregate
Fixed Charges of such person for the fiscal quarter in which
the Transaction Date occurs and the three fiscal quarters
immediately subsequent to such fiscal quarter (the "Forward
Period") reasonably anticipated by the Board of Directors of
such person to become due from time to time during such period.
For purposes of this definition, if the Transaction Date occurs
prior to the first anniversary of the Merger, "EBDIT" for the
Pro Forma Period shall be calculated, in the case of the
Company, after giving effect on a pro forma basis to the Merger
as if it had occurred on the first day of the Pro Forma Period.
In addition to, but without duplication of, the foregoing, for
<PAGE> 32
purposes of this definition, "EBDIT" shall be calculated after
giving effect (without duplication), on a pro forma basis for
the Pro Forma Period (but no longer), to (a) any Investment,
during the period commencing on the first day of the Pro Forma
Period to and including the Transaction Date (the "Reference
Period"), in any other person that, as a result of such
Investment, becomes a subsidiary of such person, (b) the
acquisition, during the Reference Period (by merger,
consolidation or purchase of stock or assets) of any business
or assets, which acquisition is not prohibited by this
Indenture, and (c) any sales or other dispositions of assets
(other than sales of inventory in the ordinary course of
business) occurring during the Reference Period, in each case
as if such incurrence, Investment, repayment, acquisition or
asset sale had occurred on the first day of the Reference
Period. In addition, for purposes of this definition, "Fixed
Charges" shall be calculated after giving effect (without
duplication), on a pro forma basis for the Forward Period, to
any Indebtedness incurred or repaid on or after the first day
of the Forward Period and prior to the Transaction Date. If
such person or any of its subsidiaries directly or indirectly
guarantees any Indebtedness of a third person, the Operating
Coverage Ratio shall give effect to the incurrence of such
Indebtedness as if such person or subsidiary had directly
incurred such guaranteed Indebtedness.
"operating lease" means any lease the obligations
under which do not constitute Capitalized Lease obligations.
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee
complying with the requirements of Sections 13.04 and 13.05.
Unless otherwise required by the Trustee, the legal counsel may
be an employee of or counsel to the Company or the Trustee.
"Pari Passu Indebtedness" means, with respect to the
Company or any Subsidiary Guarantor, Indebtedness of such
person which ranks pari passu in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be (in each case, whether or not secured by any
Lien).
"Paying Agent" shall have the meaning provided in
Section 2.03, except that, for the purposes of Articles Three
and Nine and Sections 5.15 and 5.16, the Paying Agent shall not
be the Company or an Affiliate of the Company.
"Payment Blockage Notice" shall have the meaning
provided in Section 4.02.
<PAGE> 33
"Payment Blockage Period" shall have the meaning
provided in Section 4.02.
"Payment Default" means any default in the payment of
principal, premium, if any, or interest on any Designated
Senior Indebtedness or Significant Senior Indebtedness beyond
any applicable grace period with respect thereto.
"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
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 Holder" means (i) Food 4 Less Equity
Partners, L.P., The Yucaipa Companies or any entity controlled
thereby or any of the partners thereof, (ii) Apollo Advisors,
L.P., Lion Advisors, L.P. or any entity controlled thereby or
any of the partners thereof, (iii) an employee benefit plan of
the Company, or any of its subsidiaries or any participant
therein, (iv) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
subsidiaries or (v) any Permitted Transferee of any of the
foregoing persons.
"Permitted Indebtedness" means (a) Indebtedness of
the Company and its Subsidiaries (and the Company and each
Subsidiary (to the extent it is not an obligor) may guarantee
such Indebtedness) pursuant to (i) the Term Loans in an
aggregate principal amount at any time outstanding not to
exceed $600 million less the aggregate amount of all principal
repayments thereunder pursuant to and in accordance with the
requirements of Section 5.16 subsequent to the Issue Date, (ii)
the revolving credit facility under the Credit Agreement
(including the Letter of Credit Obligations) in an aggregate
principal amount at any time outstanding not to exceed $325
million, less all permanent reductions thereunder pursuant to
and in accordance with the requirements of Section 5.16, and
(iii) any Indebtedness incurred under the Credit Agreement
pursuant to and in accordance with (A) clause (m) of this
<PAGE> 34
definition and (B) Section 5.12 (other than Permitted
Indebtedness that is not incurred pursuant to clause (m) or
this clause (a) of this definition); (b) Indebtedness of the
Company or a Subsidiary Guarantor owed to and held by the
Company or a Subsidiary Guarantor; (c) Indebtedness incurred by
the Company or any Subsidiary in connection with the purchase
or improvement of property (real or personal) or equipment or
other capital expenditures in the ordinary course of business
(including for the purchase of assets or stock of any retail
grocery store or business) or consisting of Capitalized Lease
obligations, provided that (i) at the time of the incurrence
thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (c) does not
exceed, in the aggregate, 3% of net sales of the Company and
its Subsidiaries during the most recently completed four fiscal
quarter period on a consolidated basis (calculated on a pro
forma basis if the date of incurrence is prior to the end of
the fourth fiscal quarter following the Merger) and (ii) such
Indebtedness, together with all then outstanding Indebtedness
incurred in reliance upon this clause (c) does not exceed, in
the aggregate, 3% of the aggregate net sales of the Company and
its Subsidiaries during the most recently completed twelve
fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end
of the twelfth fiscal quarter following the Merger); (d)
Indebtedness incurred by the Company or any Subsidiary in
connection with capital expenditures in an aggregate principal
amount not exceeding $150 million, provided that such capital
expenditures relate solely to the integration of the operations
of RSI, Food 4 Less and their respective subsidiaries as
described in the Prospectus of Food 4 Less relating to the
Securities dated May 31, 1995; (e) Indebtedness of the Company
or any Subsidiary incurred under Foreign Exchange Agreements
and Interest Swap Obligations entered into with respect to
Indebtedness otherwise permitted to be outstanding pursuant to
Section 5.12 or this definition of Permitted Indebtedness in a
notional amount not exceeding the aggregate principal amount of
such Indebtedness; (f) guarantees incurred in the ordinary
course of business by the Company or a Subsidiary of
Indebtedness of any other person in the aggregate not to exceed
$25 million at any time outstanding; (g) guarantees by the
Company or a Subsidiary Guarantor of Indebtedness incurred by a
wholly-owned Subsidiary Guarantor so long as the incurrence of
such Indebtedness incurred by such wholly-owned Subsidiary
Guarantor is permitted under the terms of this Indenture; (h)
Refinancing Indebtedness; (i) Indebtedness for letters of
credit relating to workers' compensation claims and
self-insurance or similar requirements in the ordinary course
of business; (j) Existing Indebtedness and other Indebtedness
<PAGE> 35
outstanding on the Issue Date (after giving effect to the
Merger); (k) Indebtedness arising from guarantees of
Indebtedness of the Company or any Subsidiary or other
agreements of the Company or a Subsidiary providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or Subsidiary,
other than guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in
connection with such disposition; (l) obligations in respect of
performance bonds and completion guarantees provided by the
Company or any Subsidiary in the ordinary course of business;
and (m) additional Indebtedness of the Company and the
Subsidiary Guarantors in an amount not to exceed $175 million
at any time outstanding.
"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 made pursuant to Section 5.16 or
any other disposition of assets not constituting an Asset Sale
by reason of the $500,000 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 Section 5.11, (vi)
Investments by Subsidiary Guarantors in other Subsidiary
Guarantors or the Company and Investments by the Company in a
Subsidiary Guarantor in the form of Indebtedness owed to the
Company by such Subsidiary Guarantor and Investments by
Subsidiaries which are not Subsidiary Guarantors in other
Subsidiaries which are not Subsidiary Guarantors and
(vii) additional Investments in an aggregate amount not
exceeding $15 million.
"Permitted Liens" means (i) Liens for taxes,
assessments and governmental charges or claims not yet due or
which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made thereof;
(ii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen, or other like
Liens arising in the ordinary course of business, deposits made
to obtain the release of such Liens, and with respect to
amounts not yet delinquent for a period of more than 60 days or
being contested in good faith by appropriate process of law,
<PAGE> 36
and for which a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made; (iii) Liens
incurred or pledges or deposits made in the ordinary course of
business to secure obligations under workers' compensation,
unemployment insurance and other types of social security or
similar legislation; (iv) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of
a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, zoning or other restrictions,
minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect
with the business of the Company or any of its Subsidiaries
incurred in the ordinary course of business; (vi) Liens upon
specific items of inventory or other goods and proceeds of any
person securing such person's obligations in respect of
bankers' acceptances issued or created for the account of such
person to facilitate the purchase, shipment or storage of such
inventory or other goods in the ordinary course of business;
(vii) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other property
relating to such letters of credit and the products and
proceeds thereof; (viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
nondelinquent customs duties in connection with the importation
of goods; (ix) judgment and attachment Liens not giving rise to
a Default or Event of Default; (x) leases or subleases granted
to others not interfering in any material respect with the
business of the Company or any Subsidiary; (xi) Liens
encumbering customary initial deposits and margin deposits, and
other Liens incurred in the ordinary course of business that
are within the general parameters customary in the industry, in
each case securing Indebtedness under Interest Swap obligations
and Foreign Exchange Agreements and forward contracts, option
futures contracts, futures options or similar agreements or
arrangements designed to protect the Company or any Subsidiary
from fluctuations in the price of commodities; (xii) Liens
encumbering deposits made in the ordinary course of business to
secure nondelinquent obligations arising from statutory,
regulatory, contractual or warranty requirements of the Company
or its Subsidiaries for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been
made; (xiii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company
or any Subsidiary in the ordinary course of business in
accordance with past practices; (xiv) any interest or title of
a lessor in the property subject to any lease, whether
characterized as capitalized or operating other than any such
<PAGE> 37
interest or title resulting from or arising out of a default by
the Company or any Subsidiary of its obligations under such
lease; (xv) Liens arising from filing UCC financing statements
for precautionary purposes in connection with true leases of
personal property that are otherwise permitted under this
Indenture and under which the Company or any Subsidiary is
lessee; (xvi) Liens on assets of the Company securing
Indebtedness which would constitute Senior Indebtedness but for
the provisions of clause (c) in the third sentence of the
definition of "Senior Indebtedness" and Liens on assets of a
Subsidiary Guarantor securing Indebtedness which would
constitute Guarantor Senior Indebtedness but for the provisions
of clause (c) in the third sentence of the definition of
"Guarantor Senior Indebtedness"; and (xvii) additional Liens
securing Indebtedness in an aggregate principal amount at any
one time outstanding not exceeding the sum of (i) $25 million
and (ii) 10% of the aggregate Consolidated Net Income of the
Company earned subsequent to the Issue Date and on or prior to
such time.
"Permitted Payments" means (i) any payment by the
Company or any Subsidiary, or any dividend by the Company or
any Subsidiary to New Holdings the proceds of which are
utilized by New Holdings to make payments, to The Yucaipa
Companies or the principals or any Affiliates thereof for
consulting, management, investment banking or similar services,
or for reimbursement of losses, costs and expenses pursuant to
the Consulting Agreement, (ii) any payment by the Company or
any Subsidiary pursuant to the Second Amended and Restated Tax
Sharing Agreement, dated as of the Issue Date, by and among
Food 4 Less, all direct and indirect Subsidiaries, and New
Holdings, as such Tax Sharing Agreement may be amended from
time to time, so long as the payment thereunder by the Company
and its Subsidiaries shall not exceed the amount of taxes the
Company would be required to pay if it were the filing person
for all applicable taxes, (iii) any payment by the Company or
any Subsidiary pursuant to the Transfer and Assumption
Agreement, dated as of June 23, 1989, between Food 4 Less and
Holdings, as in effect on the Issue Date, (iv) any payment by
the Company or any Subsidiary, or any dividend by the Company
or any Subsidiary to New Holdings the proceeds of which are
used by New Holdings to make payments, (a) in connection with
repurchases of outstanding shares of the Company's or New
Holding's Common Stock following the death, disability or
termination of employment of management stockholders, and
(b) of amounts required to be paid by New Holdings, the Company
or any of its Subsidiaries to participants or former
participants in employee benefit plans upon termination of
employment by such participants, as provided in the documents
related thereto, in an aggregate amount (for both clauses (a)
<PAGE> 38
and (b)) not to exceed $10 million in any Yearly Period
(provided that any unused amounts may be carried over to any
subsequent Yearly Period subject to a maximum amount of
$20 million in any Yearly Period), (v) from and after June 30,
1998, payments of cash dividends or loans to New Holdings in an
amount sufficient to enable New Holdings to make payments of
interest required to be made in respect of the Discount Notes
in an amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vi) from and after June 15, 2000, payments of cash dividends
to New Holdings in an amount sufficient to enable New Holdings
to make payments of interest required to be made in respect of
the Seller Debentures and the New Discount Debentures in an
amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vii) dividends or other payments to New Holdings sufficient to
enable New Holdings to perform accounting, legal, corporate
reporting and administrative functions in the ordinary course
of business or to pay required fees and expenses in connection
with the Merger, the FFL Merger, the Reincorporation Merger and
the registration under applicable laws and regulations of its
debt or equity securities (viii) dividends or other
distributions by the Company to New Holdings on the Issue Date
of shares of New Holdings common stock owned by the Company,
(ix) dividends by the Company to New Holdings of the Net Cash
Proceeds of an Asset Sale to the extent that (a) the Company or
any of the Subsidiaries is required pursuant to this Indenture
to utilize such Net Cash Proceeds to repay the Securities (and
has complied with all such requirements), (b) such Net Cash
Proceeds are not required to be and have not been utilized to
repay outstanding Indebtedness of the Company or any of the
Subsidiaries and (c) New Holdings is required pursuant to the
documents governing any outstanding Indebtedness of New
Holdings to utilize such Net Cash Proceeds to repay such
Indebtedness (it being understood that only the amounts not
utilized as described in clauses (a) and (b) of this
clause (ix) shall be permitted to be distributed to New
Holdings pursuant to this clause (ix)), (x) the loan by the
Company on the Issue Date to RGC Investment Co. of not more
than $5 million and (xi) for so long as the sole business
activity of such partnership is to acquire, hold, sell,
exchange, transfer or otherwise dispose of all or any portion
of the New Discount Debentures and to manage its investment in
the New Discount Debentures, any payment by the Company or any
Subsidiary, or any dividend or loan to New Holdings, the
proceeds of which are utilized by New Holdings to fund ongoing
costs and expenses of RGC Partners, L.P. pursuant to the
Subscription Agreement and the Registration Rights Agreement.
<PAGE> 39
"Permitted Subordinated Reorganization Securities"
means securities of the Company issued in a plan of
reorganization in a case under the Bankruptcy Law relating to
the Company which constitutes either (y) Capital Stock (other
than Disqualified Capital Stock with the reference to "Maturity
Date" in the definition of such term modified to relate to the
final stated maturity of any debt securities issued in such
plan of reorganization to the holders of Designated Senior
Indebtedness ("Senior Reorganization Securities")) or (z) debt
securities of the Company which are (i) unsecured, (ii) have no
scheduled mandatory amortization thereon prior to the final
stated maturity of the Senior Reorganization Securities and
(iii) are subordinated in right of payment to the Senior
Reorganization Securities to at least the same extent as the
Securities are subordinated to Designated Senior Indebtedness.
"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, (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 the Company, (iv) any investment
account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of
such person and (v) any investment fund or investment entity
that is a subsidiary of such person or a Permitted Transferee
of such person.
"person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"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.
<PAGE> 40
"Preferred Stock" means, with respect to any person,
Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
person, over shares of Capital Stock of any other class 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 the Company's chief financial officer or Board
of Directors in consultation with its independent certified
public accountants.
"Qualified Capital Stock" means, with respect to any
person, any Capital Stock of such person that is not
Disqualified Capital Stock.
"Ralphs Grocery Company" means, Ralphs Grocery
Company, Inc., a Delaware corporation, and its successors.
"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 Paragraph 5 of the
Securities annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any
Security to be redeemed, means the price fixed for such
redemption pursuant to this Indenture and Paragraph 5 of the
Securities annexed hereto as Exhibit A.
"Reference Date" shall have the meaning provided in
Section 5.03.
"Reference Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
<PAGE> 41
"Refinancing Indebtedness" means, with respect to any
person, Indebtedness of such person issued in exchange for, or
the proceeds from the issuance and sale or disbursement of
which are used to substantially concurrently repay, redeem,
refund, refinance, discharge or otherwise retire for value, in
whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or
renewal of (collectively, an "amendment"), any Indebtedness of
such person existing on the Issue Date or Indebtedness (other
than Permitted Indebtedness, except Permitted Indebtedness
incurred pursuant to clauses (c), (d), (h) and (j) of the
definition thereof) incurred in accordance with this Indenture
(a) in a principal amount (or, if such Refinancing Indebtedness
provides for an amount less than the principal amount thereof
to be due and payable upon the acceleration thereof, with an
original issue price) not in excess of (without duplication)
(i) the principal amount or the original issue price, as the
case may be, of the Indebtedness so refinanced (or, if such
Refinancing Indebtedness refinances Indebtedness under a
revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment
not to exceed the maximum commitment under such revolving
credit facility or other agreement) plus (ii) unpaid accrued
interest on such Indebtedness plus (iii) premiums, penalties,
fees and expenses actually incurred by such person in
connection with the repayment or amendment thereof and (b) with
respect to Refinancing Indebtedness that repays or constitutes
an amendment to Subordinated Indebtedness, such Refinancing
Indebtedness (x) shall not have any fixed mandatory redemption
or sinking fund requirement in an amount greater than or at a
time prior to the amounts and times specified in such repaid or
amended Subordinated Indebtedness, except to the extent that
any such requirement applies on a date after the Maturity Date
and (y) shall contain subordination and default provisions no
less favorable in any material respect to Holders than those
contained in such repaid or amended Subordinated Indebtedness.
"Registrar" shall have the meaning provided in
Section 2.03.
"Registration Rights Agreement" means that certain
Registration Rights Agreement by and between RGC Partners,
L.P., New Holdings and Food 4 Less, as such Registration Rights
Agreement may be amended or replaced, so long as any amounts
paid by New Holdings and the Company under any amended or
replacement agreement do not exceed the amounts payable by New
Holdings and the Company under such Registration Rights
Agreement as in effect on the Issue Date.
<PAGE> 42
"Reincorporation Merger" means the merger, prior to
the Merger, of Holdings with and into New Holdings.
"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 the Company or any of its Subsidiaries 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 the Company and its
Subsidiaries 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 the Company and its Subsidiaries as
it is conducted as of the Issue Date and as such business may
thereafter evolve or change.
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness;
provided that in no event shall United States Trust Company of
New York, in its capacities as Trustee, Registrar, co-Registrar
or Paying Agent, serve as Representative.
"Restricted Debt Prepayment" means any purchase,
redemption, defeasance (including, but not limited to,
in-substance or legal defeasance) or other acquisition or
retirement for value, directly or indirectly, by the Company or
a Subsidiary, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking fund payment, as
the case may be, in respect of Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment,
(ii) Investment (other than a Permitted Investment) or
(iii) Restricted Debt Prepayment.
"RSI" means Ralphs Supermarkets, Inc., a Delaware
corporation.
"Securities" means the Company's 13.75% Senior
Subordinated Notes due 2005, 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 Commission
promulgated thereunder.
<PAGE> 43
"Seller Debentures" means the 13 5/8% Senior
Subordinated Pay-in-Kind Debentures due 2007 of New Holdings
issued pursuant to the Seller Debenture Indenture, including
any additional 13 5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 issued as interest thereon, in each case,
as such Seller Debentures may be modified or amended from time
to time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Seller Debenture Indenture" means the indenture
between New Holdings and Norwest Bank Minnesota, National
Association as trustee, dated as of the Issue Date under which
the 13 5/8% Senior Subordinated Pay-in-Kind Debentures due 2007
of New Holdings were issued, as the same may be modified and
amended from time to time and refinancings thereof to the
extent such refinancings are permitted under this Indenture.
"Senior Indebtedness" means the principal of,
premium, if any, and interest on, and all other Obligations
with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred
or assumed, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include (x) the principal of,
premium, if any, and interest on all Obligations of every
nature of the Company from time to time owed to the lenders
under the Credit Agreement, including, without limitation, the
Letter of Credit Obligations and principal of and interest on
and all fees, indemnities, and expenses payable under the
Credit Agreement and (y) interest accruing thereon subsequent
to the occurrence of any Event of Default specified in clause
(vi) or (vii) of Section 7.01 relating to the Company, whether
or not the claim for such interest is allowed under any
applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (a) Indebtedness
evidenced by the Securities, (b) Indebtedness that is expressly
subordinate or junior in right of payment to any Indebtedness
of the Company including, but not necessarily limited to (i)
the 11.00% Senior Subordinated Notes due 2005 of the Company
issued pursuant to an Indenture dated as of June 14, 1995, (ii)
the 13.75% Senior Subordinated Notes due 2001 of the Company
issued pursuant to an Indenture dated as of June 15, 1991,
(iii) the 10.25% Senior Subordinated Notes due 2002 of the
Company issued pursuant to an Indenture dated as of July 29,
1992, and (iv) the 9% Senior Subordinated Notes due 2003 of the
Company issued pursuant to an Indenture dated as of March 30,
1993, each of (i) through (iv) above which shall rank pari
<PAGE> 44
passu with the Securities, (c) Indebtedness which, when
incurred and without respect to any election under Section
1111(b) of Title 11, United States Code, is without recourse to
the Company (other than Capitalized Lease Obligations), (d)
Indebtedness which is represented by Disqualified Capital
Stock, (e) obligations for goods, materials or services
purchased in the ordinary course of business or obligations
consisting of trade payables, (f) Indebtedness of or amounts
owed by the Company for compensation to employees or for
services rendered to the Company, (g) any liability for
federal, state, local or other taxes owed or owing by the
Company, (h) Indebtedness of the Company to a Subsidiary of the
Company, and (i) that portion of any Indebtedness which is
incurred by the Company in violation of this Indenture.
"Senior Notes" means (i) the 10.45% Senior Notes due
2004 of the Company to be issued on the Merger Date and (ii)
the 10.45% Senior Notes due 2000 of the Company.
"Significant Senior Indebtedness" means Senior
Indebtedness which, at the time of determination, is equal to
or greater than $50 million in aggregate principal amount.
"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 of the
Company 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 Issue Date) or (b) material to the financial condition or
results of operations of the Company and its Subsidiaries 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 the
Company, dividends payable solely in Qualified Capital Stock of
the Company), 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 exchangeable or convertible
Indebtedness of such person), or (b) the redemption,
repurchase, retirement or other acquisition for value by such
person or any of its subsidiaries, directly or indirectly, of
<PAGE> 45
such person's Qualified Capital Stock (and, in the case of a
Subsidiary, Qualified Capital Stock of the Company) 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 the Company, through the issuance in exchange therefor
solely of Qualified Capital Stock of the Company; provided,
however, that in the case of a Subsidiary, the term "Stock
Payment" shall not include any such payment with respect to its
Capital Stock or warrants, rights or options to purchase or
acquire shares of any class of its Capital Stock that are owned
solely by the Company or a wholly owned Subsidiary.
"Subordinated Indebtedness" means, with respect to
the Company or any Subsidiary Guarantor, Indebtedness of such
person which is subordinated in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be.
"Subscription Agreement" means that certain
Subscription Agreement, between RGC Partners, L.P., New
Holdings, Food 4 Less and the partnership investors listed on
Exhibit A thereto, as such Subscription Agreement may be
amended or replaced, so long as any amounts paid by New
Holdings and the Company under any amended or replacement
agreement do not exceed the amounts payable by New Holdings and
the Company under such Subscription Agreement as in effect on
the Issue Date.
"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 fifty percent 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.
"Subsidiary" means any subsidiary of the Company.
<PAGE> 46
"Subsidiary Guarantor" means (i) each of Alpha Beta
Company, Bay Area Warehouse Stores, Inc., Bell Markets, Inc.,
Cala Co., Cala Foods, Inc., Falley's Inc., Food 4 Less of
California, Inc., Food 4 Less Merchandising, Inc., Food 4 Less
GM, Inc. and Food 4 Less of Southern California, Inc., (ii)
upon consummation of the Merger, Crawford Stores, Inc., (iii)
each of the Company's Subsidiaries which becomes a guarantor of
the Securities in compliance with the provisions set forth in
Section 5.17, and (iv) each of the Company's Subsidiaries
executing a supplemental indenture in which such Subsidiary
agrees to be bound by the terms of this Indenture.
"Term Loans" means the term loan facility under the
Credit Agreement and any agreement governing Indebtedness
incurred to refund, replace or refinance any borrowings
outstanding under such facility or under any prior refunding,
replacement or refinancing thereof (in each case, in whole or
in part, and without limitation as to amount, terms,
conditions, covenants and other provisions).
"The Yucaipa Companies" means The Yucaipa Companies,
a California general partnership, or any successor thereto
which is an affiliate of Ronald W. Burkle or his Permitted
Transferees and which has been established for the sole purpose
of changing the form of the Yucaipa Companies from that of a
partnership to that of a limited liability company or any other
form of entity which is not materially adverse to the rights of
the Holders under this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code {{ 77aaa-77bbbb), as amended, as in effect on the date
this Indenture is qualified under the TIA, except as otherwise
provided in Section 10.03.
"Transaction Date" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"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 9.02.
<PAGE> 47
"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.
"Yearly Period" means each fiscal year of the
Company; provided that the first Yearly Period shall begin on
the Issue Date and shall end on January 28, 1996.
SECTION 1.02. 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 or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the
Company, any Subsidiary Guarantor, or any other obligor on the
Securities or the Guarantees.
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 1.03. 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;
<PAGE> 48
(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 TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Securities, the notation thereon relating to the
Guarantee 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. The Company 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
and the Guarantee shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions
and to be bound thereby.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant
Secretary, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by
manual or facsimile signature. Each Subsidiary Guarantor shall
execute the Guarantee in the manner set forth in Section 11.09.
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
<PAGE> 49
conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate Securities for
original issue in the aggregate principal amount of up to
$145,000,000 (or such lesser amount (but not less than
$140,184,000 aggregate principal amount) as is authenticated by
the Trustee and issued by the Company on the Issue Date) upon a
written order of the Company 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 $145,000,000 (or such lesser amount (but not less than
$140,184,000 aggregate principal amount) as is authenticated by
the Trustee and issued by the Company on the Issue Date),
except as provided in Section 2.07. Upon the written order of
the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent
reasonably acceptable to the Company 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 the Company and Affiliates of the Company.
The Securities shall be issuable only in registered
form without coupons in denominations of $1,000 and integral
multiples thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where (a) Secu-
rities 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 the Company in respect of
the Securities and this Indenture may be served. The Company
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 the
Company of its obligation to maintain an office or agency in
<PAGE> 50
the Borough of Manhattan, The City of New York, for such
purposes. The Company may act as its own Registrar or Paying
Agent except that for the purposes of Articles Three and Nine
and Sections 5.15 and 5.16, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, 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.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a
successor has been appointed.
The Company 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. The Company shall notify the Trustee, in
advance, of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other
than the Trustee to agree in writing that, subject to Article
Four and Article Twelve, each Paying Agent shall hold in trust
for the benefit of Holders or the Trustee all assets 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 the Company or any other obligor on the Securities),
and shall notify the Trustee of any Default by the Company (or
any other obligor on the Securities) in making any such
payment. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate such assets and hold them as a separate
trust fund, subject to Article Four and Article Twelve. The
Company at any time may require a Paying Agent to distribute
all assets 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 held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets
that shall have been delivered by the Company to the Paying
Agent, the Paying Agent shall have no further liability for
such assets.
<PAGE> 51
SECTION 2.05. 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, the Company 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 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer of such
Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transaction are met; provided, however, that the
Securities surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations
of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or
co-Registrar's request. No service charge shall be made for
any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Sections
2.02, 2.07, 2.10, 3.06, 5.15, 5.16 or 10.05). The Registrar or
co-Registrar shall not be required to register the transfer of
or exchange of any Security (i) during a period beginning at
the opening of business 15 days before the mailing of a notice
of redemption of Securities and ending at the close of business
on the day of such mailing and (ii) selected for redemption in
whole or in part pursuant to Article Three, except the
unredeemed portion of any Security being redeemed in part.
SECTION 2.07. 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, the Company shall
issue and the Trustee shall authenticate a replacement Security
if the Trustee's requirements are met. If required by the
<PAGE> 52
Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or
any Agent from any loss which any of them may suffer if a
Security is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional
obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the
Securities that have been authenticated by the Trustee 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 the Company,
the Subsidiary Guarantors or any of their respective Affiliates
holds the Security.
If a Security is replaced pursuant to Section 2.07
(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 2.07.
If on a Redemption Date or the Maturity Date the
Paying Agent (other than the Company or a 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 unless, pursuant to the provisions of Article Four
and Article Twelve, the Paying Agent is unable to make payments
on the Securities to the Holders thereof.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required
principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company, the
Subsidiary Guarantors or any of their respective 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.
<PAGE> 53
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery,
the Company 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 the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company 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 the Company or a Subsidiary), and no one else,
shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07,
the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation.
If the Company or any Subsidiary Guarantor 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 the Company defaults in a payment of interest on
the Securities, it shall, unless the Trustee fixes another
record date pursuant to Section 7.10, pay the defaulted
interest, plus (to the extent lawful) any interest payable on
the defaulted interest, to the persons who are Holders on a
subsequent special record date, which date shall be the
fifteenth day next preceding the date fixed by the Company 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, the Company
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.
<PAGE> 54
SECTION 2.13. CUSIP Number.
The Company 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 THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant
to Paragraph 5 of the Securities, it shall notify the Trustee,
with a copy to the Credit Agent, of the Redemption Date and the
principal amount of Securities to be redeemed and whether it
wants the Trustee to give notice of redemption to the Holders
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 such notice 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 3.02. 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 any other method that the
Trustee considers fair and appropriate and, if such Securities
are listed on any securities exchange, by a method that
complies with the requirements of such exchange.
The Trustee shall make the selection from the
Securities outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000
may be redeemed only in whole. The Trustee may select for
redemption portions (equal to $1,000 or integral multiples
thereof) of the principal amount of Securities that have
denominations larger than $1,000. Provisions of this Indenture
<PAGE> 55
that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company 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 and the Credit Agent. At the Company's request,
the Trustee shall give the notice of redemption in the
Company's name and at the Company's 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 (a) the Company defaults in making
the redemption payment or (b) such redemption payment is
prohibited pursuant to Article Four or Article Twelve
hereof or otherwise, 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 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.
<PAGE> 56
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance
with Section 3.03, 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
unless prohibited pursuant to Article Four or Article Twelve or
otherwise pursuant to this Indenture. Securities that are
redeemed by the Company or that are purchased by the Company
pursuant to a Net Proceeds Offer as described in Section 5.16
or pursuant to a Change of Control Offer as described in
Section 5.15 or that are otherwise acquired by the Company will
be surrendered to the Trustee for cancellation.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company 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 the
Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any U.S. Legal Tender so
deposited which is not required for that purpose upon the
written request of the Company, except with respect to monies
owed as obligations to the Trustee pursuant to Article Eight
and Article Twelve hereof.
If the Company complies with the preceding paragraph
and payment of the Securities called for redemption is not
prohibited under Article Four or Article Twelve or otherwise,
then, unless the Company 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.
SECTION 3.06. 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.
<PAGE> 57
ARTICLE FOUR
SUBORDINATION
SECTION 4.01. Securities Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, the
Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees that the payment of the
Obligations on the Securities is subordinated, to the extent
and in the manner provided in this Article Four, to the prior
payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
This Article Four 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.
The obligations of the Company to the Trustee under
Section 8.07 shall not be subject to the provisions of this
Article Four.
SECTION 4.02. Suspension of Payment When Senior
Indebtedness in Default._________
(a) Unless Section 4.03 shall be applicable, upon
(1) the occurrence of a Payment Default and (2) receipt by the
Trustee and the Company from the Representatives of written
notice of such occurrence, then no direct or indirect payment
(other than payments previously made pursuant to Article Nine
hereof) or distribution of any assets of the Company of any
kind or character shall be made by or on behalf of the Company
on account of the Obligations on the Securities or on account
of the purchase or redemption or other acquisition of
Securities whether pursuant to the terms of the Securities or
upon acceleration or otherwise unless and until such Payment
Default shall have been cured or waived or shall have ceased to
exist or such Designated Senior Indebtedness or Significant
Senior Indebtedness, as the case may be, as to which such
Payment Default relates shall have been discharged or paid in
full in cash or Cash Equivalents, after which the Company shall
resume making any and all required payments in respect of the
Securities, including any missed payments.
(b) Unless Section 4.03 shall be applicable, upon
(1) the occurrence of a Non-payment Default and (2) the earlier
<PAGE> 58
of (i) receipt by the Trustee from the Representative of
written notice of such occurrence stating that such notice is a
"Payment Blockage Notice" pursuant to Section 4.02(b) of this
Indenture or (ii) if such Non-payment Default results from the
acceleration of the Securities, the date of such acceleration,
no such payment (other than payments previously made pursuant
to Article Nine hereof) or distribution of any assets of the
Company of any kind or character shall be made by the Company
on account of any principal of, premium, if any, or interest on
the Securities or on account of the purchase or redemption or
other acquisition of Securities for a period ("Payment Blockage
Period") commencing on the earlier to occur of the date of
receipt by the Trustee of the written notice of a Non-payment
Default from the Representative or the date of the acceleration
referred to in clause (ii) above, as the case may be, unless
and until the earlier to occur of the following events: (w)
179 days shall have elapsed since receipt of such notice or the
date of the acceleration of the Securities, as the case may be
(provided such Designated Senior Indebtedness shall theretofore
not have been accelerated), (x) such Non-payment Default shall
have been cured or waived or shall have ceased to exist,
(y) such Designated Senior Indebtedness shall have been
discharged or paid in full in cash or Cash Equivalents or
(z) such Payment Blockage Period shall have been terminated by
written notice to the Company or the Trustee from the
Representative initiating such Payment Blockage Period or the
holders of at least a majority in principal amount of such
issue of Designated Senior Indebtedness initiating such Payment
Blockage Period, after which, in the case of clause (w), (x),
(y) or (z), the Company shall resume making any and all
required payments in respect of the Securities, including any
missed payments. Notwithstanding any other provision of this
Indenture, only one Payment Blockage Period may be commenced
within any consecutive 365-day period and no Non-payment
Default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of
any Payment Blockage Period shall be, or shall be made, the
basis for the commencement of a second Payment Blockage Period,
whether or not within a period of 365 consecutive days, unless
such event of default shall have been cured or waived for a
period of not less than 90 consecutive days. In no event shall
a Payment Blockage Period extend beyond 179 days from the date
of the receipt of the written notice by the Trustee of a
Non-payment Default or the date of the acceleration initiating
such Payment Blockage Period, as the case may be.
(c) In the event that, notwithstanding the
foregoing, the Trustee or the Holder of any Security shall have
received any payment prohibited by the foregoing provisions of
this Section 4.02, then and in such event such payment shall be
<PAGE> 59
paid over and delivered forthwith to the Representatives or as
a court of competent jurisdiction shall direct.
SECTION 4.03. Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company.__
Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or reorganization of the Company (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 the
Company and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall
first be entitled to receive payments in full in cash or
Cash Equivalents of all amounts payable under Senior
Indebtedness (including, with respect to Designated Senior
Indebtedness, any interest accruing after the commencement
of any such proceeding at the rate specified in the
applicable Designated Senior Indebtedness whether or not
interest is an allowed claim enforceable against the
Company in any such proceeding) before the Holders will be
entitled to receive any payment with respect to the
Securities (excluding Permitted Subordinated
Reorganization Securities), and until all Obligations with
respect to the Senior Indebtedness are paid in full in
cash or Cash Equivalents, any distribution to which the
Holders would be entitled (excluding Permitted
Subordinated Reorganization Securities) shall be made to
the holders of Senior Indebtedness; provided, however,
that no payment on any Guarantee shall constitute payment
on behalf of the Company for purposes of this
Section 4.03(a);
(b) any payment or distribution of assets of the
Company 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
(excluding Permitted Subordinated Reorganization
Securities) except for the provisions of this Article
Four, 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 remaining unpaid held or
represented by each, until all Senior Indebtedness
<PAGE> 60
remaining unpaid shall have been paid in full in cash or
Cash Equivalents after giving effect to any concurrent
payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, shall be received by the Trustee
or the Holders or any Paying Agent on account of principal
of, premium, if any, or interest on the Securities
(excluding Permitted Subordinated Reorganization
Securities) before all Senior Indebtedness is paid in full
in cash or Cash Equivalents, such payment or distribution
(subject to the provisions of Sections 4.06 and 4.07)
shall be received, segregated from other funds, and held
in trust by the Trustee 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 or Cash Equivalents, after giving effect to any
concurrent payment or distribution 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 Representative.
The consolidation of the Company with, or the merger
of the Company with or into, another person or the liquidation
or dissolution of the Company following the conveyance,
transfer or lease of its properties and assets substantially as
an entirety to another person upon the terms and conditions set
forth in Article Six hereof shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of
the Company for the purposes of this Article Four if the person
formed by such consolidation or the surviving entity of such
merger or the person which acquires by conveyance, transfer or
lease such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the
conditions set forth in such Article Six.
<PAGE> 61
The Company shall give prompt notice to the Trustee
prior to any dissolution, winding-up, total or partial
liquidation or reorganization (including, without limitation,
in bankruptcy, insolvency, or receivership proceedings or upon
any assignment for the benefit of creditors or any other
marshalling of the Company's assets and liabilities).
SECTION 4.04. Securityholders To Be Subrogated to Rights
of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash
Equivalents of all Senior Indebtedness, the Holders of
Securities shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of
assets of the Company 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 the Company, or by or on behalf of the Holders by
virtue of this Article Four, which otherwise would have been
made to the Holders, shall, as between the Company and the
Holders, be deemed to be payment by the Company to or on
account of the Senior Indebtedness, it being understood that
the provisions of this Article Four 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 Four shall have been applied, pursuant to the
provisions of this Article Four, 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 or Cash Equivalents.
SECTION 4.05. Obligations of the Company Unconditional.
Nothing contained in this Article Four or elsewhere
in this Indenture or in the Securities is intended to or shall
impair, as between the Company and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to
the Holders the principal of and interest on 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 the Company
other than the holders of the Senior Indebtedness, nor shall
<PAGE> 62
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 rights,
if any, under this Article Four, of the holders of Senior
Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon
any payment or distribution of assets or securities of the
Company referred to in this Article Four, the Trustee, subject
to the provisions of Sections 8.01 and 8.02, 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 the Company, the
amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or
to this Article Four. Nothing in this Section 4.05 shall apply
to the claims of, or payments to, the Trustee under or pursuant
to Section 8.07.
SECTION 4.06. 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 the Company 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 8.01 and 8.02, shall be entitled in all
respects conclusively to assume that no such fact exists.
SECTION 4.07. 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 9.02 shall be for the sole benefit of
Securityholders and, to the extent allocated for the payment of
Securities, shall not be subject to the subordination
provisions of this Article Four. Otherwise, any deposit of
assets or securities by or on behalf of the Company with the
Trustee or any Paying Agent (whether or not in trust) for the
payment of principal of or interest on any Securities shall be
subject to the provisions of this Article Four; provided that
<PAGE> 63
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 4.06,
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; provided, further, that no payment on any Guarantee shall
constitute payment on behalf of the Company for purposes of
this Section 4.07. The foregoing shall not apply to the Paying
Agent if the Company or any Subsidiary or Affiliate of the
Company is acting as Paying Agent. Nothing contained in this
Section 4.07 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by this
Article Four.
SECTION 4.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection
(a) of this Section 4.08, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of
or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination
provided in this Article Four or the obligations hereunder of
the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any person
liable in any manner for the collection or payment of Senior
Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other person; provided,
however, that in no event shall any such actions limit the
right of the Holders of the Securities to take any action to
<PAGE> 64
accelerate the maturity of the Securities pursuant to Article
Seven hereof or to pursue any rights or remedies hereunder or
under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
(c) 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 Four, 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 Four
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 4.09. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
Each Holder of the Securities by his acceptance
thereof 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 Four, and appoints the Trustee his attorney-in-fact for
such purpose, including, in the event of any dissolution,
winding-up, liquidation or reorganization of the Company
(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 the Company) tending
towards liquidation or reorganization of the business and
assets of the Company, the immediate filing of a claim for the
unpaid balance of its or his Securities 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
<PAGE> 65
authorize or consent to or accept or adopt on behalf of any
Securityholder 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 Securityholder in any such
proceeding.
SECTION 4.10. Right of Trustee To Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights
set forth in this Article Four 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 4.11. No Suspension of Remedies.
The failure to make a payment on account of principal
of or interest on the Securities by reason of any provision of
this Article Four shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section
7.01.
Nothing contained in this Article Four shall limit
the right of the Trustee or the Holders of Securities to take
any action to accelerate the maturity of the Securities
pursuant to Article Seven or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if
any, under this Article Four of the holders, from time to time,
of Senior Indebtedness.
SECTION 4.12. 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
the Company or any other person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of
this Article Four or otherwise. Nothing in this Section 4.12
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.
<PAGE> 66
ARTICLE FIVE
COVENANTS
SECTION 5.01. Payment of Securities.
The Company shall pay the principal of and interest
on the Securities on the dates and in the manner provided in
the Securities. An installment of principal of or interest on
the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent (other than the Company or a
Subsidiary) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment; provided, however, that
U.S. Legal Tender held by the Trustee for the benefit of
holders of Senior Indebtedness or Guarantor Senior Indebtedness
or the payment of which to the Holders is prohibited pursuant
to the provisions of Article Four or Article Twelve hereof or
otherwise shall not be considered to be designated for the
payment of any installment of principal or interest on the
Securities within the meaning of this Section 5.01.
The Company shall pay interest on overdue principal
at the rate borne by the Securities and it shall pay interest
on overdue installments of interest at the same rate, to the
extent lawful.
SECTION 5.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of
Manhattan, The City of New York, the office or agency required
under Section 2.03 hereof. The Company 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 the Company shall
fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section
13.02.
SECTION 5.03. Limitation on Restricted Payments.
The Company shall not, and shall cause each of its
Subsidiaries not to, directly or indirectly, make any
Restricted Payment if, at the time of such proposed Restricted
Payment, or after giving effect thereto, (a) a Default or an
Event of Default shall have occurred and be continuing, (b) the
Company could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 5.12 or (c)
the aggregate amount expended for all Restricted Payments,
<PAGE> 67
including such proposed 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 the Company), subsequent to
the Issue Date, shall exceed the sum of (i) 50% of the
aggregate Consolidated Net Income (or if such aggregate
Consolidated Net Income is a loss, minus 100% of such loss) of
the Company earned subsequent to the Issue Date and on or prior
to the date of the proposed Restricted Payment (the "Reference
Date"), plus (ii) 100% of the aggregate Net Proceeds received
by the Company from any person (other than a Subsidiary of the
Company) from the issuance and sale (including upon exchange or
conversion for other securities of the Company) 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 the
Company or any Subsidiary, until and to the extent such
borrowing is repaid), plus (iii) 100% of the aggregate net cash
proceeds received by the Company as capital contributions to
the Company after the Issue Date, plus (iv) $25 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 of the Company or the repurchase, redemption or
other repayment of any Subordinated Indebtedness 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 of the Company, (3) the repurchase,
redemption or other repayment of any Subordinated Indebtedness
in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of
Subordinated Indebtedness of the Company with an Average Life
equal to or greater than the then remaining Average Life of the
Subordinated Indebtedness repurchased, redeemed or repaid, (4)
any payment by the Company or any Subsidiary, or any dividend
by the Company or any Subsidiary to New Holdings the proceeds
of which are used by New Holdings to make payments, in each
case, required to be made due to the exercise of statutory
dissenters', appraisal or similar rights by holders of common
stock of FFL in connection with the FFL Merger and
(5) Permitted Payments; provided, however, that the declaration
of each dividend paid in accordance with clause (1) above, each
acquisition, repurchase, redemption or other repayment made in
<PAGE> 68
accordance with, or of the type set forth in, clause (2) above,
and each payment described in clause (iii), (iv), (vii) and
(ix) of the definition of the term "Permitted Payments" shall
each be counted for purposes of computing amounts expended
pursuant to subclause (c) in the immediately preceding
paragraph, and no amounts expended pursuant to clause (3) or
(4) above or pursuant to clauses (i), (ii), (v), (vii), (viii),
(x), (xi) or (xii) of the definition of the term "Permitted
Payments" shall be so counted; provided further that to the
extent any payments made pursuant to clause (vii) of the
definition of the term "Permitted Payments" are deducted for
purposes of computing the Consolidated Net Income of the
Company, such payments shall not be counted for purposes of
computing amounts expended as Restricted Payments pursuant to
subclause (c) in the immediately preceding paragraph.
Prior to making any Restricted Payment under the
first paragraph of this Section 5.03, the Company 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 5.04. Corporate Existence.
Except as otherwise permitted by Article Six, the
Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and 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 the
Company and each such Significant Subsidiary; provided,
however, that the Company 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 the
Company 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 the Company or any
such Significant Subsidiary.
SECTION 5.05. Payment of Taxes and Other Claims.
The Company 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
<PAGE> 69
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 the Company 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 the Company and its Subsidiaries taken as a
whole.
SECTION 5.06. Maintenance of Properties and Insurance.
(a) The Company shall cause all properties used or
useful to the conduct of its business or the business of any of
its 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 properties (together with all other such
failures) would not have a material adverse effect on the
financial condition or results of operations of the Company and
its Subsidiaries taken as a whole; provided, however, that
nothing in this Section 5.06 shall prevent the Company 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 the Company or the Subsidiary concerned, or of the
senior officers of the Company or such Subsidiary, as the case
may be, desirable in the conduct of the business of the Company
or such Subsidiary, as the case may be, or (iii) is otherwise
permitted by this Indenture.
(b) The Company 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 the
Company are adequate and appropriate for the conduct of the
business of the Company 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
<PAGE> 70
thereof, in such amounts, with such deductibles, and by such
methods as shall be either (i) consistent with past practices
of the Company or the applicable Subsidiary or (ii) customary,
in the reasonable, good faith opinion of the Company, 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 the Company and
its Subsidiaries, taken as a whole.
SECTION 5.07. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within
120 days after the end of the Company's 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 the Company
during such preceding fiscal year has kept, observed, performed
and fulfilled each and every such covenant and no event of
default in respect of any payment obligation under the Credit
Agreement, Default or Event of Default occurred during such
year or, if such signers do know of such an event of default,
Default or Event of Default, the certificate shall describe the
event of default, Default or Event of Default and its status
with particularity. The Officers' Certificate shall also
notify the Trustee should the Company 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, the Company shall deliver to the Trustee within
120 days after the end of each fiscal year a written statement
by the Company's 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) The Company shall deliver to the Trustee,
forthwith upon becoming aware, and in any event within 5 days
after the occurrence, of (i) any Default or Event of Default in
the performance of any covenant, agreement or condition
contained in this Indenture; (ii) any event of default in
respect of any payment obligation under the Credit Agreement or
<PAGE> 71
any event of default under any other bond, debenture, note, or
other evidence of Indebtedness of the Company or any of its
Subsidiaries, or under any mortgage, indenture or other
instrument if such event of default related to Indebtedness at
any time in an aggregate principal amount exceeding $20
million, an Officers' Certificate specifying with particularity
such event.
SECTION 5.08. Compliance with Laws.
The Company 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 the Company and its
Subsidiaries taken as a whole.
SECTION 5.09. SEC Reports.
The Company will deliver to the Trustee within 15
days after the filing of the same with the Commission, copies
of the quarterly and annual report and of the information
documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the
Trustee and Holders of Securities with such annual reports and
such information, documents and other reports specified in
Section 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of TIA Section 314(a).
SECTION 5.10. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
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 the Company 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> 72
covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company 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 5.11. Limitation on Transactions with Affiliates.
(a) Neither the Company nor any of its Subsidiaries
shall (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities (other than
equity securities which do not constitute Disqualified Capital
Stock) to, (ii) purchase any property, assets or securities
(other than equity securities which do not constitute
Disqualified Capital Stock) from, (iii) make any Investment in,
or (iv) enter into or suffer to exist any contract or agreement
with or for the benefit of, an Affiliate or Significant
Stockholder (or any Affiliate of such Significant Stockholder)
of the Company or any Subsidiary (an "Affiliate Transaction"),
other than (x) Affiliate Transactions permitted under Section
5.11(b) and (y) Affiliate Transactions in the ordinary course
of business that are fair to the Company 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; provided that (A) with respect to Affiliate
Transactions involving aggregate payments in excess of $1
million and less than $5 million, the Company or such
Subsidiary, as the case may be, shall have delivered an
Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (y)
above (other than the requirement set forth in section (y) that
such Affiliate Transaction be in the ordinary course of
business), (B) with respect to Affiliate Transactions involving
aggregate payments in excess of $5 million and less than $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered an Officers' Certificate to the Trustee
certifying that such Affiliate Transaction complies with clause
(y) above (other than the requirements set forth in such clause
(y) that such Affiliate Transaction be in the ordinary course
of business) and that such Affiliate Transaction has received
the approval of a majority of the disinterested members of the
Board of Directors of the Company 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 the Company
or the Subsidiary, as the case may be, that an Independent
Financial Advisor has reasonably and in good faith determined
that the financial terms of such Affiliate Transaction are fair
to the Company or such Subsidiary, as the case may be, or that
<PAGE> 73
the terms of such Affiliate Transaction are at least as
favorable as might reasonably have been obtained at such time
from an unaffiliated party and that such Independent Financial
Advisor has provided written confirmation of such determination
to the Board of Directors and (C) with respect to Affiliate
Transactions involving aggregate payments in excess of $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered to the Trustee a written opinion from an
Independent Financial Advisor to the effect that the financial
terms of such Affiliate Transaction are fair to the Company or
such Subsidiary, as the case may be, or that the terms of such
Affiliate Transaction are at least as favorable as those that
might reasonably have been obtained at the time from an
unaffiliated party.
(b) The provisions of Section 5.11(a) shall not
apply to (i) any Permitted Payment, (ii) any Restricted Payment
that is made in compliance with the provisions of Section 5.03,
(iii) reasonable and customary fees and compensation paid to,
and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary, as
determined by the Board of Directors of the Company or any
Subsidiary or the senior management thereof in good faith,
(iv) transactions exclusively between or among the Company and
any of its 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 Securityholders in
any material respect, (vi) the existence of, or the performance
by the Company or any of its Subsidiaries of its obligations
under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related
thereto) to which it (or New Holdings) is a party as of the
Issue Date and any similar agreements which it (or New
Holdings) may enter into thereafter; provided, however, that
the existence of, or the performance by the Company or any
Subsidiaries 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
Securityholders in any material respect, (vii) transactions
permitted by, and complying with, the provisions of
Section 6.01 and (viii) transactions with suppliers or other
purchases or sales of goods or services in each case in the
ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in
<PAGE> 74
compliance with the terms of this Indenture which are fair to
the Company, in the reasonable determination of the Board of
Directors of the Company or the senior management thereof, or
are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party.
SECTION 5.12. Limitation on Incurrences of
Additional Indebtedness.
The Company shall not, and shall not permit any of
its Subsidiaries, directly or indirectly, to incur, assume,
guarantee, become liable, contingently or otherwise, with
respect to, or otherwise become responsible for the payment of
(collectively "incur") any Indebtedness other than Permitted
Indebtedness; provided, however, that if no Default with
respect to payment of principal of, or interest on, the
Securities or Event of Default under this Indenture shall have
occurred and be continuing at the time of or as a consequence
of the incurrence of any such Indebtedness, the Company may
incur Indebtedness if immediately before and immediately after
giving effect to the incurrence of such Indebtedness the
Operating Coverage Ratio of the Company would be greater than
2.0 to 1.0; provided further a Subsidiary may incur Acquired
Indebtedness to the extent such Indebtedness could have been
incurred by the Company pursuant to the immediately preceding
proviso.
SECTION 5.13. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries._____
The Company 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 respect to any of its Subsidiaries, except for
(a) any such restrictions contained in (i) the Credit Agreement
in effect on the Issue Date, as any such Payment Restriction
may apply to any present or future Subsidiary, (ii) this
Indenture and any agreement in effect at or entered into on the
Issue Date, (iii) 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 of any person, other than the person so acquired and
(z) such Indebtedness is otherwise permitted to be incurred
pursuant to Section 5.12), (iv) secured Indebtedness otherwise
permitted to be incurred pursuant to Sections 5.12 and 5.14
that limit the right of the debtor to dispose of the assets
securing such Indebtedness; (b) customary non-assignment
provisions restricting subletting or assignment of any lease or
<PAGE> 75
other agreement entered into by a 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 joint venture agreements and other similar
agreements; (f) restrictions contained in Indebtedness incurred
to refinance, refund, extend or renew Indebtedness referred to
in clause (a) above; provided that the restrictions contained
therein are not materially more restrictive taken as a whole
than those provided for in such Indebtedness being refinanced,
refunded, extended or renewed and (g) Payment Restrictions
contained in any other Indebtedness permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of
Section 5.12; provided that any such Payment Restrictions are
ordinary and customary with respect to the type of Indebtedness
being incurred (under the relevant circumstances) and, in any
event, no more restrictive than the most restrictive Payment
Restrictions in effect on the Issue Date.
SECTION 5.14. Limitation on Liens.
The Company shall not and shall not permit any
Subsidiary to create, incur, assume or suffer to exist any
Liens upon any of their respective assets unless the Securities
are equally and ratably secured by the Liens covering such
assets, except for (i) Liens on assets of the Company securing
Senior Indebtedness and Liens on assets of a Subsidiary
Guarantor which, at the time of incurrence, secure Guarantor
Senior Indebtedness; (ii) existing and future Liens securing
Indebtedness and other obligations of the Company and its
Subsidiaries under the Credit Agreement and related documents
or any refinancing or replacement thereof in whole or in part
permitted under this Indenture, (iii) Permitted Liens,
(iv) Liens securing Acquired Indebtedness, provided that such
Liens (x) are not incurred in connection with, or in
contemplation of, the acquisition of the property or assets
acquired and (y) do not extend to or cover any property or
assets of the Company or any Subsidiary other than the property
or assets so acquired, (v) Liens to secure Capitalized Lease
Obligations and certain other Indebtedness that is otherwise
permitted under this Indenture, provided that (A) any such Lien
is created solely for the purpose of securing such other
Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of,
and other direct expenses paid or charged in connection
therewith) of the purchase (whether through stock or asset
<PAGE> 76
purchase, merger or otherwise) or construction or improvement
of the property subject thereto (whether real or personal,
including fixtures and other equipment), (B) the principal
amount of the Indebtedness secured by such Lien does not exceed
100% of such costs and (C) such Lien does not extend to or
cover any other property other than such item of property and
any improvements on such item, (vi) Liens existing on the Issue
Date (after giving effect to the Merger), (vii) Liens in favor
of the Trustee under this Indenture and any substantially
equivalent Lien granted to any trustee or similar institution
under any indenture for Indebtedness permitted to be incurred
under this Indenture, and (viii) any replacement, extension or
renewal, in whole or in part, of any Lien described in this or
the foregoing clauses including in connection with any
refinancing of the Indebtedness, in whole or in part, secured
by any such Lien; provided that to the extent any such clause
limits the amount secured or the assets subject to such Liens,
no replacement, extension or renewal shall increase the amount
or the assets subject to such Liens, except to the extent that
the Liens associated with such additional assets are otherwise
permitted hereunder.
SECTION 5.15. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, 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 principal amount thereof
plus accrued and unpaid interest to the date of repurchase.
Prior to the mailing of the notice of a Change of Control Offer
provided for in paragraph (b) below, within 30 days following
any Change of Control the Company shall either (a) repay in
full and terminate all commitments under Indebtedness under the
Credit Agreement to the extent the terms thereof require
repayment upon a Change of Control (or offer to repay in full
and terminate all commitments under all such Indebtedness under
the Credit Agreement and repay the Indebtedness owed to each
lender which has accepted such offer), or (b) obtain the
requisite consent under the Credit Agreement, the terms of
which require repayment upon a Change of Control, to permit the
repurchase of the Securities as provided for in this Section
5.15. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to
repurchase Securities pursuant to this Section 5.15. The
Company's failure to comply with the covenants described in
this paragraph shall constitute an Event of Default under this
Indenture.
<PAGE> 77
In addition, prior to purchasing Securities tendered
into a Change of Control Offer, the Company shall purchase all
Senior Notes (or permitted refinancings thereof) which it is
required to purchase by reason of such Change of Control
pursuant to the provisions of the agreements governing such
Indebtedness.
(b) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), the
Company must send, by first class mail, a notice to each Holder
of Securities, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. 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. The Company shall give notice
of an event giving rise to a Change of Control on the same date
and in the same manner to all Holders of Securities. Such
notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 5.15 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"); provided,
however, that the Change of Control Payment Date for the
Securities shall be subsequent to such date for the Senior
Notes;
(3) that any Security not tendered will continue to
accrue interest if interest is then accruing;
(4) that, unless (i) the Company defaults in making
payment therefor or (ii) such payment is prohibited
pursuant to Article Four, 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;
<PAGE> 78
(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 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 purchased only
in part will be issued new Securities equal in principal
amount to the unpurchased portions of the Securities
surrendered; provided that each Security purchased and
each Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof;
(8) that each Change of Control Offer is required to
remain open for at least 20 Business Days or such longer
period as may be required by law and until 12:00 Midnight
New York City time on the applicable Change of Control
Payment Date; and
(9) the circumstances and relevant facts regarding
such Change of Control.
On or before the Change of Control Payment Date, the
Company 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 the Company. The Paying
Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price (and
the Trustee shall promptly authenticate and mail to such
Holders new Securities equal in principal amount to any
unpurchased portion of the Securities surrendered provided that
each such new Security shall be in the principal amount of
$1,000 or integral multiples thereof) unless such payment is
prohibited pursuant to Article Four or otherwise. The Company
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 5.15, the Trustee
shall act as the Paying Agent.
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
<PAGE> 79
Securities pursuant to a Change of Control Offer. To the
extent the provisions of any securities laws or regulations
conflict with the provisions under this Section 5.15, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section 5.15 by virtue thereof.
SECTION 5.16. Limitation on Asset Sales.
Neither the Company nor any of its Subsidiaries shall
consummate an Asset Sale unless (a) the Company 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 and (b) upon consummation of an Asset Sale, the
Company will within 365 days of the receipt of the proceeds
therefrom, either: (i) apply or cause its Subsidiary to apply
the Net Cash Proceeds of any Asset Sale to (A) a Related
Business Investment, (B) an investment in properties and assets
that replace the properties and assets that are the subject of
such Asset Sale or (C) an investment in properties and assets
that will be used in the business of the Company and its
Subsidiaries existing on the Issue Date or in a business
reasonably related thereto; (ii) in the case of a sale of a
store or stores, deem such Net Cash Proceeds to have been
applied to the extent of any capital expenditures made to
acquire or construct a replacement store in the general
vicinity of the store sold within 365 days preceding the date
of the Asset Sale; (iii) apply or cause to be applied such Net
Cash Proceeds to the permanent repayment of Pari Passu
Indebtedness or Senior Indebtedness; provided, however, that
the repayment of any revolving loan (under the Credit Agreement
or otherwise) shall result in a permanent reduction in the
commitment thereunder; (iv) use such Net Cash Proceeds to
secure Letter of Credit obligations to the extent related
letters of credit have not been drawn upon or returned undrawn;
or (v) after such time as the accumulated Net Cash Proceeds
equal or exceed $20 million, apply or cause to be applied such
Net Cash Proceeds to the purchase of Securities tendered to the
Company for purchase at a price equal to 100% of the principal
amount thereof plus accrued interest thereon to the date of
purchase pursuant to an offer to purchase made by the Company
as set forth below (a "Net Proceeds Offer"); provided, however,
that the Company shall have the right to exclude from the
foregoing provisions Asset Sales subsequent to the Issue Date,
the proceeds of which are derived from the sale and
substantially concurrent lease-back of a supermarket and/or
related assets or equipment which are acquired or constructed
by the Company or a Subsidiary subsequent to the date that is
six months prior to the Issue Date, provided that such sale and
substantially concurrent lease-back occurs within 270 days
<PAGE> 80
following such acquisition or the completion of such
construction, as the case may be. Pending the utilization of
any Net Cash Proceeds in the manner (and within the time
period) described above, the Company may use any such Net Cash
Proceeds to repay revolving loans (under the Credit Agreement
or otherwise) without a permanent reduction of the commitment
thereunder.
Notice of a Net Proceeds Offer pursuant to this
Section 5.16 will be mailed to record Holders of Securities as
shown on the register of Holders not less than 325 days nor
more than 365 days after the relevant Asset Sale, with a copy
to the Trustee. 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 5.16 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, the Company shall select the Securities to
be purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only
Securities in denominations of $1,000 or multiples thereof
shall be purchased);
(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 (i) the Company defaults in making
payment therefor or (ii) such payment is prohibited
pursuant to Article Four hereof or otherwise, 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 of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address
<PAGE> 81
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;
(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; provided that each Security
purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples
thereof; and
(8) that the Net Proceeds Offers shall remain open
for a period of 20 Business Days or such longer period as
may be required by law.
On or before the Proceeds Purchase Date, the Company
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)(1) 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 the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment
in an amount equal to the purchase price (and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion
of the Security surrendered provided that each such new
Security shall be in the principal amount of $1,000 or integral
multiples thereof) unless such payment is prohibited pursuant
to Article Four hereof or otherwise. The Company 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 5.16, 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 the Company.
<PAGE> 82
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of
Securities pursuant to a Net Proceeds Offer. To the extent the
provisions of any securities laws or regulations conflict with
the provisions under this Section 5.16, the Company shall
comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this
Section 5.16 by virtue thereof.
SECTION 5.17. Guarantees of Certain Indebtedness.
The Company will not permit any of its Subsidiaries
to (a) incur, guarantee or secure through the granting of Liens
the payment of any Indebtedness under the term portion of the
Credit Agreement or refinancings thereof or (b) pledge any
intercompany notes representing obligations of any of its
Subsidiaries, to secure the payment of any Indebtedness under
the term portion of the Credit Agreement or refinancings
thereof, in each case unless such Subsidiary, the Company and
the Trustee execute and deliver a supplemental indenture
evidencing such Subsidiary's Guarantee.
SECTION 5.18. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries
to issue Preferred Stock (other than to the Company or to a
wholly-owned Subsidiary) or permit any person (other than the
Company or a wholly-owned Subsidiary) to own any Preferred
Stock of any Subsidiary.
SECTION 5.19. Limitation on Other Senior Subordinated
Indebtedness.
Neither the Company nor any Subsidiary Guarantor
will, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) that is subordinate in right of payment
to any Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is
either (a) pari passu in right of payment with the Securities
or the Guarantee of such Subsidiary Guarantor, as the case may
be, or (b) subordinate in right of payment to the Securities or
the Guarantee of such Subsidiary Guarantor, as the case may be,
in the same manner and at least to the same extent as the
Securities are subordinate to Senior Indebtedness or as such
Guarantee is subordinated to Senior Guarantor Indebtedness of
such Subsidiary Guarantor, as the case may be.
<PAGE> 83
ARTICLE SIX
SUCCESSOR CORPORATION
SECTION 6.01. Limitations on Mergers and Certain Other
Transactions. _
(a) The Company 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 the Company shall be the continuing
person, or the person (if other than the Company) formed
by such consolidation or into which the Company is merged
or to which all or substantially all of the properties and
assets of the Company as an entirety or substantially as
an entirety are transferred (or, in the case of a Plan of
Liquidation, any person to which assets are transferred)
(the Company 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
supplement, all the obligations of the Company 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 Consolidated Net
Worth equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and
(B) the Surviving Person could incur at least $1 of
additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 5.12;
(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
<PAGE> 84
(4) each Subsidiary Guarantor, unless it is the
other party to the transaction, shall have by supplemental
indenture confirmed that its Guarantee of the obligations
of the Company under the Securities and this Indenture
shall apply, without alteration or amendment as such
Guarantee applies on the date it was granted under this
Indenture to the obligations of the Company under this
Indenture and the Securities to the obligations of the
Company or such Person as the case may be, under this
Indenture and the Securities, after consummation of such
transaction.
(b) Notwithstanding the foregoing, the consummation
of the Merger on the Issue Date need only comply with clauses
(1) and (3) of the foregoing paragraph.
(c) 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 direct or indirect
Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
SECTION 6.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Company or any
adoption of a Plan of Liquidation by the Company in accordance
with Section 6.01, the Surviving Person formed by such
consolidation or into which the Company is merged or to which
such transfer is made (or in the case of a Plan of Liquidation,
to which assets are transferred) shall succeed to, and be
substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such
Surviving Person had been named as the Company herein;
provided, however, that solely for purposes of computing
amounts described in subclause (c) of the first paragraph of
Section 5.03, any such Surviving Person shall only be deemed to
have succeeded to and be substituted for the Company with
respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets. When a successor
corporation assumes all of the obligations of the Company
hereunder and under the Securities and agrees to be bound
hereby and thereby, the predecessor shall be released from such
obligations.
<PAGE> 85
ARTICLE SEVEN
DEFAULT AND REMEDIES
SECTION 7.01. Events of Default.
An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest
on any Securities when the same becomes due and payable
and the Default continues for a period of 30 days, whether
or not such payment shall be prohibited by the provisions
of Article Four hereof;
(ii) the Company defaults in the payment of the
principal of, or premium, if any, on the Securities when
due whether at maturity, upon acceleration, redemption,
required repurchase or otherwise, whether or not such
payment shall be prohibited by the provisions of Article
Four hereof;
(iii) the Company fails to comply with any of its
agreements contained in the Securities or this Indenture
(other than a default specified in clause (i) or (ii)
above), if such failure continues for the period and after
the notice specified below;
(iv) there shall be a default under any Indebtedness
of the Company or any of its Subsidiaries, whether such
Indebtedness now exists or shall hereafter be created, if
both (A) such default either (1) results from the failure
to pay any such Indebtedness at its stated final maturity
or (2) relates to an obligation other than the obligation
to pay 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 in default for failure to pay
principal at stated final maturity or the maturity of
which has been so accelerated, aggregates $20 million or
more at any one time outstanding;
(v) one or more judgments, orders or decrees of any
court or regulatory or administrative agency of competent
jurisdiction for the payment of money in excess of $20
million, either individually or in the aggregate, shall be
entered against the Company or any Subsidiary of the
Company or any of their respective properties and shall
<PAGE> 86
not be discharged and there shall have been a period of 60
days after the date on which any period for appeal has
expired and during which a stay of enforcement of such
judgment, order or decree shall not be in effect;
(vi) either the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding; (b) consents
to the entry of a Bankruptcy Order for relief against it
in an involuntary case or proceeding or the commencement
of any case or proceeding against it; (c) consents to the
appointment of a custodian of it or for substantially all
of its property; or (d) makes a general assignment for the
benefit of its creditors;
(vii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (a) is for
relief against the Company or any Significant Subsidiary,
in an involuntary case or proceeding; (b) appoints a
custodian of the Company or any Significant Subsidiary, or
for all or any substantial part of their respective
properties; or (c) orders the liquidation of the Company
or any Significant Subsidiary and in each case the order
or decree remains unstayed and in effect for 60 days;
(viii) the lenders under the Credit Agreement shall
commence judicial proceedings to foreclose upon any
material portion of the assets of the Company and its
Subsidiaries or shall have exercised any right under
applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; or
(ix) any of the Guarantees shall be declared or
adjudged invalid in a final judgment or order issued by
any court or governmental authority.
A Default under clause (iii) above (other than in the
case of any Default under Section 5.03, 5.15, 5.16 or 6.01,
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 the Company, or the Holders of at least
25% in principal amount of the outstanding Securities notify
the Company and the Trustee of the Default, and the Company
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 principal amount of the
<PAGE> 87
Securities then outstanding. When a Default is cured, it
ceases.
SECTION 7.02. Acceleration.
(a) If an Event of Default (other than an Event of
Default specified in Section 7.01(vi) or (vii) with respect to
the Company or a Subsidiary Guarantor) occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Securities may, and
the Trustee upon the request of the Holders of not less than
25% in aggregate principal amount of the then outstanding
Securities shall, declare due and payable all unpaid principal
and interest accrued and unpaid on the then outstanding
Securities by written notice to the Company (and, if any
Indebtedness is outstanding under the Credit Agreement or the
Credit Agreement is otherwise in effect, to the Credit Agent)
and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the
Credit Agreement, shall become due and payable upon the first
to occur of an acceleration under the Credit Agreement, or five
business days after receipt by the Company and the Credit Agent
of such Acceleration Notice. If an Event of Default specified
in Section 7.01(vi) or (vii) occurs with respect to the Company
or a Subsidiary Guarantor that is a Significant Subsidiary, all
unpaid principal of and accrued interest on all then
outstanding Securities shall be immediately due and payable
without any declaration or other act on the part of the Trustee
or any of the Holders. Upon payment of such principal amount,
interest, and premium, if any, all of the Company's obligations
under the Securities and this Indenture, other than obligations
under Section 8.07, shall terminate. After a declaration of
acceleration, the Holders of a majority in 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 of the Securities which has 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 interest and overdue principal, which
has become due otherwise than by such declaration of
acceleration, has been paid, (iii) the rescission would not
conflict with any judgment or decree of a court of competent
jurisdiction and (iv) the Company has paid or deposited with
the Trustee a sum sufficient to pay all sums paid or advanced
by the Trustee under this Indenture and the compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.
<PAGE> 88
(b) In the event of a declaration of acceleration
under this Indenture because an Event of Default set forth in
Section 7.01(iv) 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 7.03. 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 Securityholder 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 7.04. Waiver of Past Defaults.
Subject to Sections 7.07 and 10.02, the Holders of a
majority in 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 (i) and (ii) of Section 7.01. When a Default or Event
of Default is waived, it is cured and ceases.
SECTION 7.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Securities may direct the
<PAGE> 89
time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any
remedies provided for in Section 7.03. Subject to
Section 8.01, 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 Securityholder, 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 7.06. Limitation on Suits.
A Securityholder may not pursue any remedy with
respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
(2) the Holder or Holders of at least 25% in
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 a majority in 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 Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a
preference or priority over such other Securityholder.
SECTION 7.07. 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
<PAGE> 90
respective dates, shall not be impaired or affected without the
consent of the Holder.
SECTION 7.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or
interest specified in clause (i) or (ii) of Section 7.01 occurs
and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company 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 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 7.09. 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 Securityholders
allowed in any judicial proceedings relating to the Company 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 Securityholder 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
Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 8.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Security
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 Securityholder in any such proceeding.
<PAGE> 91
SECTION 7.10. Priorities.
If the Trustee collects any money pursuant to this
Article Seven, it shall pay out the money in the following
order:
First: to the Trustee for amounts due under
Section 8.07;
Second: subject to Article Four and Article Twelve,
to Holders for interest accrued on the Securities,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities
for interest;
Third: subject to Article Four and Article Twelve,
to Holders for principal amounts due and unpaid on the
Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Securities for principal; and
Fourth: subject to Article Four and Article Twelve,
to the Company or the Subsidiary Guarantors, as their
respective interests may appear.
The Trustee, upon prior notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 7.10.
SECTION 7.11. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 7.12. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article Seven or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
<PAGE> 92
expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 7.13. 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 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 7.13 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 7.07, or a suit by a
Holder or Holders of more than 10% in principal amount of the
outstanding Securities.
ARTICLE EIGHT
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 8.01. Duties of Trustee.
(a) If a Default or an Event of Default of which the
Trustee is aware 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 would 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 undertake to perform only those
duties as are specifically set forth in this Indenture and
no covenants or obligations shall be implied in this
Indenture against 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
<PAGE> 93
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 shall have no liability except 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 8.01.
(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 7.05.
(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
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 8.01.
(f) The Trustee shall not be liable for interest on
any assets received by it. Assets held in trust by the Trustee
need not be segregated from other assets except to the extent
required by law.
SECTION 8.02. Rights of Trustee.
Subject to Section 8.01:
(a) The Trustee may rely on and shall be protected
in acting or refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
<PAGE> 94
(b) Before the Trustee acts or refrains from acting,
it may consult with counsel and may require in addition to
written direction from the Company an Officers'
Certificate or an Opinion of Counsel, which shall conform
to Sections 13.04 and 13.05. 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 attorney or 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
reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or
thereby.
SECTION 8.03. 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 the Company, 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 8.10 and 8.11.
SECTION 8.04. 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 the Company's use of the proceeds
from the Securities, and it shall not be responsible for any
<PAGE> 95
statement in the Securities other than the Trustee's
certificate of authentication.
SECTION 8.05. 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 of Securities notice of the Default or
Event of Default within 90 days after such Default or Event of
Default occurs or if such Default or Event of Default is known
to the Trustee during such ninety-day period, promptly after
such Default or Event of Default becomes known to the Trustee;
provided, however, that, except in the case of a Default or
Event of Default in the payment of the principal of or interest
on any Security, including the failure to make payment on a
Change of Control Payment Date pursuant to a Change of Control
Offer or payment when due pursuant to a Net Proceeds Offer the
Trustee may withhold such notice if it in good faith determines
that withholding such notice is in the interest of the Holders.
SECTION 8.06. 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 Securityholder 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
Securityholders shall be mailed to the Company and filed with
the Commission and each stock exchange, if any, on which the
Securities are listed.
The Company shall notify the Trustee if the
Securities become listed on any stock exchange.
SECTION 8.07. Compensation and Indemnity.
The Company 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. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall
include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
<PAGE> 96
The Company 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 the Company promptly of
any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and
expenses of such counsel; provided that the Company 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
the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay
for any settlement made without its written consent. The
Company 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 the Company's payment obligations in this
Section 8.07, 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 or interest on particular Securities.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 7.01(vi) or
(vii) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 8.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company.
The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee and appoint a
successor trustee with the Company's consent, by so notifying
the Company and the Trustee. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(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.
<PAGE> 97
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company
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
principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. 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 8.07, the resignation 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 Securityholder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 8.10, any
Securityholder 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 8.08, the Company's obligations under
Section 8.07 shall continue for the benefit of the retiring
Trustee.
SECTION 8.09. 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 8.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who
satisfies the requirement of TIA {{ 310(a)(1) and 310(a)(5).
<PAGE> 98
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 the Company are
outstanding, if the requirements for such exclusion set forth
in TIA { 310(b)(1) are met.
SECTION 8.11. Preferential Collection of Claims Against
Company._________________________________
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
{ 311(a) to the extent indicated.
ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 9.01. Termination of the Company's
Obligations.________________
The Company may terminate its obligations under the
Securities and this Indenture, and the obligations of any
Subsidiary Guarantor shall terminate, except those obligations
referred to in the penultimate paragraph of this Section 9.01,
if all Securities previously authenticated and delivered (other
than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money has
theretofore been deposited with the Trustee or the Paying Agent
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company, as provided in Section 9.04)
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
(1) either (i) pursuant to Article Three, the
Company shall have given notice to the Trustee and mailed
a notice of redemption to each Holder of the redemption of
all of the Securities under arrangements satisfactory to
the Trustee for the giving of such notice or (ii) all
Securities have otherwise become due and payable
hereunder;
(2) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee or a trustee
<PAGE> 99
satisfactory to the Trustee, under the terms of an
irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust
solely for the benefit of the Holders for that purpose,
money in such amount as is sufficient without
consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the
outstanding Securities to maturity or redemption; provided
that the Trustee shall have been irrevocably instructed to
apply such money to the payment of said principal,
premium, if any, and interest with respect to the
Securities and, provided, further, that from and after the
time of deposit, the money deposited shall not be subject
to the rights of holders of Senior Indebtedness pursuant
to the provisions of Article Four and Article Twelve;
(3) no Default or Event of Default with respect to
this Indenture or the Securities shall have occurred and
be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a
default under, any other instrument to which the Company
is a party or by which it is bound;
(4) the Company shall have paid all other sums
payable by it hereunder; and
(5) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent providing for the
termination of the Company's and any Subsidiary
Guarantor's obligation under the Securities and this
Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit
Agreement (if then in effect) or any other agreement or
instrument then known to such counsel that binds or
affects the Company.
Notwithstanding the foregoing paragraph, the
Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 5.01,
5.02 and 8.07 and any Subsidiary Guarantor's obligations in
respect thereof shall survive until the Securities are no
longer outstanding pursuant to the last paragraph of
Section 2.08. After the Securities are no longer outstanding,
the Company's obligations in Sections 8.07, 9.04 and 9.05 and
any Subsidiary Guarantor's obligations in respect thereof shall
survive.
<PAGE> 100
After such delivery or irrevocable deposit the
Trustee upon request shall acknowledge in writing the discharge
of the Company's and any Subsidiary Guarantor's obligations
under the Securities and this Indenture except for those
surviving obligations specified above.
SECTION 9.02. Legal Defeasance and Covenant
Defeasance.__________________
(a) The Company may, at its option by Board
Resolution of the Board of Directors of the Company, at any
time, with respect to the Securities, elect to have either
paragraph (b) or paragraph (c) below be applied to the
outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (b), the Company and
any Subsidiary Guarantor shall be deemed to have been released
and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth
below are satisfied (hereinafter, "legal defeasance"). For
this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which
shall thereafter be deemed to be "outstanding" only for the
purposes of paragraph (e) below and the other Sections of and
matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), and
Holders of the Securities and the Guarantees and any amounts
deposited under paragraph (d) below shall cease to be subject
to any obligations to, or the rights of, any holder of Senior
Indebtedness or Guarantor Senior Indebtedness under Article
Four, Article Twelve or otherwise, except for the following
which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Securities
to receive solely from the funds held by the Trustee in the
trust fund described in paragraph (d) below and as more fully
set forth in such paragraph, payments in respect of the
principal of, premium, if any, and interest on such Securities
when such payments are due, (ii) the Company's obligations with
respect to such Securities under Sections 2.06, 2.07 and 5.02,
and, with respect to the Trustee, under Section 8.07 and any
Subsidiary Guarantor's obligations in respect thereof, (iii)
the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (iv) this Section 9.02 and Section 9.05.
Subject to compliance with this Section 9.02, the Company may
<PAGE> 101
exercise its option under this paragraph (b) notwithstanding
the prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (c), the Company
shall be released and discharged from its obligations under any
covenant contained in Article Four and Article Six and in
Sections 5.03, 5.05 through 5.09 and 5.11 through 5.19 with
respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for
all other purposes hereunder and Holders of the Securities and
the Guarantees and any amounts deposited under paragraph (d)
below shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Indebtedness or Guarantor
Senior Indebtedness under Article Four, Article Twelve or
otherwise. For this purpose, such covenant defeasance means
that, with respect to the outstanding Securities, the Company
and any Subsidiary Guarantor may omit to comply with and shall
have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or
an Event of Default under Section 7.01(iii), but, except as
specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.
(d) The following shall be the conditions to
application of either paragraph (b) or paragraph (c) above to
the outstanding Securities:
(i) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 8.10 who
shall agree to comply with the provisions of this
Section 9.02 applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, (x) money in an
amount or (y) direct non-callable obligations of, or non-
callable obligations guaranteed by, the United States of
America for the payment of which guarantee or obligation
the full faith and credit of the United States is pledged
<PAGE> 102
("U.S. Government obligations") maturing as to principal,
premium, if any, and interest in such amounts of money and
at such times as are sufficient without consideration of
any reinvestment of such interest, to pay principal of and
interest on the outstanding Securities not later than one
day before the due date of any payment, or (z) a
combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which
shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge principal of, premium, if
any, and interest on the outstanding Securities on the
Maturity Date or otherwise in accordance with the terms of
this Indenture and of such Securities; provided, however,
that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to
apply such money or the proceeds of such U.S. Government
obligations to said payments with respect to the
Securities;
(ii) no Default or Event of Default or event which
with notice or lapse of time or both would become a
Default or an Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit or, insofar as Section 7.01(vi) or
(vii) is concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed
satisfied until the expiration of such period);
(iii) such legal defeasance or covenant defeasance
shall not cause the Trustee to have a conflicting interest
with respect to any Securities of the Company or any
Subsidiary Guarantor;
(iv) such legal defeasance or covenant defeasance
shall not result in a breach or violation of, or
constitute a Default or Event of Default under, this
Indenture or any other material agreement or instrument to
which the Company or any Subsidiary Guarantor is a party
or by which it is bound (and in that connection, the
Trustee shall have received a certificate from the Credit
Agent to that effect with respect to such Credit Agreement
if then in effect);
(v) in the case of an election under paragraph (b)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has
<PAGE> 103
received from, or there has been published by, the
Internal Revenue Service a ruling or (y) since the Issue
Date, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders
of the outstanding Securities will not recognize income,
gain or loss for Federal income tax purposes as a result
of such legal defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at
the same times as would have been the case if such legal
defeasance had not occurred;
(vi) in the case of an election under paragraph (c)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant
defeasance had not occurred;
(vii) in the case of an election under either
paragraph (b) or (c) above, an Opinion of Counsel to the
effect that after the 91st day following the deposit
(A) the trust funds will not be subject to any rights of
holders of Senior Indebtedness or Guarantor Senior
Indebtedness, including, without limitation, those arising
under this Indenture and (y) the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(viii) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under
paragraph (c) above, as the case may be, have been
complied with; and
(ix) the Company shall have delivered to the Trustee
an Officer's Certificate stating that the deposit was not
made by the Company with the intent of preferring the
Holders of the Securities over other creditors of the
Company or any Subsidiary Guarantor or with the intent of
defeating, hindering, delaying or defrauding creditors of
the Company, any Subsidiary Guarantor or others.
(e) All money and U.S. Government obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
<PAGE> 104
paragraph (e), the "Trustee") pursuant to paragraph (d) above
in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (other than the Company or
any Affiliate of the Company), to the Holders of such
Securities of all sums due and to become due thereon in respect
of principal, premium and interest, but such money need not be
segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Government obligations deposited pursuant to
paragraph (d) above or the principal, premium, if any, and
interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the
Holders of the outstanding Securities. The Company's
obligation to pay and indemnify the Trustee as set forth in
this paragraph shall survive the termination of this Indenture
and the Securities.
Anything in this Section 9.02 to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon the request, in writing, by the
Company any money or U.S. Government obligations held by it as
provided in paragraph (d) above which, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal
defeasance or covenant defeasance.
SECTION 9.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S.
Government obligations deposited with it pursuant to Sections
9.01 and 9.02, and shall apply the deposited money and the
money from U.S. Government obligations in accordance with this
Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION 9.04. Repayment to Company or Subsidiary
Guarantors._______________________
Subject to Sections 8.07, 9.01 and 9.02, the Trustee
shall promptly pay to the Company, or if deposited with the
Trustee by any Subsidiary Guarantor, to such Guarantor, upon
receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Section 9.02, held by it
<PAGE> 105
at any time. The Trustee and the Paying Agent shall pay to the
Company or any Subsidiary Guarantor, as the case may be, upon
receipt by the Trustee or the Paying Agent, as the case may be,
of an Officers' Certificate, any money held by it for the
payment of principal, premium, if any, or interest that remains
unclaimed for two years after payment to the Holders is
required; provided, however, that the Trustee and the Paying
Agent before being required to make any payment may, but need
not, at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York
or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining will be repaid to the Company. After payment to
the Company or any Subsidiary Guarantor, as the case may be,
Securityholders entitled to money must look solely to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person, and all
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 9.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government obligations in accordance with this
Indenture 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, then and only then the Company's and each
Subsidiary Guarantor's, if any, obligations under this
Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture
until such time as the Trustee is permitted to apply all such
money or U.S. Government obligations in accordance with this
Indenture; provided, however, that if the Company or the
Subsidiary Guarantors, as the case may be, has made any payment
of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company or
the Subsidiary Guarantors, as the case may be, shall be,
subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government
obligations held by the Trustee or Paying Agent.
<PAGE> 106
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
The Company and the Subsidiary Guarantors, 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 Securityholder:
(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 Six and Section 11.06;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(4) to make any other change that does not adversely
affect the rights of any Securityholder in any material
respect; or
(5) to comply with any requirements of the
Commission in connection with the qualification of this
Indenture under the TIA;
provided that the Company has delivered to the Trustee an
Opinion of Counsel stating that such amendment or supplement
complies with the provisions of this Section 10.01.
SECTION 10.02. With Consent of Holders.
Subject to Section 7.07, the Company and each
Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together with the written consent of the
Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Securities, may amend or supplement,
or waive compliance with any provision of, this Indenture, the
Securities or any Guarantee without notice to any other
Securityholders; provided that without the consent of Holders
of not less than two thirds in aggregate principal amount of
Securities then outstanding, no such amendment, supplement or
waiver may release any Subsidiary Guarantor from any of its
obligations under its Guarantee or this Indenture other than in
accordance with the terms of such Guarantee and this Indenture;
provided, further, that without the consent of Holders of not
less than 75% in aggregate principal amount of the Securities
<PAGE> 107
then outstanding, no such amendment, supplement or waiver may
change the Change of Control Payment Date or the purchase price
in connection with any repurchase of Securities pursuant to
Section 5.15 in a manner adverse to any Holder or waive a
Default or Event of Default resulting from a failure to comply
with Section 5.15. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver,
including a waiver pursuant to Section 7.04, may:
(1) change the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver
of any provision of this Indenture, the Securities or the
Guarantees;
(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 in this Indenture 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 7.04, 7.07 or this
Section 10.02;
(7) make the principal of, or the interest on any
Security payable with anything or in any manner other than
as provided for in this Indenture, the Securities and the
Guarantees as in effect on the date hereof; or
(8) modify the subordination provisions of this
Indenture (including the related definitions) so as to
adversely affect the ranking of any Security or Guarantee;
provided, however, that it is understood that any
amendment the purpose of which is to permit the incurrence
of additional Indebtedness under this Indenture shall not
be construed as adversely affecting the ranking of any
Security of Guarantee
The Company and each Subsidiary Guarantor agree that
no amendment, supplement or waiver under this Article Ten may
make any change that adversely affects the rights under Article
Four or Twelve of any holder of Senior Indebtedness or any
<PAGE> 108
Guarantor Senior Indebtedness unless the holders of such Senior
Indebtedness or Guarantor Senior Indebtedness consent to the
change.
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.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company 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 Ten, the Company 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.
SECTION 10.03. Compliance with TIA.
From the date on which the Indenture is qualified
under the TIA, every amendment, waiver or supplement of this
Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 10.04. 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 the Company
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.
The Company 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
<PAGE> 109
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 Securityholder, unless it makes
a change described in any of clauses (1) through (8) of Section
10.02, 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.
SECTION 10.05. 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 the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.
SECTION 10.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement
or waiver authorized pursuant to this Article Ten; 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
Indenture. 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 Ten is authorized or
permitted by this Indenture.
<PAGE> 110
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally,
jointly and severally, guarantees (such guarantee to be
referred to herein as the "Guarantee"), subject to Article
Twelve, to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, the Securities or the obligations of the Company
hereunder or thereunder, that: (i) the principal of and
interest on the Securities will be promptly paid in full when
due, subject to any applicable grace period, whether at
maturity, by acceleration or otherwise and interest on the
overdue principal, if any, and interest on any interest, to the
extent lawful, of the Securities and all other obligations of
the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case
of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of
clauses (i) and (ii) above, to the limitations set forth in
Section 11.05. Each Subsidiary Guarantor hereby agrees that
its obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Securities
or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities
with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor. Each
Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and in
this Guarantee. If any Securityholder or the Trustee is
required by any court or otherwise to return to the Company,
any Subsidiary Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to the Company or
any Subsidiary Guarantor, any amount paid by the Company or any
<PAGE> 111
Subsidiary Guarantor to the Trustee or such Securityholder,
this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor
further agrees that, as between each Subsidiary Guarantor, on
the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article Seven for the purposes of
this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article Seven,
such obligations (whether or not due and payable) shall
forthwith become due and payable by each Subsidiary Guarantor
for the purpose of this Guarantee.
SECTION 11.02. Subordination of Guarantee.
The obligations of each Subsidiary Guarantor to the
Holders of Securities pursuant to the Guarantee and this
Indenture are expressly subordinate and subject in right of
payment to the prior payment in full of all Guarantor Senior
Indebtedness of such Subsidiary Guarantor, to the extent and in
the manner provided in Article Twelve.
SECTION 11.03. Severability.
In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.04. Release of a Subsidiary Guarantor.
Upon (i) the release by the lenders under the Term
Loans, related documents and future refinancings thereof of all
guarantees of a Subsidiary Guarantor and all Liens on the
property and assets of such Subsidiary Guarantor relating to
such Indebtedness, or (ii) the sale or disposition (whether by
merger, stock purchase, asset sale or otherwise) of a
Subsidiary Guarantor (or all or substantially all its assets)
to an entity which is not a Subsidiary of the Company and which
sale or disposition is otherwise in compliance with the terms
of this Indenture, such Subsidiary Guarantor shall be deemed
released from all obligations under this Article Eleven without
any further action required on the part of the Trustee or any
Holder; provided, however, that any such termination shall
occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under
all of its pledges of assets or other security interests which
<PAGE> 112
secure, such Indebtedness of the Company shall also terminate
upon such release, sale or transfer.
The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as
to the compliance with this Section 11.04. Any Subsidiary
Guarantor not so released remains liable for the full amount of
principal of and interest on, and all other obligations under,
the Securities as provided in this Article Eleven.
SECTION 11.05. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance
hereof each Holder hereby confirms that it is the intention of
all such parties that the guarantee by such Subsidiary
Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such
Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor (including, but not limited to, the
Guarantor Senior Indebtedness of such Subsidiary Guarantor) and
after giving effect to any collections from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its
Guarantee or pursuant to Section 11.07, result in the
obligations of such Subsidiary Guarantor under the Guarantee
not constituting such fraudulent transfer or conveyance.
SECTION 11.06. Subsidiary Guarantors May Consolidate,
etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale or conveyance of
the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to the Company or another
Subsidiary Guarantor. Upon any such consolidation, merger,
sale or conveyance, the Guarantee given by such Subsidiary
Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article Five and Article
Six hereof, nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
<PAGE> 113
Subsidiary Guarantor with or into a corporation or corporations
other than the Company or another Subsidiary Guarantor (whether
or not affiliated with the Subsidiary Guarantor); provided,
however, that, subject to Sections 11.04 and 11.06(a),
(i) immediately after such transaction, and giving effect
thereto, no Default or Event of Default shall have occurred as
a result of such transaction and be continuing, and (ii) upon
any such consolidation, merger, sale or conveyance, the
Subsidiary Guarantee set forth in this Article Eleven, and the
due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by
such Subsidiary Guarantor, shall be expressly assumed (in the
event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to
the Trustee, by the corporation formed by such consolidation,
or into which the Subsidiary Guarantor shall have merged, or by
the corporation that shall have acquired such property. In the
case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee
and satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had been
named herein as a Subsidiary Guarantor; provided, however, that
solely for purposes of computing amounts described in subclause
(c) of the first paragraph of Section 5.03, any such successor
corporation shall only be deemed to have succeeded to and be
substituted for any Subsidiary Guarantor with respect to
periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
SECTION 11.07. Contribution.
In order to provide for just and equitable
contribution among the Subsidiary Guarantors, the Subsidiary
Guarantors agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Guarantor (a "Funding
Guarantor") under the Guarantee, such Funding Guarantor shall
be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net
Assets of each Subsidiary Guarantor (including the Funding
Guarantor) for all payments, damages and expenses incurred by
that Funding Guarantor in discharging the Company's obligations
with respect to the Securities or any other Subsidiary
Guarantor's obligations with respect to the Guarantee.
"Adjusted Net Assets" with respect to the Guarantee of such
Subsidiary Guarantor at any date shall mean the lesser of the
<PAGE> 114
amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after
giving effect to all other fixed and contingent liabilities
incurred or assumed on such date (other than liabilities of
such Subsidiary Guarantor under Indebtedness which constitutes
Subordinated Indebtedness with respect to such Guarantee)), but
excluding liabilities under the Guarantee, of such Subsidiary
Guarantor at such date and (y) the present fair salable value
of the assets of such Subsidiary Guarantor at such date exceeds
the amount that will be required to pay the probable liability
of such Subsidiary Guarantor on its debts (after giving effect
to all other fixed and contingent liabilities incurred or
assumed on such date (other than liabilities of such Subsidiary
Guarantor under Indebtedness which constitutes Subordinated
Indebtedness with respect to such Guarantee) and after giving
effect to any collection from any Subsidiary of such Subsidiary
Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding debt in respect of the
Guarantee of such Subsidiary Guarantor, as they become absolute
and matured.
SECTION 11.08. Waiver of Subrogation.
Each Subsidiary Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment,
performance or enforcement of such Subsidiary Guarantor's
obligations under the Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in
any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be
paid to any Subsidiary Guarantor in violation of the preceding
sentence and the Securities shall not have been paid in full,
such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for
the benefit of, the Holders of the Securities, and shall,
subject to the provisions of Section 11.02, Article Four and
Article Twelve, forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the
Securities, whether matured or unmatured, in accordance with
the terms of this Indenture. Each Subsidiary Guarantor
acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by this Indenture
<PAGE> 115
and that the waiver set forth in this Section 11.08 is
knowingly made in contemplation of such benefits.
SECTION 11.09. Execution of Guarantee.
To evidence their guarantee to the Securityholders
set forth in this Article Eleven, the Subsidiary Guarantors
hereby agree to execute the Guarantee in substantially the form
included in Exhibit A, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each
Subsidiary Guarantor hereby agrees that its Guarantee set forth
in this Article Eleven shall remain in full force and effect
notwithstanding any failure to endorse on each Security a
notation of such Guarantee. Each such Guarantee shall be
signed on behalf of each Subsidiary Guarantor by two Officers,
or an Officer and an Assistant Secretary or one Officer shall
sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to such Guarantee prior to the
authentication of the Security on which it is endorsed, and the
delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of such Guarantee on behalf of such Subsidiary Guarantor. Such
signatures upon the Guarantee may be by manual or facsimile
signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee, and in case any such officer who
shall have signed the Guarantee shall cease to be such officer
before the Security on which such Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or
disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person
who signed the Guarantee had not ceased to be such officer of
the Subsidiary Guarantor.
SECTION 11.10. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor 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 each such
Subsidiary Guarantor from performing its Guarantee as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) each such Subsidiary Guarantor 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
<PAGE> 116
the execution of every such power as though no such law had
been enacted.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Guarantee Obligations Subordinated
to Guarantor Senior Indebtedness.
Anything herein to the contrary notwithstanding, each
of the Subsidiary Guarantors, for itself and its successors,
and each Holder, by his acceptance of Guarantees, agrees, that
any payment of Obligations by a Subsidiary Guarantor in respect
of its Guarantee (collectively, as to any Subsidiary Guarantor,
its "Guarantee obligations") is subordinated, to the extent and
in the manner provided in this Article Twelve, to the prior
payment in full in cash or Cash Equivalents of all Guarantor
Senior Indebtedness of such Subsidiary Guarantor.
This Article Twelve shall constitute a continuing
offer to all persons who become holders of, or continue to
hold, Guarantor Senior Indebtedness, and such provisions are
made for the benefit of the holders of Guarantor Senior
Indebtedness and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
The obligations of the Subsidiary Guarantors to the
Trustee under Section 8.07 shall not be subject to the
provisions of this Article Twelve.
SECTION 12.02. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness in Default.
(a) Unless Section 12.03 shall be applicable, upon
(1) the occurrence of a Payment Default with respect to any
Designated Senior Indebtedness or Significant Senior
Indebtedness guaranteed by a Subsidiary Guarantor (which
guarantee consititutes Guarantor Senior Indebtedness of such
Subsidiary Guarantor) and (2) receipt by the Trustee, the
Company and such Subsidiary Guarantor from the Representatives
of written notice of such occurrence, then no payment (other
than payments previously made pursuant to Article Nine hereof)
or distribution of any assets of such Subsidiary Guarantor of
any kind or character shall be made by such Subsidiary
Guarantor on account of Obligations on the Securities or on
account of the purchase, redemption or other acquisition of
Securities or any of the obligations of such Subsidiary
<PAGE> 117
Guarantor under this Guarantee unless and until such Payment
Default shall have been cured or waived or shall have ceased to
exist or such Guarantor Senior Indebtedness shall have been
discharged or paid in full in cash or Cash Equivalents, after
which such Guarantor shall resume making any and all required
payments in respect of its obligations under this Guarantee.
(b) Unless Section 12.03 shall be applicable upon
(1) the occurrence of a Non-payment Default with respect to any
Designated Senior Indebtedness guaranteed by a Subsidiary
Guarantor (which guarantee constitutes Guarantor Senior
Indebtedness of such Subsidiary Guarantor) and (2) the earlier
of (i) receipt by the Trustee, the Company and such Subsidiary
Guarantor from the Representatives of written notice of such
occurrence stating that such notice is a "Payment Blockage
Notice" pursuant to Sections 4.02(b) and 12.02(b) of this
Indenture or (ii) if such Non-payment Default results from the
acceleration of the Securities, the date of the acceleration of
the Securities, no payment (other than payments previously made
pursuant to Article Nine hereof) or distribution of any assets
of such Subsidiary Guarantor of any kind or character shall be
made by such Guarantor on account of principal, premium, if
any, or interest on the Securities or on account of the
purchase, redemption or other acquisition of Securities or on
account of any of the other obligations of such Subsidiary
Guarantor under this Guarantee for a period ("Guarantor Payment
Blockage Period") commencing on the date of receipt by the
Trustee of such notice or the date of the acceleration referred
to in clause (ii) above, as the case may be, unless and until
the earlier to occur of the following events: (w) 179 days
shall have elapsed since receipt of such written notice by the
Trustee or the date of the acceleration of the Securities, as
the case may be (provided such Guarantor Senior Indebtedness
shall theretofore not have been accelerated), (x) such Non-
payment Default shall have been cured or waived or shall have
ceased to exist, (y) such Guarantor Senior Indebtedness shall
have been discharged or paid in full in cash or Cash
Equivalents or (z) such Guarantor Payment Blockage Period shall
have been terminated by written notice to the Guarantor or the
Trustee from the Representative initiating such Guarantor
Payment Blockage Period, or the holders of at least a majority
in principal amount of such issue of such Guarantor Senior
Indebtedness, after which, in the case of clause (w), (x), (y)
or (z), the Subsidiary Guarantor shall resume making any and
all required payments in respect of its obligations under this
Guarantee. Notwithstanding any other provisions of this
Indenture, only one Guarantor Payment Blockage Period may be
commenced within any consecutive 365 day period and no Non-
payment Default with respect to Guarantor Senior Indebtedness
guaranteed by any Subsidiary Guarantor (which guarantee
<PAGE> 118
constitutes Guarantor Senior Indebtedness of such Subsidiary
Guarantor) which existed or was continuing on the date of the
commencement of any Guarantor Payment Blockage Period shall be,
or be made, the basis for the commencement of a second
Guarantor Payment Blockage Period, whether or not within a
period of 365 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than
90 consecutive days. In no event shall a Guarantor Payment
Blockage Period extend beyond 179 days from the date of the
receipt of the notice or the date of the acceleration of the
Securities referred to in clause (2) hereof.
(c) In the event that, notwithstanding the
foregoing, the Trustee or the Holder of any Security shall have
received any payment prohibited by the foregoing provisions of
this Section 12.02, then and in such event such payment shall
be paid over and delivered forthwith to the Representatives or
as a court of competent jurisdiction shall direct.
SECTION 12.03. Guarantee Obligations Subordinated to Prior
Payment of All Guarantor Senior Indebtedness
on Dissolution, Liquidation or Reorganization
of Such Subsidiary Guarantor.________________
Upon any payment or distribution of assets of any
Subsidiary Guarantor of any kind or character, whether in cash,
property or securities upon any dissolution, winding up, total
or partial liquidation or reorganization of such Subsidiary
Guarantor and whether voluntary or involuntary (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 such
Subsidiary Guarantor and whether voluntary or involuntary):
(a) the holders of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor shall first be entitled to
receive payments in full in cash or Cash Equivalents of
all amounts payable under Guarantor Senior Indebtedness
(including, with respect to Designated Senior Indebtedness
guaranteed by such Subsidiary Guarantor, any interest
accruing after the commencement of any such proceeding at
the rate specified in the applicable Designated Senior
Indebtedness whether or not interest is an allowed claim
enforceable against the Company in any such proceeding)
before the Holders will be entitled to receive any payment
with respect to the Guarantee (excluding Permitted
Subordinated Reorganization Securities), and until all
Obligations with respect to the Guarantor Senior
Indebtedness are paid in full in cash or Cash Equivalents,
any distribution to which the Holders would be entitled
<PAGE> 119
(excluding Permitted Subordinated Reorganization
Securities) shall be made to the holders of Guarantor
Senior Indebtedness; provided, however, that no payment by
any other Subsidiary Guarantor or the Company shall
constitute payment on behalf of such Subsidiary Guaranty
for purposes of this Section 12.03(a);
(b) any payment or distribution of assets of such
Subsidiary Guarantor 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
(excluding Permitted Subordinated Indebtedness) except for
the provisions of this Article Twelve, shall be paid by
the liquidating trustee or agent or other person making
such a payment or distribution, directly to the holders of
Guarantor Senior Indebtedness of such Subsidiary Guarantor
or their Representative, ratably according to the
respective amounts of such Guarantor Senior Indebtedness
remaining unpaid held or represented by each, until all
such Guarantor Senior Indebtedness remaining unpaid shall
have been paid in full in cash or Cash Equivalents after
giving effect to any concurrent payment or distribution to
the holders of such Guarantor Senior Indebtedness;
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of such
Subsidiary Guarantor of any kind or character, whether in
cash, property or securities, shall be received by the
Trustee or the Holders or any Paying Agent in respect of
payment of the Guarantee before all Guarantor Senior
Indebtedness of such Subsidiary Guarantor is paid in full
in cash or Cash Equivalents, such payment or distribution
(subject to the provisions of Sections 12.06 and 12.07)
shall be received, segregated from other funds, and held
in trust by the Trustee or such Holder or Paying Agent for
the benefit of, and shall immediately be paid over to, the
holders of such Guarantor Senior Indebtedness or their
Representative, ratably according to the respective
amounts of such Guarantor Senior Indebtedness held or
represented by each, until all such Guarantor Senior
Indebtedness remaining unpaid shall have been paid in full
in cash or Cash Equivalents, after giving effect to any
concurrent payment or distribution to the holders of
Guarantor 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
<PAGE> 120
pay over such payment over to, the holders of such
Guarantor Senior Indebtedness or their Representative.
Each Subsidiary Guarantor shall give prompt notice to
the Trustee prior to any dissolution, winding up, total or
partial liquidation or total or reorganization (including,
without limitation, in bankruptcy, insolvency, or receivership
proceedings or upon any assignment for the benefit of creditors
or any other marshalling of such Subsidiary Guarantor's assets
and liabilities).
SECTION 12.04. Holders of Guarantee Obligations To Be
Subrogated to Rights of Holders of
Guarantor Senior Indebtedness.
Subject to the payment in full in cash or Cash
Equivalents of all Guarantor Senior Indebtedness, the Holders
of Guarantee obligations of a Subsidiary Guarantor shall be
subrogated to the rights of the holders of Guarantor Senior
Indebtedness of such Subsidiary Guarantor to receive payments
or distributions of assets of such Subsidiary Guarantor
applicable to such Guarantor Senior Indebtedness until all
amounts owing on or in respect of the Guarantee obligations
shall be paid in full in cash, and for the purpose of such
subrogation no payments or distributions to the holders of such
Guarantor Senior Indebtedness by or on behalf of such
Subsidiary Guarantor, or by or on behalf of the Holders by
virtue of this Article Twelve, which otherwise would have been
made to the Holders, shall, as between such Subsidiary
Guarantor and the Holders, be deemed to be payment by such
Subsidiary Guarantor to or on account of such Guarantor Senior
Indebtedness, it being understood that the provisions of this
Article Twelve are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand,
and the holders of such Guarantor 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 Twelve shall have been applied, pursuant to the
provisions of this Article Twelve, to the payment of all
amounts payable under such Guarantor Senior Indebtedness, then
the Holders shall be entitled to receive from the holders of
such Guarantor Senior Indebtedness any payments or
distributions received by such holders of such Guarantor Senior
Indebtedness in excess of the amount sufficient to pay all
amounts payable under or in respect of such Guarantor Senior
Indebtedness in full in cash or Cash Equivalents.
<PAGE> 121
SECTION 12.05. Obligations of the Subsidiary
Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere
in this Indenture or in the Guarantees is intended to or shall
impair, as between the Subsidiary Guarantors and the Holders,
the obligation of the Subsidiary Guarantors, which is absolute
and unconditional, to pay to the Holders all amounts due and
payable under the Guarantees 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 the Subsidiary Guarantors other than the holders
of the Guarantor 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 rights, if any, under this
Article Twelve, of the holders of Guarantor Senior Indebtedness
in respect of cash, property or securities of the Subsidiary
Guarantors received upon the exercise of any such remedy. Upon
any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article Twelve, the Trustee,
subject to the provisions of Sections 8.01 and 8.02, 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 Guarantor Senior Indebtedness and other Indebtedness
of any Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article Twelve.
Nothing in this Section 12.05 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 8.07.
SECTION 12.06. 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 notice thereof
from the Company or any Subsidiary Guarantor or from one or
more holders of Guarantor Senior Indebtedness or from any
Representative therefor and, prior to the receipt of any such
notice, the Trustee, subject to the provisions of Sections 8.01
and 8.02, shall be entitled in all respects conclusively to
assume that no such fact exists.
<PAGE> 122
SECTION 12.07. 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 Sections 9.01 and 9.02 shall be for the sole
benefit of Securityholders and, to the extent allocated for the
payment of Securities, shall not be subject to the
subordination provisions of this Article Twelve. Otherwise,
any deposit of assets or securities by or on behalf of a
Subsidiary Guarantor with the Trustee or any Paying Agent
(whether or not in trust) for payment of the Guarantee shall be
subject to the provisions of this Article Twelve; 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
12.06, 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 the Company or any Subsidiary or Affiliate of the
Company is acting as Paying Agent. Nothing contained in this
Section 12.07 shall limit the right of the holders of Guarantor
Senior Indebtedness to recover payments as contemplated by this
Article Twelve.
SECTION 12.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Guarantor Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any
Subsidiary Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any non-compliance by any
Subsidiary Guarantor with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection
(a) of this Section 12.08, the holders of Guarantor Senior
Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of
the Securities and without impairing or releasing the
subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Securities to the
<PAGE> 123
holders of Guarantor Senior Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Guarantor Senior Indebtedness or any instrument evidencing the
same or any agreement under which Guarantor Senior Indebtedness
is outstanding; (2) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing
Guarantor Senior Indebtedness; (3) release any person liable in
any manner for the collection or payment of Guarantor Senior
Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other person; provided,
however, that in no event shall any such actions limit the
right of the Holders of the Securities to take any action to
accelerate the maturity of the Securities pursuant to Article
Seven hereof or to pursue any rights or remedies hereunder or
under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
(c) Each Holder by accepting a Security agrees that
the Representative of any Guarantor Senior Indebtedness
(including without limitation, the Credit Agent), in its
discretion, without notice or demand and without affecting any
rights of any holder of Guarantor Senior Indebtedness under
this Article Twelve, 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 Guarantor Senior
Indebtedness or by any holder of any Guarantor Senior
Indebtedness against such Holder of this Article Twelve 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 12.09. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.
Each Holder of the Guarantee obligations by his
acceptance thereof 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 Twelve, and appoints the Trustee his
attorney-in-fact for such purpose, including, in the event of
any dissolution, winding up, liquidation or reorganization of
any Subsidiary Guarantor (whether in bankruptcy, insolvency or
<PAGE> 124
receivership proceedings or upon an assignment for the benefit
of creditors or any other marshalling of assets and liabilities
of any Subsidiary Guarantor) tending towards liquidation or
reorganization of the business and assets of any Subsidiary
Guarantor, the immediate filing of a claim for the unpaid
balance under its or his Guarantee 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 Guarantor Senior Indebtedness
or their Representative is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said
Guarantee obligations. Nothing herein contained shall be
deemed to authorize the Trustee or the holders of Guarantor
Senior Indebtedness or their Representative to authorize or
consent to or accept or adopt on behalf of any holder of
Guarantee obligations any plan of reorganization, arrangement,
adjustment or composition affecting the Guarantee obligations
or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Guarantor Senior Indebtedness or
their Representative to vote in respect of the claim of any
holder of Guarantee obligations in any such proceeding.
SECTION 12.10. Right of Trustee To Hold Guarantor
Senior Indebtedness.
The Trustee shall be entitled to all of the rights
set forth in this Article Twelve in respect of any Guarantor
Senior Indebtedness at any time held by it to the same extent
as any other holder of Guarantor Senior Indebtedness, and
nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
SECTION 12.11. No Suspension of Remedies.
The failure to make a payment in respect of the
Guarantees by reason of any provision of this Article Twelve
shall not be construed as preventing the occurrence of a
Default or an Event of Default under Section 7.01.
Nothing contained in this Article Twelve shall limit
the right of the Trustee or the Holders of Securities to take
any action to accelerate the maturity of the Securities
pursuant to Article Seven or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if
any, under this Article Twelve of the holders, from time to
time, of Guarantor Senior Indebtedness.
<PAGE> 125
SECTION 12.12. No Fiduciary Duty of Trustee to Holders
of Guarantor Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Guarantor 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 Guarantee
obligations or the Company or any other person, money or assets
to which any holders of Guarantor Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
Nothing in this Section 12.12 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
Guarantor Senior Indebtedness or their Representative.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with the duties imposed by operation of Section
3.18(c) of the TIA, the imposed duties shall control.
SECTION 13.02. 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:
if to the Company or any Subsidiary Guarantor:
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mark A. Resnik
<PAGE> 126
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
if to the Credit Agent:
Bankers Trust Company
130 Liberty Street, 14th Floor
New York, NY 10006
Attention: [Mary Jo Jolly]
with copy to: Bankers Trust Company
300 S. Grand Ave., 41st Floor
Los Angeles, CA 90071
Attn: Eric S. Swanson
Each of the Company, the Trustee, the Subsidiary
Guarantors and the Credit Agent by written notice to each other
such person may designate additional or different addresses for
notices to such person. Any notice or communication to the
Company, the Trustee, the Subsidiary Guarantors and the Credit
Agent 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 Security-
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
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA
{ 312(b) with other Securityholders with respect to their
rights under this Indenture or the Securities. The Company,
<PAGE> 127
the Subsidiary Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA { 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent.______________________________
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
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
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
SECTION 13.05. 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 5.07, 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 convenant 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.
<PAGE> 128
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by
or at a meeting of Securityholders. The Paying Agent or
Registrar may make reasonable rules for its functions.
SECTION 13.07. 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 13.08. 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.
SECTION 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of any of the Company or any
of its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
A director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any
liability for any obligations of the Company 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 Securityholder 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 13.11. Successors.
All agreements of the Company and each Subsidiary
Guarantor in this Indenture and the Securities shall bind their
<PAGE> 129
respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 13.12. 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 13.13. 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.
SECTION 13.14. No Violation.
Notwithstanding the provisions of this Indenture, in
no event shall any transaction, agreement, payment or other
event to be consummated, entered into or made in connection
with the Merger or any financing thereof be considered a
violation of any provision of this Indenture or constitute a
Change of Control hereunder.
<PAGE> 130
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.
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
------------------------------------
Name:
Title:
Attest: /s/ George G. Golleher
------------------------
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By: /s/ Christine C. Collins
------------------------------------
Name: Christine C. Collins
Title: Assistance Vice President
Attest: /s/ Christine C. Collins
------------------------
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
<PAGE> 131
By: /s/ Mark A. Resnik
--------------------------------
Name:
(for each of the above-
listed Subsidiary Guarantors)
Attest: /s/ George G. Golleher
----------------------
(for each of the
above-listed
Subsidiary Guarantors)
<PAGE> 132
EXHIBIT A
[FORM OF NOTE]
FOOD 4 LESS SUPERMARKETS, INC.
13.75% Senior Subordinated Note
due 2005
No. $
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company", which term includes any successor
corporation), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on
June 15, 2005.
Interest Payment Dates: June 15 and December 15
commencing December 15, 1995.
Record Dates: June 1 and December 1.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
A-1
<PAGE> 133
IN WITNESS WHEREOF, the Company has caused this
Security to be signed manually or by facsimile by its duly
authorized officers.
Dated: June 14, 1995
FOOD 4 LESS SUPERMARKETS, INC.
By:
Name:
Title:
By:
Name:
Title:
A-2
<PAGE> 134
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By
Authorized Signatory
A-3
<PAGE> 135
FOOD 4 LESS SUPERMARKETS, INC.
13.75% Senior Subordinated Note
due 2005
1. Interest.
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on each
June 15 and December 15 of each year (the "Interest Payment
Date"), commencing December 15, 1995, to the Holders of record
on the immediately preceding June 1 and December 1. Interest
on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid,
from the date of issuance of the Securities. Interest will be
computed on the basis of a 360-day year comprised of twelve
30-day months.
The Company shall pay interest on overdue principal
and interest on overdue installments of interest, to the extent
lawful, at a rate equal to the rate of interest otherwise
payable on the Securities.
2. Method of Payment.
The Company 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. The Company 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"). However, the Company may pay principal and interest
by wire transfer of Federal funds, or interest by its check
payable in such U.S. Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. Notwithstanding the foregoing,
the Company shall pay or cause to be paid all amounts payable
with respect to non-DTC eligible Securities by wire transfer of
Federal funds to the account of the Holders of such Securities.
A-4
<PAGE> 136
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York
(the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying
Agent, Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture,
dated as of June 1, 1995 (the "Indenture"), among the Company,
the Subsidiary Guarantors and the Trustee. 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 Securities are
general unsecured obligations of the Company limited in
aggregate principal amount to $ . Payment on each
Security is guaranteed on a senior subordinated basis, jointly
and severally, by the Subsidiary Guarantors pursuant to Article
Eleven of the Indenture.
5. Optional Redemption.
On or after June 15, 1996 the Securities may be
redeemed in whole at any time or in part from time to time, at
the option of the Company, at a redemption price equal to the
applicable percentage of the principal amount thereof set forth
below, together with accrued and unpaid interest to the
Redemption Date, if redeemed during the 12 months commencing on
June 15 in the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
1996 ...................... 106.111%
1997 ...................... 104.583%
1998 ...................... 103.056%
1999 ...................... 101.528%
and thereafter ............ 100.000%
</TABLE>
A-5
<PAGE> 137
The documents evidencing Senior Indebtedness will
restrict the Company's ability to optionally redeem the
Securities.
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 and
payment of the Securities called for redemption is not
prohibited under Article Four or Article Twelve of the
Indenture, then, unless the Company 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.
Upon the occurrence of a Change of Control, each
Holder shall have the right to require the repurchase of such
Holder's Securities pursuant to a Change of Control Offer at a
purchase price equal to 101% of the principal amount thereof
plus accrued interest, if any, to the date of purchase. The
Company shall not be required to repurchase Securities until it
has complied with its covenants to repay in full all
Indebtedness of the Company and its Subsidiaries under the
Credit Agreement or offer to repay in full all such
Indebtedness and repay the Indebtedness of each lender who has
accepted its offer to repay such Indebtedness or to obtain the
requisite consent under the Credit Agreement to permit the
repurchase of the Securities pursuant to a Change of Control
Offer. In addition, prior to purchasing the Securities
tendered in a Change of Control Offer, the Company shall
purchase all Senior Notes (or permitted refinancings thereof)
which it is required to purchase by reason of such Change of
Control.
8. Limitation on Asset Sales.
Under certain circumstances the Company is required
to apply the net proceeds from Asset Sales to the repayment of
A-6
<PAGE> 138
Pari Passu Indebtedness or Senior Indebtedness, to make Related
Business Investments, an investment in properties and assets
that replace the properties and assets that are the subject of
such Asset Sale, an investment in properties and assets that
will be used in the business of the Company and its
Subsidiaries existing on the Issue Date or in a business
reasonably related thereto or to purchase in a Net Proceeds
Offer (at a price equal to 100% of the aggregate principal
amount thereof, plus accrued interest to the date of purchase)
such aggregate principal amount of Securities which, when added
to the accrued interest thereon, shall be equal to the net
proceeds required to be applied thereto.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without
coupons, in denominations of $1,000 and integral multiples of
$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.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated
as the owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying
Agents will pay the money back to the Company at its request.
After that, all liability of the Trustee and such Paying Agents
with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company 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, the Company will be
discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding
A-7
<PAGE> 139
its obligation to pay the principal of and interest on the
Securities).
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the
Securities and the Guarantees 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 a majority in aggregate principal amount 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 Six or Section 11.06 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.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments
in respect of its Capital Stock and merge or consolidate with
any other person and sell, lease, transfer or otherwise dispose
of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications
and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
15. Subordination.
The Securities will be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness
(as defined in the Indenture) of the Company. The Guarantees
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 Guarantor Senior Indebtedness (as defined in the Indenture).
To the extent and in the manner provided in the Indenture,
Senior Indebtedness, and in the case of payment by a Subsidiary
Guarantor, Guarantor Senior Indebtedness, must be paid before
any payment may be made to any Holder of this Security. Any
Securityholder by accepting this Security agrees to the
subordination and authorizes the Trustee to give it effect.
A-8
<PAGE> 140
16. 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.
17. 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 immediately in the manner 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 may require
indemnity satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the Securities then
outstanding may 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.
18. Trustee Dealings with Company.
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 the Company, its
Subsidiaries or their respective Affiliates as if it were not
the Trustee.
19. No Recourse Against Others.
No stockholder, director, officer, employee or
incorporator, as such, of the Company shall have any liability
for any obligation of the Company 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.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of
authentication on this Security.
A-9
<PAGE> 141
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, the
Company 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.
The Company 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 Supermarkets,
Inc., c/o The Yucaipa Companies, 10000 Santa Monica Boulevard,
Fifth Floor, Los Angeles, California 90067, Attn: Mark Resnik.
A-10
<PAGE> 142
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the
Indenture (the "Indenture") referred to in the Security upon
which this notation is endorsed and each hereinafter referred
to as a "Subsidiary Guarantor," which term includes any
successor person under the Indenture) have unconditionally
guaranteed on a senior subordinated basis (such guarantee by
each Subsidiary Guarantor being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal
of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the
Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms set
forth in Article Eleven and Article Twelve of the Indenture and
(ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that the same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the
Holders of Securities and to the Trustee pursuant to the
Guarantee and the Indenture are expressly set forth and are
expressly subordinated and subject in right of payment to the
prior payment in full of all Guarantor Senior Indebtedness of
such Subsidiary Guarantor, to the extent and in the manner
provided, in Article Eleven and Article Twelve of the
Indenture, and reference is hereby made to such Indenture for
the precise terms of the Guarantee therein made.
No stockholder, officer, director or incorporator, as
such, past, present or future, of any Subsidiary Guarantor
shall have any liability under the Guarantee by reason of his
or its status as such stockholder, officer, director or
incorporator.
A-11
<PAGE> 143
The Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the
Securities upon which the Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS MERCHANDISING, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS GM, INC.
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
A-12
<PAGE> 144
[FORM OF ASSIGNMENT]
To assign this Security fill in the form below:
I or we assign and transfer this Security to
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
(Print or type assignee's name, address and zip code)
Please insert Social Security or other
identifying number of assignee
_______________________________________
and irrevocably appoint _______________________ agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated:____________________ Signature:__________________________
______________________________________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:__________________________________________
A-13
<PAGE> 145
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 5.15 or Section 5.16 of the
Indenture, as the case may be, check the appropriate box below:
Section 5.15 [ ] Section 5.16 [ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 5.15 or
Section 5.16 of the Indenture, as the case may be, state the
amount you want to be purchased:
$
<TABLE>
<S> <C>
Date:__________ Signature:____________________________
(Sign exactly as your name
appears on the face of
this Security)
</TABLE>
Signature Guarantee:______________________________________
A-14
<PAGE> 1
Exhibit 4.5.2
13.75% Senior Subordinated Notes
due 2005
______________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
to
INDENTURE
Dated as of June 1, 1995
______________________
RALPHS GROCERY COMPANY,
as successor by merger to Food 4 Less Supermarkets, Inc.
and
SUBSIDIARY GUARANTORS
and
CRAWFORD STORES, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
<PAGE> 2
This FIRST SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "First Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation ("Ralphs"),
as successor by merger to Food 4 Less Supermarkets, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors, Crawford Stores, Inc.,
a California corporation ("Crawford") and a wholly-owned subsidiary of Ralphs,
and United States Trust Company of New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of June 1, 1995
(the "Indenture"), between the Company, the Subsidiary Guarantors and the
Trustee, the Company issued $[145,000,000] principal amount of its 13.75%
Senior Subordinated Notes due 2005 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, the Company, Ralphs Supermarkets, Inc., a
Delaware corporation ("RSI"), and the stockholders of RSI, the Company merged
with and into RSI, and immediately thereafter Ralphs Grocery Company, a
Delaware corporation ("RGC"), which was a wholly-owned subsidiary of RSI,
merged with and into RSI and RSI changed its name to Ralphs Grocery Company
(together, the "Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 6.01 of the Indenture. Section 6.02 of the Indenture
provides that upon any consolidation or merger, or any transfer of assets in
accordance with Section 6.01 thereof, the successor person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to and be substituted for, and may exercise every right and
power of the Company under the Indenture with the same effect as if such
successor person had been named as the Company therein. Section 6.02 also
provides that when a successor corporation assumes all of the obligations of
the Company under the Indenture and under the Securities, and agrees to be
bound thereby, the predecessor shall be released from such obligations.
E. Following the Merger, the obligations under the
Indenture assumed by Ralphs hereby will rank pari passu in right of payment
with the obligations to be assumed by Ralphs under the indentures governing the
9% Senior Subordinated Notes due 2003 of RGC, the 10.25% Senior Subordinated
Notes due 2002 of RGC, the
2
<PAGE> 3
11% Senior Subordinated Notes due 2005 of the Company, and the 13.75% Senior
Subordinated Notes due 2001 of the Company.
F. Crawford has guaranteed payment of the Indebtedness
under the term portion of the Credit Agreement. Section 5.17 of the
Indenture provides that Ralphs, as successor to the Company under the
Indenture, may not permit any of its Subsidiaries to guarantee the payment of
any Indebtedness under the term portion of the Credit Agreement unless such
Subsidiary, Ralphs and the Trustee execute and deliver a supplemental indenture
evidencing such Subsidiary's Guarantee under the Indenture.
G. The purposes of this First Supplemental Indenture are
to (i) allow Ralphs, as the successor person to the Company in the Merger, to
assume the obligations of the Company under the Indenture, (ii) release the
Company from such obligations and (iii) add Crawford as a Subsidiary Guarantor
under the Indenture.
H. Section 10.01 of the Indenture provides that Ralphs,
as successor by merger to the Company, and each Subsidiary Guarantor, when
authorized by a Board Resolution, and the Trustee, together, without notice to
or consent of any Holder, may amend or supplement the Securities and the
Indenture, as set forth below.
I. Ralphs, the Subsidiary Guarantors and Crawford, each
having been duly authorized by a Board Resolution, and the Trustee, having
received an Opinion of Counsel pursuant to Section 10.01 of the Indenture
stating that the amendment or supplement to the Indenture contained in the
First Supplemental Indenture complies with the provisions of 10.01 of the
Indenture, are authorized to execute and deliver this First Supplemental
Indenture.
J. All of the conditions and requirements necessary to
make this First Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 6.02 of the Indenture, Ralphs, as
the successor person into which the Company has been merged in the Merger in
accordance with Section 6.01 of the Indenture, hereby succeeds to and is
substituted for, and may exercise every right and power of the Company under
the Indenture with the same effect as if Ralphs had been named as the Company
therein.
2. Pursuant to Section 6.02 of the Indenture, Ralphs
hereby assumes all of the obligations of the Company under the Indenture and
under the Securities and agrees to be bound thereby.
3
<PAGE> 4
3. Pursuant to Section 6.02 of the Indenture, the
Company is released from all of the obligations of it under the Indenture and
under the Securities.
4. Pursuant to Section 5.17 of the Indenture, this First
Supplemental Indenture shall evidence Crawford's Guarantee of the Securities.
5. Crawford shall become a party to the Indenture as a
Subsidiary Guarantor thereunder and shall be bound by the terms of Article
Eleven and all other applicable provisions thereof, all in accordance with the
terms of the Indenture.
6. This First Supplemental Indenture shall be effective
as of the date hereof.
7. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this First
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as
successor by merger to the
Company
[Seal]
Attest:
/s/ Jan Charles Gray
------------------------------- ------------------------------
By: Jan Charles Gray
Its:
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE
STORES, INC.
[Seal]
Attest:
/s/ Mark A. Resnik
------------------------------- ------------------------------
By: Mark A. Resnik
Its:
CRAWFORD STORES, INC.
[Seal]
Attest:
/s/ Jan Charles Gray
------------------------------- ------------------------------
By:
Its:
5
<PAGE> 6
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ Christine C. Collins /s/ Christine C. Collins
------------------------------- ------------------------------
By: Christine C. Collins
Its:
6
<PAGE> 1
Exhibit 4.6.1
FOOD 4 LESS SUPERMARKETS, INC.
TO BE MERGED WITH AND INTO RALPHS GROCERY COMPANY
AND
SUBSIDIARY GUARANTORS
AND
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
_________________
INDENTURE
Dated as of June 1, 1995
________________
$524,055,000
11% Senior Subordinated Notes
due 2005
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1).......................................... 8.10
(a)(2).......................................... 8.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A
(a)(5).......................................... 8.10; 8.11
(b)............................................. 8.08; 8.10;
13.02
(c)............................................. N.A.
311(a)............................................. 8.11
(b)............................................. 8.11
(c)............................................. N.A.
312(a)............................................. 2.05
(b)............................................. 13.03
(c)............................................. 13.03
313(a)............................................. 8.06
(b)(1).......................................... N.A
(b)(2).......................................... 8.06
(c)............................................. 8.06; 13.02
(d)............................................. 8.06
314(a)............................................. 5.07; 5.09;
13.02
(b)............................................. N.A.
(c)(1).......................................... 8.02; 13.04
(c)(2).......................................... 8.02; 13.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e)............................................. 13.05
(f)............................................. N.A
315(a)............................................. 8.01(b)
(b)............................................. 8.05; 13.02
(c)............................................. 8.01(a)
(d)............................................. 8.01(c)
(e)............................................. 7.11
316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 7.05
(a)(1)(B)....................................... 7.04
(a)(2).......................................... N.A.
(b)............................................. 7.07
317(a)(1).......................................... 7.08
(a)(2).......................................... 7.09
(b)............................................. 2.04
318(a)............................................. 13.01
(c)............................................. 13.01
</TABLE>
<PAGE> 3
_______________________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
-i-
<PAGE> 4
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1.01 Definitions..................................... 1
Section 1.02 Incorporation by Reference of TIA............... 33
Section 1.03 Rules of Construction........................... 34
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating................................. 35
Section 2.02 Execution and Authentication.................... 35
Section 2.03 Registrar and Paying Agent...................... 36
Section 2.04 Paying Agent To Hold Assets in
Trust........................................ 37
Section 2.05 Securityholder Lists............................ 37
Section 2.06 Transfer and Exchange........................... 38
Section 2.07 Replacement Securities.......................... 39
Section 2.08 Outstanding Securities.......................... 39
Section 2.09 Treasury Securities............................. 39
Section 2.10 Temporary Securities............................ 40
Section 2.11 Cancellation.................................... 40
Section 2.12 Defaulted Interest.............................. 40
Section 2.13 CUSIP Number.................................... 41
ARTICLE THREE
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
REDEMPTION
Section 3.01 Notices to Trustee.............................. 41
Section 3.02 Selection of Securities To Be
Redeemed..................................... 41
Section 3.03 Notice of Redemption............................ 42
Section 3.04 Effect of Notice of Redemption.................. 43
Section 3.05 Deposit of Redemption Price..................... 43
Section 3.06 Securities Redeemed in Part..................... 44
</TABLE>
-ii-
<PAGE> 6
ARTICLE FOUR
SUBORDINATION
<TABLE>
<S> <C> <C>
Section 4.01 Securities Subordinated to Senior
Indebtedness................................. 44
Section 4.02 Suspension of Payment When Senior
Indebtedness in Default...................... 44
Section 4.03 Securities Subordinated to Prior
Payment of All Senior
Indebtedness on Dissolution,
Liquidation or Reorganization of
Company...................................... 46
Section 4.04 Securityholders To Be Subrogated
to Rights of Holders of Senior
Indebtedness................................. 48
Section 4.05 Obligations of the Company
Unconditional................................ 49
Section 4.06 Trustee Entitled To Assume
Payments Not Prohibited in
Absence of Notice............................ 50
Section 4.07 Application by Trustee of Assets
Deposited with It............................ 50
Section 4.08 No Waiver of Subordination
Provisions................................... 51
Section 4.09 Securityholders Authorize Trustee
To Effectuate Subordination of
Securities................................... 52
Section 4.10 Right of Trustee To Hold Senior
Indebtedness................................. 53
Section 4.11 No Suspension of Remedies...................... 53
Section 4.12 No Fiduciary Duty of Trustee to
Holders of Senior Indebtedness............... 53
ARTICLE FIVE
COVENANTS
Section 5.01 Payment of Securities.......................... 54
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Section 5.02 Maintenance of Office or Agency................. 54
Section 5.03 Limitation on Restricted Payments............... 54
Section 5.04 Corporate Existence............................. 56
Section 5.05 Payment of Taxes and Other Claims............... 57
Section 5.06 Maintenance of Properties and
Insurance..................................... 57
Section 5.07 Compliance Certificate; Notice of
Default....................................... 58
Section 5.08 Compliance with Laws............................ 59
Section 5.09 SEC Reports..................................... 59
</TABLE>
-iii-
<PAGE> 8
<TABLE>
<S> <C> <C>
Section 5.10 Waiver of Stay, Extension or Usury
Laws......................................... 60
Section 5.11 Limitation on Transactions with
Affiliates................................... 60
Section 5.12 Limitation on Incurrences of
Additional Indebtedness...................... 62
Section 5.13 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries................................. 63
Section 5.14 Limitation on Liens............................ 64
Section 5.15 Limitation on Change of Control................ 65
Section 5.16 Limitation on Asset Sales...................... 67
Section 5.17 Guarantees of Certain Indebtedness............. 71
Section 5.18 Limitation on Preferred Stock of
Subsidiaries................................. 71
Section 5.19 Limitation on Other Senior
Subordinated Indebtedness.................... 71
ARTICLE SIX
SUCCESSOR CORPORATION
Section 6.01 Limitation on Mergers and Certain
Other Transactions........................... 72
Section 6.02 Successor Corporation Substituted.............. 73
ARTICLE SEVEN
DEFAULT AND REMEDIES
Section 7.01 Events of Default.............................. 74
Section 7.02 Acceleration................................... 76
Section 7.03 Other Remedies................................. 77
Section 7.04 Waiver of Past Defaults........................ 78
Section 7.05 Control by Majority............................ 78
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
Section 7.06 Limitation on Suits............................. 78
Section 7.07 Rights of Holders To Receive
Payment....................................... 79
Section 7.08 Collection Suit by Trustee...................... 79
Section 7.09 Trustee May File Proofs of Claim................ 79
Section 7.10 Priorities...................................... 80
Section 7.11 Rights and Remedies Cumulative.................. 81
Section 7.12 Delay or Omission Not Waiver.................... 81
Section 7.13 Undertaking for Costs........................... 81
</TABLE>
-iv-
<PAGE> 10
ARTICLE EIGHT
TRUSTEE
<TABLE>
<S> <C> <C>
Section 8.01 Duties of Trustee............................... 82
Section 8.02 Rights of Trustee............................... 83
Section 8.03 Individual Rights of Trustee.................... 84
Section 8.04 Trustee's Disclaimer............................ 84
Section 8.05 Notice of Default............................... 84
Section 8.06 Reports by Trustee to Holders................... 85
Section 8.07 Compensation and Indemnity...................... 85
Section 8.08 Replacement of Trustee.......................... 86
Section 8.09 Successor Trustee by Merger, Etc................ 87
Section 8.10 Eligibility; Disqualification................... 87
Section 8.11 Preferential Collection of Claims
Against Company............................... 88
ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE
Section 9.01 Termination of the Company's
Obligations................................... 88
Section 9.02 Legal Defeasance and Covenant
Defeasance.................................... 90
Section 9.03 Application of Trust Money...................... 94
Section 9.04 Repayment to the Company or
Subsidiary Guarantors......................... 95
Section 9.05 Reinstatement................................... 95
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 10.01 Without Consent of Holders...................... 96
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C>
Section 10.02 With Consent of Holders......................... 96
Section 10.03 Compliance with TIA............................. 98
Section 10.04 Revocation and Effect of Consents............... 99
Section 10.05 Notation on or Exchange of
Securities................................... 99
Section 10.06 Trustee To Sign Amendments, Etc................. 100
</TABLE>
-v-
<PAGE> 12
ARTICLE ELEVEN
GUARANTEE
<TABLE>
<S> <C> <C>
Section 11.01 Unconditional Guarantee......................... 100
Section 11.02 Subordination of Guarantee...................... 101
Section 11.03 Severability.................................... 102
Section 11.04 Release of a Subsidiary Guarantor............... 102
Section 11.05 Limitation of Subsidiary
Guarantor's Liability......................... 102
Section 11.06 Subsidiary Guarantors May
Consolidate, etc., on Certain
Terms......................................... 103
Section 11.07 Contribution.................................... 104
Section 11.08 Waiver of Subrogation........................... 105
Section 11.09 Execution of Guarantee.......................... 105
Section 11.10 Waiver of Stay, Extension or Usury
Laws.......................................... 106
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
Section 12.01 Guarantee Obligations Subordinated
to Guarantor Senior Indebtedness.............. 107
Section 12.02 Suspension of Guarantee
Obligations When Guarantor
Senior Indebtedness in Default................ 107
Section 12.03 Guarantee Obligations Subordinated
to Prior Payment of All
Guarantor Senior Indebtedness on
Dissolution, Liquidation or
Reorganization of Such
Subsidiary Guarantor.......................... 109
Section 12.04 Holders of Guarantee Obligations
To Be Subrogated to Rights of
Holders of Guarantor Senior
Indebtedness.................................. 111
</TABLE>
<PAGE> 13
<TABLE>
<S> <C> <C>
Section 12.05 Obligations of the Subsidiary
Guarantors Unconditional..................... 112
Section 12.06 Trustee Entitled To Assume
Payments Not Prohibited in
Absence of Notice............................ 113
Section 12.07 Application by Trustee of Assets
Deposited with It............................ 113
Section 12.08 No Waiver of Subordination
Provisions................................... 114
</TABLE>
-vi-
<PAGE> 14
<TABLE>
<S> <C> <C>
Section 12.09 Holders Authorize Trustee To
Effectuate Subordination of
Guarantee Obligations........................ 115
Section 12.10 Right of Trustee To Hold Guarantor
Senior Indebtedness.......................... 116
Section 12.11 No Suspension of Remedies...................... 116
Section 12.12 No Fiduciary Duty of Trustee to
Holders of Guarantor Senior
Indebtedness................................. 116
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.01 TIA Controls................................... 117
Section 13.02 Notices........................................ 117
Section 13.03 Communications by Holders with
Other Holders................................ 118
Section 13.04 Certificate and Opinion as to
Conditions Precedent......................... 118
Section 13.05 Statements Required in Certificate
or Opinion................................... 119
Section 13.06 Rules by Trustee, Paying Agent,
Registrar.................................... 119
Section 13.07 Legal Holidays................................. 119
Section 13.08 Governing Law.................................. 120
Section 13.09 No Adverse Interpretation of Other
Agreements................................... 120
Section 13.10 No Recourse Against Others..................... 120
Section 13.11 Successors..................................... 120
Section 13.12 Duplicate Originals............................ 120
Section 13.13 Severability................................... 121
Section 13.14 No Violation................................... 121
</TABLE>
<PAGE> 15
<TABLE>
<S> <C>
Signatures........................................................ S-1
Exhibit A - Form of Note
</TABLE>
Note: This Table of Contents shall not, for any purpose, be
deemed to be part of the Indenture.
-vii-
<PAGE> 16
INDENTURE dated as of June 1, 1995, among FOOD 4 LESS
SUPERMARKETS, INC., a Delaware corporation (the "Company"), the
SUBSIDIARY GUARANTORS, and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York 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 Company's 11% Senior Subordinated Notes due
2005:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means (i) with respect to any
person that becomes a Subsidiary of the Company (or is merged
into the Company or any of its Subsidiaries) after the Issue
Date, Indebtedness of such person or any of its Subsidiaries
existing at the time such person becomes a Subsidiary of the
Company (or is merged into the Company or any of its
Subsidiaries) and which was not incurred in connection with, or
in contemplation of, such person becoming a Subsidiary of the
Company (or being merged into the Company or any of its
Subsidiaries) and (ii) with respect to the Company or any of
its Subsidiaries, any Indebtedness assumed by the Company or
any of its Subsidiaries in connection with the acquisition of
any assets from another person (other than the Company or any
of its Subsidiaries), and which was not incurred by such other
person in connection with, or in contemplation of, such
acquisition.
"Adjusted Net Assets" shall have the meaning provided
in Section 11.07.
"Affiliate" means, with respect to any person, any
other person directly or indirectly controlling or controlled
by or under direct or indirect common control with such
specified person. For the purposes of this definition,
"control" when used with respect to any 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
<PAGE> 17
correlative to the foregoing. Notwithstanding the foregoing,
for purposes of this Indenture, neither BT Securities
Corporation nor any of its Affiliates shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries.
"Affiliate Transaction" shall have the meaning
provided in Section 5.11.
"Agent" means any Registrar, Paying Agent or
co-Registrar.
"Apollo Advisors, L.P." means Apollo Advisors, L.P.,
a Delaware limited partnership.
"Asset Sale" means, with respect to 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 the Company or a directly or indirectly 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, in each case, outside of the
ordinary course of business, excluding, however, any sale,
transfer or other disposition, or series of related sales,
transfers or other dispositions (i) involving only Excluded
Assets, (ii) resulting in Net Proceeds to the Company and the
Subsidiaries of $500,000 or less, (iii) pursuant to any
foreclosure of assets or other remedy provided by applicable
law to a creditor of the Company or any Subsidiary with a Lien
on such assets, which Lien is permitted under this Indenture,
provided that such foreclosure or other remedy is conducted in
a commercially reasonable manner or in accordance with any
Bankruptcy Law, (iv) involving only Cash Equivalents or
inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with
past practices of the Company, (v) involving only the lease or
sub-lease of any real or personal property in the ordinary
course of business or (vi) the proceeds of such Asset Sale
which are not applied as contemplated in Section 5.16 and which
together with all other such Asset Sale Proceeds do not exceed
$20 million.
"Average Life" means, as of the date of
determination, with respect to any debt security, the quotient
<PAGE> 18
obtained by dividing (i) the sum of the products of the number
of years from the date of determination to the dates of each
successive scheduled principal payments of such debt security
multiplied by the amount of each such principal payment by
(ii) the sum of all such principal payments.
"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 of a
subsidiary of such person or any duly authorized committee of
the Board of Directors.
"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, participation or other
equivalents (however designated) of corporate stock, including
each class of common stock and preferred stock of such person.
"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 Ratings Group 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), (v) shares of any
money market mutual fund that (a) has at least 95% of its
<PAGE> 19
assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets
of not less than $500 million, and (c) has the highest rating
obtainable from either Standard & Poor's Ratings Group of
Moody's Investors Service, Inc. and (vi) 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 Ratings Group.
"Change of Control" means 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 New Holdings or the Company 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 the then
outstanding voting securities entitled to vote on a regular
basis for a majority of the Board of Directors of the Company
(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); provided, 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 the Company's Board of Directors.
"Change of Control Date" shall have the meaning
provided in Section 5.15.
"Change of Control Offer" shall have the meaning
provided in Section 5.15.
"Change of Control Payment Date" shall have the
meaning provided in Section 5.15.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means, with respect to any person, any
and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or
nonvoting) of, such person's common stock, whether outstanding
<PAGE> 20
at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common
stock.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means such successor.
"Consolidated Net Income," means, with respect to any
person, for any period, 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 any other person in which
such person or any of its subsidiaries has an interest (which
interest 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 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; 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, (vii)
(A) all non-cash charges, (B) up to $10 million of severance
costs and (C) any other restructuring reserves or charges
(provided, however, that any cash payments actually made with
respect to the liabilities for which such restructuring
reserves or charges were created shall be deducted from
Consolidated Net Income in the period when made), in each case,
incurred by the Company or any of its Subsidiaries in
connection with the Merger, including, without limitation, the
divestiture of the Excluded Assets, (viii) losses incurred by
the Company and its Subsidiaries resulting from earthquakes and
(ix) with respect to the Company, all deferred financing costs
<PAGE> 21
written off in connection with the early extinguishment of any
Indebtedness, shall each be excluded; provided further that
solely for the purpose of computing amounts described in
subclause (c) of the first paragraph of Section 5.03,
"Consolidated Net Income" of the Company for any period shall
be reduced by the aggregate amount of dividends paid by the
Company or a Subsidiary to New Holdings pursuant to clauses
(v), (vi) and (xi) of the definition of "Permitted Payments"
during such period.
"Consolidated Net Worth" means, with respect to any
person, the total stockholders' equity (exclusive of any
Disqualified Capital Stock) of such person and its subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consulting Agreement" means that certain Consulting
Agreement dated as of the Issue Date, between Food 4 Less, New
Holdings and The Yucaipa Companies (as such Consulting
Agreement may be amended or replaced, so long as any amounts
paid under any amended or replacement agreement do not exceed
the amounts payable under such Consulting Agreement as in
effect on the Issue Date).
"Credit Agent" means, at any time, the then-acting
Administrative Agent as defined in and under the Credit
Agreement, which initially shall be Bankers Trust Company. The
Company shall promptly notify the Trustee of any change in the
Credit Agent.
"Credit Agreement" means the Credit Agreement, dated
as of the Issue Date, by and among Food 4 Less, as borrower,
certain of its subsidiaries, New Holdings, as guarantor, the
Lenders referred to therein and Bankers Trust Company, as
administrative agent, as the same may be amended, extended,
renewed, restated, supplemented or otherwise modified (in each
case, 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, replace or refinance any borrowings and commitments
then outstanding or permitted to be outstanding under such
Credit Agreement or any such prior agreement as the same may be
amended, extended, renewed, restated, supplemented or otherwise
modified (in each case, in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other
provisions). The term "Credit Agreement" shall include all
related or ancillary documents, including, without limitation,
any guarantee agreements and security documents. The Company
shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement.
<PAGE> 22
"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.
"Designated Senior Indebtedness" means (i) in the
event any Indebtedness is outstanding under the Credit
Agreement, all Senior Indebtedness under the Credit Agreement
and (ii) if no Indebtedness is outstanding under the Credit
Agreement, any other issue of Senior Indebtedness which (a) at
the time of determination is equal to or greater than
$50 million in aggregate principal amount and (b) is
specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" by the
Company. For purposes of this definition, the term "Credit
Agreement" shall not include any agreement governing
Indebtedness incurred to refund, replace or refinance
borrowings or commitments under the Credit Agreement other than
any such agreements incurred to refund, replace or refinance
the entirety of the borrowings and commitments then outstanding
or permitted to be outstanding thereunder.
"Discount Notes" means the 15.25% Senior Discount
Notes due 2004 of Holdings issued pursuant to the Discount Note
Indenture, as the same may be modified or amended from time to
time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Discount Note Indenture" means the indenture dated
as of December 15, 1992 under which the 15.25% Senior Discount
Notes due 2004 of Holdings were issued, as the same may be
modified or amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"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 thereof, 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 of the Securities or any
other Capital Stock of such person or its subsidiaries
<PAGE> 23
designated as Disqualified Capital Stock by such person at the
time of issuance; provided, however, that if such Capital Stock
is either (i) redeemable or repurchasable solely at the option
of such person or (ii) issued to employees of the Company 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, with respect to any person, for any
period, the Consolidated Net Income of such person for such
period, plus, in each case to the extent deducted in computing
Consolidated Net Income of such person for such period (without
duplication) (i) provisions for income taxes or similar charges
recognized by such person and its consolidated subsidiaries
accrued during such period, (ii) depreciation and amortization
expense of such person and its consolidated subsidiaries
accrued during such period (but only to the extent not included
in Fixed Charges), (iii) Fixed Charges of such person and its
consolidated subsidiaries for such period, (iv) LIFO charges
(credits) of such person and its consolidated subsidiaries for
such period, (v) the amount of any restructuring reserve or
charge recorded during such period in accordance with GAAP,
including any such reserve or charge related to the Merger, and
(vi) any other non-cash charges reducing Consolidated Net
Income for such period (excluding any such charge which
requires an accrual of or a cash reserve for cash charges for
any future period), less, without duplication, (i) non-cash
items increasing Consolidated Net Income of such person for
such period (excluding any such items which represent the
reversal of any accrual of, or cash reserve for, anticipated
cash charges in any prior period) in each case determined in
accordance with GAAP and (ii) the amount of all cash payments
made by such person or its subsidiaries during such period to
the extent that such cash payment has been provided for in a
restructuring reserve or charge referred to in clause (v) above
(and was not otherwise deducted in the computation of
Consolidated Net Income of such person for such period).
"Event of Default" shall have the meaning provided in
Section 7.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by
the Commission thereunder.
"Excluded Assets" means assets of the Company or any
Subsidiary required to be disposed of by applicable regulatory
authorities in connection with the Merger.
<PAGE> 24
"Existing Indebtedness" means the following
indebtedness of the Company to the extent outstanding on the
Issue Date after giving effect to the Merger; (a) the 10.45%
Senior Notes due 2004 issued pursuant to an indenture dated as
of the date hereof; (b) the 10.45% Senior Notes due 2000 issued
pursuant to an indenture dated as of April 15, 1992; (c) the
11% Senior Subordinated Notes due 2005 issued pursuant to an
indenture dated as of the date hereof; (d) the 9% Senior
Subordinated Notes due 2003 issued pursuant to an indenture
dated as of March 30, 1993; (e) the 10<% Senior Subordinated
Notes due 2002 issued pursuant to an indenture dated as of
July 29, 1992; (f) the 13.75% Senior Subordinated Notes due
2005 issued pursuant to an indenture dated as of the date
hereof, and (g) the 13.75% Senior Subordinated Notes due 2001
issued pursuant to an indenture dated as of June 15, 1991.
"Fixed Charges" means, with respect to any person,
for any period, the aggregate amount of (i) interest, whether
expensed or capitalized, paid, accrued or scheduled to be paid
or accrued during such period (except to the extent accrued in
a prior period) in respect of all Indebtedness of such person
and its consolidated subsidiaries (including (a) original issue
discount on any Indebtedness (including, (without duplication)
in the case of the Company, any original issue discount on the
Securities but excluding amortization of debt issuance costs)
and (b) the interest portion of all deferred payment
obligations, calculated in accordance with the effective
interest method, in each case to the extent attributable to
such period but excluding the amortization of debt issuance
costs), (ii) dividend requirements on Preferred Stock of such
person and its consolidated subsidiaries (whether in cash or
otherwise (except dividends payable in shares of Qualified
Capital Stock)) declared or paid or required to be declared or
paid during such period (except to the extent accrued in a
prior period) and excluding items eliminated in consolidation
and (iii) dividends declared or paid or scheduled or required
to be declared or paid to New Holdings which are permitted to
be paid pursuant to clauses (v) and (vi) of the definition of
"Permitted Payments." For purposes of this definition,
(a) interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by the
Board of Directors of such person (as evidenced by a Board
Resolution) to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP,
(b) interest on Indebtedness that is determined on a
fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such
Indebtedness in effect on the date Fixed Charges are being
calculated, (c) interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime
<PAGE> 25
or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate, and (d) Fixed Charges
shall be increased or reduced by the net cost (including
amortization of discount) or benefit associated with Interest
Swap Obligations attributable to such period. For purposes of
clause (ii) above, dividend requirements shall be increased to
an amount representing the pre-tax earnings that would be
required to cover such dividend requirements; accordingly, the
increased amount shall be equal to a fraction, the numerator of
which is the amount of such dividend requirements and the
denominator of which is one (1) minus the applicable actual
combined federal, state, local and foreign income tax rate of
such person and its subsidiaries (expressed as a decimal), on a
consolidated basis, for the fiscal year immediately preceding
the date of the transaction giving rise to the need to
calculate Fixed Charges.
"FFL" means Food 4 Less, Inc., a Delaware
corporation, and its successors, including, without limitation,
Holdings following the FFL Merger and New Holdings following
the Reincorporation Merger.
"FFL Merger" means the merger, prior to the Merger
and the Reincorporation Merger, of FFL and Holdings.
"Food 4 Less" means Food 4 Less Supermarkets, Inc., a
Delaware corporation, and its successors, including, without
limitation, Ralphs Supermarkets, Inc. (to be renamed Ralphs
Grocery Company following the Merger).
"Foreign Exchange Agreement" means any foreign
exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect against
fluctuations in currency values.
"Forward Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"GAAP" means generally accepted accounting principles
as in effect in the United States of America as of the date of
this Indenture.
"Guarantee" means the guarantee of each Subsidiary
Guarantor set forth in Article Eleven and any additional
guarantee of the Securities executed by any Subsidiary of the
Company.
<PAGE> 26
"Guarantee Obligations" shall have the meaning
provided in Section 12.01.
"Guarantor Payment Blockage Period" shall have the
meaning provided in Section 12.02.
"Guarantor Senior Indebtedness" means, with respect
to any Subsidiary Guarantor, the principal of, premium, if any,
and interest on and all other Obligations with respect to any
Indebtedness of such Subsidiary Guarantor, whether outstanding
on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which
the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Guarantee of such Subsidiary Guarantor. Without limiting the
generality of the foregoing, "Guarantor Senior Indebtedness"
shall include the principal of, premium, if any, and interest
on all Obligations of every nature of such Subsidiary Guarantor
from time to time owed to the lenders under the Credit
Agreement, including, without limitation, the Letter of Credit
Obligations and principal of and interest on, and all fees,
indemnities and expenses payable under the Credit Agreement.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness"
shall not include (a) Indebtedness evidenced by the Guarantee
of such Subsidiary Guarantor, (b) Indebtedness that is
expressly subordinate or junior in right of payment to any
Indebtedness of such Subsidiary Guarantor, (c) Indebtedness
which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without
recourse to such Subsidiary Guarantor (other than Capitalized
Lease Obligations), (d) Indebtedness which is represented by
Disqualified Capital Stock, (e) obligations for goods,
materials or services purchased in the ordinary course of
business or obligations consisting of trade payables, (f)
Indebtedness of or amounts owed by such Subsidiary Guarantors
for compensation to employees or for services rendered to such
Subsidiary Guarantors, (g) any liability for federal, state,
local or other taxes owed or owing by such Subsidiary
Guarantor, (h) Indebtedness of such Subsidiary Guarantor
representing a guarantee of Subordinated Indebtedness or Pari
Passu Indebtedness (in each case, with respect to the
Securities or any Guarantee) of the Company or any other
Subsidiary Guarantor, (i) Indebtedness of such Subsidiary
Guarantor to a Subsidiary of the Company and (j) that portion
of any Indebtedness which is incurred by such Subsidiary
Guarantor in violation of this Indenture.
"Holder" or "Securityholder" means the person in
whose name a Security is registered on the Registrar's books.
<PAGE> 27
"Holdings" means Food 4 Less Holdings, Inc., a
California corporation, and its successors including, without
limitation, New Holdings following the Reincorporation Merger.
"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 exended 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; (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
<PAGE> 28
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 of this Indenture, Indebtedness incurred by any person
that is a general partnership (other than non-recourse
Indebtedness) shall be deemed to 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 the
Company, 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 nationally recognized investment
banking or consulting firm that is, in the reasonable judgment
of the Board of Directors of the Company, qualified to perform
the tasks for which such firm has been engaged and
disinterested and independent with respect to the Company and
its Affiliates.
"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, whether by
share purchase, capital contribution, loan, advance (other than
reasonable loans and advances to employees for moving and
<PAGE> 29
travel expenses, as salary advances, or to permit the purchase
of Qualified Capital Stock of New Holdings or any of its
Subsidiaries 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.
"Issue Date" means the date of original issuance of
the Securities under this Indenture.
"Legal Holiday" shall have the meaning provided in
Section 13.07.
"Letter of Credit Obligations" means Indebtedness of
the Company or any of its Subsidiaries with respect to letters
of credit issued pursuant to the Credit Agreement, and for
purposes of the definition of the term "Permitted
Indebtedness," the aggregate principal amount of Indebtedness
outstanding at any time with respect thereto shall be deemed to
consist of (a) the aggregate maximum amount then available to
be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions
for drawing), and (b) the aggregate amount that has then been
paid by, and not reimbursed to, the issuers under such letters
of credit.
"Lien" means any mortgage, pledge, lien, encumbrance,
charge or adverse claim affecting title or resulting in an
encumbrance against real or personal property, or a security
interest of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any
option or other agreement to sell which is intended to
constitute or create a security interest, mortgage, pledge or
lien, and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction); provided that in no event shall
an operating lease be deemed to constitute a Lien under this
Indenture.
"Maturity Date" means June 15, 2005.
"Merger" means (i) the merger of Food 4 Less into RSI
(with RSI surviving such merger) pursuant to the Merger
Agreement and (ii) immediately following the merger described
in clause (i) of this definition, the merger of Ralphs Grocery
Company into RSI (with RSI surviving such merger and changing
its name to "Ralphs Grocery Company" in connection with such
merger).
<PAGE> 30
"Merger Agreement" means the Agreement and Plan of
Merger, dated September 14, 1994, by and among Holdings, FFL,
Food 4 Less, RSI and the stockholders of RSI, as such agreement
is in effect on the Issue Date.
"Net Cash Proceeds" means the Net Proceeds of any
Asset Sale received 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 (and, in the case of any
Asset Sale, net of the amount of cash applied to repay
Indebtedness secured by the asset involved in such Asset Sale),
whether such proceeds are in cash or in property (valued at the
fair market value thereof at the time of receipt, as determined
with respect to any Asset Sale resulting in Net Proceeds in
excess of $5 million in good faith by the Board of Directors of
such person, which determination shall be evidenced by a Board
Resolution) 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
the Company, the sum of (i) the fair market value of the
proceeds received by the Company 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 the Company upon such conversion or exchange.
"New Discount Debenture Indenture" means the
indenture dated as of the Issue Date under which the 13 5/8%
Senior Discount Debentures due 2005 of New Holdings were
issued, as the same may be modified and amended from time to
time and refinancings thereof to the extent such refinancings
are permitted under this Indenture.
"New Discount Debentures" means the 13 5/8% Senior
Discount Debentures due 2005 of New Holdings issued pursuant to
the New Discount Debenture Indenture, as the same may be
modified and amended from time to time and future refinancings
thereof to the extent such refinancings are permitted under
this Indenture.
"New Holdings" means Food 4 Less Holdings, Inc., a
Delaware corporation, and its successors.
"Non-payment Default" means any event (other than a
Payment Default) the occurrence of which entitles one or more
persons to act to accelerate the maturity of any Designated
Senior Indebtedness.
<PAGE> 31
"Obligations" means all obligations of every nature
whether for principal, reimbursements, interest, fees,
expenses, indemnities or otherwise, and whether primary,
secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance) under the documentation
governing any Indebtedness, provided, that with respect to the
term "Obligations" shall not include the obligations of the
Company to the Trustee under Section 8.07.
"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 13.04 and 13.05.
"Old RGC Indentures" means the indentures between
Ralphs Grocery Company, as issuer, and United States Trust
Company of New York, as trustee, pursuant to which the Old RGC
Notes were issued.
"Old RGC Notes" means the 9% Senior Subordinated
Notes due 2003 of Ralphs Grocery Company and the 10<% Senior
Subordinated Notes due 2002 of Ralphs Grocery.
"Operating Coverage Ratio" means, with respect to any
person, the ratio of (1) EBDIT of such person for the period
(the "Pro Forma Period") consisting of the most recent four
full fiscal quarters for which financial information in respect
thereof is available immediately prior to the date of the
transaction giving rise to the need to calculate the Operating
Coverage Ratio (the "Transaction Date") to (2) the aggregate
Fixed Charges of such person for the fiscal quarter in which
the Transaction Date occurs and the three fiscal quarters
immediately subsequent to such fiscal quarter (the "Forward
Period") reasonably anticipated by the Board of Directors of
such person to become due from time to time during such period.
For purposes of this definition, if the Transaction Date occurs
prior to the first anniversary of the Merger, "EBDIT" for the
Pro Forma Period shall be calculated, in the case of the
Company, after giving effect on a pro forma basis to the Merger
as if it had occurred on the first day of the Pro Forma Period.
In addition to, but without duplication of, the foregoing, for
purposes of this definition, "EBDIT" shall be calculated after
giving effect (without duplication), on a pro forma basis for
the Pro Forma Period (but no longer), to (a) any Investment,
<PAGE> 32
during the period commencing on the first day of the Pro Forma
Period to and including the Transaction Date (the "Reference
Period"), in any other person that, as a result of such
Investment, becomes a subsidiary of such person, (b) the
acquisition, during the Reference Period (by merger,
consolidation or purchase of stock or assets) of any business
or assets, which acquisition is not prohibited by this
Indenture, and (c) any sales or other dispositions of assets
(other than sales of inventory in the ordinary course of
business) occurring during the Reference Period, in each case
as if such incurrence, Investment, repayment, acquisition or
asset sale had occurred on the first day of the Reference
Period. In addition, for purposes of this definition, "Fixed
Charges" shall be calculated after giving effect (without
duplication), on a pro forma basis for the Forward Period, to
any Indebtedness incurred or repaid on or after the first day
of the Forward Period and prior to the Transaction Date. If
such person or any of its subsidiaries directly or indirectly
guarantees any Indebtedness of a third person, the Operating
Coverage Ratio shall give effect to the incurrence of such
Indebtedness as if such person or subsidiary had directly
incurred such guaranteed Indebtedness.
"Operating lease" means any lease the obligations
under which do not constitute Capitalized Lease obligations.
"Opinion of Counsel" means a written opinion from
legal counsel who is reasonably acceptable to the Trustee
complying with the requirements of Sections 13.04 and 13.05.
Unless otherwise required by the Trustee, the legal counsel may
be an employee of or counsel to the Company or the Trustee.
"Pari Passu Indebtedness" means, with respect to the
Company or any Subsidiary Guarantor, Indebtedness of such
person which ranks pari passu in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be (in each case, whether or not secured by any
Lien).
"Paying Agent" shall have the meaning provided in
Section 2.03, except that, for the purposes of Articles Three
and Nine and Sections 5.15 and 5.16, the Paying Agent shall not
be the Company or an Affiliate of the Company.
"Payment Blockage Notice" shall have the meaning
provided in Section 4.02.
"Payment Blockage Period" shall have the meaning
provided in Section 4.02.
<PAGE> 33
"Payment Default" means any default in the payment of
principal, premium, if any, or interest on any Designated
Senior Indebtedness or Significant Senior Indebtedness beyond
any applicable grace period with respect thereto.
"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
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 Holder" means (i) Food 4 Less Equity
Partners, L.P., The Yucaipa Companies or any entity controlled
thereby or any of the partners thereof, (ii) Apollo Advisors,
L.P., Lion Advisors, L.P. or any entity controlled thereby or
any of the partners thereof, (iii) an employee benefit plan of
the Company, or any of its subsidiaries or any participant
therein, (iv) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
subsidiaries or (v) any Permitted Transferee of any of the
foregoing persons.
"Permitted Indebtedness" means (a) Indebtedness of
the Company and its Subsidiaries (and the Company and each
Subsidiary (to the extent it is not an obligor) may guarantee
such Indebtedness) pursuant to (i) the Term Loans in an
aggregate principal amount at any time outstanding not to
exceed $600 million less the aggregate amount of all principal
repayments thereunder pursuant to and in accordance with the
requirements of Section 5.16 subsequent to the Issue Date, (ii)
the revolving credit facility under the Credit Agreement
(including the Letter of Credit Obligations) in an aggregate
principal amount at any time outstanding not to exceed $325
million, less all permanent reductions thereunder pursuant to
and in accordance with the requirements of Section 5.16, and
(iii) any Indebtedness incurred under the Credit Agreement
pursuant to and in compliance with (A) clause (m) of this
definition and (B) Section 5.12 (other than Permitted
Indebtedness that is not incurred pursuant to clause (m) or
this clause (a) of this definition); (b) Indebtedness of the
<PAGE> 34
Company or a Subsidiary Guarantor owed to and held by the
Company or a Subsidiary Guarantor; (c) Indebtedness incurred by
the Company or any Subsidiary in connection with the purchase
or improvement of property (real or personal) or equipment or
other capital expenditures in the ordinary course of business
(including for the purchase of assets or stock of any retail
grocery store or business) or consisting of Capitalized Lease
obligations, provided that (i) at the time of the incurrence
thereof, such Indebtedness, together with any other
Indebtedness incurred during the most recently completed four
fiscal quarter period in reliance upon this clause (c) does not
exceed, in the aggregate, 3% of net sales of the Company and
its Subsidiaries during the most recently completed four fiscal
quarter period on a consolidated basis (calculated on a pro
forma basis if the date of incurrence is prior to the end of
the fourth fiscal quarter following the Merger) and (ii) such
Indebtedness, together with all then outstanding Indebtedness
incurred in reliance upon this clause (c) does not exceed, in
the aggregate, 3% of the aggregate net sales of the Company and
its Subsidiaries during the most recently completed twelve
fiscal quarter period on a consolidated basis (calculated on a
pro forma basis if the date of incurrence is prior to the end
of the twelfth fiscal quarter following the Merger); (d)
Indebtedness incurred by the Company or any Subsidiary in
connection with capital expenditures in an aggregate principal
amount not exceeding $150 million, provided that such capital
expenditures relate solely to the integration of the operations
of RSI, Food 4 Less and their respective subsidiaries as
described in the Prospectus of Food 4 Less dated May 31, 1995
(relating to the Securities); (e) Indebtedness of the Company
or any Subsidiary incurred under Foreign Exchange Agreements
and Interest Swap Obligations entered into with respect to
Indebtedness otherwise permitted to be outstanding pursuant to
Section 5.12 or this definition of Permitted Indebtedness in a
notional amount not exceeding the aggregate principal amount of
such Indebtedness; (f) guarantees incurred in the ordinary
course of business by the Company or a Subsidiary of
Indebtedness of any other person in the aggregate not to exceed
$25 million at any time outstanding; (g) guarantees by the
Company or a Subsidiary Guarantor of Indebtedness incurred by a
wholly-owned Subsidiary Guarantor so long as the incurrence of
such Indebtedness incurred by such wholly-owned Subsidiary
Guarantor is permitted under the terms of this Indenture; (h)
Refinancing Indebtedness; (i) Indebtedness for letters of
credit relating to workers' compensation claims and
self-insurance or similar requirements in the ordinary course
of business; (j) Existing Indebtedness and other Indebtedness
outstanding on the Issue Date (after giving effect to the
Merger); (k) Indebtedness arising from guarantees of
Indebtedness of the Company or any Subsidiary or other
<PAGE> 35
agreements of the Company or a Subsidiary providing for
indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection
with the disposition of any business, assets or Subsidiary,
other than guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition;
provided that the maximum aggregate liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in
connection with such disposition; (l) obligations in respect of
performance bonds and completion guarantees provided by the
Company or any Subsidiary in the ordinary course of business;
and (m) additional Indebtedness of the Company and the
Subsidiary Guarantors in an amount not to exceed $175 million
at any time outstanding.
"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 made pursuant to Section 5.16 or
any other disposition of assets not constituting an Asset Sale
by reason of the $500,000 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 Section 5.11,
(vi) Investments by Subsidiary Guarantors in other Subsidiary
Guarantors or the Company and Investments by the Company in a
Subsidiary Guarantor in the form of Indebtedness owed to the
Company by such Subsidiary Guarantor and Investments by
Subsidiaries which are not Subsidiary Guarantors in other
Subsidiaries which are not Subsidiary Guarantors and
(vii) additional Investments in an aggregate amount not
exceeding $15 million.
"Permitted Liens" means (i) Liens for taxes,
assessments and governmental charges or claims not yet due or
which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made thereof;
(ii) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen, or other like
Liens arising in the ordinary course of business, deposits made
to obtain the release of such Liens, and with respect to
amounts not yet delinquent for a period of more than 60 days or
being contested in good faith by appropriate process of law,
and for which a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made; (iii) Liens
incurred or pledges or deposits made in the ordinary course of
<PAGE> 36
business to secure obligations under workers' compensation,
unemployment insurance and other types of social security or
similar legislation; (iv) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory
obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of
a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, zoning or other restrictions,
minor defects or irregularities in title and other similar
charges or encumbrances not interfering in any material respect
with the business of the Company or any of its Subsidiaries
incurred in the ordinary course of business; (vi) Liens upon
specific items of inventory or other goods and proceeds of any
person securing such person's obligations in respect of
bankers' acceptances issued or created for the account of such
person to facilitate the purchase, shipment or storage of such
inventory or other goods in the ordinary course of business;
(vii) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other property
relating to such letters of credit and the products and
proceeds thereof; (viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
nondelinquent customs duties in connection with the importation
of goods; (ix) judgment and attachment Liens not giving rise to
a Default or Event of Default; (x) leases or subleases granted
to others not interfering in any material respect with the
business of the Company or any Subsidiary; (xi) Liens
encumbering customary initial deposits and margin deposits, and
other Liens incurred in the ordinary course of business that
are within the general parameters customary in the industry, in
each case securing Indebtedness under Interest Swap obligations
and Foreign Exchange Agreements and forward contracts, option
futures contracts, futures options or similar agreements or
arrangements designed to protect the Company or any Subsidiary
from fluctuations in the price of commodities; (xii) Liens
encumbering deposits made in the ordinary course of business to
secure nondelinquent obligations arising from statutory,
regulatory, contractual or warranty requirements of the Company
or its Subsidiaries for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been
made; (xiii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company
or any Subsidiary in the ordinary course of business in
accordance with past practices; (xiv) any interest or title of
a lessor in the property subject to any lease, whether
characterized as capitalized or operating other than any such
interest or title resulting from or arising out of a default by
the Company or any Subsidiary of its obligations under such
lease; (xv) Liens arising from filing UCC financing statements
<PAGE> 37
for precautionary purposes in connection with true leases of
personal property that are otherwise permitted under this
Indenture and under which the Company or any Subsidiary is
lessee; (xvi) Liens on assets of the Company securing
Indebtedness which would constitute Senior Indebtedness but for
the provisions of clause (c) in the third sentence of the
definition of "Senior Indebtedness" and Liens on assets of a
Subsidiary Guarantor securing Indebtedness which would
constitute Guarantor Senior Indebtedness but for the provisions
of clause (c) in the third sentence of the definition of
"Guarantor Senior Indebtedness"; and (xvii) additional Liens
securing Indebtedness in an aggregate principal amount at any
one time outstanding not exceeding the sum of (i) $25 million
and (ii) 10% of the aggregate Consolidated Net Income of the
Company earned subsequent to the Issue Date and on or prior to
such time.
"Permitted Payments" means (i) any payment by the
Company or any Subsidiary, or any dividend by the Company or
any Subsidiary to New Holdings the proceeds of which are
utilized by New Holdings to make payments, to The Yucaipa
Companies or the principals or any Affiliates thereof for
consulting, management, investment banking or similar services,
or for reimbursement of losses, costs and expenses pursuant to
the Consulting Agreement, (ii) any payment by the Company or
any Subsidiary pursuant to the Second Amended and Restated Tax
Sharing Agreement, dated as of the Issue Date, by and among
Food 4 Less, all direct and indirect Subsidiaries, and New
Holdings, as such Tax Sharing Agreement may be amended from
time to time, so long as the payment thereunder by the Company
and its Subsidiaries shall not exceed the amount of taxes the
Company would be required to pay if it were the filing person
for all applicable taxes, (iii) any payment by the Company or
any Subsidiary pursuant to the Transfer and Assumption
Agreement, dated as of June 23, 1989, between Food 4 Less and
Holdings, as in effect on the Issue Date, (iv) any payment by
the Company or any Subsidiary, or any dividend by the Company
or any Subsidiary to New Holdings the proceeds of which are
used by New Holdings to make payments, (a) in connection with
repurchases of outstanding shares of the Company's or New
Holding's Common Stock following the death, disability or
termination of employment of management stockholders, and
(b) of amounts required to be paid by New Holdings, the Company
or any of its Subsidiaries to participants or former
participants in employee benefit plans upon 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 any unused amounts may be carried over to any
subsequent Yearly Period subject to a maximum amount of
<PAGE> 38
$20 million in any Yearly Period), (v) from and after June 30,
1998, payments of cash dividends or loans to New Holdings in an
amount sufficient to enable New Holdings to make payments of
interest required to be made in respect of the Discount Notes
in an amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vi) from and after June 15, 2000, payments of cash dividends
to New Holdings in an amount sufficient to enable New Holdings
to make payments of interest required to be made in respect of
the Seller Debentures and the New Discount Debentures in an
amount not to exceed the amount payable thereunder in
accordance with the terms thereof in effect on the Issue Date,
(vii) dividends or other payments to New Holdings sufficient to
enable New Holdings to perform accounting, legal, corporate
reporting and administrative functions in the ordinary course
of business or to pay required fees and expenses in connection
with the Merger, the FFL Merger, the Reincorporation Merger and
the registration under applicable laws and regulations of its
debt or equity securities, (viii) dividends or other
distributions by the Compay to New Holdings on the Issue Date
of shares of New Holdings common stock owned by the Company,
(ix) dividends by the Company to New Holdings of the Net Cash
Proceeds of an Asset Sale to the extent that (a) the Company or
any of the Subsidiaries is required pursuant to this Indenture
to utilize such Net Cash Proceeds to repay the Securities (and
has complied with all such requirements), (b) such Net Cash
Proceeds are not required to be and have not been utilized to
repay outstanding Indebtedness of the Company or any of the
Subsidiaries and (c) New Holdings is required pursuant to the
documents governings any outstanding Indebtedness of New
Holdings to utilize such Net Cash Proceeds to repay such
Indebtedness (it being understood that only the amounts not
utilized as described in clauses (a) and (b) of this
clause (ix) shall be permitted to be distributed to New
Holdings pursuant to this clause (ix)), (x) the loan by the
Company on the Issue Date to RGC Investment Co. of not more
than $5 million and (xi) for so long as the sole business
activity of such partnership is to acquire, hold, sell,
exchange, transfer or otherwise dispose of all or any portion
of the New Discount Debentures and to manage its investment in
the New Discount Debentures, any payment by the Company or any
Subsidiary, or any dividend or loan to New Holdings, the
proceeds of which are utilized by New Holdings to fund ongoing
costs and expenses of RGC Partners, L.P. pursuant to the
Subscription Agreement and the Registration Rights Agreement.
"Permitted Subordinated Reorganization Securities"
means securities of the Company issued in a plan of
reorganization in a case under the Bankruptcy Law relating to
the Company which constitutes either (y) Capital Stock (other
<PAGE> 39
than Disqualified Capital Stock with the reference to "Maturity
Date" in the definition of such term modified to relate to the
final stated maturity of any debt securities issued in such
plan of reorganization to the holders of Designated Senior
Indebtedness ("Senior Reorganization Securities")) or (z) debt
securities of the Company which are (i) unsecured, (ii) have no
scheduled mandatory amortization thereon prior to the final
stated maturity of the Senior Reorganization Securities and
(iii) are subordinated in right of payment to the Senior
Reorganization Securities to at least the same extent as the
Securities are subordinated to Designated Senior Indebtedness.
"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, (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 the Company, (iv) any investment
account whose investment managers and investment advisors
consist solely of such person and/or Permitted Transferees of
such person and (v) any investment fund or investment entity
that is a subsidiary of such person or a Permitted Transferee
of such person.
"person" means any individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated
organization or government or other agency or political
subdivision thereof.
"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,
Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
<PAGE> 40
person, over shares of Capital Stock of any other class 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 the Company's chief financial officer or Board
of Directors in consultation with its independent certified
public accountants.
"Public Equity Offering" means an underwritten public
offering of Common Stock of the Company or New Holdings
pursuant to a registration statement filed with the Commission
in accordance with the Securities Act which public equity
offering results in gross proceeds to the Company or New
Holdings, as the case may be, of not less than $20 million;
provided, however, that in the case of a Public Equity Offering
by New Holdings, New Holdings contributes to the capital of the
Company net proceeds in an amount sufficient to redeem
Securities called for redemption in accordance with the terms
thereof.
"Qualified Capital Stock" means, with respect to any
person, any Capital Stock of such person that is not
Disqualified Capital Stock.
"Ralphs Grocery Company" means Ralphs Grocery
Company, Inc., a Delaware corporation, and its successors.
"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 Paragraph 5 of the
Securities annexed hereto as Exhibit A.
"Redemption Price," when used with respect to any
Security to be redeemed, means the price fixed for such
redemption pursuant to this Indenture and Paragraph 5 of the
Securities annexed hereto as Exhibit A.
<PAGE> 41
"Reference Date" shall have the meaning provided in
Section 5.03.
"Reference Period" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"Refinancing Indebtedness" means, with respect to any
person, Indebtedness of such person issued in exchange for, or
the proceeds from the issuance and sale or disbursement of
which are used to substantially concurrently repay, redeem,
refund, refinance, discharge or otherwise retire for value, in
whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or
renewal of (collectively, an "amendment"), any Indebtedness of
such person existing on the Issue Date or Indebtedness (other
than Permitted Indebtedness, except Permitted Indebtedness
incurred pursuant to clauses (c), (d), (h) and (j) of the
definition thereof) incurred in accordance with this Indenture
(a) in a principal amount (or, if such Refinancing Indebtedness
provides for an amount less than the principal amount thereof
to be due and payable upon the acceleration thereof, with an
original issue price) not in excess of (without duplication)
(i) the principal amount or the original issue price, as the
case may be, of the Indebtedness so refinanced (or, if such
Refinancing Indebtedness refinances Indebtedness under a
revolving credit facility or other agreement providing a
commitment for subsequent borrowings, with a maximum commitment
not to exceed the maximum commitment under such revolving
credit facility or other agreement) plus (ii) unpaid accrued
interest on such Indebtedness plus (iii) premiums, penalties,
fees and expenses actually incurred by such person in
connection with the repayment or amendment thereof and (b) with
respect to Refinancing Indebtedness that repays or constitutes
an amendment to Subordinated Indebtedness, such Refinancing
Indebtedness (x) shall not have any fixed mandatory redemption
or sinking fund requirement in an amount greater than or at a
time prior to the amounts and times specified in such repaid or
amended Subordinated Indebtedness, except to the extent that
any such requirement applies on a date after the Maturity Date
and (y) shall contain subordination and default provisions no
less favorable in any material respect to Holders than those
contained in such repaid or amended Subordinated Indebtedness.
"Registrar" shall have the meaning provided in
Section 2.03.
"Registration Rights Agreement" means that certain
Registration Rights Agreement by and between RGC Partners,
L.P., New Holdings and Food 4 Less, as such Registration Rights
<PAGE> 42
Agreement may be amended or replaced, so long as any amounts
paid by New Holdings and the Company under any amended or
replacement agreement do not exceed the amounts payable by New
Holdings and the Company under such Registration Rights
Agreement as in effect on the Issue Date.
"Reincorporation Merger" means the merger, prior to
the Merger, of Holdings with and into New Holdings.
"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 the Company or any of its Subsidiaries 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 the Company and its
Subsidiaries 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 the Company and its Subsidiaries as
it is conducted as of the Issue Date and as such business may
thereafter evolve or change.
"Representative" means the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness;
provided that in no event shall United States Trust Company of
New York, in its capacities as Trustee, Registrar, co-Registrar
or Paying Agent, serve as Representative.
"Restricted Debt Prepayment" means any purchase,
redemption, defeasance (including, but not limited to,
in-substance or legal defeasance) or other acquisition or
retirement for value, directly or indirectly, by the Company or
a Subsidiary, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking fund payment, as
the case may be, in respect of Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment,
(ii) Investment (other than a Permitted Investment) or
(iii) Restricted Debt Prepayment.
"RSI" means Ralphs Supermarkets Inc., a Delaware
corporation, and its successors.
"Securities" means the Company's 11% Senior
Subordinated Notes due 2005, as amended or supplemented from
time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
<PAGE> 43
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission
promulgated thereunder.
"Seller Debentures" means the 13 5/8% Senior
Subordinated Pay-in-Kind Debentures due 2007 of New Holdings
issued pursuant to the Seller Debenture Indenture, including
any additional 13 5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 issued as interest thereon, in each case,
as such Seller Debentures may be modified or amended from time
to time and future refinancings thereof to the extent such
refinancings are permitted under this Indenture.
"Seller Debenture Indenture" means the indenture
between New Holdings and Norwest Bank Minnesota, National
Association, as trustee, dated as of the Issue Date under which
the 13 5/8% Senior Subordinated Pay-in-Kind Debentures due 2007
of New Holdings were issued, as the same may be modified and
amended from time to time and refinancings thereof to the
extent such refinancings are permitted under this Indenture.
"Senior Indebtedness" means the principal of,
premium, if any, and interest on, and all other Obligations
with respect to, any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred
or assumed, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include (x) the principal of,
premium, if any, and interest on all Obligations of every
nature of the Company from time to time owed to the lenders
under the Credit Agreement, including, without limitation, the
Letter of Credit Obligations and principal of and interest on
and all fees, indemnities, and expenses payable under the
Credit Agreement and (y) interest accruing thereon subsequent
to the occurrence of any Event of Default specified in clause
(vi) or (vii) of Section 7.01 relating to the Company, whether
or not the claim for such interest is allowed under any
applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (a) Indebtedness
evidenced by the Securities, (b) Indebtedness that is expressly
subordinate or junior in right of payment to any Indebtedness
of the Company including, but not necessarily limited to (i)
the 13.75% Senior Subordinated Notes due 2005 of the Company
issued pursuant to an Indenture dated as of June 14, 1995, (ii)
the 13.75% Senior Subordinated Notes due 2001 of the Company
issued pursuant to an Indenture dated as of June 15, 1991,
(iii) the 10.25% Senior Subordinated Notes due 2002 of the
<PAGE> 44
Company issued pursuant to an Indenture dated as of July 29,
1992, and (iv) the 9% Senior Subordinated Notes due 2003 of the
Company issued pursuant to an Indenture dated as of March 30,
1993, each of (i) through (iv) above which shall rank pari
passu with the Securities, (c) Indebtedness which, when
incurred and without respect to any election under Section
1111(b) of Title 11, United States Code, is without recourse to
the Company (other than Capitalized Lease Obligations), (d)
Indebtedness which is represented by Disqualified Capital
Stock, (e) obligations for goods, materials or services
purchased in the ordinary course of business or obligations
consisting of trade payables, (f) Indebtedness of or amounts
owed by the Company for compensation to employees or for
services rendered to the Company, (g) any liability for
federal, state, local or other taxes owed or owing by the
Company, (h) Indebtedness of the Company to a Subsidiary of the
Company, and (i) that portion of any Indebtedness which is
incurred by the Company in violation of this Indenture.
"Senior Notes" means (i) the 10.45% Senior Notes due
2004 of the Company to be issued on the Merger Date and
(ii) the 10.45% Senior Notes due 2000 of the Company.
"Significant Senior Indebtedness" means Senior
Indebtedness which, at the time of determination, is equal to
or greater than $50 million in aggregate principal amount.
"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 of the
Company 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 Issue Date) or (b) material to the financial condition or
results of operations of the Company and its Subsidiaries 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 the
Company, dividends payable solely in Qualified Capital Stock of
the Company), 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
<PAGE> 45
Capital Stock (other than exchangeable or convertible
Indebtedness of such person), 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 the Company) 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 the Company, through the issuance in exchange therefor
solely of Qualified Capital Stock of the Company; provided,
however, that in the case of a Subsidiary, the term "Stock
Payment" shall not include any such payment with respect to its
Capital Stock or warrants, rights or options to purchase or
acquire shares of any class of its Capital Stock that are owned
solely by the Company or a wholly owned Subsidiary.
"Subordinated Indebtedness" means, with respect to
the Company or any Subsidiary Guarantor, Indebtedness of such
person which is subordinated in right of payment to the
Securities or the Guarantee of such Subsidiary Guarantor, as
the case may be.
"Subscription Agreement" means that certain
Subscription Agreement, between RGC Partners, L.P., New
Holdings, Food 4 Less and the partnership investors listed on
Exhibit A thereto, as such Subscription Agreement may be
amended or replaced, so long as any amounts paid by New
Holdings and the Company under any amended or replacement
agreement do not exceed the amounts payable by New Holdings and
the Company under such Subscription Agreement as in effect on
the Issue Date.
"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 fifty percent 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
<PAGE> 46
election of a majority of the directors or other governing body
of such person.
"Subsidiary" means any subsidiary of the Company.
"Subsidiary Guarantor" means (i) each of Alpha Beta
Company, Bay Area Warehouse Stores, Inc., Bell Markets, Inc.,
Cala Co., Cala Foods, Inc., Falley's Inc., Food 4 Less of
California, Inc., Food 4 Less Merchandising, Inc., Food 4 Less
GM, Inc. and Food 4 Less of Southern California, Inc., (ii)
upon consummation of the Merger, Crawford Stores, Inc., (iii)
each of the Company's Subsidiaries which becomes a guarantor of
the Securities in compliance with the provisions set forth in
Section 5.17, and (iv) each of the Company's Subsidiaries
executing a supplemental indenture in which such Subsidiary
agrees to be bound by the terms of this Indenture.
"Term Loans" means the term loan facility under the
Credit Agreement and any agreement governing Indebtedness
incurred to refund, replace or refinance any borrowings
outstanding under such facility or under any prior refunding,
replacement or refinancing thereof (in each case, in whole or
in part, and without limitation as to amount, terms,
conditions, covenants and other provisions).
"The Yucaipa Companies" means The Yucaipa Companies,
a California general partnership, or any successor thereto
which is an affiliate of Ronald W. Burkle or his Permitted
Transferees and which has been established for the sole purpose
of changing the form of The Yucaipa Companies from that of a
partnership to that of a limited liability company or any other
form of entity which is not materially adverse to the rights of
the Holders under this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code {{ 77aaa-77bbbb), as amended, as in effect on the date
this Indenture is qualified under the TIA, except as otherwise
provided in Section 10.03.
"Transaction Date" shall have the meaning provided in
the definition of "Operating Coverage Ratio" contained in this
Section 1.01.
"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.
<PAGE> 47
"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 9.02.
"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.
"Yearly Period" means each fiscal year of the
Company; provided that the first Yearly Period shall begin on
the Issue Date and shall end on January 28, 1996.
SECTION 1.02. 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 or a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the
Company, any Subsidiary Guarantor, or any other obligor on the
Securities or the Guarantees.
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 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
<PAGE> 48
(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 TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Securities, the notation thereon relating to the
Guarantee 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. The Company 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
and the Guarantee shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable,
the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions
and to be bound thereby.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant
Secretary, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by
manual or facsimile signature. Each Subsidiary Guarantor shall
execute the Guarantee in the manner set forth in Section 11.09.
<PAGE> 49
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 for
original issue in the aggregate principal amount of up to
$550,000,000 (or such lesser amount (but not less than
$524,055,000 aggregate principal amount) as is requested
authenticated by the Trustee and issued by the Company on the
Issue Date) upon a written order of the Company 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 $550,000,000 (or such lesser amount (but
not less than $522,395,000 aggregate principal amount) as is
requested authenticated by the Trustee and issued by the
Company on the Issue Date), except as provided in Section 2.07.
Upon the written order of the Company in the form of an
Officers' Certificate, the Trustee shall authenticate
Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent
reasonably acceptable to the Company 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 the Company and Affiliates of the Company.
The Securities shall be issuable only in registered
form without coupons in denominations of $1,000 and integral
multiples thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the
Borough of Manhattan, The City of New York, where (a) Secu-
rities 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
<PAGE> 50
(c) notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The Company
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 the
Company of its obligation to maintain an office or agency in
the Borough of Manhattan, The City of New York, for such
purposes. The Company may act as its own Registrar or Paying
Agent except that for the purposes of Articles Three and Nine
and Sections 5.15 and 5.16, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, 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.
The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a
successor has been appointed.
The Company 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. The Company shall notify the Trustee, in
advance, of the name and address of any such Agent. If the
Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other
than the Trustee to agree in writing that, subject to Article
Four and Article Twelve, each Paying Agent shall hold in trust
for the benefit of Holders or the Trustee all assets 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 the Company or any other obligor on the Securities),
and shall notify the Trustee of any Default by the Company (or
any other obligor on the Securities) in making any such
payment. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate such assets and hold them as a separate
trust fund, subject to Article Four and Article Twelve. The
Company at any time may require a Paying Agent to distribute
all assets 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 held by it to the Trustee and to account for any assets
<PAGE> 51
distributed. Upon distribution to the Trustee of all assets
that shall have been delivered by the Company to the Paying
Agent, the Paying Agent shall have no further liability for
such assets.
SECTION 2.05. 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, the Company 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 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer of such
Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transaction are met; provided, however, that the
Securities surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or
co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations
of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or
co-Registrar's request. No service charge shall be made for
any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Sections
2.02, 2.07, 2.10, 3.06, 5.15, 5.16 or 10.05). The Registrar or
co-Registrar shall not be required to register the transfer of
or exchange of any Security (i) during a period beginning at
the opening of business 15 days before the mailing of a notice
of redemption of Securities and ending at the close of business
on the day of such mailing and (ii) selected for redemption in
whole or in part pursuant to Article Three, except the
unredeemed portion of any Security being redeemed in part.
<PAGE> 52
SECTION 2.07. 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, the Company shall
issue and the Trustee shall authenticate a replacement Security
if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or
any Agent from any loss which any of them may suffer if a
Security is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel.
Every replacement Security is an additional
obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the
Securities that have been authenticated by the Trustee 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 the Company,
the Subsidiary Guarantors or any of their respective Affiliates
holds the Security.
If a Security is replaced pursuant to Section 2.07
(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 2.07.
If on a Redemption Date or the Maturity Date the
Paying Agent (other than the Company or a 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 unless, pursuant to the provisions of Article Four
and Article Twelve, the Paying Agent is unable to make payments
on the Securities to the Holders thereof.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required
principal amount of Securities have concurred in any direction,
<PAGE> 53
waiver or consent, Securities owned by the Company, the
Subsidiary Guarantors or any of their respective 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.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery,
the Company 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 the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company 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 the Company or a Subsidiary), and no one else,
shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07,
the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation.
If the Company or any Subsidiary Guarantor 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 the Company defaults in a payment of interest on
the Securities, it shall, unless the Trustee fixes another
record date pursuant to Section 7.10, pay the defaulted
interest, plus (to the extent lawful) any interest payable on
the defaulted interest, to the persons who are Holders on a
subsequent special record date, which date shall be the
fifteenth day next preceding the date fixed by the Company 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, the Company
<PAGE> 54
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.
The Company 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 THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant
to Paragraph 5 of the Securities, it shall notify the Trustee,
with a copy to the Credit Agent, of the Redemption Date and the
principal amount of Securities to be redeemed and whether it
wants the Trustee to give notice of redemption to the Holders
at least 30 days (unless a shorter notice shall be satisfactory
to the Trustee) but not more than 60 days before the Redemption
Date. In order to effect a redemption pursuant to Paragraph 5
of the Securities with the proceeds of a Public Equity
Offering, the Company shall send the redemption notice not
later than 60 days after the consummation of such Public Equity
Offering. Any such notice 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 3.02. 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 any other method that the
Trustee considers fair and appropriate and, if such Securities
are listed on any securities exchange, by a method that
complies with the requirements of such exchange; provided,
however, that any redemption pursuant to Paragraph 5 of the
Securities with the proceeds of a Public Equity Offering shall
<PAGE> 55
be made on a pro rata basis unless such method is otherwise
legally prohibited.
The Trustee shall make the selection from the
Securities outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000
may be redeemed only in whole. The Trustee may select for
redemption portions (equal to $1,000 or integral multiples
thereof) of the principal amount 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 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company 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 and the Credit Agent. In order to effect a
redemption pursuant to Paragraph 5 of the Securities with the
proceeds of a Public Equity Offering, the Company shall send
the redemption notice not later than 60 days after the
consummation of such Public Equity Offering. At the Company's
request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's 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 (a) the Company defaults in making
the redemption payment or (b) such redemption payment is
prohibited pursuant to Article Four or Article Twelve
hereof or otherwise, 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
<PAGE> 56
upon surrender to the Paying Agent of the Securities
redeemed;
(6) if any Security is being redeemed in part, the
portion of the 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 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance
with Section 3.03, 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
unless prohibited pursuant to Article Four or Article Twelve or
otherwise pursuant to this Indenture. Securities that are
redeemed by the Company or that are purchased by the Company
pursuant to a Net Proceeds Offer as described in Section 5.16
or pursuant to a Change of Control Offer as described in
Section 5.15 or that are otherwise acquired by the Company will
be surrendered to the Trustee for cancellation.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company 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 the
Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any U.S. Legal Tender so
deposited which is not required for that purpose upon the
written request of the Company, except with respect to monies
owed as obligations to the Trustee pursuant to Article Eight
and Article Twelve hereof.
If the Company complies with the preceding paragraph
and payment of the Securities called for redemption is not
prohibited under Article Four or Article Twelve or otherwise,
then, unless the Company defaults in the payment of such
<PAGE> 57
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.
SECTION 3.06. 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 FOUR
SUBORDINATION
SECTION 4.01. Securities Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, the
Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees that the payment of the
Obligations on the Securities is subordinated, to the extent
and in the manner provided in this Article Four, to the prior
payment in full in cash or Cash Equivalents of all Senior
Indebtedness.
This Article Four 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.
The obligations of the Company to the Trustee under
Section 8.07 shall not be subject to the provisions of this
Article Four.
SECTION 4.02. Suspension of Payment When Senior
Indebtedness in Default._________
(a) Unless Section 4.03 shall be applicable, upon
(1) the occurrence of a Payment Default and (2) receipt by the
Trustee and the Company from the Representatives of written
notice of such occurrence, then no direct or indirect payment
(other than payments previously made pursuant to Article Nine
hereof) or distribution of any assets of the Company of any
kind or character shall be made by or on behalf of the Company
on account of the Obligations on the Securities or on account
of the purchase or redemption or other acquisition of
<PAGE> 58
Securities whether pursuant to the terms of the Securities or
upon acceleration or otherwise unless and until such Payment
Default shall have been cured or waived or shall have ceased to
exist or such Designated Senior Indebtedness or Significant
Senior Indebtedness, as the case may be, as to which such
Payment Default relates shall have been discharged or paid in
full in cash or Cash Equivalents, after which the Company shall
resume making any and all required payments in respect of the
Securities, including any missed payments.
(b) Unless Section 4.03 shall be applicable, upon
(1) the occurrence of a Non-payment Default and (2) the earlier
of (i) receipt by the Trustee from the Representative of
written notice of such occurrence stating that such notice is a
"Payment Blockage Notice" pursuant to Section 4.02(b) of this
Indenture or (ii) if such Non-payment Default results from the
acceleration of the Securities, the date of such acceleration,
no such payment (other than payments previously made pursuant
to Article Nine hereof) or distribution of any assets of the
Company of any kind or character shall be made by the Company
on account of any principal of, premium, if any, or interest on
the Securities or on account of the purchase or redemption or
other acquisition of Securities for a period ("Payment Blockage
Period") commencing on the earlier to occur of the date of
receipt by the Trustee of the written notice of a Non-payment
Default from the Representative or the date of the acceleration
referred to in clause (ii) above, as the case may be, unless
and until the earlier to occur of the following events: (w)
179 days shall have elapsed since receipt of such notice or the
date of the acceleration of the Securities, as the case may be
(provided such Designated Senior Indebtedness shall theretofore
not have been accelerated), (x) such Non-payment Default shall
have been cured or waived or shall have ceased to exist,
(y) such Designated Senior Indebtedness shall have been
discharged or paid in full in cash or Cash Equivalents or
(z) such Payment Blockage Period shall have been terminated by
written notice to the Company or the Trustee from the
Representative initiating such Payment Blockage Period or the
holders of at least a majority in principal amount of such
issue of Designated Senior Indebtedness initiating such Payment
Blockage Period, after which, in the case of clause (w), (x),
(y) or (z), the Company shall resume making any and all
required payments in respect of the Securities, including any
missed payments. Notwithstanding any other provision of this
Indenture, only one Payment Blockage Period may be commenced
within any consecutive 365-day period and no Non-payment
Default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of
any Payment Blockage Period shall be, or shall be made, the
basis for the commencement of a second Payment Blockage Period,
<PAGE> 59
whether or not within a period of 365 consecutive days, unless
such event of default shall have been cured or waived for a
period of not less than 90 consecutive days. In no event shall
a Payment Blockage Period extend beyond 179 days from the date
of the receipt of the written notice by the Trustee of a
Non-payment Default or the date of the acceleration initiating
such Payment Blockage Period, as the case may be.
(c) In the event that, notwithstanding the
foregoing, the Trustee or the Holder of any Security shall have
received any payment prohibited by the foregoing provisions of
this Section 4.02, then and in such event such payment shall be
paid over and delivered forthwith to the Representatives or as
a court of competent jurisdiction shall direct.
SECTION 4.03. Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company.__
Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, upon any dissolution, winding-up, total or partial
liquidation or reorganization of the Company (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 the
Company and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall
first be entitled to receive payments in full in cash or
Cash Equivalents of all amounts payable under Senior
Indebtedness (including, with respect to Designated Senior
Indebtedness, any interest accruing after the commencement
of any such proceeding at the rate specified in the
applicable Designated Senior Indebtedness whether or not
interest is an allowed claim enforceable against the
Company in any such proceeding) before the Holders will be
entitled to receive any payment with respect to the
Securities (excluding Permitted Subordinated
Reorganization Securities), and until all Obligations with
respect to the Senior Indebtedness are paid in full in
cash or Cash Equivalents, any distribution to which the
Holders would be entitled (excluding Permitted
Subordinated Reorganization Securities) shall be made to
the holders of Senior Indebtedness; provided, however,
that no payment on any Guarantee shall constitute payment
on behalf of the Company for purposes of this
Section 4.03(a);
<PAGE> 60
(b) any payment or distribution of assets of the
Company 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
(excluding Permitted Subordinated Reorganization
Securities) except for the provisions of this Article
Four, 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 remaining unpaid held or
represented by each, until all Senior Indebtedness
remaining unpaid shall have been paid in full in cash or
Cash Equivalents after giving effect to any concurrent
payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, shall be received by the Trustee
or the Holders or any Paying Agent on account of principal
of, premium, if any, or interest on the Securities
(excluding Permitted Subordinated Reorganization
Securities) before all Senior Indebtedness is paid in full
in cash or Cash Equivalents, such payment or distribution
(subject to the provisions of Sections 4.06 and 4.07)
shall be received, segregated from other funds, and held
in trust by the Trustee 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 or Cash Equivalents, after giving effect to any
concurrent payment or distribution 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 Representative.
The consolidation of the Company with, or the merger
of the Company with or into, another person or the liquidation
or dissolution of the Company following the conveyance,
transfer or lease of its properties and assets substantially as
<PAGE> 61
an entirety to another person upon the terms and conditions set
forth in Article Six hereof shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of
the Company for the purposes of this Article Four if the person
formed by such consolidation or the surviving entity of such
merger or the person which acquires by conveyance, transfer or
lease such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the
conditions set forth in such Article Six.
The Company shall give prompt notice to the Trustee
prior to any dissolution, winding-up, total or partial
liquidation or reorganization (including, without limitation,
in bankruptcy, insolvency, or receivership proceedings or upon
any assignment for the benefit of creditors or any other
marshalling of the Company's assets and liabilities).
SECTION 4.04. Securityholders To Be Subrogated to Rights
of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash
Equivalents of all Senior Indebtedness, the Holders of
Securities shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of
assets of the Company 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 the Company, or by or on behalf of the Holders by
virtue of this Article Four, which otherwise would have been
made to the Holders, shall, as between the Company and the
Holders, be deemed to be payment by the Company to or on
account of the Senior Indebtedness, it being understood that
the provisions of this Article Four 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 Four shall have been applied, pursuant to the
provisions of this Article Four, 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 or Cash Equivalents.
<PAGE> 62
SECTION 4.05. Obligations of the Company Unconditional.
Nothing contained in this Article Four or elsewhere
in this Indenture or in the Securities is intended to or shall
impair, as between the Company and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to
the Holders the principal of and interest on 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 the Company
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 rights,
if any, under this Article Four, of the holders of Senior
Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon
any payment or distribution of assets or securities of the
Company referred to in this Article Four, the Trustee, subject
to the provisions of Sections 8.01 and 8.02, 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 the Company, the
amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or
to this Article Four. Nothing in this Section 4.05 shall apply
to the claims of, or payments to, the Trustee under or pursuant
to Section 8.07.
SECTION 4.06. 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 the Company 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 8.01 and 8.02, shall be entitled in all
respects conclusively to assume that no such fact exists.
<PAGE> 63
SECTION 4.07. 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 9.02 shall be for the sole benefit of
Securityholders and, to the extent allocated for the payment of
Securities, shall not be subject to the subordination
provisions of this Article Four. Otherwise, any deposit of
assets or securities by or on behalf of the Company with the
Trustee or any Paying Agent (whether or not in trust) for the
payment of principal of or interest on any Securities shall be
subject to the provisions of this Article Four; 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 4.06,
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; provided, further, that no payment on any Guarantee shall
constitute payment on behalf of the Company for purposes of
this Section 4.07. The foregoing shall not apply to the Paying
Agent if the Company or any Subsidiary or Affiliate of the
Company is acting as Paying Agent. Nothing contained in this
Section 4.07 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by this
Article Four.
SECTION 4.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection
(a) of this Section 4.08, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of
or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination
provided in this Article Four or the obligations hereunder of
<PAGE> 64
the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (2) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any person
liable in any manner for the collection or payment of Senior
Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other person; provided,
however, that in no event shall any such actions limit the
right of the Holders of the Securities to take any action to
accelerate the maturity of the Securities pursuant to Article
Seven hereof or to pursue any rights or remedies hereunder or
under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
(c) 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 Four, 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 Four
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 4.09. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
Each Holder of the Securities by his acceptance
thereof 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 Four, and appoints the Trustee his attorney-in-fact for
such purpose, including, in the event of any dissolution,
winding-up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency or receivership proceedings
or upon an assignment for the benefit of creditors or any other
<PAGE> 65
marshalling of assets and liabilities of the Company) tending
towards liquidation or reorganization of the business and
assets of the Company, the immediate filing of a claim for the
unpaid balance of its or his Securities 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
Securityholder 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 Securityholder in any such
proceeding.
SECTION 4.10. Right of Trustee To Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights
set forth in this Article Four 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 4.11. No Suspension of Remedies.
The failure to make a payment on account of principal
of or interest on the Securities by reason of any provision of
this Article Four shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section
7.01.
Nothing contained in this Article Four shall limit
the right of the Trustee or the Holders of Securities to take
any action to accelerate the maturity of the Securities
pursuant to Article Seven or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if
any, under this Article Four of the holders, from time to time,
of Senior Indebtedness.
<PAGE> 66
SECTION 4.12. 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
the Company or any other person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of
this Article Four or otherwise. Nothing in this Section 4.12
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 FIVE
COVENANTS
SECTION 5.01. Payment of Securities.
The Company shall pay the principal of and interest
on the Securities on the dates and in the manner provided in
the Securities. An installment of principal of or interest on
the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent (other than the Company or a
Subsidiary) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment; provided, however, that
U.S. Legal Tender held by the Trustee for the benefit of
holders of Senior Indebtedness or Guarantor Senior Indebtedness
or the payment of which to the Holders is prohibited pursuant
to the provisions of Article Four or Article Twelve hereof or
otherwise shall not be considered to be designated for the
payment of any installment of principal or interest on the
Securities within the meaning of this Section 5.01.
The Company shall pay interest on overdue principal
at the rate borne by the Securities and it shall pay interest
on overdue installments of interest at the same rate, to the
extent lawful.
SECTION 5.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of
Manhattan, The City of New York, the office or agency required
under Section 2.03 hereof. The Company shall give prior notice
to the Trustee of the location, and any change in the location,
<PAGE> 67
of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section
13.02.
SECTION 5.03. Limitation on Restricted Payments.
The Company shall not, and shall cause each of its
Subsidiaries not to, directly or indirectly, make any
Restricted Payment if, at the time of such proposed Restricted
Payment, or after giving effect thereto, (a) a Default or an
Event of Default shall have occurred and be continuing, (b) the
Company could not incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 5.12 or (c)
the aggregate amount expended for all Restricted Payments,
including such proposed 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 the Company), subsequent to
the Issue Date, shall exceed the sum of (i) 50% of the
aggregate Consolidated Net Income (or if such aggregate
Consolidated Net Income is a loss, minus 100% of such loss) of
the Company earned subsequent to the Issue Date and on or prior
to the date of the proposed Restricted Payment (the "Reference
Date"), plus (ii) 100% of the aggregate Net Proceeds received
by the Company from any person (other than a Subsidiary of the
Company) from the issuance and sale (including upon exchange or
conversion for other securities of the Company) 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 the
Company or any Subsidiary, until and to the extent such
borrowing is repaid), plus (iii) 100% of the aggregate net cash
proceeds received by the Company as capital contributions to
the Company after the Issue Date, plus (iv) $25 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 of the Company or the repurchase, redemption or
other repayment of any Subordinated Indebtedness in exchange
for or solely out of the proceeds of the substantially
<PAGE> 68
concurrent sale (other than to a Subsidiary) of shares of
Qualified Capital Stock of the Company, (3) the repurchase,
redemption or other repayment of any Subordinated Indebtedness
in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of
Subordinated Indebtedness of the Company with an Average Life
equal to or greater than the then remaining Average Life of the
Subordinated Indebtedness repurchased, redeemed or repaid,
(4) any payment by the Company or any Subsidiary, or any
dividend by the Company or any Subsidiary to New Holdings the
proceeds of which are used by New Holdings to make payments
required to be made due to the exercise of statutory
dissenter's, appraisal or similar rights by holders of common
stock of FFL in connection with the FFL Merger and
(5) Permitted Payments; provided, however, that the declaration
of each dividend paid in accordance with clause (1) above, each
acquisition, repurchase, redemption or other repayment made in
accordance with, or of the type set forth in, clause (2) above,
and each payment described in clause (iii), (iv), (vii) and
(ix) of the definition of the term "Permitted Payments" shall
each be counted for purposes of computing amounts expended
pursuant to subclause (c) in the immediately preceding
paragraph, and no amounts expended pursuant to clause (3) or
(4) above or pursuant to clauses (i), (ii), (v), (vi), (viii),
(x), (xi) or (xii) of the definition of the term "Permitted
Payments" shall be so counted; provided further that to the
extent any payments made pursuant to clause (vii) of the
definition of the term "Permitted Payments" are deducted for
purposes of computing the Consolidated Net Income of the
Company, such payments shall not be counted for purposes of
computing amounts expended as Restricted Payments pursuant to
subclause (c) in the immediately preceding paragraph.
Prior to making any Restricted Payment under the
first paragraph of this Section 5.03, the Company 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 5.04. Corporate Existence.
Except as otherwise permitted by Article Six, the
Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its
Significant Subsidiaries in accordance with the respective
organizational documents of each such Significant Subsidiary
<PAGE> 69
and the rights (charter and statutory) and franchises of the
Company and each such Significant Subsidiary; provided,
however, that the Company 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 the
Company 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 the Company or any
such Significant Subsidiary.
SECTION 5.05. Payment of Taxes and Other Claims.
The Company 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 the Company 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 the Company and its Subsidiaries taken as a
whole.
SECTION 5.06. Maintenance of Properties and Insurance.
(a) The Company shall cause all properties used or
useful to the conduct of its business or the business of any of
its 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 properties (together with all other such
failures) would not have a material adverse effect on the
financial condition or results of operations of the Company and
its Subsidiaries taken as a whole; provided, however, that
nothing in this Section 5.06 shall prevent the Company or any
Subsidiary from discontinuing the operation or maintenance of
<PAGE> 70
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 the Company or the Subsidiary concerned, or of the
senior officers of the Company or such Subsidiary, as the case
may be, desirable in the conduct of the business of the Company
or such Subsidiary, as the case may be, or (iii) is otherwise
permitted by this Indenture.
(b) The Company 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 the
Company are adequate and appropriate for the conduct of the
business of the Company 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 the Company or the applicable Subsidiary or (ii) customary,
in the reasonable, good faith opinion of the Company, 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 the Company and
its Subsidiaries, taken as a whole.
SECTION 5.07. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within
120 days after the end of the Company's 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 the Company
during such preceding fiscal year has kept, observed, performed
and fulfilled each and every such covenant and no event of
default in respect of any payment obligation under the Credit
Agreement, Default or Event of Default occurred during such
year or, if such signers do know of such an event of default,
Default or Event of Default, the certificate shall describe the
event of default, Default or Event of Default and its status
with particularity. The Officers' Certificate shall also
notify the Trustee should the Company elect to change the
manner in which it fixes its fiscal year end.
<PAGE> 71
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the Company shall deliver to the Trustee within
120 days after the end of each fiscal year a written statement
by the Company's 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) The Company shall deliver to the Trustee,
forthwith upon becoming aware, and in any event within 5 days
after the occurrence, of (i) any Default or Event of Default in
the performance of any covenant, agreement or condition
contained in this Indenture; (ii) any event of default in
respect of any payment obligation under the Credit Agreement or
any event of default under any other bond, debenture, note, or
other evidence of Indebtedness of the Company or any of its
Subsidiaries, or under any mortgage, indenture or other
instrument if such event of default related to Indebtedness at
any time in an aggregate principal amount exceeding $20
million, an Officers' Certificate specifying with particularity
such event.
SECTION 5.08. Compliance with Laws.
The Company 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 the Company and its
Subsidiaries taken as a whole.
SECTION 5.09. SEC Reports.
The Company will deliver to the Trustee within 15
days after the filing of the same with the Commission, copies
of the quarterly and annual report and of the information
documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act. Notwithstanding that the
<PAGE> 72
Company may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the
Trustee and Holders of Securities with such annual reports and
such information, documents and other reports specified in
Section 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of TIA Section 314(a).
SECTION 5.10. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
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 the Company 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
covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company 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 5.11. Limitation on Transactions with Affiliates.
(a) Neither the Company nor any of its Subsidiaries
shall (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities (other than
equity securities which do not constitute Disqualified Capital
Stock) to, (ii) purchase any property, assets or securities
(other than equity securities which do not constitute
Disqualified Capital Stock) from, (iii) make any Investment in,
or (iv) enter into or suffer to exist any contract or agreement
with or for the benefit of, an Affiliate or Significant
Stockholder (or any Affiliate of such Significant Stockholder)
of the Company or any Subsidiary (an "Affiliate Transaction"),
other than (x) Affiliate Transactions permitted under Section
5.11(b) and (y) Affiliate Transactions in the ordinary course
of business that are fair to the Company 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; provided that (A) with respect to Affiliate
Transactions involving aggregate payments in excess of $1
million and less than $5 million, the Company or such
Subsidiary, as the case may be, shall have delivered an
Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (y)
<PAGE> 73
above (other than the requirement set forth in such clause (y)
that such Affiliate Transaction be in the ordinary course of
business), (B) with respect to Affiliate Transactions involving
aggregate payments in excess of $5 million and less than $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered an Officers' Certificate to the Trustee
certifying that such Affiliate Transaction complies with clause
(y) above (other than the requirement set forth in such clause
(y) that such Affiliate Transaction be in the ordinary course
of business) and that such Affiliate Transaction has received
the approval of a majority of the disinterested members of the
Board of Directors of the Company 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 the Company
or the Subsidiary, as the case may be, that an Independent
Financial Advisor has reasonably and in good faith determined
that the financial terms of such Affiliate Transaction are fair
to the Company or such Subsidiary, as the case may be, or that
the terms of such Affiliate Transaction are at least as
favorable as might reasonably have been obtained at such time
from an unaffiliated party and that such Independent Financial
Advisor has provided written confirmation of such determination
to the Board of Directors and (C) with respect to Affiliate
Transactions involving aggregate payments in excess of $15
million, the Company or such Subsidiary, as the case may be,
shall have delivered to the Trustee a written opinion from an
Independent Financial Advisor to the effect that the financial
terms of such Affiliate Transaction are fair to the Company or
such Subsidiary, as the case may be, or that the terms of such
Affiliate Transaction are at least as favorable as those that
might reasonably have been obtained at the time from an
unaffiliated party.
(b) The provisions of Section 5.11(a) shall not
apply to (i) any Permitted Payment, (ii) any Restricted Payment
that is made in compliance with the provisions of Section 5.03,
(iii) reasonable and customary fees and compensation paid to,
and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary, as
determined by the Board of Directors of the Company or any
Subsidiary or the senior management thereof in good faith,
(iv) transactions exclusively between or among the Company and
any of its 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 Securityholders in
any material respect, (vi) the existence of, or the performance
<PAGE> 74
by the Company or any of its Subsidiaries of its obligations
under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related
thereto) to which it (or New Holdings) is a party as of the
Issue Date and any similar agreements which it (or New
Holdings) may enter into thereafter; provided, however, that
the existence of, or the performance by the Company or any
Subsidiaries 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
Securityholders in any material respect, (vii) transactions
permitted by, and complying with, the provisions of
Section 6.01 and (viii) transactions with suppliers or other
purchases or sales of goods or services, in each case in the
ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in
compliance with the terms of this Indenture which are fair to
the Company, in the reasonable determination of the Board of
Directors of the Company or the senior management thereof, or
are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party.
SECTION 5.12. Limitation on Incurrences of
Additional Indebtedness.
The Company shall not, and shall not permit any of
its Subsidiaries, directly or indirectly, to incur, assume,
guarantee, become liable, contingently or otherwise, with
respect to, or otherwise become responsible for the payment of
(collectively "incur") any Indebtedness other than Permitted
Indebtedness; provided, however, that if no Default with
respect to payment of principal of, or interest on, the
Securities or Event of Default under this Indenture shall have
occurred and be continuing at the time of or as a consequence
of the incurrence of any such Indebtedness, the Company may
incur Indebtedness if immediately before and immediately after
giving effect to the incurrence of such Indebtedness the
Operating Coverage Ratio of the Company would be greater than
2.0 to 1.0; provided further a Subsidiary may incur Acquired
Indebtedness to the extent such Indebtedness could have been
incurred by the Company pursuant to the immediately preceding
proviso.
SECTION 5.13. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries._____
The Company shall not, and shall not permit any
Subsidiary to, directly or indirectly, create or suffer to
<PAGE> 75
exist, or allow to become effective any consensual Payment
Restriction with respect to any of its Subsidiaries, except for
(a) any such restrictions contained in (i) the Credit Agreement
in effect on the Issue Date, as any such Payment Restriction
may apply to any present or future Subsidiary, (ii) this
Indenture and any agreement in effect at or entered into on the
Issue Date, (iii) 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 of any person, other than the person so acquired and
(z) such Indebtedness is otherwise permitted to be incurred
pursuant to Section 5.12), (iv) secured Indebtedness otherwise
permitted to be incurred pursuant to Sections 5.12 and 5.14
that limit the right of the debtor to dispose of the assets
securing such Indebtedness; (b) customary non-assignment
provisions restricting subletting or assignment of any lease or
other agreement entered into by a 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 joint venture agreements and other similar
agreements; (f) restrictions contained in Indebtedness incurred
to refinance, refund, extend or renew Indebtedness referred to
in clause (a) above; provided that the restrictions contained
therein are not materially more restrictive taken as a whole
than those provided for in such Indebtedness being refinanced,
refunded, extended or renewed and (g) Payment Restrictions
contained in any other Indebtedness permitted to be incurred
subsequent to the Issue Date pursuant to the provisions of
Section 5.12; provided that any such Payment Restrictions are
ordinary and customary with respect to the type of Indebtedness
being incurred (under the relevant circumstances) and, in any
event, no more restrictive than the most restrictive Payment
Restrictions in effect on the Issue Date.
SECTION 5.14. Limitation on Liens.
The Company shall not and shall not permit any
Subsidiary to create, incur, assume or suffer to exist any
Liens upon any of their respective assets unless the Securities
are equally and ratably secured by the Liens covering such
assets, except for (i) Liens on assets of the Company securing
Senior Indebtedness and Liens on assets of a Subsidiary
Guarantor which, at the time of incurrence, secure Guarantor
Senior Indebtedness; (ii) existing and future Liens securing
<PAGE> 76
Indebtedness and other obligations of the Company and its
Subsidiaries under the Credit Agreement and related documents
or any refinancing or replacement thereof in whole or in part
permitted under this Indenture, (iii) Permitted Liens,
(iv) Liens securing Acquired Indebtedness, provided that such
Liens (x) are not incurred in connection with, or in
contemplation of, the acquisition of the property or assets
acquired and (y) do not extend to or cover any property or
assets of the Company or any Subsidiary other than the property
or assets so acquired, (v) Liens to secure Capitalized Lease
Obligations and certain other Indebtedness that is otherwise
permitted under this Indenture, provided that (A) any such Lien
is created solely for the purpose of securing such other
Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including sales and excise taxes,
installation and delivery charges and other direct costs of,
and other direct expenses paid or charged in connection
therewith) of the purchase (whether through stock or asset
purchase, merger or otherwise) or construction or improvement
of the property subject thereto (whether real or personal,
including fixtures and other equipment), (B) the principal
amount of the Indebtedness secured by such Lien does not exceed
100% of such costs and (C) such Lien does not extend to or
cover any other property other than such item of property and
any improvements on such item, (vi) Liens existing on the Issue
Date (after giving effect to the Merger), (vii) Liens in favor
of the Trustee under this Indenture and any substantially
equivalent Lien granted to any trustee or similar institution
under any indenture for Indebtedness permitted to be incurred
under this Indenture, and (viii) any replacement, extension or
renewal, in whole or in part, of any Lien described in this or
the foregoing clauses including in connection with any
refinancing of the Indebtedness, in whole or in part, secured
by any such Lien; provided that to the extent any such clause
limits the amount secured or the assets subject to such Liens,
no replacement, extension or renewal shall increase the amount
or the assets subject to such Liens, except to the extent that
the Liens associated with such additional assets are otherwise
permitted hereunder.
SECTION 5.15. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, 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 principal amount thereof
plus accrued and unpaid interest to the date of repurchase.
Prior to the mailing of the notice of a Change of Control Offer
provided for in paragraph (b) below, within 30 days following
<PAGE> 77
any Change of Control the Company shall either (a) repay in
full and terminate all commitments under Indebtedness under the
Credit Agreement to the extent the terms thereof require
repayment upon a Change of Control (or offer to repay in full
and terminate all commitments under all such Indebtedness under
the Credit Agreement and repay the Indebtedness owed to each
lender which has accepted such offer), or (b) obtain the
requisite consent under the Credit Agreement, the terms of
which require repayment upon a Change of Control, to permit the
repurchase of the Securities as provided for in this Section
5.15. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to
repurchase Securities pursuant to this Section 5.15. The
Company's failure to comply with the covenants described in
this paragraph shall constitute an Event of Default under this
Indenture.
In addition, prior to purchasing Securities tendered
into a Change of Control Offer, the Company shall purchase all
Senior Notes (or permitted refinancings thereof) which it is
required to purchase by reason of such Change of Control
pursuant to the provisions of the agreements governing such
Indebtedness.
(b) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), the
Company must send, by first class mail, a notice to each Holder
of Securities, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. 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. The Company shall give notice
of an event giving rise to a Change of Control on the same date
and in the same manner to all Holders of Securities. Such
notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 5.15 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"); provided,
however, that the Change of Control Payment Date for the
Securities shall be subsequent to such date for the Senior
Notes;
<PAGE> 78
(3) that any Security not tendered will continue to
accrue interest if interest is then accruing;
(4) that, unless (i) the Company defaults in making
payment therefor or (ii) such payment is prohibited
pursuant to Article Four, 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 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 purchased only
in part will be issued new Securities equal in principal
amount to the unpurchased portions of the Securities
surrendered; provided that each Security purchased and
each Security issued shall be in an original principal
amount of $1,000 or integral multiples thereof;
(8) that each Change of Control Offer is required to
remain open for at least 20 Business Days or such longer
period as may be required by law and until 12:00 Midnight
New York City time on the applicable Change of Control
Payment Date; and
(9) the circumstances and relevant facts regarding
such Change of Control.
On or before the Change of Control Payment Date, the
Company 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
<PAGE> 79
with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to the Holders of Securities so
accepted payment in an amount equal to the purchase price (and
the Trustee shall promptly authenticate and mail to such
Holders new Securities equal in principal amount to any
unpurchased portion of the Securities surrendered provided that
each such new Security shall be in the principal amount of
$1,000 or integral multiples thereof) unless such payment is
prohibited pursuant to Article Four or otherwise. The Company
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 5.15, the Trustee
shall act as the Paying Agent.
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of
Securities pursuant to a Change of Control Offer. To the
extent the provisions of any securities laws or regulations
conflict with the provisions under this Section 5.15, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section 5.15 by virtue thereof.
SECTION 5.16. Limitation on Asset Sales.
Neither the Company nor any of its Subsidiaries shall
consummate an Asset Sale unless (a) the Company 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 and (b) upon consummation of an Asset Sale, the
Company will within 365 days of the receipt of the proceeds
therefrom, either: (i) apply or cause its Subsidiary to apply
the Net Cash Proceeds of any Asset Sale to (A) a Related
Business Investment, (B) an investment in properties and assets
that replace the properties and assets that are the subject of
such Asset Sale or (C) an investment in properties and assets
that will be used in the business of the Company and its
Subsidiaries existing on the Issue Date or in a business
reasonably related thereto; (ii) in the case of a sale of a
store or stores, deem such Net Cash Proceeds to have been
applied to the extent of any capital expenditures made to
acquire or construct a replacement store in the general
vicinity of the store sold within 365 days preceding the date
of the Asset Sale; (iii) apply or cause to be applied such Net
Cash Proceeds to the permanent repayment of Pari Passu
Indebtedness or Senior Indebtedness; provided, however, that
the repayment of any revolving loan (under the Credit Agreement
<PAGE> 80
or otherwise) shall result in a permanent reduction in the
commitment thereunder; (iv) use such Net Cash Proceeds to
secure Letter of Credit obligations to the extent related
letters of credit have not been drawn upon or returned undrawn;
or (v) after such time as the accumulated Net Cash Proceeds
equal or exceed $20 million, apply or cause to be applied such
Net Cash Proceeds to the purchase of Securities tendered to the
Company for purchase at a price equal to 100% of the principal
amount thereof plus accrued interest thereon to the date of
purchase pursuant to an offer to purchase made by the Company
as set forth below (a "Net Proceeds Offer"); provided, however,
that the Company shall have the right to exclude from the
foregoing provisions Asset Sales subsequent to the Issue Date,
the proceeds of which are derived from the sale and
substantially concurrent lease-back of a supermarket and/or
related assets or equipment which are acquired or constructed
by the Company or a Subsidiary subsequent to the date that is
six months prior to the Issue Date, provided that such sale and
substantially concurrent lease-back occurs within 270 days
following such acquisition or the completion of such
construction, as the case may be. Pending the utilization of
any Net Cash Proceeds in the manner (and within the time
period) described above, the Company may use any such Net Cash
Proceeds to repay revolving loans (under the Credit Agreement
or otherwise) without a permanent reduction of the commitment
thereunder.
Notice of a Net Proceeds Offer pursuant to this
Section 5.16 will be mailed to record Holders of Securities as
shown on the register of Holders not less than 325 days nor
more than 365 days after the relevant Asset Sale, with a copy
to the Trustee. 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 5.16 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, the Company shall select the Securities to
be purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only
Securities in denominations of $1,000 or multiples thereof
shall be purchased);
(2) the purchase price (including the amount of
accrued interest) and the purchase date (which shall be no
<PAGE> 81
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 (i) the Company defaults in making
payment therefor or (ii) such payment is prohibited
pursuant to Article Four hereof or otherwise, 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 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;
(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; provided that each Security
purchased and each new Security issued shall be in an
original principal amount of $1,000 or integral multiples
thereof; and
(8) that the Net Proceeds Offer shall remain open
for a period of 20 Business Days or such longer period as
may be required by law.
On or before the Proceeds Purchase Date, the Company
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)(1) 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
<PAGE> 82
Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment
in an amount equal to the purchase price (and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion
of the Security surrendered provided that each such new
Security shall be in the principal amount of $1,000 or integral
multiples thereof) unless such payment is prohibited pursuant
to Article Four hereof or otherwise. The Company 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 5.16, 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 the Company.
The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of
Securities pursuant to a Net Proceeds Offer. To the extent the
provisions of any securities laws or regulations conflict with
the provisions under this Section 5.16, the Company shall
comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this
Section 5.16 by virtue thereof.
SECTION 5.17. Guarantees of Certain Indebtedness.
The Company will not permit any of its Subsidiaries
to (a) incur, guarantee or secure through the granting of Liens
the payment of any Indebtedness under the term portion of the
Credit Agreement or refinancings thereof or (b) pledge any
intercompany notes representing obligations of any of its
Subsidiaries, to secure the payment of any Indebtedness under
the term portion of the Credit Agreement or refinancings
thereof, in each case unless such Subsidiary, the Company and
the Trustee execute and deliver a supplemental indenture
evidencing such Subsidiary's Guarantee.
SECTION 5.18. Limitation on Preferred Stock of Subsidiaries.
The Company will not permit any of its Subsidiaries
to issue Preferred Stock (other than to the Company or to a
wholly-owned Subsidiary) or permit any person (other than the
Company or a wholly-owned Subsidiary) to own any Preferred
Stock of any Subsidiary.
<PAGE> 83
SECTION 5.19. Limitation on Other Senior Subordinated
Indebtedness.
Neither the Company nor any Subsidiary Guarantor
will, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) that is subordinate in right of payment
to any Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be, unless such Indebtedness is
either (a) pari passu in right of payment with the Securities
or the Guarantee of such Subsidiary Guarantor, as the case may
be, or (b) subordinate in right of payment to the Securities or
the Guarantee of such Subsidiary Guarantor, as the case may be,
in the same manner and at least to the same extent as the
Securities are subordinate to Senior Indebtedness or as such
Guarantee is subordinated to Senior Guarantor Indebtedness of
such Subsidiary Guarantor, as the case may be.
ARTICLE SIX
SUCCESSOR CORPORATION
SECTION 6.01. Limitations on Mergers and Certain Other
Transactions. _
(a) The Company 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 the Company shall be the continuing
person, or the person (if other than the Company) formed
by such consolidation or into which the Company is merged
or to which all or substantially all of the properties and
assets of the Company as an entirety or substantially as
an entirety are transferred (or, in the case of a Plan of
Liquidation, any person to which assets are transferred)
(the Company 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
supplement, all the obligations of the Company under the
Securities and this Indenture;
<PAGE> 84
(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 Consolidated Net
Worth equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and
(B) the Surviving Person could incur at least $1 of
additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 5.12;
(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) each Subsidiary Guarantor, unless it is the
other party to the transaction, shall have by supplemental
indenture confirmed that its Guarantee of the obligations
of the Company under the Securities and this Indenture
shall apply, without alteration or amendment as such
Guarantee applies on the date it was granted under this
Indenture to the obligations of the Company under this
Indenture and the Securities to the obligations of the
Company or such Person as the case may be, under this
Indenture and the Securities, after consummation of such
transaction.
(b) Notwithstanding the foregoing, the consummation
of the Merger on the Issue Date need only comply with clauses
(1) and (3) of the foregoing paragraph.
(c) 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 direct or indirect
Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
SECTION 6.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Company or any
adoption of a Plan of Liquidation by the Company in accordance
with Section 6.01, the Surviving Person formed by such
<PAGE> 85
consolidation or into which the Company is merged or to which
such transfer is made (or in the case of a Plan of Liquidation,
to which assets are transferred) shall succeed to, and be
substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such
Surviving Person had been named as the Company herein;
provided, however, that solely for purposes of computing
amounts described in subclause (c) of the first paragraph of
Section 5.03, any such Surviving Person shall only be deemed to
have succeeded to and be substituted for the Company with
respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets. When a successor
corporation assumes all of the obligations of the Company
hereunder and under the Securities and agrees to be bound
hereby and thereby, the predecessor shall be released from such
obligations.
ARTICLE SEVEN
DEFAULT AND REMEDIES
SECTION 7.01. Events of Default.
An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest
on any Securities when the same becomes due and payable
and the Default continues for a period of 30 days, whether
or not such payment shall be prohibited by the provisions
of Article Four hereof;
(ii) the Company defaults in the payment of the
principal of, or premium, if any, on the Securities when
due whether at maturity, upon acceleration, redemption,
required repurchase or otherwise, whether or not such
payment shall be prohibited by the provisions of Article
Four hereof;
(iii) the Company fails to comply with any of its
agreements contained in the Securities or this Indenture
(other than a default specified in clause (i) or (ii)
above), if such failure continues for the period and after
the notice specified below;
(iv) there shall be a default under any Indebtedness
of the Company or any of its Subsidiaries, whether such
Indebtedness now exists or shall hereafter be created, if
both (A) such default either (1) results from the failure
<PAGE> 86
to pay any such Indebtedness at its stated final maturity
or (2) relates to an obligation other than the obligation
to pay 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 in default for failure to pay
principal at stated final maturity or the maturity of
which has been so accelerated, aggregates $20 million or
more at any one time outstanding;
(v) one or more judgments, orders or decrees of any
court or regulatory or administrative agency of competent
jurisdiction for the payment of money in excess of $20
million, either individually or in the aggregate, shall be
entered against the Company or any Subsidiary of the
Company or any of their respective properties and shall
not be discharged and there shall have been a period of 60
days after the date on which any period for appeal has
expired and during which a stay of enforcement of such
judgment, order or decree shall not be in effect;
(vi) either the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case or proceeding; (b) consents
to the entry of a Bankruptcy Order for relief against it
in an involuntary case or proceeding or the commencement
of any case or proceeding against it; (c) consents to the
appointment of a custodian of it or for substantially all
of its property; or (d) makes a general assignment for the
benefit of its creditors;
(vii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (a) is for
relief against the Company or any Significant Subsidiary,
in an involuntary case or proceeding; (b) appoints a
custodian of the Company or any Significant Subsidiary, or
for all or any substantial part of their respective
properties; or (c) orders the liquidation of the Company
or any Significant Subsidiary and in each case the order
or decree remains unstayed and in effect for 60 days;
(viii) the lenders under the Credit Agreement shall
commence judicial proceedings to foreclose upon any
material portion of the assets of the Company and its
Subsidiaries or shall have exercised any right under
applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; or
<PAGE> 87
(ix) any of the Guarantees shall be declared or
adjudged invalid in a final judgment or order issued by
any court or governmental authority.
A Default under clause (iii) above (other than in the
case of any Default under Section 5.03, 5.15, 5.16 or 6.01,
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 the Company, or the Holders of at least
25% in principal amount of the outstanding Securities notify
the Company and the Trustee of the Default, and the Company
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 principal amount of the
Securities then outstanding. When a Default is cured, it
ceases.
SECTION 7.02. Acceleration.
(a) If an Event of Default (other than an Event of
Default specified in Section 7.01(vi) or (vii) with respect to
the Company or a Subsidiary Guarantor) occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Securities may, and
the Trustee upon the request of the Holders of not less than
25% in aggregate principal amount of the then outstanding
Securities shall, declare due and payable all unpaid principal
and interest accrued and unpaid on the then outstanding
Securities by written notice to the Company (and, if any
Indebtedness is outstanding under the Credit Agreement or the
Credit Agreement is otherwise in effect, to the Credit Agent)
and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the
Credit Agreement, shall become due and payable upon the first
to occur of an acceleration under the Credit Agreement, or five
business days after receipt by the Company and the Credit Agent
of such Acceleration Notice. If an Event of Default specified
in Section 7.01(vi) or (vii) occurs with respect to the Company
or a Subsidiary Guarantor that is a Significant Subsidiary, all
unpaid principal of and accrued interest on all then
outstanding Securities shall be immediately due and payable
without any declaration or other act on the part of the Trustee
or any of the Holders. Upon payment of such principal amount,
interest, and premium, if any, all of the Company's obligations
under the Securities and this Indenture, other than obligations
<PAGE> 88
under Section 8.07, shall terminate. After a declaration of
acceleration, the Holders of a majority in 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 of the Securities which has 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 interest and overdue principal, which
has become due otherwise than by such declaration of
acceleration, has been paid, (iii) the rescission would not
conflict with any judgment or decree of a court of competent
jurisdiction and (iv) the Company has paid or deposited with
the Trustee a sum sufficient to pay all sums paid or advanced
by the Trustee under this Indenture and the compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel.
(b) In the event of a declaration of acceleration
under this Indenture because an Event of Default set forth in
Section 7.01(iv) 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 7.03. 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 Securityholder 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
<PAGE> 89
Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by
law.
SECTION 7.04. Waiver of Past Defaults.
Subject to Sections 7.07 and 10.02, the Holders of a
majority in 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 (i) and (ii) of Section 7.01. When a Default or Event
of Default is waived, it is cured and ceases.
SECTION 7.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
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, including, without limitation, any
remedies provided for in Section 7.03. Subject to
Section 8.01, 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 Securityholder, 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 7.06. Limitation on Suits.
A Securityholder may not pursue any remedy with
respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
(2) the Holder or Holders of at least 25% in
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
<PAGE> 90
(5) during such 60-day period the Holder or Holders
of a majority in 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 Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a
preference or priority over such other Securityholder.
SECTION 7.07. 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 7.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or
interest specified in clause (i) or (ii) of Section 7.01 occurs
and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company 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 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 7.09. 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 Securityholders
allowed in any judicial proceedings relating to the Company 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 Securityholder to make
<PAGE> 91
such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 8.07. Nothing herein
contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Security
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 Securityholder in any such proceeding.
SECTION 7.10. Priorities.
If the Trustee collects any money pursuant to this
Article Seven, it shall pay out the money in the following
order:
First: to the Trustee for amounts due under
Section 8.07;
Second: subject to Article Four and Article Twelve,
to Holders for interest accrued on the Securities,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities
for interest;
Third: subject to Article Four and Article Twelve,
to Holders for principal amounts due and unpaid on the
Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Securities for principal; and
Fourth: subject to Article Four and Article Twelve,
to the Company or the Subsidiary Guarantors, as their
respective interests may appear.
The Trustee, upon prior notice to the Company, may
fix a record date and payment date for any payment to
Securityholders pursuant to this Section 7.10.
SECTION 7.11. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
<PAGE> 92
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 7.12. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder
of any Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article Seven or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 7.13. 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 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 7.13 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 7.07, or a suit by a
Holder or Holders of more than 10% in principal amount of the
outstanding Securities.
ARTICLE EIGHT
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 8.01. Duties of Trustee.
(a) If a Default or an Event of Default of which the
Trustee is aware 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 would exercise or use
under the circumstances in the conduct of his own affairs.
<PAGE> 93
(b) Except during the continuance of a Default or an
Event of Default:
(1) The Trustee need undertake to perform only those
duties as are specifically set forth in this Indenture and
no covenants or obligations shall be implied in this
Indenture against 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 shall have no liability except 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 8.01.
(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 7.05.
(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
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 8.01.
(f) The Trustee shall not be liable for interest on
any assets received by it. Assets held in trust by the Trustee
need not be segregated from other assets except to the extent
required by law.
<PAGE> 94
SECTION 8.02. Rights of Trustee.
Subject to Section 8.01:
(a) The Trustee may rely on and shall be protected
in acting or refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may consult with counsel and may require in addition to
written direction from the Company an Officers'
Certificate or an Opinion of Counsel, which shall conform
to Sections 13.04 and 13.05. 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 attorney or 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
reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or
thereby.
SECTION 8.03. 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 the Company, its Subsidiaries, or their respective
<PAGE> 95
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 8.10 and 8.11.
SECTION 8.04. 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 the Company's 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 8.05. 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 of Securities notice of the Default or
Event of Default within 90 days after such Default or Event of
Default occurs or if such Default or Event of Default is known
to the Trustee during such 90-day period, promptly after such
Default or Event of Default becomes known to the Trustee;
provided, however, that, except in the case of a Default or
Event of Default in the payment of the principal of or interest
on any Security, including the failure to make payment on a
Change of Control Payment Date pursuant to a Change of Control
Offer or payment when due pursuant to a Net Proceeds Offer the
Trustee may withhold such notice if it in good faith determines
that withholding such notice is in the interest of the Holders.
SECTION 8.06. 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 Securityholder 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
Securityholders shall be mailed to the Company and filed with
the Commission and each stock exchange, if any, on which the
Securities are listed.
The Company shall notify the Trustee if the
Securities become listed on any stock exchange.
<PAGE> 96
SECTION 8.07. Compensation and Indemnity.
The Company 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. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall
include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company 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 the Company promptly of
any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and
expenses of such counsel; provided that the Company 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
the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay
for any settlement made without its written consent. The
Company 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 the Company's payment obligations in this
Section 8.07, 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 or interest on particular Securities.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 7.01(vi) or
(vii) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 8.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company.
The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee and appoint a
successor trustee with the Company's consent, by so notifying
<PAGE> 97
the Company and the Trustee. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(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, the Company
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
principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the
Company.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. 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 8.07, the resignation 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 Securityholder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the outstanding Securities may petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 8.10, any
Securityholder 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 8.08, the Company's obligations under
Section 8.07 shall continue for the benefit of the retiring
Trustee.
<PAGE> 98
SECTION 8.09. 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 8.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who
satisfies the requirement 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 the Company are
outstanding, if the requirements for such exclusion set forth
in TIA { 310(b)(1) are met.
SECTION 8.11. Preferential Collection of Claims Against
Company._________________________________
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
{ 311(a) to the extent indicated.
ARTICLE NINE
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 9.01. Termination of the Company's
Obligations.________________
The Company may terminate its obligations under the
Securities and this Indenture, and the obligations of any
Subsidiary Guarantor shall terminate, except those obligations
referred to in the penultimate paragraph of this Section 9.01,
if all Securities previously authenticated and delivered (other
than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money has
theretofore been deposited with the Trustee or the Paying Agent
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company, as provided in Section 9.04)
<PAGE> 99
have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
(1) either (i) pursuant to Article Three, the
Company shall have given notice to the Trustee and mailed
a notice of redemption to each Holder of the redemption of
all of the Securities under arrangements satisfactory to
the Trustee for the giving of such notice or (ii) all
Securities have otherwise become due and payable
hereunder;
(2) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee or a trustee
satisfactory to the Trustee, under the terms of an
irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust
solely for the benefit of the Holders for that purpose,
money in such amount as is sufficient without
consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the
outstanding Securities to maturity or redemption; provided
that the Trustee shall have been irrevocably instructed to
apply such money to the payment of said principal,
premium, if any, and interest with respect to the
Securities and, provided, further, that from and after the
time of deposit, the money deposited shall not be subject
to the rights of holders of Senior Indebtedness pursuant
to the provisions of Article Four and Article Twelve;
(3) no Default or Event of Default with respect to
this Indenture or the Securities shall have occurred and
be continuing on the date of such deposit or shall occur
as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a
default under, any other instrument to which the Company
is a party or by which it is bound;
(4) the Company shall have paid all other sums
payable by it hereunder; and
(5) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent providing for the
termination of the Company's and any Subsidiary
Guarantor's obligation under the Securities and this
Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and
discharge does not result in a default under the Credit
Agreement (if then in effect) or any other agreement or
<PAGE> 100
instrument then known to such counsel that binds or
affects the Company.
Notwithstanding the foregoing paragraph, the
Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 5.01,
5.02 and 8.07 and any Subsidiary Guarantor's obligations in
respect thereof shall survive until the Securities are no
longer outstanding pursuant to the last paragraph of
Section 2.08. After the Securities are no longer outstanding,
the Company's obligations in Sections 8.07, 9.04 and 9.05 and
any Subsidiary Guarantor's obligations in respect thereof shall
survive.
After such delivery or irrevocable deposit the
Trustee upon request shall acknowledge in writing the discharge
of the Company's and any Subsidiary Guarantor's obligations
under the Securities and this Indenture except for those
surviving obligations specified above.
SECTION 9.02. Legal Defeasance and Covenant
Defeasance.__________________
(a) The Company may, at its option by Board
Resolution of the Board of Directors of the Company, at any
time, with respect to the Securities, elect to have either
paragraph (b) or paragraph (c) below be applied to the
outstanding Securities upon compliance with the conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (b), the Company and
any Subsidiary Guarantor shall be deemed to have been released
and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth
below are satisfied (hereinafter, "legal defeasance"). For
this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which
shall thereafter be deemed to be "outstanding" only for the
purposes of paragraph (e) below and the other Sections of and
matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), and
Holders of the Securities and the Guarantees and any amounts
deposited under paragraph (d) below shall cease to be subject
to any obligations to, or the rights of, any holder of Senior
Indebtedness or Guarantor Senior Indebtedness under Article
Four, Article Twelve or otherwise, except for the following
<PAGE> 101
which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Securities
to receive solely from the funds held by the Trustee in the
trust fund described in paragraph (d) below and as more fully
set forth in such paragraph, payments in respect of the
principal of, premium, if any, and interest on such Securities
when such payments are due, (ii) the Company's obligations with
respect to such Securities under Sections 2.06, 2.07 and 5.02,
and, with respect to the Trustee, under Section 8.07 and any
Subsidiary Guarantor's obligations in respect thereof, (iii)
the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (iv) this Section 9.02 and Section 9.05.
Subject to compliance with this Section 9.02, the Company may
exercise its option under this paragraph (b) notwithstanding
the prior exercise of its option under paragraph (c) below with
respect to the Securities.
(c) Upon the Company's exercise under paragraph (a)
of the option applicable to this paragraph (c), the Company
shall be released and discharged from its obligations under any
covenant contained in Article Four and Article Six and in
Sections 5.03, 5.05 through 5.09 and 5.11 through 5.19 with
respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for
all other purposes hereunder and Holders of the Securities and
the Guarantees and any amounts deposited under paragraph (d)
below shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Indebtedness or Guarantor
Senior Indebtedness under Article Four, Article Twelve or
otherwise. For this purpose, such covenant defeasance means
that, with respect to the outstanding Securities, the Company
and any Subsidiary Guarantor may omit to comply with and shall
have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or
an Event of Default under Section 7.01(iii), but, except as
specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby.
(d) The following shall be the conditions to
application of either paragraph (b) or paragraph (c) above to
the outstanding Securities:
<PAGE> 102
(i) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 8.10 who
shall agree to comply with the provisions of this
Section 9.02 applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, (x) money in an
amount or (y) direct non-callable obligations of, or non-
callable obligations guaranteed by, the United States of
America for the payment of which guarantee or obligation
the full faith and credit of the United States is pledged
("U.S. Government Obligations") maturing as to principal,
premium, if any, and interest in such amounts of money and
at such times as are sufficient without consideration of
any reinvestment of such interest, to pay principal of and
interest on the outstanding Securities not later than one
day before the due date of any payment, or (z) a
combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which
shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge principal of, premium, if
any, and interest on the outstanding Securities on the
Maturity Date or otherwise in accordance with the terms of
this Indenture and of such Securities; provided, however,
that the Trustee (or other qualifying trustee) shall have
received an irrevocable written order from the Company
instructing the Trustee (or other qualifying trustee) to
apply such money or the proceeds of such U.S. Government
obligations to said payments with respect to the
Securities;
(ii) no Default or Event of Default or event which
with notice or lapse of time or both would become a
Default or an Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit or, insofar as Section 7.01(vi) or
(vii) is concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed
satisfied until the expiration of such period);
(iii) such legal defeasance or covenant defeasance
shall not cause the Trustee to have a conflicting interest
with respect to any Securities of the Company or any
Subsidiary Guarantor;
<PAGE> 103
(iv) such legal defeasance or covenant defeasance
shall not result in a breach or violation of, or
constitute a Default or Event of Default under, this
Indenture or any other material agreement or instrument to
which the Company or any Subsidiary Guarantor is a party
or by which it is bound (and in that connection, the
Trustee shall have received a certificate from the Credit
Agent to that effect with respect to such Credit Agreement
if then in effect);
(v) in the case of an election under paragraph (b)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has
received from, or there has been published by, the
Internal Revenue Service a ruling or (y) since the Issue
Date, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders
of the outstanding Securities will not recognize income,
gain or loss for Federal income tax purposes as a result
of such legal defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at
the same times as would have been the case if such legal
defeasance had not occurred;
(vi) in the case of an election under paragraph (c)
above, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant
defeasance had not occurred;
(vii) in the case of an election under either
paragraph (b) or (c) above, an Opinion of Counsel to the
effect that after the 91st day following the deposit,
(A) the trust funds will not be subject to any rights of
holders of Senior Indebtedness or Guarantor Senior
Indebtedness, including, without limitation, those arising
under this Indenture and (B) the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(viii) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under
<PAGE> 104
paragraph (c) above, as the case may be, have been
complied with; and
(ix) the Company shall have delivered to the Trustee
an Officer's Certificate stating that the deposit was not
made by the Company with the intent of preferring the
Holders of the Securities over other creditors of the
Company or any Subsidiary Guarantor or with the intent of
defeating, hindering, delaying or defrauding creditors of
the Company, any Subsidiary Guarantor or others.
(e) All money and U.S. Government obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
paragraph (e), the "Trustee") pursuant to paragraph (d) above
in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (other than the Company or
any Affiliate of the Company), to the Holders of such
Securities of all sums due and to become due thereon in respect
of principal, premium and interest, but such money need not be
segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Government obligations deposited pursuant to
paragraph (d) above or the principal, premium, if any, and
interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the
Holders of the outstanding Securities. The Company's
obligations to pay and indemnify the Trustee as set forth in
this paragraph shall survive the termination of this Indenture
and the Securities.
Anything in this Section 9.02 to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon the request, in writing, by the
Company any money or U.S. Government obligations held by it as
provided in paragraph (d) above which, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal
defeasance or covenant defeasance.
<PAGE> 105
SECTION 9.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S.
Government obligations deposited with it pursuant to Sections
9.01 and 9.02, and shall apply the deposited money and the
money from U.S. Government obligations in accordance with this
Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION 9.04. Repayment to the Company or Subsidiary
Guarantors.___________________________
Subject to Sections 8.07, 9.01 and 9.02, the Trustee
shall promptly pay to the Company, or if deposited with the
Trustee by any Subsidiary Guarantor, to such Guarantor, upon
receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Section 9.02, held by it
at any time. The Trustee and the Paying Agent shall pay to the
Company or any Subsidiary Guarantor, as the case may be, upon
receipt by the Trustee or the Paying Agent, as the case may be,
of an Officers' Certificate, any money held by it for the
payment of principal, premium, if any, or interest that remains
unclaimed for two years after payment to the Holders is
required; provided, however, that the Trustee and the Paying
Agent before being required to make any payment may, but need
not, at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York
or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money
then remaining will be repaid to the Company. After payment to
the Company or any Subsidiary Guarantor, as the case may be,
Securityholders entitled to money must look solely to the
Company for payment as general creditors unless an applicable
abandoned property law designates another person, and all
liability of the Trustee or Paying Agent with respect to such
money shall thereupon cease.
SECTION 9.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government obligations in accordance with this
Indenture 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, then and only then the Company's and each
Subsidiary Guarantor's, if any, obligations under this
Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture
<PAGE> 106
until such time as the Trustee is permitted to apply all such
money or U.S. Government obligations in accordance with this
Indenture; provided, however, that if the Company or the
Subsidiary Guarantors, as the case may be, has made any payment
of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company or
the Subsidiary Guarantors, as the case may be, shall be,
subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government
obligations held by the Trustee or Paying Agent.
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
The Company and the Subsidiary Guarantors, 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 Securityholder:
(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 Six and Section 11.06;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(4) to make any other change that does not adversely
affect the rights of any Securityholder in any material
respect; or
(5) to comply with any requirements of the
Commission in connection with the qualification of this
Indenture under the TIA;
provided that the Company has delivered to the Trustee an
Opinion of Counsel stating that such amendment or supplement
complies with the provisions of this Section 10.01.
SECTION 10.02. With Consent of Holders.
Subject to Section 7.07, the Company and each
Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together with the written consent of the
<PAGE> 107
Holder or Holders of at least a majority in aggregate principal
amount of the outstanding Securities, may amend or supplement,
or waive compliance with any provision of, this Indenture, the
Securities or any Guarantee without notice to any other
Securityholders; provided that without the consent of Holders
of not less than two thirds in aggregate principal amount of
Securities then outstanding, no such amendment, supplement or
waiver may release any Subsidiary Guarantor from any of its
obligations under its Guarantee or this Indenture other than in
accordance with the terms of such Guarantee and this Indenture;
provided, further, that without the consent of Holders of not
less than 75% in aggregate principal amount of the Securities
then outstanding, no such amendment, supplement or waiver may
change the Change of Control Payment Date or the purchase price
in connection with any repurchase of Securities pursuant to
Section 5.15 in a manner adverse to any Holder or waive a
Default or Event of Default resulting from a failure to comply
with Section 5.15. Without the consent of each Securityholder
affected, however, no amendment, supplement or waiver,
including a waiver pursuant to Section 7.04, may:
(1) change the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver
of any provision of this Indenture, the Securities or the
Guarantees;
(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 in this Indenture or 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 7.04, 7.07 or this
Section 10.02;
(7) make the principal of, or the interest on any
Security payable with anything or in any manner other than
as provided for in this Indenture, the Securities and the
Guarantees as in effect on the date hereof;
<PAGE> 108
(8) modify the subordination provisions of this
Indenture (including the related definitions) so as to
adversely affect the ranking of any Security or Guarantee;
provided, however, that it is understood that any
amendment the purpose of which is to permit the incurrence
of additional Indebtedness under this Indenture shall not
be construed as adversely affecting the ranking of any
Security or Guarantee.
The Company and each Subsidiary Guarantor agree that
no amendment, supplement or waiver under this Article Ten may
make any change that adversely affects the rights under
Article Four or Twelve of any holders of any Senior
Indebtedness or any Guarantor Senior Indebtedness unless the
holders of such Senior Indebtedness or Guarantor Senior
Indebtedness consent to the change.
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.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the
Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company 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 Ten, the Company 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.
SECTION 10.03. Compliance with TIA.
From the date on which the Indenture is qualified
under the TIA, every amendment, waiver or supplement of this
Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 10.04. 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
<PAGE> 109
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 the Company
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.
The Company 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 Securityholder, unless it makes
a change described in any of clauses (1) through (8) of Section
10.02, 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.
SECTION 10.05. 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 the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.
<PAGE> 110
SECTION 10.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement
or waiver authorized pursuant to this Article Ten; 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
Indenture. 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 Ten is authorized or
permitted by this Indenture.
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally,
jointly and severally, guarantees (such guarantee to be
referred to herein as the "Guarantee"), subject to Article
Twelve, to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, the Securities or the obligations of the Company
hereunder or thereunder, that: (i) the principal of and
interest on the Securities will be promptly paid in full when
due, subject to any applicable grace period, whether at
maturity, by acceleration or otherwise and interest on the
overdue principal, if any, and interest on any interest, to the
extent lawful, of the Securities and all other obligations of
the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case
of any extension of time of payment or renewal of any
Securities or of any such other obligations, the same will be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of
clauses (i) and (ii) above, to the limitations set forth in
Section 11.05. Each Subsidiary Guarantor hereby agrees that
its obligations hereunder shall be unconditional, irrespective
of the validity, regularity or enforceability of the Securities
or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities
with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the
<PAGE> 111
same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor. Each
Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and in
this Guarantee. If any Securityholder or the Trustee is
required by any court or otherwise to return to the Company,
any Subsidiary Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to the Company or
any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Securityholder,
this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor
further agrees that, as between each Subsidiary Guarantor, on
the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article Seven for the purposes of
this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
acceleration of such obligations as provided in Article Seven,
such obligations (whether or not due and payable) shall
forthwith become due and payable by each Subsidiary Guarantor
for the purpose of this Guarantee.
SECTION 11.02. Subordination of Guarantee.
The obligations of each Subsidiary Guarantor to the
Holders of Securities pursuant to the Guarantee and this
Indenture are expressly subordinate and subject in right of
payment to the prior payment in full of all Guarantor Senior
Indebtedness of such Subsidiary Guarantor, to the extent and in
the manner provided in Article Twelve.
SECTION 11.03. Severability.
In case any provision of this Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.04. Release of a Subsidiary Guarantor.
Upon (i) the release by the lenders under the Term
Loans, related documents and future refinancings thereof of all
guarantees of a Subsidiary Guarantor and all Liens on the
<PAGE> 112
property and assets of such Subsidiary Guarantor relating to
such Indebtedness, or (ii) the sale or disposition (whether by
merger, stock purchase, asset sale or otherwise) of a
Subsidiary Guarantor (or all or substantially all its assets)
to an entity which is not a Subsidiary of the Company and which
sale or disposition is otherwise in compliance with the terms
of this Indenture, such Subsidiary Guarantor shall be deemed
released from all obligations under this Article Eleven without
any further action required on the part of the Trustee or any
Holder; provided, however, that any such termination shall
occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under
all of its pledges of assets or other security interests which
secure, such Indebtedness of the Company shall also terminate
upon such release, sale or transfer.
The Trustee shall deliver an appropriate instrument
evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as
to the compliance with this Section 11.04. Any Subsidiary
Guarantor not so released remains liable for the full amount of
principal of and interest on, and all other obligations under,
the Securities as provided in this Article Eleven.
SECTION 11.05. Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor and by its acceptance
hereof each Holder hereby confirms that it is the intention of
all such parties that the guarantee by such Subsidiary
Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such
Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor (including, but not limited to, the
Guarantor Senior Indebtedness of such Subsidiary Guarantor) and
after giving effect to any collections from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its
Guarantee or pursuant to Section 11.07, result in the
obligations of such Subsidiary Guarantor under the Guarantee
not constituting such fraudulent transfer or conveyance.
<PAGE> 113
SECTION 11.06. Subsidiary Guarantors May Consolidate,
etc., on Certain Terms.
(a) Nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale or conveyance of
the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to the Company or another
Subsidiary Guarantor. Upon any such consolidation, merger,
sale or conveyance, the Guarantee given by such Subsidiary
Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article Five and Article
Six hereof, nothing contained in this Indenture or in any of
the Securities shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into a corporation or corporations
other than the Company or another Subsidiary Guarantor (whether
or not affiliated with the Subsidiary Guarantor); provided,
however, that, subject to Sections 11.04 and 11.06(a),
(i) immediately after such transaction, and giving effect
thereto, no Default or Event of Default shall have occurred as
a result of such transaction and be continuing, and (ii) upon
any such consolidation, merger, sale or conveyance, the
Subsidiary Guarantee set forth in this Article Eleven, and the
due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by
such Subsidiary Guarantor, shall be expressly assumed (in the
event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to
the Trustee, by the corporation formed by such consolidation,
or into which the Subsidiary Guarantor shall have merged, or by
the corporation that shall have acquired such property. In the
case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by
supplemental indenture executed and delivered to the Trustee
and satisfactory in form to the Trustee of the due and punctual
performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had been
named herein as a Subsidiary Guarantor; provided, however, that
solely for purposes of computing amounts described in subclause
(c) of the first paragraph of Section 5.03, any such successor
corporation shall only be deemed to have succeeded to and be
substituted for any Subsidiary Guarantor with respect to
periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
<PAGE> 114
SECTION 11.07. Contribution.
In order to provide for just and equitable
contribution among the Subsidiary Guarantors, the Subsidiary
Guarantors agree, inter se, that in the event any payment or
distribution is made by any Subsidiary Guarantor (a "Funding
Guarantor") under the Guarantee, such Funding Guarantor shall
be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net
Assets of each Subsidiary Guarantor (including the Funding
Guarantor) for all payments, damages and expenses incurred by
that Funding Guarantor in discharging the Company's obligations
with respect to the Securities or any other Subsidiary
Guarantor's obligations with respect to the Guarantee.
"Adjusted Net Assets" with respect to the Guarantee of such
Subsidiary Guarantor at any date shall mean the lesser of the
amount by which (x) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after
giving effect to all other fixed and contingent liabilities
incurred or assumed on such date (other than liabilities of
such Subsidiary Guarantor under Indebtedness which constitutes
Subordinated Indebtedness with respect to such Guarantee)), but
excluding liabilities under the Guarantee, of such Subsidiary
Guarantor at such date and (y) the present fair salable value
of the assets of such Subsidiary Guarantor at such date exceeds
the amount that will be required to pay the probable liability
of such Subsidiary Guarantor on its debts (after giving effect
to all other fixed and contingent liabilities incurred or
assumed on such date (other than liabilities of such Subsidiary
Guarantor under Indebtedness which constitutes Subordinated
Indebtedness with respect to such Guarantee) and after giving
effect to any collection from any Subsidiary of such Subsidiary
Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding debt in respect of the
Guarantee of such Subsidiary Guarantor, as they become absolute
and matured.
SECTION 11.08. Waiver of Subrogation.
Each Subsidiary Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment,
performance or enforcement of such Subsidiary Guarantor's
obligations under the Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in
any claim or remedy of any Holder of Securities against the
Company, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including,
<PAGE> 115
without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be
paid to any Subsidiary Guarantor in violation of the preceding
sentence and the Securities shall not have been paid in full,
such amount shall have been deemed to have been paid to such
Subsidiary Guarantor for the benefit of, and held in trust for
the benefit of, the Holders of the Securities, and shall,
subject to the provisions of Section 11.02, Article Four and
Article Twelve, forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the
Securities, whether matured or unmatured, in accordance with
the terms of this Indenture. Each Subsidiary Guarantor
acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by this Indenture
and that the waiver set forth in this Section 11.08 is
knowingly made in contemplation of such benefits.
SECTION 11.09. Execution of Guarantee.
To evidence their guarantee to the Securityholders
set forth in this Article Eleven, the Subsidiary Guarantors
hereby agree to execute the Guarantee in substantially the form
included in Exhibit A, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each
Subsidiary Guarantor hereby agrees that its Guarantee set forth
in this Article Eleven shall remain in full force and effect
notwithstanding any failure to endorse on each Security a
notation of such Guarantee. Each such Guarantee shall be
signed on behalf of each Subsidiary Guarantor by two Officers,
or an Officer and an Assistant Secretary or one Officer shall
sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to such Guarantee prior to the
authentication of the Security on which it is endorsed, and the
delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of such Guarantee on behalf of such Subsidiary Guarantor. Such
signatures upon the Guarantee may be by manual or facsimile
signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee, and in case any such officer who
shall have signed the Guarantee shall cease to be such officer
before the Security on which such Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or
disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person
who signed the Guarantee had not ceased to be such officer of
the Subsidiary Guarantor.
<PAGE> 116
SECTION 11.10. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor 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 each such
Subsidiary Guarantor from performing its Guarantee as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) each such Subsidiary Guarantor 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.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Guarantee Obligations Subordinated
to Guarantor Senior Indebtedness.
Anything herein to the contrary notwithstanding, each
of the Subsidiary Guarantors, for itself and its successors,
and each Holder, by his acceptance of Guarantees, agrees, that
any payment of Obligations by a Subsidiary Guarantor in respect
of its Guarantee (collectively, as to any Subsidiary Guarantor,
its "Guarantee Obligations") is subordinated, to the extent and
in the manner provided in this Article Twelve, to the prior
payment in full in cash or Cash Equivalents of all Guarantor
Senior Indebtedness of such Subsidiary Guarantor.
This Article Twelve shall constitute a continuing
offer to all persons who become holders of, or continue to
hold, Guarantor Senior Indebtedness, and such provisions are
made for the benefit of the holders of Guarantor Senior
Indebtedness and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
The obligations of the Subsidiary Guarantors to the
Trustee under Section 8.07 shall not be subject to the
provisions of this Article Twelve.
<PAGE> 117
SECTION 12.02. Suspension of Guarantee Obligations When
Guarantor Senior Indebtedness in Default.
(a) Unless Section 12.03 shall be applicable, upon
(1) the occurrence of a Payment Default with respect to any
Designated Senior Indebtedness or Significant Senior
Indebtedness guaranteed by a Subsidiary Guarantor (which
guarantee consititutes Guarantor Senior Indebtedness of such
Subsidiary Guarantor) and (2) receipt by the Trustee, the
Company and such Subsidiary Guarantor from the Representatives
of written notice of such occurrence, then no payment (other
than payments previously made pursuant to Article Nine hereof)
or distribution of any assets of such Subsidiary Guarantor of
any kind or character shall be made by such Subsidiary
Guarantor on account of Obligations on the Securities or on
account of the purchase, redemption or other acquisition of
Securities or any of the obligations of such Subsidiary
Guarantor under this Guarantee unless and until such Payment
Default shall have been cured or waived or shall have ceased to
exist or such Guarantor Senior Indebtedness shall have been
discharged or paid in full cash or Cash Equivalents, after
which such Guarantor shall resume making any and all required
payments in respect of its obligations under this Guarantee.
(b) Unless Section 12.03 shall be applicable upon
(1) the occurrence of a Non-payment Default with respect to any
Designated Senior Indebtedness guaranteed by a Subsidiary
Guarantor (which guarantee constitutes Guarantor Senior
Indebtedness of such Subsidiary Guarantor) and (2) the earlier
of (i) receipt by the Trustee, the Company and such Subsidiary
Guarantor from the Representatives of written notice of such
occurrence stating that such notice is a "Payment Blockage
Notice" pursuant to Sections 4.02(b) and 12.02(b) of this
Indenture or (ii) if such Non-payment Default results from the
acceleration of the Securities, the date of the acceleration of
the Securities, no payment (other than payments previously made
pursuant to Article Nine hereof) or distribution of any assets
of such Subsidiary Guarantor of any kind or character shall be
made by such Guarantor on account of principal, premium, if
any, or interest on the Securities or on account of the
purchase, redemption or other acquisition of Securities or on
account of any of the other obligations of such Subsidiary
Guarantor under this Guarantee for a period ("Guarantor Payment
Blockage Period") commencing on the date of receipt by the
Trustee of such notice or the date of the acceleration referred
to in clause (ii) above, as the case may be, unless and until
the earlier to occur of the following events: (w) 179 days
shall have elapsed since receipt of such written notice by the
Trustee or the date of the acceleration of the Securities, as
the case may be (provided such Guarantor Senior Indebtedness
<PAGE> 118
shall theretofore not have been accelerated), (x) such Non-
payment Default shall have been cured or waived or shall have
ceased to exist, (y) such Guarantor Senior Indebtedness shall
have been discharged or paid in full in cash or Cash
Equivalents or (z) such Guarantor Payment Blockage Period shall
have been terminated by written notice to the Guarantor or the
Trustee from the Representative initiating such Guarantor
Payment Blockage Period, or the holders of at least a majority
in principal amount of such issue of such Guarantor Senior
Indebtedness, after which, in the case of clause (w), (x), (y)
or (z), the Subsidiary Guarantor shall resume making any and
all required payments in respect of its obligations under this
Guarantee. Notwithstanding any other provisions of this
Indenture, only one Guarantor Payment Blockage Period may be
commenced within any consecutive 365 day period and no Non-
payment Default with respect to Guarantor Senior Indebtedness
guaranteed by any Subsidiary Guarantor (which guarantee
constitutes Guarantor Senior Indebtedness of such Subsidiary
Guarantor) which existed or was continuing on the date of the
commencement of any Guarantor Payment Blockage Period shall be,
or be made, the basis for the commencement of a second
Guarantor Payment Blockage Period, whether or not within a
period of 365 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than
90 consecutive days. In no event shall a Guarantor Payment
Blockage Period extend beyond 179 days from the date of the
receipt of the notice or the date of the acceleration of the
Securities referred to in clause (2) hereof.
(c) In the event that, notwithstanding the
foregoing, the Trustee or the Holder of any Security shall have
received any payment prohibited by the foregoing provisions of
this Section 12.02, then and in such event such payment shall
be paid over and delivered forthwith to the Representatives or
as a court of competent jurisdiction shall direct.
SECTION 12.03. Guarantee Obligations Subordinated to Prior
Payment of All Guarantor Senior Indebtedness
on Dissolution, Liquidation or Reorganization
of Such Subsidiary Guarantor.________________
Upon any payment or distribution of assets of any
Subsidiary Guarantor of any kind or character, whether in cash,
property or securities upon any dissolution, winding up, total
or partial liquidation or reorganization of such Subsidiary
Guarantor and whether voluntary or involuntary (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 such
Subsidiary Guarantor and whether voluntary or involuntary):
<PAGE> 119
(a) the holders of all Guarantor Senior Indebtedness
of such Subsidiary Guarantor shall first be entitled to
receive payments in full in cash or Cash Equivalents of
all amounts payable under Guarantor Senior Indebtedness
(including, with respect to Designated Senior Indebtedness
guaranteed by such Subsidiary Guarantor, any interest
accruing after the commencement of any such proceeding at
the rate specified in the applicable Designated Senior
Indebtedness whether or not interest is an allowed claim
enforceable against the Company in any such proceeding)
before the Holders will be entitled to receive any payment
with respect to the Guarantee (excluding Permitted
Subordinated Reorganization Securities), and until all
Obligations with respect to the Guarantor Senior
Indebtedness are paid in full in cash or Cash Equivalents,
any distribution to which the Holders would be entitled
(excluding Permitted Subordinated Reorganization
Securities) shall be made to the holders of Guarantor
Senior Indebtedness; provided, however, that no payment by
any other Subsidiary Guarantor or the Company shall
constitute payment on behalf of such Subsidiary Guaranty
for purposes of this Section 12.03(a);
(b) any payment or distribution of assets of such
Subsidiary Guarantor 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
(excluding Permitted Subordinated Indebtedness) except for
the provisions of this Article Twelve, shall be paid by
the liquidating trustee or agent or other person making
such a payment or distribution, directly to the holders of
Guarantor Senior Indebtedness of such Subsidiary Guarantor
or their Representative, ratably according to the
respective amounts of such Guarantor Senior Indebtedness
remaining unpaid held or represented by each, until all
such Guarantor Senior Indebtedness remaining unpaid shall
have been paid in full in cash or Cash Equivalents after
giving effect to any concurrent payment or distribution to
the holders of such Guarantor Senior Indebtedness;
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of such
Subsidiary Guarantor of any kind or character, whether in
cash, property or securities, shall be received by the
Trustee or the Holders or any Paying Agent in respect of
payment of the Guarantee before all Guarantor Senior
Indebtedness of such Subsidiary Guarantor is paid in full
in cash or Cash Equivalents, such payment or distribution
(subject to the provisions of Sections 12.06 and 12.07)
shall be received, segregated from other funds, and held
<PAGE> 120
in trust by the Trustee or such Holder or Paying Agent for
the benefit of, and shall immediately be paid over to, the
holders of such Guarantor Senior Indebtedness or their
Representative, ratably according to the respective
amounts of such Guarantor Senior Indebtedness held or
represented by each, until all such Guarantor Senior
Indebtedness remaining unpaid shall have been paid in full
in cash or Cash Equivalents, after giving effect to any
concurrent payment or distribution to the holders of
Guarantor 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 such
Guarantor Senior Indebtedness or their Representative.
Each Subsidiary Guarantor shall give prompt notice to
the Trustee prior to any dissolution, winding up, total or
partial liquidation or total or reorganization (including,
without limitation, in bankruptcy, insolvency, or receivership
proceedings or upon any assignment for the benefit of creditors
or any other marshalling of such Subsidiary Guarantor's assets
and liabilities).
SECTION 12.04. Holders of Guarantee Obligations To Be
Subrogated to Rights of Holders of
Guarantor Senior Indebtedness.
Subject to the payment in full in cash or Cash
Equivalents of all Guarantor Senior Indebtedness, the Holders
of Guarantee Obligations of a Subsidiary Guarantor shall be
subrogated to the rights of the holders of Guarantor Senior
Indebtedness of such Subsidiary Guarantor to receive payments
or distributions of assets of such Subsidiary Guarantor
applicable to such Guarantor Senior Indebtedness until all
amounts owing on or in respect of the Guarantee Obligations
shall be paid in full in cash, and for the purpose of such
subrogation no payments or distributions to the holders of such
Guarantor Senior Indebtedness by or on behalf of such
Subsidiary Guarantor, or by or on behalf of the Holders by
virtue of this Article Twelve, which otherwise would have been
made to the Holders, shall, as between such Subsidiary
Guarantor and the Holders, be deemed to be payment by such
Subsidiary Guarantor to or on account of such Guarantor Senior
Indebtedness, it being understood that the provisions of this
Article Twelve are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand,
<PAGE> 121
and the holders of such Guarantor 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 Twelve shall have been applied, pursuant to the
provisions of this Article Twelve, to the payment of all
amounts payable under such Guarantor Senior Indebtedness, then
the Holders shall be entitled to receive from the holders of
such Guarantor Senior Indebtedness any payments or
distributions received by such holders of such Guarantor Senior
Indebtedness in excess of the amount sufficient to pay all
amounts payable under or in respect of such Guarantor Senior
Indebtedness in full in cash or Cash Equivalents.
SECTION 12.05. Obligations of the Subsidiary
Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere
in this Indenture or in the Guarantees is intended to or shall
impair, as between the Subsidiary Guarantors and the Holders,
the obligation of the Subsidiary Guarantors, which is absolute
and unconditional, to pay to the Holders all amounts due and
payable under the Guarantees 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 the Subsidiary Guarantors other than the holders
of the Guarantor 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 rights, if any, under this
Article Twelve, of the holders of Guarantor Senior Indebtedness
in respect of cash, property or securities of the Subsidiary
Guarantors received upon the exercise of any such remedy. Upon
any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article Twelve, the Trustee,
subject to the provisions of Sections 8.01 and 8.02, 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 Guarantor Senior Indebtedness and other Indebtedness
of any Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article Twelve.
<PAGE> 122
Nothing in this Section 12.05 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 8.07.
SECTION 12.06. 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 notice thereof
from the Company or any Subsidiary Guarantor or from one or
more holders of Guarantor Senior Indebtedness or from any
Representative therefor and, prior to the receipt of any such
notice, the Trustee, subject to the provisions of Sections 8.01
and 8.02, shall be entitled in all respects conclusively to
assume that no such fact exists.
SECTION 12.07. 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 Sections 9.01 and 9.02 shall be for the sole
benefit of Securityholders and, to the extent allocated for the
payment of Securities, shall not be subject to the
subordination provisions of this Article Twelve. Otherwise,
any deposit of assets or securities by or on behalf of a
Subsidiary Guarantor with the Trustee or any Paying Agent
(whether or not in trust) for payment of the Guarantee shall be
subject to the provisions of this Article Twelve; 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
12.06, 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 the Company or any Subsidiary or Affiliate of the
Company is acting as Paying Agent. Nothing contained in this
Section 12.07 shall limit the right of the holders of Guarantor
Senior Indebtedness to recover payments as contemplated by this
Article Twelve.
<PAGE> 123
SECTION 12.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Guarantor Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any
Subsidiary Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any non-compliance by any
Subsidiary Guarantor with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection
(a) of this Section 12.08, the holders of Guarantor Senior
Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of
the Securities and without impairing or releasing the
subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Guarantor Senior Indebtedness or any instrument evidencing the
same or any agreement under which Guarantor Senior Indebtedness
is outstanding; (2) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing
Guarantor Senior Indebtedness; (3) release any person liable in
any manner for the collection or payment of Guarantor Senior
Indebtedness; and (4) exercise or refrain from exercising any
rights against the Company and any other person; provided,
however, that in no event shall any such actions limit the
right of the Holders of the Securities to take any action to
accelerate the maturity of the Securities pursuant to Article
Seven hereof or to pursue any rights or remedies hereunder or
under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
(c) Each Holder by accepting a Security agrees that
the Representative of any Guarantor Senior Indebtedness
(including without limitation, the Credit Agent), in its
discretion, without notice or demand and without affecting any
rights of any holder of Guarantor Senior Indebtedness under
this Article Twelve, 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 Guarantor Senior
Indebtedness or by any holder of any Guarantor Senior
Indebtedness against such Holder of this Article Twelve after a
<PAGE> 124
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 12.09. Holders Authorize Trustee To Effectuate
Subordination of Guarantee Obligations.
Each Holder of the Guarantee Obligations by his
acceptance thereof 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 Twelve, and appoints the Trustee his
attorney-in-fact for such purpose, including, in the event of
any dissolution, winding up, liquidation or reorganization of
any Subsidiary Guarantor (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 any Subsidiary Guarantor) tending towards liquidation or
reorganization of the business and assets of any Subsidiary
Guarantor, the immediate filing of a claim for the unpaid
balance under its or his Guarantee 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 Guarantor Senior Indebtedness
or their Representative is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said
Guarantee Obligations. Nothing herein contained shall be
deemed to authorize the Trustee or the holders of Guarantor
Senior Indebtedness or their Representative to authorize or
consent to or accept or adopt on behalf of any holder of
Guarantee Obligations any plan of reorganization, arrangement,
adjustment or composition affecting the Guarantee Obligations
or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Guarantor Senior Indebtedness or
their Representative to vote in respect of the claim of any
holder of Guarantee Obligations in any such proceeding.
SECTION 12.10. Right of Trustee To Hold Guarantor
Senior Indebtedness.
The Trustee shall be entitled to all of the rights
set forth in this Article Twelve in respect of any Guarantor
Senior Indebtedness at any time held by it to the same extent
<PAGE> 125
as any other holder of Guarantor Senior Indebtedness, and
nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
SECTION 12.11. No Suspension of Remedies.
The failure to make a payment in respect of the
Guarantees by reason of any provision of this Article Twelve
shall not be construed as preventing the occurrence of a
Default or an Event of Default under Section 7.01.
Nothing contained in this Article Twelve shall limit
the right of the Trustee or the Holders of Securities to take
any action to accelerate the maturity of the Securities
pursuant to Article Seven or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if
any, under this Article Twelve of the holders, from time to
time, of Guarantor Senior Indebtedness.
SECTION 12.12. No Fiduciary Duty of Trustee to Holders
of Guarantor Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Guarantor 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 Guarantee
Obligations or the Company or any other person, money or assets
to which any holders of Guarantor Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
Nothing in this Section 12.12 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
Guarantor Senior Indebtedness or their Representative.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with the duties imposed by operation of Section
3.18(c) of the TIA, the imposed duties shall control.
<PAGE> 126
SECTION 13.02. 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:
if to the Company or any Subsidiary Guarantor:
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mark A. Resnik
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Division
if to the Credit Agent:
Bankers Trust Company
130 Liberty Street, 14th Floor
New York, NY 10006
Attention: [Mary Jo Jolly]
w/a copy to:
Bankers Trust Company
308 S. Grand Avenue, 41st Floor
Los Angeles, CA 90071
Attn.: Eric S. Swanson
Each of the Company, the Trustee, the Subsidiary
Guarantors and the Credit Agent by written notice to each other
such person may designate additional or different addresses for
notices to such person. Any notice or communication to the
Company, the Trustee, the Subsidiary Guarantors and the Credit
Agent 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
<PAGE> 127
of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Security-
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
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA
{ 312(b) with other Securityholders with respect to their
rights under this Indenture or the Securities. The Company,
the Subsidiary Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA { 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent.______________________________
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
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
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
SECTION 13.05. 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 5.07, shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or
condition;
<PAGE> 128
(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 convenant 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 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by
or at a meeting of Securityholders. The Paying Agent or
Registrar may make reasonable rules for its functions.
SECTION 13.07. 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 13.08. 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.
SECTION 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of any of the Company or any
<PAGE> 129
of its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others.
A director, officer, employee, stockholder or
incorporator, as such, of the Company shall not have any
liability for any obligations of the Company 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 Securityholder 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 13.11. Successors.
All agreements of the Company and each Subsidiary
Guarantor in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 13.12. 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 13.13. 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.
SECTION 13.14. No Violation.
Notwithstanding the provisions of this Indenture, in
no event shall any transaction, agreement, payment or other
event to be consummated, entered into or made in connection
with the Merger or any financing thereof be considered a
violation of any provision of this Indenture or constitute a
Change of Control hereunder.
<PAGE> 130
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.
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
-------------------------
Name:
Title:
Attest: /s/ George G. Golleher
------------------------
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By: /s/ Christine C. Collins
-------------------------
Name: Christine C. Collins
Title: Assistant Vice President
Attest: /s/ Christine C. Collins
------------------------
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
<PAGE> 131
By: /s/ Mark A. Resnik
-------------------------
Name:
(for each of the above-
listed Subsidiary Guarantors)
Attest: /s/ George G. Golleher
-----------------------
(for each of the
above-listed
Subsidiary Guarantors)
<PAGE> 132
EXHIBIT A
[FORM OF NOTE]
FOOD 4 LESS SUPERMARKETS, INC.
11% Senior Subordinated Note
due 2005
No. $
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company", which term includes any successor
corporation), for value received promises to pay to
or registered assigns, the principal sum of Dollars, on
June 15, 2005.
Interest Payment Dates: June 15 and December 15
commencing on December 15, 1995.
Record Dates: June 1 and December 1.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if
set forth at this place.
A-1
<PAGE> 133
IN WITNESS WHEREOF, the Company has caused this
Security to be signed manually or by facsimile by its duly
authorized officers.
Dated:
FOOD 4 LESS SUPERMARKETS, INC.
By:
Name:
Title:
By:________________________________
Name:
Title:
Trustee's Certification of Authentication
This is one of the Sections described in
the within-mentioned Indenture
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:____________________________________
Authorized Signatory
A-2
<PAGE> 134
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By
Authorized Signatory
A-3
<PAGE> 135
FOOD 4 LESS SUPERMARKETS, INC.
11% Senior Subordinated Note
due 2005
1. Interest.
FOOD 4 LESS SUPERMARKETS, INC., a Delaware
corporation (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on each
June 15 and December 15 of each year (the "Interest Payment
Date"), commencing on December 15, 1995, to the Holders of
record on the immediately preceding June 1 and December 1.
Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has
been paid, from the date of issuance of the Securities.
Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
The Company shall pay interest on overdue principal
and interest on overdue installments of interest, to the extent
lawful, at a rate equal to the rate of interest otherwise
payable on the Securities.
2. Method of Payment.
The Company 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. The Company 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"). However, the Company may pay principal and interest
by wire transfer of Federal funds, or interest by its check
payable in such U.S. Legal Tender. The Company may deliver any
such interest payment to the Paying Agent or to a Holder at the
Holder's registered address. Notwithstanding the foregoing,
the Company shall pay or cause to be paid all amounts payable
with respect to non-DTC eligible Securities by wire transfer of
Federal funds to the account of the Holders of such Securities.
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York
(the "Trustee") will act as Paying Agent and Registrar. The
A-4
<PAGE> 136
Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying
Agent, Registrar or co-Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture,
dated as of June 1, 1995 (the "Indenture"), among the Company,
the Subsidiary Guarantors and the Trustee. 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 Securities are
general unsecured obligations of the Company limited in
aggregate principal amount to $550,000,000. Payment on each
Security is guaranteed on a senior subordinated basis, jointly
and severally, by the Subsidiary Guarantors pursuant to Article
Eleven of the Indenture.
5. Optional Redemption.
On or after June 15, 2000 the Securities may be
redeemed in whole at any time or in part from time to time, at
the option of the Company, at a redemption price equal to the
applicable percentage of the principal amount thereof set forth
below, together with accrued and unpaid interest to the
Redemption Date, if redeemed during the 12 months commencing on
June 15 in the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2000 ...................... 105.500%
2001 ...................... 103.667%
2002 ...................... 101.833%
2003 and thereafter ....... 100.000%
</TABLE>
In addition, on or prior to June 15, 1998, the
Company may, at its option, use the net cash proceeds of one or
more Public Equity Offering to redeem up to an aggregate of 35%
of the principal amount of the Securities originally issued, at
a redemption price equal to 111.000% of the principal amount
thereof if redeemed during the 12 months commencing on June 15,
A-5
<PAGE> 137
1995, 109.429% of the principal amount thereof if redeemed
during the 12 months commencing on June 15, 1996 and 107.857%
of the principal amount thereof if redeemed during the 12
months commencing on June 15, 1997, in each case plus accrued
and unpaid interest, if any, to the redemption date.
The documents evidencing Senior Indebtedness will
restrict the Company's ability to optionally redeem the
Securities.
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. In order to effect a redemption with the proceeds of
a Public Equity Offering, the Company shall send the redemption
notice not later than 60 days after the consummation of such
Public Equity Offering. 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 and
payment of the Securities called for redemption is not
prohibited under Article Four or Article Twelve of the
Indenture, then, unless the Company 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.
Upon the occurrence of a Change of Control, each
Holder shall have the right to require the repurchase of such
Holder's Securities pursuant to a Change of Control Offer at a
purchase price equal to 101% of the principal amount thereof
plus accrued interest, if any, to the date of purchase. The
Company shall not be required to repurchase Securities until it
has complied with its covenants to repay in full all
Indebtedness of the Company and its Subsidiaries under the
Credit Agreement or offer to repay in full all such
Indebtedness and repay the Indebtedness of each lender who has
accepted its offer to repay such Indebtedness or to obtain the
requisite consent under the Credit Agreement to permit the
repurchase of the Securities pursuant to a Change of Control
Offer. In addition, prior to purchasing the Securities
tendered in a Change of Control Offer, the Company shall
A-6
<PAGE> 138
purchase all Senior Notes (or permitted refinancings thereof)
which it is required to purchase by reason of such Change of
Control.
8. Limitation on Asset Sales.
Under certain circumstances the Company is required
to apply the net proceeds from Asset Sales to the repayment of
Pari Passu Indebtedness or Senior Indebtedness, to make Related
Business Investments, an investment in properties and assets
that replace the properties and assets that are the subject of
such Asset Sale, an investment in properties and assets that
will be used in the business of the Company and its
Subsidiaries existing on the Issue Date or in a business
reasonably related thereto or to purchase in a Net Proceeds
Offer (at a price equal to 100% of the aggregate principal
amount thereof, plus accrued interest to the date of purchase)
such aggregate principal amount of Securities which, when added
to the accrued interest thereon, shall be equal to the net
proceeds required to be applied thereto.
9. Denominations; Transfer; Exchange.
The Securities are in registered form, without
coupons, in denominations of $1,000 and integral multiples of
$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.
10. Persons Deemed Owners.
The registered Holder of a Security shall be treated
as the owner of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying
Agents will pay the money back to the Company at its request.
After that, all liability of the Trustee and such Paying Agents
with respect to such money shall cease.
A-7
<PAGE> 139
12. Discharge Prior to Redemption or Maturity.
If the Company 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, the Company 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).
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the
Securities and the Guarantees 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 a majority in aggregate principal amount 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 Six or Section 11.06 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.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments
in respect of its Capital Stock and merge or consolidate with
any other person and sell, lease, transfer or otherwise dispose
of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications
and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
15. Subordination.
The Securities will be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness
(as defined in the Indenture) of the Company. The Guarantees
are subordinated in right of payment, in the manner and to the
A-8
<PAGE> 140
extent set forth in the Indenture, to the prior payment in full
of Guarantor Senior Indebtedness (as defined in the Indenture).
To the extent and in the manner provided in the Indenture,
Senior Indebtedness, and in the case of payment by a Subsidiary
Guarantor, Guarantor Senior Indebtedness, must be paid before
any payment may be made to any Holder of this Security. Any
Securityholder by accepting this Security agrees to the
subordination and authorizes the Trustee to give it effect.
16. 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.
17. 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 immediately in the manner 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 may require
indemnity satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the Securities then
outstanding may 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.
18. Trustee Dealings with Company.
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 the Company, its
Subsidiaries or their respective Affiliates as if it were not
the Trustee.
19. No Recourse Against Others.
No stockholder, director, officer, employee or
incorporator, as such, of the Company shall have any liability
for any obligation of the Company 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
A-9
<PAGE> 141
liability. The waiver and release are part of the
consideration for the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or
authenticating agent manually signs the certificate of
authentication on this Security.
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, the
Company 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.
The Company 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 Supermarkets,
Inc., c/o The Yucaipa Companies, 10000 Santa Monica Boulevard,
Fifth Floor, Los Angeles, California 90067, Attn: Mark Resnik.
A-10
<PAGE> 142
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The Subsidiary Guarantors (as defined in the
Indenture (the "Indenture") referred to in the Security upon
which this notation is endorsed and each hereinafter referred
to as a "Subsidiary Guarantor," which term includes any
successor person under the Indenture) have unconditionally
guaranteed on a senior subordinated basis (such guarantee by
each Subsidiary Guarantor being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal
of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the
Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms set
forth in Article Eleven and Article Twelve of the Indenture and
(ii) in case of any extension of time of payment or renewal of
any Securities or any of such other obligations, that the same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the
Holders of Securities and to the Trustee pursuant to the
Guarantee and the Indenture are expressly set forth and are
expressly subordinated and subject in right of payment to the
prior payment in full of all Guarantor Senior Indebtedness of
such Subsidiary Guarantor, to the extent and in the manner
provided, in Article Eleven and Article Twelve of the
Indenture, and reference is hereby made to such Indenture for
the precise terms of the Guarantee therein made.
No stockholder, officer, director or incorporator, as
such, past, present or future, of any Subsidiary Guarantor
shall have any liability under the Guarantee by reason of his
or its status as such stockholder, officer, director or
incorporator.
A-11
<PAGE> 143
The Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the
Securities upon which the Guarantee is noted shall have been
executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS MERCHANDISING, INC.
BAY AREA WAREHOUSE STORES, INC.
FOOD 4 LESS GM, INC.
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
By:
Name:
(for each of the above-listed
Subsidiary Guarantors)
A-12
<PAGE> 144
[FORM OF ASSIGNMENT]
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type assignee's name, address and zip code)
Please insert Social Security or other
identifying number of assignee
_______________________________________
and irrevocably appoint _______________________ agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated:____________________ Signature:_________________________
______________________________________________________________
(Sign exactly as your name appears on
the face of this Security)
Signature Guarantee:__________________________________________
A-13
<PAGE> 145
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 5.15 or Section 5.16 of the
Indenture, as the case may be, check the appropriate box below:
Section 5.15 [ ] Section 5.16 [ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 5.15 or
Section 5.16 of the Indenture, as the case may be, state the
amount you want to be purchased:
$
Date:__________ Signature:____________________________
(Sign exactly as your name
appears on the face of
this Security)
Signature Guarantee:______________________________________
A-14
<PAGE> 1
Exhibit 4.6.2
11% Senior Subordinated Notes
due 2005
______________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
to
INDENTURE
Dated as of June 1, 1995
______________________
RALPHS GROCERY COMPANY,
as successor by merger to Food 4 Less Supermarkets, Inc.
and
SUBSIDIARY GUARANTORS
and
CRAWFORD STORES, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
<PAGE> 2
This FIRST SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "First Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation ("Ralphs"),
as successor by merger to Food 4 Less Supermarkets, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors, Crawford Stores, Inc.,
a California corporation ("Crawford") and a wholly-owned subsidiary of Ralphs,
and United States Trust Company of New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of June 1, 1995
(the "Indenture"), between the Company, the Subsidiary Guarantors and the
Trustee, there was issued $[550,000,000] principal amount of its 11% Senior
Subordinated Notes due 2005 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, the Company, Ralphs Supermarkets, Inc., a
Delaware corporation ("RSI"), and the stockholders of RSI, the Company merged
with and into RSI, and immediately thereafter Ralphs Grocery Company, a
Delaware corporation ("RGC"), which was a wholly-owned subsidiary of RSI,
merged with and into RSI and RSI changed its name to Ralphs Grocery Company
(together, the "Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 6.01 of the Indenture. Section 6.02 of the Indenture
provides that upon any consolidation or merger, or any transfer of assets in
accordance with Section 6.01 thereof, the successor person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to and be substituted for, and may exercise every right and
power of the Company under the Indenture with the same effect as if such
successor person had been named as the Company therein. Section 6.02 also
provides that when a successor corporation assumes all of the obligations of
the Company under the Indenture and under the Securities, and agrees to be
bound thereby, the predecessor shall be released from such obligations.
E. Following the Merger, the obligations under the
Indenture assumed by Ralphs hereby will rank pari passu in right of payment
with the obligations to be assumed by Ralphs under the indentures governing the
9% Senior Subordinated Notes due 2003 of RGC, the 10.25% Senior Subordinated
Notes due 2002 of RGC, the 13.75% Senior Subordinated Notes due 2001 of the
Company, and the 13.75% Senior Subordinated Notes due 2005 of the Company.
2
<PAGE> 3
F. Crawford has guaranteed payment of the Indebtedness
under the term portion of the Credit Agreement. Section 5.17 of the Indenture
provides that Ralphs, as successor to the Company under the Indenture, may not
permit any of its Subsidiaries to guarantee the payment of any Indebtedness
under the term portion of the Credit Agreement unless such Subsidiary, Ralphs
and the Trustee execute and deliver a supplemental indenture evidencing such
Subsidiary's Guarantee under the Indenture.
G. The purposes of this First Supplemental Indenture are
to (i) allow Ralphs, as the successor person to the Company in the Merger, to
assume the obligations of the Company under the Indenture, (ii) release the
Company from such obligations and (iii) add Crawford as a Subsidiary Guarantor
under the Indenture.
H. Section 10.01 of the Indenture provides that Ralphs,
as successor to the Company, and each Subsidiary Guarantor, when authorized by
a Board Resolution, and the Trustee, together, without notice to or consent of
any Holder, may amend or supplement the Securities and the Indenture, as set
forth below.
I. Ralphs, the Subsidiary Guarantors and Crawford, each
having been duly authorized by a Board Resolution, and the Trustee, having
received an Opinion of Counsel pursuant to Section 10.01 of the Indenture
stating that the amendment or supplement to the Indenture contained in the
First Supplemental Indenture complies with the provisions of 10.01 of the
Indenture, are authorized to execute and deliver this First Supplemental
Indenture.
J. All of the conditions and requirements necessary to
make this First Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 6.02 of the Indenture, Ralphs, as
the successor person into which the Company has been merged in the Merger in
accordance with Section 6.01 of the Indenture, hereby succeeds to and is
substituted for, and may exercise every right and power of the Company under
the Indenture with the same effect as if Ralphs had been named as the Company
therein.
2. Pursuant to Section 6.02 of the Indenture, Ralphs
hereby assumes all of the obligations of the Company under the Indenture and
under the Securities and agrees to be bound thereby.
3. Pursuant to Section 6.02 of the Indenture, the
Company is released from all of the obligations of it under the Indenture and
under the Securities.
3
<PAGE> 4
4. Pursuant to Section 5.17 of the Indenture, this First
Supplemental Indenture shall evidence Crawford's Guarantee of the Securities.
5. Crawford shall become a party to the Indenture as a
Subsidiary Guarantor thereunder and shall be bound by the terms of Article
Eleven and all other applicable provisions thereof, all in accordance with the
terms of the Indenture.
6. This First Supplemental Indenture shall be effective
as of the date hereof.
7. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this First
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as
successor by merger to the
Company
[Seal]
Attest:
/s/ Jan Charles Gray
------------------------------- ------------------------------
By:
Its:
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE
STORES, INC.
[Seal]
Attest:
/s/ Mark A. Resnik
------------------------------- ------------------------------
By: Mark A. Resnik
Its:
CRAWFORD STORES, INC.
[Seal]
Attest:
/s/ Jan Charles Gray
------------------------------- ------------------------------
By: Jan Charles Gray
Its:
5
<PAGE> 6
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ Christine C. Collins
------------------------------- ------------------------------
By: Christine C. Collins
Its:
6
<PAGE> 1
Exhibit 4.7.3
RALPHS GROCERY COMPANY,
as successor in the merger defined herein,
Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
______________________
SECOND SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
______________________
10-1/4% Senior Subordinated Notes due 2002
<PAGE> 2
This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as
defined below) (the "Second Supplemental Indenture") is dated as of June 14,
1995, and is made by and among Ralphs Grocery Company, a Delaware corporation,
as the successor corporation in the Merger (as defined) ("Newco"), and United
States Trust Company of New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of July 29, 1992,
as amended (the "Indenture"), between Ralphs Grocery Company, a Delaware
corporation (the "Company"), and the Trustee, the Company issued $300,000,000
in aggregate principal amount of its 10-1/4% Senior Subordinated Notes due 2002
(the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, Food 4 Less Supermarkets, Inc., a Delaware
corporation ("Food 4 Less"), Ralphs Supermarkets, Inc., a Delaware corporation
("RSI"), and the stockholders of RSI, Food 4 Less merged with and into RSI, and
immediately thereafter the Company, which was a wholly-owned subsidiary of RSI,
merged with and into RSI and RSI changed its name to Ralphs Grocery Company
(together, the "Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 011of the Indenture. Section 802 of the Indenture
provides that upon any consolidation or merger or any sale, assignment,
transfer, lease or conveyance or other disposition of all or substantially all
of the assets of the Company in accordance with Section 801 thereof, the
successor Person formed by such consolidation or into which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture with the same effect
as if such successor Person had been named as the Company therein. Section 802
also provides that when a successor corporation assumes all of the obligations
of the Company under the Indenture and under the Securities, the Company will
be released from those obligations. The purposes of this Second Supplemental
Indenture are to (i) allow Newco, as the successor person to the Company in the
Merger, to assume the obligations of the Company under the Indenture, (ii)
release the Company from such obligations, and (iii) restate the definition of
"New Credit Facility" set forth in the Indenture.
2
<PAGE> 3
E. Following the Merger, the obligations under the
Indenture assumed by Newco hereby will rank pari passu in right of payment with
the obligations to be assumed by Newco under the indentures governing the 9%
Senior Subordinated Notes due 2003 of the Company, the 11% Senior Subordinated
Notes due 2004 of Food 4 Less, the 13.75% Senior Subordinated Notes due 2001 of
Food 4 Less, and the 13.75% Senior Subordinated Notes due 2005 of Food 4 Less.
F. Section 901 of the Indenture provides that Newco, as
successor to the Company, when authorized by a Board Resolution, and the
Trustee, together, without notice to or consent of any Holder may amend or
supplement the Securities and the Indenture, as set forth below.
G. Newco, being duly authorized by a Board Resolution,
and the Trustee, having received an Opinion of Counsel pursuant to Section 903
of the Indenture stating that the execution of this Second Supplemental
Indenture is authorized and permitted by the Indenture, are authorized to
execute and deliver this Second Supplemental Indenture.
H. All of the conditions and requirements necessary to
make this Second Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 802 of the Indenture, Newco, as
the successor Person into which the Company has been merged in the Merger in
accordance with Section 801 of the Indenture, hereby succeeds to and is
substituted for, and may exercise every right and power of the Company under
the Indenture with the same effect as if Newco had been named as the Company
therein.
2. Pursuant to Section 802 of the Indenture, Newco
hereby assumes all of the obligations of the Company under the Indenture and
the Securities and agrees to be bound thereby.
3. Pursuant to Section 802 of the Indenture, the Company
is released from all obligations of it under the Indenture and the Securities.
4. The following definition set forth in Section 101 of
the Indenture is hereby restated as follows:
"New Credit Facility" means the Credit Agreement, dated as of
June 14, 1995, by and among Food 4 Less, as borrower, certain of its
subsidiaries, New Holdings, as guarantor, the Lenders referred to
therein and Bankers Trust Company, as administrative agent providing
for extensions of credit in an aggregate principal amount of up to
$925 million.
3
<PAGE> 4
5. This Second Supplemental Indenture shall be effective
as of the date hereof.
6. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
IN WITNESS WHEREOF, the parties hereto caused this Second
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as
the successor corporation
in the Merger
[Seal]
Attest:
/s/ Jan Charles Gray /s/ Jan Charles Gray
------------------------------- -------------------------------
By: Jan Charles Gray
Its:
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ Christine C. Collins /s/ Christine C. Collins
------------------------------- -------------------------------
By: Christine C. Collins
Its: Assistant Vice President
4
<PAGE> 1
Exhibit 4.8.4
RALPHS GROCERY COMPANY,
as successor in the merger defined herein,
Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
______________________
THIRD SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
______________________
9% Senior Subordinated Notes due 2003
and 9% Series B Senior Subordinated Notes
due 2003
<PAGE> 2
This THIRD SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "Third Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation, as the
successor corporation in the Merger (as defined) ("Newco"), and United States
Trust Company of New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated March 30, 1993, as
amended (the "Indenture"), between Ralphs Grocery Company, a Delaware
corporation (the "Company"), and the Trustee, the Company issued $150,000,000
in aggregate principal amount of its 9% Senior Subordinated Notes due 2003 (the
"Initial Securities").
B. Pursuant to the First Supplemental Indenture to the
Indenture dated June 23, 1993, between the Company and the Trustee, the Company
consummated an exchange offer for the Initial Securities whereby the Company
offered to exchange $1,000 principal amount of its 9% Series B Senior
Subordinated Notes due 2003 (the "Exchange Securities," and together with the
Initial Securities, the "Securities"), for each $1,000 principal amount of its
Initial Securities.
C. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
D. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, Food 4 Less Supermarkets, Inc., a Delaware
corporation ("Food 4 Less"), Ralphs Supermarkets, Inc., a Delaware corporation
("RSI"), and the stockholders of RSI, Food 4 Less Supermarkets merged with and
into RSI, and immediately thereafter the Company, which was a wholly-owned
subsidiary of RSI, merged with and into RSI and RSI changed its name to Ralphs
Grocery Company (together, the "Merger"). The Merger became effective on June
14, 1995.
E. Following the Merger, the obligations under the
Indenture assumed by Newco hereby will rank pari passu in right of payment with
the obligations to be assumed by Newco under the indentures governing the
10.25% Senior Subordinated Notes due 2002 of the Company, the 11% Senior
Subordinated Notes due 2004 of Food 4 Less, the 13.75% Senior Subordinated
Notes due 2001 of Food 4 Less, and the 13.75% Senior Subordinated Notes due
2005 of Food 4 Less.
F. The Merger was a transaction subject to the
requirements of Section 011of the Indenture. Section 802 of the Indenture
provides that upon any consolidation or merger or any sale, assignment,
transfer, lease or conveyance or other
2
<PAGE> 3
disposition of all or substantially all of the assets of the Company in
accordance with Section 801 thereof, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture with the same effect as if such successor
Person had been named as the Company therein. Section 802 also provides that
when a successor corporation assumes all of the obligations of the Company
under the Indenture and under the Securities, the Company will be released from
those obligations. The purposes of this Third Supplemental Indenture are to
(i) allow Newco, as the successor person to the Company in the Merger, to
assume the obligations of the Company under the Indenture, (ii) release the
Company from such obligations, and (iii) restate the definition of "New Credit
Facility" set forth in the Indenture.
G. Section 901 of the Indenture provides that Newco, as
successor to the Company, when authorized by a Board Resolution, and the
Trustee, together, without notice to or consent of any Holder may amend or
supplement the Securities and the Indenture, as set forth below.
H. Newco, being duly authorized by a Board Resolution,
and the Trustee, having received an Opinion of Counsel pursuant to Section 903
of the Indenture stating that the execution of this Third Supplemental
Indenture is authorized and permitted by the Indenture, are authorized to
execute and deliver this Third Supplemental Indenture.
I. All of the conditions and requirements necessary to
make this Third Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 802 of the Indenture, Newco, as
the successor Person into which the Company has been merged in the Merger in
accordance with Section 801 of the Indenture, hereby succeeds to and is
substituted for, and may exercise every right and power of the Company under
the Indenture with the same effect as if Newco had been named as the Company
therein.
2. Pursuant to Section 802 of the Indenture, Newco
hereby assumes all of the obligations of the Company under the Indenture and
the Securities and agrees to be bound thereby.
3. Pursuant to Section 802 of the Indenture, the Company
is released from all obligations of it under the Indenture and the Securities.
3
<PAGE> 4
4. The following definition set forth in Section 101 of
the Indenture is hereby restated as follows:
"New Credit Facility" means the Credit Agreement, dated as of
June 14, 1995, by and among Food 4 Less, as borrower, certain of its
subsidiaries, New Holdings, as guarantor, the Lenders referred to
therein and Bankers Trust Company, as administrative agent providing
for extensions of credit in an aggregate principal amount of up to
$925 million.
5. This Third Supplemental Indenture shall be effective
as of the date hereof.
6. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this Third
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as the
successor corporation in the
Merger
[Seal]
Attest:
/s/ Jan Charles Gray /s/ Jan Charles Gray
------------------------------- ------------------------------
By: Jan Charles Gray
Its:
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ Christine C. Collins /s/ Christine C. Collins
------------------------------- ------------------------------
By: Christine C. Collins
Its: Assistant Vice President
5
<PAGE> 1
Exhibit 4.9.3
$175,000,000
10.45% Senior Notes
due 2000
______________________
SECOND SUPPLEMENTAL INDENTURE
Dated as of May 30, 1995
to
INDENTURE
Dated as of April 15, 1992
______________________
FOOD 4 LESS SUPERMARKETS, INC.
and
SUBSIDIARY GUARANTORS
and
NORWEST BANK MINNESOTA, N.A.
Trustee
<PAGE> 2
This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as
defined below) (the "Second Supplemental Indenture") is dated as of May 30,
1995, and is made by and among Food 4 Less Supermarkets, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors (as defined in the
Indenture), and Norwest Bank Minnesota, N.A. (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of April 15, 1992
(the "Indenture") between the Company, the Subsidiary Guarantors and the
Trustee, the Company issued $175,000,000 principal amount of its 10.45% Senior
Notes due 2000 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated as of September 14, 1994 and amended on January 12, 1995,
February 24, 1995 and April 26, 1995, by and among Food 4 Less, Inc., a
Delaware corporation, Food 4 Less Holdings, Inc., a California corporation,
Food 4 Less Holdings, Inc., a Delaware corporation, the Company, Ralphs
Supermarkets, Inc., a Delaware corporation ("RSI"), and the stockholders of
RSI, the Company will be merged with and into RSI and immediately thereafter
Ralphs Grocery Company, a Delaware corporation, which is a wholly-owned
subsidiary of RSI, will merge with and into RSI and RSI will change its name to
Ralphs Grocery Company (together, the "Merger").
D. In connection with the Merger, the Company has filed
a Registration Statement on Form S-4 (File No. 33- 56451) with the Securities
and Exchange Commission (the "Registration Statement") pursuant to which the
Company has made an offer to the holders of the Securities to exchange such
Securities for certain new Senior Notes due June 1, 2004 as described in such
Registration Statement. Such offer, as described in such Registration
Statement, is referred to in this Second Supplemental Indenture as the
"Exchange Offer." In connection with the Exchange Offer, the Company has
solicited consents to the amendments set forth below.
E. Section 9.02 of the Indenture provides that the
Company and each Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together, with the written consent of the Holder or Holders of
at least a majority in aggregate principal amount of the outstanding
Securities, may amend or supplement the Securities and the Indenture, as set
forth below.
F. The Company and each of the Subsidiary Guarantors
having been duly authorized by a Board Resolution, and the Trustee (i) having
received an Opinion of Counsel pursuant to Section 9.06 of the Indenture
stating that the execution of this
2
<PAGE> 3
Second Supplemental Indenture is authorized or permitted by the Indenture and
(ii) having received an Officers' Certificate of the Company pursuant to
Section 9.04 of the Indenture certifying that Holders of at least a majority in
aggregate principal amount of the outstanding Securities held by persons other
than the Company and its affiliates have consented to (and not theretofore
revoked) the amendments set forth below, the Company and the Trustee are
authorized to execute and deliver this Second Supplemental Indenture pursuant
to Article 9 of the Indenture.
G. All of the conditions and requirements necessary to
make this Second Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms (subject
to becoming effective as provided in paragraph 3, below), have been performed
and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 9.02 of the Indenture, and having
received the written consents of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities required thereby, the
Indenture is amended, effective as set forth in paragraph 3, below, as follows:
a. The covenant entitled "Limitation on
Restricted Payments", set forth in Section 4.03 of the Indenture, is hereby
deleted in its entirety.
b. The covenant entitled "Maintenance of Net
Worth", set forth in Section 4.04 of the Indenture, is hereby deleted in its
entirety.
c. The covenant entitled "Limitation on
Transactions with Affiliates", set forth in Section 4.12 of the Indenture, is
hereby deleted in its entirety.
d. The covenant entitled "Limitation on
Incurrences of Additional Indebtedness", set forth in Section 4.13 of the
Indenture, is hereby deleted in its entirety.
e. The covenant entitled "Limitation on Payment
Restrictions Affecting Subsidiaries", set forth in Section 4.14 of the
Indenture, is hereby deleted in its entirety.
f. The covenant entitled "Limitation on Liens",
set forth in Section 4.15 of the Indenture, is hereby deleted in its entirety.
g. The covenant entitled "Limitation on Change
of Control", set forth in Section 4.16 of the Indenture, is hereby deleted in
its entirety.
3
<PAGE> 4
h. The covenant entitled "Limitation on
Disposition of Assets", set forth in Section 4.17 of the Indenture, is hereby
deleted in its entirety.
i. The covenant entitled "Guarantees of Certain
Indebtedness", set forth in Section 4.18 of the Indenture, is hereby deleted in
its entirety.
j. Section 5.01(a)(2) of the Indenture under the
covenant entitled "When Company May Merge, Etc." is hereby deleted in its
entirety.
k. The following definition is hereby added to
Section 1.01 of the Indenture:
"New Credit Facility" means the senior bank facility pursuant
to which Bankers Trust Company has agreed, subject to certain
conditions, to provide up to $1,075 million of financing.
1. All definitions set forth in Section 1.01 of the
Indenture that relate to defined terms used solely in covenants or sections
deleted hereby are deleted in their entirety.
2. The parties hereto agree that the New Credit Facility
shall be deemed to constitute a refinancing of the Loan Documents.
3. The amendments to the Indenture set forth in this
Second Supplemental Indenture shall become effective only upon the acceptance
by the Company of the Securities that are validly tendered and not withdrawn
pursuant to the Exchange Offer.
4. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this Second
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
FOOD 4 LESS SUPERMARKETS, INC.
[Seal]
Attest:
/s/ Ronald W. Burkle /s/ Mark A. Resnik
------------------------------- ------------------------------
Ronald W. Burkle By: Mark A. Resnik
Chairman of the Board and Its: Vice President and
Executive Officer Secretary
SUBSIDIARY GUARANTORS:
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE STORES, INC.
[Seal]
Attest:
/s/ Ronald W. Burkle /s/ Mark A. Resnik
------------------------------- ------------------------------
Ronald W. Burkle By: Mark A. Resnik
Chairman of the Board Its: Vice President
NORWEST BANK MINNESOTA, N.A.
[Seal]
Attest:
/s/ /s/ Raymond S. Haverstock
------------------------------- ------------------------------
By: Raymond S. Haverstock
Its: Assistant Vice President
5
<PAGE> 1
Exhibit 4.9.4
10.45% Senior Notes
due 2000
______________________
THIRD SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
to
INDENTURE
Dated as of April 15, 1992
______________________
RALPHS GROCERY COMPANY,
as successor by merger to Food 4 Less Supermarkets, Inc.
and
SUBSIDIARY GUARANTORS
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
<PAGE> 2
This THIRD SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "Third Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation, as
successor by merger to Food 4 Less Supermarkets, Inc., a Delaware corporation
(the "Company"), the Subsidiary Guarantors, and Norwest Bank Minnesota,
National Association (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of April 15, 1992,
as amended (the "Indenture"), between the Company, the Subsidiary Guarantors
and the Trustee, the Company issued $175,000,000 principal amount of its 10.45%
Senior Notes due 2000 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, the Company, Ralphs Supermarkets, Inc., a
Delaware corporation ("RSI"), and the stockholders of RSI, the Company merged
with and into RSI, and immediately thereafter Ralphs Grocery Company, a
Delaware corporation, which was a wholly-owned subsidiary of RSI, merged with
and into RSI and RSI changed its name to Ralphs Grocery Company (together, the
"Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 5.01 of the Indenture. Section 5.02 of the Indenture
provides that upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.01 thereof, the successor person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to and be substituted for, and may exercise every right and
power of the Company under the Indenture with the same effect as if such
successor person had been named as the Company therein. Section 5.02 also
provides that when a successor corporation assumes all of the obligations of
the Company under the Indenture and under the Securities, and agrees to be
bound thereby, the predecessor shall be released from such obligations. The
purposes of this Third Supplemental Indenture are to (i) allow Ralphs Grocery
Company, as the successor person to the Company in the Merger, to assume the
obligations of the Company under the Indenture, (ii) release the Company from
such obligations, and (iii) restate the definition of "New Credit Facility" set
forth in the Indenture.
E. Section 9.01 of the Indenture provides that the
Company and each Subsidiary Guarantor, when authorized by a Board
2
<PAGE> 3
Resolution, and the Trustee, together, without notice to or consent of any
Holder, may amend or supplement the Securities and the Indenture, as set forth
below.
F. The Company and each of the Subsidiary Guarantors,
having been duly authorized by a Board Resolution, and the Trustee, having
received an Opinion of Counsel pursuant to Section 9.01 of the Indenture
stating that the amendment or supplement to the Indenture contained in the
Third Supplemental Indenture complies with the provisions of Section 9.01 of
the Indenture, are authorized to execute and deliver this Third Supplemental
Indenture.
G. All of the conditions and requirements necessary to
make this Third Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 5.02 of the Indenture, Ralphs
Grocery Company, as the successor person into which the Company has been merged
in the Merger in accordance with Section 5.01 of the Indenture, hereby succeeds
to and is substituted for, and may exercise every right and power of the
Company under the Indenture with the same effect as if Ralphs Grocery Company
had been named as the Company therein.
2. Pursuant to Section 5.02 of the Indenture, Ralphs
Grocery Company hereby assumes all of the obligations of the Company under the
Indenture and under the Securities and agrees to be bound thereby.
3. Pursuant to Section 5.02 of the Indenture, the
Company is released from all of the obligations of it under the Indenture and
under the Securities.
4. The following definition set forth in Section 1.01 of
the Indenture is hereby restated as follows:
"New Credit Facility" means the Credit Agreement, dated as of
June 14, 1995, by and among Food 4 Less, as borrower, certain of its
subsidiaries, New Holdings, as guarantor, the Lenders referred to
therein and Bankers Trust Company, as administrative agent providing
for extensions of credit in an aggregate principal amount of up to
$925 million.
5. (1) This Third Supplemental Indenture shall be
effective as of the date hereof.
6. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one
3
<PAGE> 4
and the same instrument, and any of the parties hereto may execute the
instrument by signing such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this Third
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY, as
successor by merger to the
Company
[Seal]
Attest:
/s/ Jan Charles Gray /s/ Jan Charles Gray
------------------------------- ------------------------------
By: Jan Charles Gray
Its:
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE
STORES, INC.
[Seal]
Attest:
/s/ George G. Golleher /s/ Mark A. Resnik
------------------------------- ------------------------------
By: Mark A. Resnik
Its:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
[Seal]
Attest:
/s/ Raymond S. Haverstock /s/ Raymond S. Haverstock
------------------------------- ------------------------------
By: Raymond S. Haverstock
Its: Assistant Vice President
5
<PAGE> 1
Exhibit 4.10.5
$145,000,000
13-3/4% Senior Subordinated Notes
due 2001
______________________
FOURTH SUPPLEMENTAL INDENTURE
Dated as of May 30, 1995
to
INDENTURE
Dated as of June 15, 1991
______________________
FOOD 4 LESS SUPERMARKETS, INC.
and
SUBSIDIARY GUARANTORS
and
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
<PAGE> 2
This FOURTH SUPPLEMENTAL INDENTURE to the Indenture (as
defined below) (the "Fourth Supplemental Indenture") is dated as of May 30,
1995, and is made by and among Food 4 Less Supermarkets, Inc., a Delaware
corporation (the "Company"), the Subsidiary Guarantors (as defined in the
Indenture), and United States Trust Company of New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated as of June 15, 1991
(the "Indenture") between the Company, the Subsidiary Guarantors and the
Trustee, the Company issued $145,000,000 principal amount of its 13-3/4% Senior
Subordinated Notes due 2001 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated as of September 14, 1994 and amended on January 12, 1995,
February 24, 1995 and April 26, 1995, by and among Food 4 Less, Inc., a
Delaware corporation, Food 4 Less Holdings, Inc., a California corporation,
Food 4 Less Holdings, Inc., a Delaware corporation, the Company, Ralphs
Supermarkets, Inc., a Delaware corporation ("RSI"), and the stockholders of
RSI, Ralphs Grocery Company will be merged with and into RSI and immediately
thereafter Ralphs Grocery Company, a Delaware corporation, which is a
wholly-owned subsidiary of RSI, will merge with and into RSI and RSI will
change its name to Ralphs Grocery Company (together, the "Merger").
D. In connection with the Merger, the Company has filed
a Registration Statement on Form S-4 (File No. 33- 56451) with the Securities
and Exchange Commission (the "Registration Statement") pursuant to which the
Company has made an offer to the holders of the Securities to exchange such
Securities for certain new 13.75% Senior Subordinated Notes due June 1, 2005 as
described in such Registration Statement. Such offer, as described in such
Registration Statement, is referred to in this Fourth Supplemental Indenture as
the "Exchange Offer." In connection with the Exchange Offer, the Company has
solicited consents to the amendments set forth below.
E. Section 10.02 of the Indenture provides that the
Company and each Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together, with the written consent of the Holder or Holders of
at least a majority in aggregate principal amount of the outstanding
Securities, may amend or supplement the Securities and the Indenture, as set
forth below.
F. The Company and each of the Subsidiary Guarantors
having been duly authorized by a Board Resolution, and the Trustee (i) having
received an Opinion of Counsel pursuant to Section 10.06 of the Indenture
stating that the execution of this
2
<PAGE> 3
Fourth Supplemental Indenture is authorized or permitted by the Indenture and
(ii) having received an Officers' Certificate of the Company pursuant to
Section 10.04 of the Indenture certifying that Holders of at least a majority
in aggregate principal amount of the outstanding Securities held by persons
other than the Company and its affiliates have consented to (and not
theretofore revoked) the amendments set forth below, the Company and the
Trustee are authorized to execute and deliver this Fourth Supplemental
Indenture pursuant to Article 10 of the Indenture.
G. All the conditions and requirements necessary to make
this Fourth Supplemental Indenture, when duly executed and delivered, a valid
and binding agreement, enforceable in accordance with its terms (subject to
becoming effective as provided in paragraph 3, below), have been performed and
fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 10.02 of the Indenture and having
received the written consents of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities, the Indenture is
amended, effective as set forth in paragraph 3, below, as follows:
a. The covenant entitled "Limitation on
Restricted Payments", set forth in Section 5.03 of the Indenture, is hereby
deleted in its entirety.
b. The covenant entitled "Maintenance of Net
Worth", set forth in Section 5.04 of the Indenture, is hereby deleted in its
entirety.
c. The covenant entitled "Limitation on
Transactions with Affiliates", set forth in Section 5.12 of the Indenture, is
hereby deleted in its entirety.
d. The covenant entitled "Limitation on
Incurrences of Additional Indebtedness", set forth in Section 5.13 of the
Indenture, is hereby deleted in its entirety.
e. The covenant entitled "Limitation on Payment
Restrictions Affecting Subsidiaries", set forth in Section 5.14 of the
Indenture, is hereby deleted in its entirety.
f. The covenant entitled "Limitation on Liens",
set forth in Section 5.15 of the Indenture, is hereby deleted in its entirety.
g. The covenant entitled "Limitation on Change
of Control", set forth in Section 5.16 of the Indenture, is hereby deleted in
its entirety.
3
<PAGE> 4
h. The covenant entitled "Limitation on
Disposition of Assets", set forth in Section 5.17 of the Indenture, is hereby
deleted in its entirety.
i. The covenant entitled "Guarantees of Certain
Indebtedness", set forth in Section 5.18 of the Indenture, is hereby deleted in
its entirety.
j. Section 6.01(a)(2) of the Indenture under the
covenant entitled "When Company May Merge, Etc." is hereby deleted in its
entirety.
k. The following definition is hereby added to
Section 1.01 of the Indenture:
"The New Credit Facility" means the senior bank
facility pursuant to which Bankers Trust Company has agreed, subject
to certain conditions, to provide up to $1,075 million of financing.
l. All definitions set forth in Section 1.01 of
the Indenture that relate to defined terms used solely in covenants or sections
deleted hereby are deleted in their entirety.
2. The parties hereto agree that the New Credit Facility
shall be deemed to constitute a refinancing of the Loan Documents.
3. The amendments to the Indenture set forth in this
Fourth Supplemental Indenture shall become effective only upon the acceptance
by the Company of the Securities that are validly tendered and not withdrawn
pursuant to the Exchange Offer.
4. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this Fourth
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
FOOD 4 LESS SUPERMARKETS, INC.
[Seal]
Attest:
/s/ Ronald W. Burkle /s/ Mark A. Resnik
------------------------------- ------------------------------
Ronald W. Burkle By: Mark A. Resnik
Chairman of the Board and Its: Vice President and Chief
Executive Officer Secretary
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE STORES, INC.
[Seal]
Attest:
/s/ Ronald W. Burkle /s/ Mark A. Resnik
------------------------------- ------------------------------
By: Mark A. Resnik
Its: Vice President
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ /s/ Christine C. Collins
------------------------------- ------------------------------
By: Christine C. Collins
Its: Assistant Vice President
5
<PAGE> 1
Exhibit 4.10.6
13-3/4% Senior Subordinated Notes
due 2001
______________________
FIFTH SUPPLEMENTAL INDENTURE
Dated as of June 14, 1995
to
INDENTURE
Dated as of June 15, 1991
______________________
RALPHS GROCERY COMPANY,
as successor by merger to Food 4 Less Supermarkets, Inc.
and
SUBSIDIARY GUARANTORS
and
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
1
<PAGE> 2
This FIFTH SUPPLEMENTAL INDENTURE to the Indenture (as defined
below) (the "Fifth Supplemental Indenture") is dated as of June 14, 1995, and
is made by and among Ralphs Grocery Company, a Delaware corporation, as
successor by merger to Food 4 Less Supermarkets, Inc., a Delaware corporation
(the "Company"), the Subsidiary Guarantors, and United States Trust Company of
New York (the "Trustee").
RECITALS
A. Pursuant to an Indenture dated June 15, 1991, as
amended (the "Indenture"), between the Company, the Subsidiary Guarantors and
the Trustee, the Company issued $145,000,000 principal amount of its 13-3/4%
Senior Subordinated Notes due 2001 (the "Securities").
B. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
C. Pursuant to a definitive Agreement and Plan of
Merger, dated September 14, 1994 and amended on January 12, 1995, February 24,
1995 and April 26, 1995, by and among Food 4 Less, Inc., a Delaware
corporation, Food 4 Less Holdings, Inc., a California corporation, Food 4 Less
Holdings, a Delaware corporation, the Company, Ralphs Supermarkets, Inc., a
Delaware corporation ("RSI"), and the stockholders of RSI, the Company merged
with and into RSI, and immediately thereafter Ralphs Grocery Company, a
Delaware corporation ("RGC"), which was a wholly-owned subsidiary of RSI,
merged with and into RSI and RSI changed its name to Ralphs Grocery Company
(together, the "Merger"). The Merger became effective on June 14, 1995.
D. The Merger was a transaction subject to the
requirements of Section 6.01 of the Indenture. Section 6.02 of the Indenture
provides that upon any consolidation or merger, or any transfer of assets in
accordance with Section 6.01 thereof, the successor person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to and be substituted for, and may exercise every right and
power of the Company under the Indenture with the same effect as if such
successor person had been named as the Company therein. Section 6.02 also
provides that when a successor corporation assumes all of the obligations of
the Company under the Indenture and under the Securities, and agrees to be
bound thereby, the predecessor shall be released from such obligations. The
purposes of this Fifth Supplemental Indenture are to (i) allow Ralphs Grocery
Company, as the successor person to the Company in the Merger, to assume the
obligations of the Company under the Indenture, (ii) release the Company from
such obligations, and (iii) restate the definition of "New Credit Facility" set
forth in the Indenture.
2
<PAGE> 3
E. Following the Merger, the obligations under the
Indenture assumed by Ralphs Grocery Company hereby will rank pari passu in
right of payment with the obligations to be assumed by Ralphs Grocery Company
under the indentures governing the 9% Senior Subordinated Notes due 2003 of
RGC, the 10.25% Senior Subordinated Notes due 2002 of RGC, the 11% Senior
Subordinated Notes due 2005 of Food 4 Less, and the 13.75% Senior Subordinated
Notes due 2005 of Food 4 Less.
F. Section 10.01 of the Indenture provides that the
Company and each Subsidiary Guarantor, when authorized by a Board Resolution,
and the Trustee, together, without notice to or consent of any Holder, may
amend or supplement the Securities and the Indenture, as set forth below.
G. The Company and each of the Subsidiary Guarantors,
having been duly authorized by a Board Resolution, and the Trustee, having
received an Opinion of Counsel pursuant to Section 10.01 of the Indenture
stating that the amendment or supplement to the Indenture contained in the
Fifth Supplemental Indenture complies with the provisions of Section 10.01 of
the Indenture, are authorized to execute and deliver this Fifth Supplemental
Indenture.
H. All of the conditions and requirements necessary to
make this Fifth Supplemental Indenture, when duly executed and delivered, a
valid and binding agreement, enforceable in accordance with its terms, have
been performed and fulfilled.
NOW, THEREFORE, it is agreed as follows:
1. Pursuant to Section 6.02 of the Indenture, Ralphs
Grocery Company, as the successor person into which the Company has been merged
in the Merger in accordance with Section 6.01 of the Indenture, hereby succeeds
to and is substituted for, and may exercise every right and power of the
Company under the Indenture with the same effect as if Ralphs Grocery Company
had been named as the Company therein.
2. Pursuant to Section 6.02 of the Indenture, Ralphs
Grocery Company hereby assumes all of the obligations of the Company under the
Indenture and under the Securities and agrees to be bound thereby.
3. Pursuant to Section 6.02 of the Indenture, the
Company is released from all of the obligations of it under the Indenture and
under the Securities.
4. The following definition set forth in Section 1.01 of
the Indenture is hereby restated as follows:
"New Credit Facility" means the Credit Agreement, dated as of
June 14, 1995, by and among Food 4 Less, as borrower, certain of its
subsidiaries, New Holdings, as
3
<PAGE> 4
guarantor, the Lenders referred to therein and Bankers Trust Company, as
administrative agent providing for extensions of credit in an aggregate
principal amount of up to $925 million.
5. This Fifth Supplemental Indenture shall be effective
as of the date hereof.
6. This instrument may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute the instrument by signing
such counterpart.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto caused this Fifth
Supplemental Indenture to be signed and acknowledged by their respective
officers thereunto duly authorized and their respective corporate seals to be
hereunto duly affixed and attested, all as of the day and year first above
written.
RALPHS GROCERY COMPANY
[Seal]
Attest:
/s/ Jan Charles Gray /s/ Jan Charles Gray
------------------------------- ------------------------------
By: Jan Charles Gray
Its:
SUBSIDIARY GUARANTORS
CALA CO.
CALA FOODS, INC.
BELL MARKETS, INC.
FOOD 4 LESS OF SOUTHERN
CALIFORNIA, INC.
ALPHA BETA COMPANY
FOOD 4 LESS OF
CALIFORNIA, INC.
FALLEY'S, INC.
FOOD 4 LESS
MERCHANDISING, INC.
FOOD 4 LESS GM, INC.
BAY AREA WAREHOUSE
STORES, INC.
[Seal]
Attest:
/s/ George G. Golleher /s/ Mark A. Resnik
------------------------------- ------------------------------
By: Mark A. Resnik
Its:
UNITED STATES TRUST COMPANY
OF NEW YORK
[Seal]
Attest:
/s/ Christine C. Collins /s/ Christine C. Collins
------------------------------- ------------------------------
By: Christine C. Collins
Its: Assistant Vice President
5
<PAGE> 1
Exhibit 10.1
SECOND AMENDED AND RESTATED TAX SHARING AGREEMENT
This SECOND AMENDED AND RESTATED TAX SHARING AGREEMENT (the
"Agreement") is entered into as of June 14, 1995, by and among Food 4 Less
Holdings, Inc., a Delaware corporation ("F4L"), Ralphs Grocery Company, a
Delaware corporation ("Ralphs"), and all of the directly and indirectly owned
subsidiaries of Ralphs (the "Ralphs Subsidiaries"), to amend and restate that
certain Amended and Restated Tax Sharing Agreement entered into by and among
Food 4 Less, Inc. (predecessor to F4L), Food 4 Less Supermarkets, Inc.
("Supermarkets") (predecessor to Ralphs) and the subsidiaries of Supermarkets
as of June 17, 1991.
WHEREAS, Ralphs is a wholly-owned subsidiary of F4L, and the
Ralphs Subsidiaries are directly and indirectly wholly-owned subsidiaries of
Ralphs;
WHEREAS, F4L, Ralphs and the Ralphs Subsidiaries are members
of an affiliated group of corporations within the meaning of Section 1504(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), of which F4L is the
common parent corporation (the "F4L Group"); and
WHEREAS, F4L, Ralphs and the Ralphs Subsidiaries desire to
provide for the sharing and allocation of income taxes in accordance with this
Agreement.
NOW, THEREFORE, in consideration of their mutual covenants set
forth herein, the parties hereto agree as follows:
1. Agreement to File Consolidated Income Tax Returns.
Ralphs and the Ralphs Subsidiaries consent to the filing with the F4L Group of
consolidated Federal income
<PAGE> 2
tax returns for all taxable periods in which each of them is eligible to be a
member of the F4L Group. F4L agrees to file such consents, elections, tax
returns and other documents, and to take such other actions as may be necessary
or appropriate to file a consolidated Federal income tax return for each
taxable period for which the F4L Group is required or permitted to file such a
tax return. Any taxable period ending after the date of this Agreement for
which any of Ralphs or the Ralphs Subsidiaries is included in a consolidated
Federal income tax return filed by the F4L Group is referred to as a
"Consolidated Return Year."
2. Payments by Ralphs; Audit Adjustments. On each due
date (including extensions) for the payment of any Federal income tax (or any
portion thereof, including installments of estimated tax) by the F4L Group for
each Consolidated Return Year, Ralphs shall pay to F4L, subject to the next
sentence, the amount of income tax liability it would have had on such due date
if it had filed a separate consolidated Federal income tax return for the
affiliated group consisting of it and the Ralphs Subsidiaries (the "Ralphs
Group") for such taxable year and all prior taxable years. In the event that
the amount to be paid by Ralphs to F4L pursuant to the preceding sentence in
any Consolidated Return Year exceeds the amount equal to the product of (a) the
income tax liability of the F4L Group for the Consolidated Return Year and (b)
a fraction, the numerator of which is equal to the Ralphs Group separate income
tax liability determined pursuant to paragraph 3 hereof and the denominator of
which is equal to the aggregate total of the separate income tax liability of
the Ralphs Group for such Consolidated Return Year and the separate income tax
liabilities of each of the other members of the F4L Group for such Consolidated
Return Year, then the amount of the payment to be made by Ralphs to F4L
pursuant to the preceding sentence shall
<PAGE> 3
be reduced by the amount of such excess. In the event that upon audit of any
consolidated Federal income tax return for the F4L Group, there are adjustments
that affect the computations under the preceding two sentences of this
paragraph or paragraphs 3 or 4 hereof, appropriate adjustments and payments
shall be made to reflect the difference between the amounts previously paid and
the amounts due taking into account the effect of such adjustments.
3. Computation of Ralphs Group Separate Income Tax
Liability. The amount of the Federal income tax liability that the Ralphs
Group would have had for any Consolidated Return Year if it had not joined in a
consolidated Federal income tax return with the F4L Group shall be computed as
if it were filing a separate consolidated Federal income tax return. Ralphs
shall be entitled to credit against any income tax liability so computed the
net amount of any credit at the time outstanding to its account arising by
reason of the provisions of paragraph 4 hereof.
4. Tax Benefits. If, on the basis of the computations
made by F4L in accordance with paragraph 3 hereof, the Ralphs Group would have
had a net loss, tax credit or claim for a refund of Federal income taxes, F4L
will credit to Ralphs an amount equal to such net loss, tax credit or refund,
to the extent such net loss, tax credit or refund reduced the consolidated
Federal income tax liability of the F4L Group (excluding the Ralphs Group). As
used herein, the term "net loss" shall include a capital loss. Any such credit
to Ralphs shall be applied against payments due under paragraph 2 hereof (as
described in paragraph 3 hereof) after the date of such credit. If, at any
payment date, Ralphs shall have a net credit to its account which has been
outstanding for more than one year, F4L shall pay to Ralphs an amount equal to
the amount of such net credit plus interest, compounded semi-annually, at
<PAGE> 4
the short-term applicable federal rate, provided that no such payment shall
exceed the aggregate amount that shall theretofore have been paid by Ralphs to
F4L hereunder, reduced by any previous payments by F4L to Ralphs pursuant to
this paragraph 4.
5. State, Local or Foreign Income Tax Returns. In the
event F4L files combined or consolidated state, local or foreign income tax
returns with Ralphs and any other member of the Ralphs Group, the provisions of
paragraphs 1 through 5 hereof shall be applicable to the amount and time of
payment by Ralphs to F4L and by F4L to Ralphs as if such combined or
consolidated income tax returns filed were consolidated Federal income tax
returns.
6. Obligations and Entitlements of Ralphs Subsidiaries.
The Ralphs Subsidiaries shall be obligated to make such payments to Ralphs, and
shall be entitled to receive such payments and other credits from Ralphs,
pursuant to paragraphs 1 through 6 hereof as if such Ralphs Subsidiaries were
in Ralphs' position and Ralphs were in F4L's position.
7. New Ralphs Subsidiaries. Ralphs (or any Ralphs
Subsidiary which is a member of the Ralphs Group, as appropriate) shall cause
any future directly or indirectly owned subsidiary of Ralphs to agree in
writing (by executing a revised signature page) to be bound by the terms of
this Agreement as if it were an original party hereto.
8. Further Actions. The parties will execute and
deliver such further instruments and do such further acts and things
(including, without limitation, by causing their subsidiaries to do such acts
and things) as may be required to carry out the intent and purposes of this
Agreement.
<PAGE> 5
9. Termination of Prior Tax Sharing Agreements. Any and
all tax sharing agreements or arrangements binding on any of F4L, Ralphs or the
Ralphs Subsidiaries shall be terminated and have no further force and effect as
of the date hereof; provided, however, that this paragraph 9 shall not apply to
terminate (i) the Tax Election Agreement, effective as of February 3, 1992, by
and among The Edward J. DeBartolo Corporation, Federated Department Stores,
Inc., Federated Stores, Inc. and Ralphs Holding Company (now Ralphs), (ii) the
Indemnification Agreement, effective as of February 3, 1992, by and among
Federated Department Stores, Inc., each of its subsidiaries, Allied Stores
Corporation, each of its subsidiaries, Federated Stores, Inc., each of its
holding companies and real estate subsidiaries, Ralphs Grocery Company (now
Ralphs) and Ralphs Holding Company (now also Ralphs), or (iii) the
Reimbursement Agreement, dated as of January 31, 1992, between Ralphs Grocery
Company (now Ralphs) and The Edward J. DeBartolo Corporation.
10. Successors. This Agreement shall be binding on and
shall inure to the benefit of any successor, by merger, acquisition of assets
or otherwise, to any of the parties hereto, to the same extent as if such
successor had been an original party to this Agreement.
11. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of California, without giving effect
to the conflict laws of such state.
12. Severability. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity or legality of the remainder of this Agreement.
<PAGE> 6
13. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
14. Headings. The headings of the paragraphs of this
Agreement are for reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers duly authorized as of the day and year
first above written.
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation
By: /s/ Jan Charles Gray
----------------------------------------------
Printed Name: Jan Charles Gray
Title: Senior Vice President, General Counsel
and Secretary
RALPHS GROCERY COMPANY, a Delaware corporation
By: /s/ Jan Charles Gray
----------------------------------------------
Printed Name: Jan Charles Gray
Title: Senior Vice President, General Counsel
and Secretary
FALLEYS, INC., a Kansas corporation
By: /s/ Mark A. Resnik
----------------------------------------------
Printed Name: Mark A. Resnik
<PAGE> 7
Title: Vice President and Secretary
<PAGE> 8
CALA CO., a Delaware corporation
By: /s/ Mark A. Resnik
---------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
FOOD 4 LESS OF SOUTHERN CALIFORNIA, INC.,
a Delaware corporation
By: /s/ Mark A. Resnik
---------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
CRAWFORD STORES, INC., a California corporation
By: /s/ Jan Charles Gray
---------------------------------------------
Printed Name: Jan Charles Gray
Title: Senior Vice President, General Counsel
and Secretary
BAY AREA WAREHOUSE STORES, INC.,
a California corporation
By: /s/ Mark A. Resnik
---------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
CALA FOODS, INC., a California corporation
By: /s/ Mark A. Resnik
---------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
<PAGE> 9
BELL MARKETS, INC., a California corporation
By: /s/ Mark A. Resnik
--------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
ALPHA BETA COMPANY, a California corporation
By: /s/ Mark A. Resnik
--------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
FOOD 4 LESS GM, INC., a California corporation
By: /s/ Mark A. Resnik
--------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
FOOD 4 LESS MERCHANDISING, INC.,
a California corporation
By: /s/ Mark A. Resnik
--------------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
<PAGE> 10
FOOD 4 LESS OF CALIFORNIA, INC.,
a California corporation
By: /s/ Mark A. Resnik
---------------------------------------
Printed Name: Mark A. Resnik
Title: Vice President and Secretary
<PAGE> 1
Exhibit 10.2
___________________________________________________
STOCKHOLDERS AGREEMENT
of
FOOD 4 LESS HOLDINGS, INC.
_______________________
Dated as of
June 14, 1995
_______________________
___________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II RESTRICTIONS ON TRANSFERS . . . . . . . . . . . . . . . . . . . . .
Section 2.1 Transfers in Accordance with this Agreement . . . . . . . . . .
Section 2.2 Agreement to be Bound . . . . . . . . . . . . . . . . . . . . .
Section 2.3 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.4 [Intentionally Left Blank] . . . . . . . . . . . . . . . . . .
Section 2.5 Transfer of Pecuniary Interests . . . . . . . . . . . . . . . .
Section 2.6 Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . .
Section 2.7 Rights to Compel Sale . . . . . . . . . . . . . . . . . . . . .
Section 2.8 Offering Memorandum . . . . . . . . . . . . . . . . . . . . . .
Section 2.9 Deliveries at Closing; Method of Payment of
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III SCOPE OF BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . .
Section 3.1 Scope of Business . . . . . . . . . . . . . . . . . . . . . . .
Section 3.2 Business Opportunities . . . . . . . . . . . . . . . . . . . .
ARTICLE IV ADDITIONAL RIGHTS AND OBLIGATIONS OF INVESTORS AND THE COMPANY . .
Section 4.1 Management Fees . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.2 Investment Banking Services . . . . . . . . . . . . . . . . . .
Section 4.3 Access to Information;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .
Section 4.4 Furnishing of Information . . . . . . . . . . . . . . . . . . .
Section 4.5 Regulatory Problems, etc . . . . . . . . . . . . . . . . . . .
Section 4.6 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . .
Section 4.7 Earthquake Losses . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V CORPORATE GOVERNANCE AND VOTING . . . . . . . . . . . . . . . .
Section 5.1 Board of Directors of the Company . . . . . . . . . . . . .
Section 5.2 Action by the Board of Directors . . . . . . . . . . . . .
Section 5.3 Charter Documents . . . . . . . . . . . . . . . . . . . . .
Section 5.4 Appointment of Representative . . . . . . . . . . . . . . .
Section 5.5 Board Visitation Rights . . . . . . . . . . . . . . . . . .
ARTICLE VI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.1 No Inconsistent Agreements . . . . . . . . . . . . . . . .
Section 7.2 No Other Affiliate Stockholders . . . . . . . . . . . . . .
Section 7.3 Recapitalization, Exchanges, etc. . . . . . . . . . . . . .
Section 7.4 Successors and Assigns . . . . . . . . . . . . . . . . . .
Section 7.5 No Waivers; Amendments . . . . . . . . . . . . . . . . . .
Section 7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.7 Inspection . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . .
Section 7.9 Section Headings . . . . . . . . . . . . . . . . . . . . .
Section 7.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . .
Section 7.11 Severability . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.13 Required Approvals . . . . . . . . . . . . . . . . . . . . .
Section 7.14 Consistency . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.15 Public Disclosure . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
Exhibit A - Restated Certificate of Incorporation of the Company
Exhibit B - By-Laws of the Company
Exhibit C - Consulting Agreement
</TABLE>
ii
<PAGE> 4
STOCKHOLDERS AGREEMENT
OF FOOD 4 LESS HOLDINGS, INC.
STOCKHOLDERS AGREEMENT (the "Agreement"), dated as of June 14,
1995, by and among (i) each of the purchasers listed on the signature pages
attached hereto (together with their Permitted Transferees (defined below), the
"Purchasers"), (ii) each of the investors listed on the signature pages or
consent forms attached hereto, (iii) The Yucaipa Companies, a California
general partnership, FFL Partners, a California general partnership, Yucaipa
Capital Fund, L.P., a California limited partnership, F4L Equity Partners,
L.P., a California limited partnership, Yucaipa/F4L Partners, a California
general partnership, and Ronald W. Burkle (collectively, the "Yucaipa
Affiliates"), (iv) Food 4 Less Holdings, Inc., a Delaware corporation (the
"Company"), (v) Ralphs Grocery Company, a Delaware corporation and wholly owned
subsidiary of the Company ("RGC"), and (vi) each other Person (defined below)
who becomes a party to this Agreement in accordance with the terms hereof.
W I T N E S S E T H:
WHEREAS, this Agreement shall become effective (the "Effective
Date") on the date of, and simultaneously with, the closings under the Stock
Purchase and Exchange Agreement, dated as of June 14, 1995, among the Company,
Yucaipa (defined below) and the Purchasers (the "Stock Purchase Agreement");
WHEREAS, certain of the parties hereto are parties to that
certain FFL Holdings Corporation Stock Purchase and Shareholders' Agreement,
dated as of May 23, 1987 (the "1987 Stockholders Agreement"), that certain
Stockholders Agreement, dated as of June 17, 1991 (the "1991 Stockholders
Agreement"), that certain Registration Rights Agreement, dated as of June 17,
1991 (the "1991 Registration Rights Agreement") and/or that certain
Warrantholders' Agreement of Food 4 Less Holdings, Inc., a California
corporation, dated as of December 31, 1992 (the "Warrantholders Agreement");
WHEREAS, on the Effective Date, (i) the authorized capital
stock of the Company will consist of 60,000,000 shares of voting common stock,
$.01 par value (the "Voting Stock"), 25,000,000 shares of non-voting common
stock, $.01 par value (the "Non-Voting Stock" and together with the Voting
Stock, the "Common Stock"), 25,000,000 shares of Series A Preferred Stock,
$.01 par value (the "Series A Preferred Stock"), and 25,000,000 shares of
Series B Preferred Stock, $.01 par value (the "Series B Preferred Stock"),
and (ii) the issued and outstanding capital stock of the Company will consist
of 17,207,882 shares of Common Stock, 16,683,244 shares of Series A Preferred
Stock and
1
<PAGE> 5
3,100,000 shares of Series B Preferred Stock, with 2,008,874 shares of Common
Stock reserved for issuance upon the exercise of certain warrants (the
"Warrants"), 3,000,000 shares of Common Stock reserved for issuance upon the
exercise of certain management stock options, and 8,000,000 shares of Common
Stock reserved for issuance upon the exercise of the Yucaipa Warrant (defined
below);
WHEREAS, on the Effective Date (i) each Yucaipa Affiliate shall
beneficially own the number of shares of Common Stock set forth under its name
on the signature pages attached hereto, and the Yucaipa Affiliates shall
collectively beneficially own 10,761,688 shares of Common Stock, (ii) each
Purchaser shall beneficially own the number and kind of Shares (defined below)
set forth under its name on the signature pages attached hereto, and (iii) each
Other Investor shall beneficially own the number and kind of Shares set forth
in the stock records of the Company; and
WHEREAS, the parties hereto desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the Shares,
including both issued and outstanding Shares as well as Shares that may be
issued or otherwise hereafter, to provide for certain rights and obligations
in respect to the Shares and the Company as hereinafter provided, and to
terminate substantially all rights and obligations of the parties under the
Existing Stockholders Agreements (defined below).
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Additional Shares" shall have the meaning set forth in
Section 2.6(c).
"Affiliate," as applied to any specified Person, shall mean
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person and, in the case
of a Person who is an individual, shall include (i) members of such specified
Person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified Person or members of such Person's
immediate family as
2
<PAGE> 6
determined in accordance with the foregoing clause (i). Notwithstanding the
foregoing, the Purchasers and their respective Affiliates shall not be deemed
Affiliates of the Company.
"Affiliate Transaction" shall mean (i) any sale, lease,
transfer or other disposition by the Company or its Subsidiaries of any of
their respective properties or assets to, (ii) any purchase of property or
assets by the Company or its Subsidiaries from, (iii) any investment by the
Company or its Subsidiaries in, (iv) any agreement by the Company or its
Subsidiaries with or for the benefit of, or (v) any other transaction between
the Company or its Subsidiaries and, an Affiliate of the Company or of any
Subsidiary of the Company.
"Apollo" shall mean, collectively, the Purchaser identified as
such on the signature page attached hereto and any of its Permitted Transferees
to which Apollo has Transferred Shares.
"Apollo Nominees" shall have the meaning set forth in Section
5.1(a).
"Appraisal Notice" shall have the meaning set forth in Section
2.7(c).
"Appraisal Request" shall mean a written request for an
appraisal pursuant to Section 2.7(c)(i) sent to Yucaipa, Apollo and the Other
Purchasers on or prior to the fifth business day following delivery of the
Compelled Sale Notice by (i) Apollo, or (ii) Other Purchasers holding at least
65% of the Shares then held by the Other Purchasers, which request shall
identify five proposed Appraisers that are independent from the Company, the
stockholders of the Company or any of their respective Affiliates; provided
that the right to deliver an Appraisal Request shall terminate (i) with respect
to Apollo, on the first date on which Apollo owns fewer than 40% of the Shares
held by Apollo on the Effective Date, and (ii) with respect to the Other
Purchasers, on the first date on which the Other Purchasers own fewer than 40%
of the Shares held by the Other Purchasers on the Effective Date.
"Appraised Value" shall mean, with respect to any Compelled
Sale, the per Share value of the Company immediately prior to such Compelled
Sale (without giving effect thereto or to the rights of Apollo contained in
Section 2.7(c)(ii) hereof), as determined in good faith by the Appraiser.
"Appraiser" shall mean a nationally recognized investment
bank, appraisal firm or other Person with experience in valuing businesses
chosen pursuant to Section 2.7(c)(i).
3
<PAGE> 7
"Audit Request" shall have the meaning set forth in Section
4.7.
"Beneficial owner" of a security shall mean any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has (i) the power to vote, or to direct the voting
of, such security and (ii) the power to dispose, or to direct the disposition
of, such security. Ownership of the Yucaipa Warrant shall not constitute
beneficial ownership of the Shares issuable upon the exercise thereof.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean each day other than Saturdays,
Sundays and days when commercial banks are authorized to be closed for business
in New York, New York.
"Business Opportunity" shall have the meaning set forth in
Section 3.2.
"Certificates of Designation" shall mean the Certificates of
Designation of Series A Preferred Stock and Series B Preferred Stock,
respectively, in the forms attached as exhibits to the Stock Purchase
Agreement.
"Charter Documents" shall mean the Restated Certificate of
Incorporation and By-Laws of the Company, attached hereto as Exhibits A and B,
respectively.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Common Stock" shall have the meaning set forth in the
recitals.
"Company" shall have the meaning set forth in the preamble.
"Compelled Sale" shall have the meaning set forth in Section
2.7(a).
"Compelled Sale Acceptance" shall have the meaning set forth
in Section 2.7(c).
"Compelled Sale Agreement" shall have the meaning set forth in
Section 2.7(a).
4
<PAGE> 8
"Compelled Sale Closing" shall have the meaning set forth in
Section 2.7(e).
"Compelled Sale Date" shall have the meaning set forth in
Section 2.7(b).
"Compelled Sale Notice" shall have the meaning set forth in
Section 2.7(b).
"Compelled Sale Termination Date" shall have the meaning set
forth in Section 2.7(b).
"Consulting Agreement" shall mean that certain Consulting
Agreement, dated as of the date hereof, by and among RGC, the Company and
Yucaipa, attached hereto as Exhibit D.
"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 "controlling" and "controlled" have meanings
correlative to the foregoing.
"Controlling Stockholders" shall mean the Yucaipa Affiliates
and any of their Permitted Transferees to which any Yucaipa Affiliate or any
other Controlling Stockholder has Transferred Shares.
"Credit Agreement" shall mean the Credit Agreement, dated as
of the date hereof, among the Company, Food 4 Less Supermarkets, Inc., a
Delaware corporation and predecessor of RGC, and its Subsidiaries and the
lenders, arrangers and administrative agents named therein.
"Customary Trading Activities" shall mean market-making,
broker-dealer, investment banking, capital markets or investment management
activities undertaken in the ordinary course of business.
"Disallowed Reserve" shall have the meaning set forth in
Section 4.7.
"Disqualified Indebtedness" shall have the meaning set forth
in Section 2.7(h).
"Earthquake Reserve" shall have the meaning set forth in
Section 4.7.
5
<PAGE> 9
"EBITDA" shall mean with respect to any Person for any period,
(a) the net income (or loss) of such person and its subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP,
excluding (to the extent included therein), without duplication, (i) all net
extraordinary gains (or losses), (ii) total interest expense (including that
portion attributable to capital leases in accordance with GAAP) of such Person
and its subsidiaries on a consolidated basis with respect to outstanding
indebtedness of such person and its subsidiaries, including without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
interest rate swap, cap, collar or similar agreements, (iii) provisions for
taxes based on income, (iv) total depreciation expense, (v) total amortization
expense, (vi) LIFO provision, (vii) reserves for non-cash restructuring charges
("Restructuring Reserve"), (viii) tax indemnification payments to Federated
Department Stores, Inc., (ix) provision for earthquake losses or other natural
disasters, (x) gain (or loss) on disposal of assets, (xi) the cumulative effect
of any accounting changes, and (xii) other non-cash, non-operating items
reducing net income and other non-cash, non-operating items increasing net
income, minus (b) cash expenditures charged against, or adjustments resulting
in a decrease of, the Restructuring Reserve or the Disallowed Reserve, all of
the foregoing as determined on a consolidated basis for such Person and its
subsidiaries in accordance with GAAP; provided, that EBITDA of the Company for
any period shall be calculated to give pro forma effect to all acquisitions and
divestitures during such period as if such acquisitions and divestitures had
occurred on the first day of such period, such calculations to be made in
accordance with GAAP and Rule 11-02 of Regulation S-X of the Commission.
"Effective Date" shall have the meaning set forth in the
recitals.
"Employee Plans" shall mean any employee or similar plans set
forth in Schedule 3.9 to the Stock Purchase Agreement or approved in accordance
with Section 5.2(e) hereof.
"Enterprise Value" with respect to any proposed Compelled
Sale, shall mean (without duplication) the sum of (a) the aggregate value of
the fully diluted common equity of the Company, based on the price per Share
proposed to be paid in such Compelled Sale, net of the exercise, exchange or
conversion price, if any, with respect to any security exercisable or
exchangeable for or convertible into Common Stock of the Company, plus (b) the
aggregate principal amount of all Indebtedness of the Company and its
consolidated Subsidiaries and the aggregate liquidation preference of all
preferred stock of the Company (other than the Shares or other convertible
preferred stock included in clause (a) above), in each case as reflected on the
Company's most recent consolidated balance sheet that was (or was required to
be) provided pursuant to Section 4.4 hereof on or prior to the date of the
Compelled Sale Notice, less (c) all cash and cash
6
<PAGE> 10
equivalents of the Company and its consolidated Subsidiaries as reflected on
such balance sheet.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"Existing Stockholders Agreements" shall mean the 1987
Stockholders Agreement, the 1991 Stockholders Agreement, the 1991 Registration
Rights Agreement and the Warrantholders Agreement.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Holdings Indenture" shall mean the Indenture, dated as of
June 14, 1995, relating to the 13 5/8% Senior Subordinated Pay-In-Kind
Debentures due 2007 of the Company, by and among the Company and the Trustee
named therein, as in effect on the date hereof.
"Holdings Merger" shall mean (i) the merger of Food 4 Less,
Inc., a Delaware corporation, with and into Food 4 Less Holdings, Inc., a
California corporation, and (ii) the merger of Food 4 Less Holdings, Inc., a
California corporation, with and into the Company, in each case as consummated
on or prior to the Effective Date.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" shall mean with respect to any person, without
duplication, all liabilities 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 or
similar instruments 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)), or (c) for the payment of money relating to a
Capitalized Lease Obligation (as defined in the Holdings Indenture).
"Initial Public Offering" shall mean the initial primary
Public Offering of common stock by the Company (other than pursuant to a
registration statement on Form S-8 or otherwise relating to equity securities
issuable exclusively under any employee benefit plan of the Company).
"Investors" shall mean each of the parties to this Agreement
(other than the Company and Controlling Stockholders), together with such
party's
7
<PAGE> 11
Permitted Transferees, including (without limitation) any Person who shall
become a party to or agree to be bound by the terms of this Agreement after the
date hereof. For purposes of determining the number of Shares held by any
Investor, such Investor shall be deemed to hold all Shares held by such
Investor's Permitted Transferees.
"MD&A" shall mean a management's discussion and analysis of
the Company's financial condition and results of operation comparable to the
discussion that is required to be included in periodic reports filed under the
Exchange Act.
"New Nominees" shall have the meaning set forth in Section
5.1(a).
"Non-Voting Stock" shall have the meaning set forth in the
recitals.
"Notices" shall have the meaning set forth in Section 7.6.
"Offering Notice" shall have the meaning set forth in Section
4.6(b).
"Other Investors" shall mean the Investors other than the
Purchasers.
"Other Purchasers" shall mean the Purchasers other than Apollo.
"Other Purchasers Nominees" shall have the meaning set forth
in Section 5.1(a).
"Pecuniary interest" in any security shall mean the
opportunity, directly or indirectly, to profit or share in any profit derived
from a transaction in such security, and shall include securities owned by an
individual's spouse or issue or any trust solely for the benefit of such
individual, spouse or issue.
"Permitted Affiliate Transaction" shall mean:
(a) any transaction enumerated in (1) Section
5.11(b) of the Indenture, dated as of June 14, 1995, relating to the Senior
Subordinated Notes due 2005 of RGC, by and among RGC, the Subsidiary Guarantors
and the Trustee named therein, as in effect on the date hereof, or (2) Section
4.11(b) of the Holdings Indenture, other than (with respect to either Indenture
named in (1) or (2)), subsections (b)(i), (ii), (v), (vi) and (vii) thereof,
8
<PAGE> 12
(b) payment of amounts or provision of benefits
required to be paid or provided to participants in any Employee Plans, as
provided in the documents related thereto,
(c) transactions pursuant to leases between the
Company and partnerships of which Ronald W. Burkle is general partner, relating
to three warehouse format stores located in Victorville, Corona and Rialto,
California, respectively, as in effect on the Effective Date, and
(d) transactions pursuant to any provision of this
Agreement, the Registration Rights Agreement, the Stock Purchase Agreement, the
Consulting Agreement, or the Yucaipa Warrant, including, but not limited to,
the Holdings Merger.
"Permitted Exchange" shall mean the New York Stock Exchange,
the American Stock Exchange or the Nasdaq Stock Market National Market.
"Permitted Transferee" shall mean:
(a) in the case of any Purchaser (i) any officer,
director or partner of, or Person controlling, such Purchaser or any other
Purchaser, or (ii) any other Person that is (x) an Affiliate of the general
partner(s), investment manager(s) or investment advisor(s) of such Purchaser on
the date hereof, (y) an Affiliate of such Purchaser or a Permitted Transferee
of such Purchaser or (z) an investment fund, investment account or investment
entity whose investment manager, investment advisor or general partner thereof
is such Purchaser or a Permitted Transferee of such Purchaser, in each case in
a bona fide distribution or other transaction not intended to avoid the
provisions of this Agreement;
(b) in the case of any Controlling Stockholder, (i)
any Person that is controlled by Ronald W. Burkle, (ii) upon a bona fide
liquidation of, or a bona fide withdrawal from, such Controlling Stockholder,
in each case, not intended to avoid the provisions of this Agreement, the
shareholders, partners or principals, as the case may be, of such Controlling
Stockholder, (iii) upon a bona fide reduction (not intended to avoid the
provisions of this Agreement) in such Controlling Stockholder's interest in
another Controlling Stockholder (a "Specified Person"), and a corresponding
increase in a Yucaipa Individual's interest in such Specified Person, such
Yucaipa Individual; provided, that immediately after such Transfer, Ronald W.
Burkle continues to control such Specified Person, or (iv) if such Controlling
Stockholder is an individual, (x) any spouse or issue of such individual, or
any trust solely for the benefit of such individual, spouse or issue, and (y)
upon such individual's death, any Person to whom Shares are transferred in
accordance with the laws of descent and/or testamentary distribution; and
9
<PAGE> 13
(c) in the case of any Other Investor, (i) any
Subsidiary of such Other Investor, (ii) any Person of which such Other Investor
is a Subsidiary, (iii) any Subsidiary of a Person described in the foregoing
clause (ii), or (iv) if such Other Investor is an individual, (x) any spouse or
issue of such Other Investor or any trust for the benefit of such individual,
spouse or issue, and (y) upon such Other Investor's death, any Person to whom
Shares are transferred in accordance with the laws of descent and/or
testamentary distribution.
"Person" shall mean an individual or a corporation,
partnership, trust, or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Preferred Preemptive Purchase" shall mean the purchase,
within one year following the Effective Date, of Series A Preferred Stock or
Series B Preferred Stock by any Person who holds Shares as of the Effective
Date pursuant to the exercise of preemptive rights granted to such Person under
the Existing Stockholder Agreements with respect to the transactions
contemplated by the Stock Purchase Agreement; provided that prior to or
concurrently with such purchase, such Person has become a party to, or agreed
to be bound as an Other Investor by the terms of, this Agreement.
"Proposed Purchaser" shall mean a Person or group of Persons
to which any Controlling Stockholder proposes to Transfer Shares in accordance
with Section 2.6.
"Public Offering" shall mean any bona fide underwritten public
distribution of equity securities of the Company pursuant to an effective
registration statement under the Securities Act.
"Purchaser Transaction" shall mean (a) any sale, lease,
transfer or other disposition by the Company or its Subsidiaries of any of
their respective properties or assets to, (b) any purchase of property or
assets by the Company or its Subsidiaries from, (c) any investment by the
Company or its Subsidiaries in, (d) any agreement by the Company or its
Subsidiaries with, or (e) any other transaction between the Company or its
Subsidiaries and, a Purchaser or its Affiliates, in each case occurring after
the Effective Date; provided, however, that the term "Purchaser Transaction"
shall not include (i) any Permitted Affiliate Transaction, (ii) any transaction
on terms no less favorable to the Company on the whole than those obtainable
from an unrelated third party, or (iii) any transaction effected within the
ordinary course of business of the Company or such Subsidiary.
"Purchasers" shall have the meaning set forth in the preamble.
10
<PAGE> 14
"Qualified IPO" shall mean:
(a) an Initial Public Offering in which (i) the
shares of Common Stock distributed either (A) constitute at least 20% of the
fully diluted Shares outstanding or (B) have a market value of at least $150
million, in either case immediately after such offering, (ii) immediately after
such offering the Common Stock of the Company is listed for trading on a
Permitted Exchange and (iii) the price at which such Common Stock is sold to
the public implies an aggregate value of the Shares outstanding immediately
after the closings under the Stock Purchase Agreement (the "Initial Equity
Account") greater than the Trigger Amount on the date on which such offering is
consummated; provided, that if (1) an Initial Public Offering meets the
requirements of clauses (a)(i) and (ii) hereof but not those of this clause
(iii) on the date of the consummation thereof and (2) thereafter, for any
period of 45 consecutive trading days, the last reported sale price of the
Common Stock on each such day implies an aggregate value of the Initial Equity
Account greater than the Trigger Amount on the last day of such period, then
(except for purposes of Section 5.2(f) hereof) a Qualified IPO will be deemed
to occur on the last day of such period, or
(b) a merger of the Company pursuant to a
registration statement on Form S-4 that results in the holders of all of the
Shares (other than any holders who exercise statutory dissenters rights)
receiving registered equity securities in exchange therefor; but only if (i)
the average weekly trading volume of the class of shares issued to holders of
the Shares pursuant to such merger (the "Merger Shares") for the 12 consecutive
week period immediately preceding the public announcement of such merger is at
least 0.75% of the outstanding Merger Shares on the last day of such period,
(ii) the value of the Initial Equity Account implied by such transaction is
greater than the Trigger Amount on the date of such merger, and (iii) both
immediately before and after the consummation of such merger the Merger Shares
are listed on a Permitted Exchange.
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated as of the date hereof, by and among the
Company, the Purchasers and the other parties thereto.
"Regulatory Problem" shall have the meaning set forth in
Section 4.5.
"Remaining Holders" shall have the meaning set forth in
Section 2.7(a).
"Reserve Notice" shall have the meaning set forth in Section
4.7.
"Reviewer" shall have the meaning set forth in Section 4.7.
11
<PAGE> 15
"RGC" shall have the meaning set forth in the preamble.
"RGC Board" shall mean the Board of Directors of RGC.
"ROFO Acceptance" shall have the meaning set forth in Section
5.1(g).
"ROFO Closing Date" shall have the meaning set forth in
Section 5.1(g).
"ROFO Notice" shall have the meaning set forth in Section
5.1(g).
"ROFO Shares" shall have the meaning set forth in Section
5.1(g).
"RPHC" shall mean any Person, if an interest in such Person is
treated as a "United States real property interest" within the meaning of
section 897 of the Internal Revenue Code of 1986, as amended.
"Rule 144 Open Market Transaction" shall mean any bona fide
public sale of Shares in an open market transaction under Rule 144 of the
Securities Act (or any successor rule) if such sale is in compliance with the
requirements of paragraphs (c), (d), (e), (f) and (g) of such Rule
(notwithstanding the provisions of paragraph (k) of such Rule).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"Series A Preferred Stock" shall have the meaning set forth in
the recitals.
"Series B Preferred Stock" shall have the meaning set forth in
the recitals.
"Shares" shall mean, collectively, the Common Stock, the
Series A Preferred Stock, the Series B Preferred Stock, and the Warrants.
Whenever this Agreement refers to a number or percentage of Shares, such number
or percentage shall be calculated as if each of the Shares had been exchanged
or converted into shares of Common Stock immediately prior to such calculation
regardless of the existence of any restrictions on such exchange or conversion.
"Stock Purchase Agreement" shall have the meaning set forth in
the recitals.
12
<PAGE> 16
"Subsidiary" shall mean, with respect to any Person, (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person, or by such Person and one or
more Subsidiaries of such Person, (b) a partnership in which such Person or a
Subsidiary of such Person is, at the date of determination, a general partner
of such partnership, or (c) any other Person (other than a corporation) 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 thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such Person.
"Tag-Along Notice" shall have the meaning set forth in Section
2.6(c).
"Tag-Along Sale" shall mean a bona fide Transfer of a
Controlling Stockholder's pecuniary interest in any Shares (except in
accordance with Section 2.7), including (without limitation) (a) by means of
such Controlling Stockholder's Transfer of an interest in any Person owning
such Shares or (b) a Transfer of a pecuniary interest in any Shares by such
Controlling Stockholder's spouse or issue, or by any trust solely for the
benefit of such Controlling Stockholder's spouse or issue.
"Tag-Along Stockholder" shall have the meaning set forth in
Section 2.6(a).
"Third Party" shall mean any prospective purchaser of Shares
(that is not an Affiliate or Permitted Transferee of the transferor or of any
Yucaipa Affiliate) in an arm's length purchase from such transferor.
"Transfer" shall mean (i) when used as a noun: any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or
other disposition and (ii) when used as a verb: to directly or indirectly
transfer, sell, assign, pledge, hypothecate, encumber, or otherwise dispose of.
"Transferee" shall mean any Person to whom Shares have been
Transferred in compliance with the terms of this Agreement.
"Transfer Allotment" of any Tag-Along Stockholder with respect
to any Tag-Along Sale shall mean the product of (i) the total number of Shares
proposed to be Transferred in such Tag-Along Sale multiplied by (ii) a
fraction, the numerator of which is the total number of Shares owned by such
Tag-Along Stockholder as of the close of business on the second day immediately
preceding the mailing date of the Transfer Notice and the denominator of which
is the total
13
<PAGE> 17
number of Shares then owned by the Controlling Stockholders, the Investors, and
all other stockholders of the Company having tag- along or other contractual
rights to participate in the proposed Transfer.
"Transfer Date" shall have the meaning set forth in Section
2.6(b).
"Transfer Notice" shall have the meaning set forth in Section
2.6(b).
"Trigger Amount" shall mean, on any date, the lesser of (a)
$1.95 billion or (b) the sum of (i) $650 million plus (ii) if such date is
after the second anniversary of the Effective Date, the value accreted on such
amount (on a daily basis) from such second anniversary to such date, at a rate
of 25% per annum, compounded annually.
"Voting Stock" shall have the meaning set forth in the
recitals.
"Warrants" shall have the meaning set forth in the recitals.
"Warrant Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated as of December 31, 1992, by and among Food
4 Less Holdings, Inc. and the purchasers of the Warrants.
"Yucaipa" shall mean The Yucaipa Companies, a California
general partnership, until a successor controlled by Ronald W. Burkle replaces
such Person, and thereafter means such successor; provided that the rights set
forth in Section 5.1 of this Agreement as belonging to Yucaipa initially shall
be exercisable personally by Ronald W. Burkle, and neither The Yucaipa
Companies nor any other Yucaipa Affiliate shall have any right or interest in
the exercise of such rights; provided further that Ronald W. Burkle may assign
such rights to any successor controlled by him, and for purposes of Section
5.1, "Yucaipa" thereafter shall mean such successor so long as it remains
controlled by Ronald W. Burkle.
"Yucaipa Affiliate" shall have the meaning set forth in the
preamble.
"Yucaipa Individual" shall mean (a) a full-time employee of a
Yucaipa Affiliate or the Company or (b) a partner of a Yucaipa Affiliate who
devotes substantially all of his business efforts to such Yucaipa Affiliate.
"Yucaipa Nominees" shall have the meaning set forth in Section
5.1(a).
14
<PAGE> 18
"Yucaipa Warrant" shall mean the warrant to purchase 8,000,000
shares of Common Stock issued by the Company to Yucaipa on the Effective Date.
ARTICLE II
RESTRICTIONS ON TRANSFERS
Section 2.1 Transfers in Accordance with this Agreement. Any
attempt to Transfer, or purported Transfer of, any Shares in violation of the
terms of this Agreement shall be null and void and neither the Company nor any
transfer agent shall register upon its books any such Transfer. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company.
Section 2.2 Agreement to be Bound. (a) No party hereto
shall Transfer any Shares (other than Transfers to the Company or Transfers
constituting a bona fide public distribution pursuant to (i) the registration
rights included in the Registration Rights Agreement, (ii) any shelf
registration pursuant to Rule 415 under the Securities Act or any Public
Offering or (iii) Rule 144 Open Market Transactions) unless (x) the
certificates representing such Shares issued to the Transferee bear the legend
provided in Section 2.3, if required by such Section, and (y) the Transferee
(if not already a party hereto) has executed and delivered to each other party
hereto, as a condition precedent to such Transfer, an instrument or
instruments, reasonably satisfactory to the Company, confirming that the
Transferee agrees to be bound by the terms of this Agreement in the same manner
as such Transferee's transferor, except as otherwise specifically provided in
this Agreement.
(b) At any time prior to the earlier of an Initial
Public Offering or a Qualified IPO, the Company shall cause each Person (other
than any Person already a party to this Agreement) acquiring newly issued
Shares (other than acquisitions of Shares (i) pursuant to Employee Plans or
(ii) in exchange for consideration consisting only of property, assets or
services (other than cash) pursuant to a transaction approved in writing by a
majority of the New Nominees), including any Person who acquires Shares
pursuant to the Preferred Preemptive Purchase, to execute and deliver to each
other party hereto a written agreement, reasonably satisfactory to the parties
hereto, confirming that such Person agrees to be bound as an Other Investor
under this Agreement (or to be bound under another agreement by provisions
substantially identical to those contained herein) and to cause any
certificates representing Shares issued to such Person to bear the legend
provided in Section 2.3 (or a substantially similar legend).
15
<PAGE> 19
Section 2.3 Legend. Each Investor and Controlling
Stockholder hereby agrees that each outstanding certificate representing Shares
issued to any of them, or any certificate issued in exchange for or upon
conversion of any similarly legended certificate, shall, unless sold in a
transaction exempted from the operation of Section 2.2(a) above, bear a legend
reading substantially as follows (except for certificates representing Shares
issued in the Holdings Merger pursuant to a Registration Statement on Form S-4,
which certificate shall bear only the legend set forth in the second paragraph
below):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES MAY BE
REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF
COUNSEL (REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR
QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY
TRANSFER OF THESE SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY TRANSFEREE
AGREES BY HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE STOCKHOLDERS AGREEMENT,
DATED AS OF JUNE 14, 1995, COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY.
NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS
ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND BY
AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE RESTRICTIONS SET FORTH IN THE
STOCKHOLDERS AGREEMENT.
Notwithstanding the foregoing, each Investor and Controlling
Stockholder hereby agrees that each outstanding Warrant shall, unless sold in a
transaction exempted from the operation of Section 2.2(a) above, bear
substantially the legend set forth in the Warrantholders Agreement
(notwithstanding the termination of such agreement), provided that any
reference in such legend to the Warrantholders Agreement shall be amended, upon
any reissuance of a Warrant in connection with a Transfer thereof, to refer to
this Agreement.
Section 2.4 [Intentionally Left Blank].
16
<PAGE> 20
Section 2.5 Transfer of Pecuniary Interests. Prior to a
Transfer of a pecuniary interest in any Shares by Ronald W. Burkle or any
Controlling Stockholder controlled by Ronald W. Burkle to a Permitted
Transferee (including, without limitation, by means of a Transfer of an
interest in any Person owning Shares) Ronald W. Burkle shall provide each of
the Purchasers with a written notice specifying the number of Shares in which a
pecuniary interest is being Transferred.
Without the prior written consent of (a) the holders of a
majority of the Shares held by the Purchasers and (b) at least two unrelated
Purchasers, neither Ronald W. Burkle nor any Controlling Stockholder controlled
by Ronald W. Burkle shall Transfer a pecuniary interest in any Shares to a
Permitted Transferee (including, without limitation, by means of a Transfer of
an interest in any Person owning Shares), if immediately after giving effect to
such Transfer Ronald W. Burkle would have a pecuniary interest in a number of
Shares less than (i) 85% of the number of Shares in which Ronald W. Burkle has
a pecuniary interest on the date hereof minus (ii) any Shares as to which
Ronald W. Burkle has a pecuniary interest on the date hereof that are
Transferred in a Tag-Along Sale exempt from the provisions of Section 2.6
pursuant to Section 2.6(e)(iv).
The provisions of this Section 2.5 shall not apply to any
Transfer to (x) any spouse or issue of Ronald W. Burkle, or any trust solely
for the benefit of Ronald W. Burkle or any such spouse or issue, and (y) upon
Ronald W. Burkle's death, any Person to whom Shares are transferred in
accordance with the laws of descent and/or testamentary distribution.
Section 2.6 Tag-Along Rights. (a) Each Controlling
Stockholder who proposes to effect a Tag-Along Sale shall afford each of the
Investors (each, a "Tag-Along Stockholder") the opportunity to participate
therein in accordance with this Section 2.6.
Each Controlling Stockholder represents to the Investors that
it has not entered into any agreement providing for any rights inconsistent
with the rights provided to the Investors in this Section 2.6 and that it has
not otherwise directly or indirectly granted any such rights, other than
pursuant to the Existing Stockholders Agreements. No Controlling Stockholder
shall enter into any agreement providing for, or otherwise directly or
indirectly grant, any tag-along or other contractual rights (other than
customary registration rights) to participate, directly or indirectly, in any
Tag-Along Sale (other than with respect to (i) Shares issued under the Employee
Plans representing no more than 11% of the Shares outstanding immediately
following the Effective Date or (ii) Shares issued pursuant to the Preferred
Preemptive Purchase) without the prior unanimous written approval of the New
Nominees.
17
<PAGE> 21
(b) With respect to each Tag-Along Sale, each
Tag-Along Stockholder shall have the right to Transfer, at the same price and
upon identical terms and conditions as such proposed Transfer (except as set
forth below), the number of Shares owned by such Tag-Along Stockholder equal to
such Tag-Along Stockholder's Transfer Allotment; provided, however, that (i) a
Tag- Along Stockholder may Transfer Shares of a different kind than those
transferred by a Controlling Stockholder pursuant to a Tag- Along Sale; and
(ii) in the event of a Tag-Along Sale pursuant to a Transfer by a Controlling
Stockholder of an interest in a Person that directly or indirectly owns Shares,
the price and other terms and conditions of such Tag-Along Sale applicable to
each Tag-Along Stockholder and the Shares to be sold by such Tag-Along
Stockholder, shall as closely approximate those of the proposed Transfer as is
reasonably practicable.
At the time any Tag-Along Sale is proposed, the Controlling
Stockholders shall give written notice to each Tag- Along Stockholder of its
right to sell Shares hereunder (the "Transfer Notice"), which notice shall
identify the Proposed Purchaser and state the number of Shares proposed to be
Transferred, the proposed offering price (including the form and terms of any
non-cash consideration to be received in connection therewith), the proposed
date of any such Transfer (the "Transfer Date") and any other material terms
and conditions of the proposed Transfer. The Transfer Notice shall also
contain a complete and correct copy of any offer to, or agreement with, the
Controlling Stockholders by the Proposed Purchaser to purchase such Shares.
The Controlling Stockholders shall use their best efforts to deliver the
Transfer Notice at least 30 days prior to the Transfer Date and in no event
shall the Controlling Stockholders provide such Transfer Notice later than 21
days prior to the Transfer Date.
(c) Each Tag-Along Stockholder that wishes to
participate in the Tag-Along Sale shall provide written notice (or oral notice
confirmed in writing) (the "Tag-Along Notice") to the Controlling Stockholders
no less than 7 days prior to the Transfer Date. The Tag-Along Notice shall set
forth the number and kind of Shares that such Tag-Along Stockholder elects to
include in the Transfer, which shall not exceed such Tag-Along Stockholder's
Transfer Allotment; provided that the failure of a Tag- Along Stockholder to
correctly specify a number or kind of Shares not exceeding its Transfer
Allotment shall not affect the rights such Tag-Along Stockholder may otherwise
have under this Section 2.6. The Tag-Along Notice shall also specify the
aggregate number and kind of additional Shares owned of record by such
Tag-Along Stockholder as of the close of business on the second day immediately
preceding the date on which the Tag-Along Notice is given by such Tag-Along
Stockholder, if any, which such Tag-Along Stockholder desires also to include
in the Transfer ("Additional Shares") in the event there is any
under-subscription for the entire amount of all Tag-Along Stockholders'
Transfer Allotments. In the event there is an under-subscription by the
Tag-Along Stockholders for any portion of the aggregate Tag-
18
<PAGE> 22
Along Stockholders' Transfer Allotments, the Controlling Stockholders shall
apportion the unsubscribed Tag-Along Stockholders' Transfer Allotments to
Tag-Along Stockholders whose Tag-Along Notices specified an amount of
Additional Shares, which apportionment shall be on a pro rata basis among such
Tag-Along Stockholders in accordance with the number of Additional Shares
specified by all such Tag-Along Stockholders in their Tag-Along Notices. The
Tag-Along Notices given by the Tag-Along Stockholders shall constitute their
binding agreements to sell such Shares on the terms and conditions applicable
to the Transfer.
If a Tag-Along Notice is not received by the Controlling
Stockholders from a Tag-Along Stockholder prior to the 7- day period specified
above, the Controlling Stockholders shall have the right to sell or otherwise
Transfer the number of Shares specified in the Transfer Notice to the Proposed
Purchaser specified in the Transfer Notice without any participation by such
Tag-Along Stockholder (subject to the right of other Tag-Along Stockholders to
sell Additional Shares in the event of an under-subscription by Tag-Along
Stockholders, as described above), but only on terms and conditions with
respect to the consideration paid by the Proposed Purchaser no more favorable
(and other material terms and conditions which a reasonable investor would
consider significant to the decision to include Shares in the Transfer no more
favorable in any material respect) to the Controlling Stockholders than as
stated in the Transfer Notice to the Tag-Along Stockholders, and only if such
Transfer occurs on a date within 45 business days of the Transfer Date.
(d) No Tag-Along Stockholder shall be required to
make any representations and warranties to any Person in connection with such
Tag-Along Sale except as to (i) good title and the absence of liens with
respect to such Tag-Along Stockholder's Shares, (ii) the corporate or other
existence of such Tag-Along Stockholder and (iii) the authority for and the
validity and binding effect of, and the absence of any conflicts under the
charter documents and material agreements of such Tag-Along Stockholder as to,
any agreements entered into by such Tag-Along Stockholder in connection with
such Transfer. No Tag-Along Stockholder shall be required to provide any
indemnities in connection with such Tag-Along Sale except for a breach of such
representations and warranties.
(e) The provisions of this Section 2.6 shall not
apply to any Transfers (i) by a Controlling Stockholder to a Permitted
Transferee of such Controlling Stockholder (provided that such Permitted
Transferee has agreed to be bound by this Agreement as contemplated by Section
2.2 hereof), (ii) pursuant to a Public Offering, (iii) pursuant to a Rule 144
Open Market Transaction of which each of the New Nominees has been provided at
least 2 business days' prior written notice, or (iv) on or after the one year
anniversary of the Effective
19
<PAGE> 23
Date, by Ronald W. Burkle or Controlling Stockholders controlled by Ronald W.
Burkle; provided, that the aggregate number of Shares transferred pursuant to
this clause (iv) by all such Persons does not exceed 807,127 (7.5% of the
number of Shares beneficially owned by the Yucaipa Affiliates on the date
hereof).
Section 2.7 Rights to Compel Sale. (a) If at any time the
Controlling Stockholders shall enter into a written agreement with a Third
Party to acquire solely for cash all, but not less than all, of the issued and
outstanding Shares in a bona fide transaction (a "Compelled Sale Agreement"),
the Controlling Stockholders shall have the right, subject to the terms and
conditions set forth below, to require each of the Investors (the "Remaining
Holders") to sell all, but not less than all, of the Shares held by each such
Remaining Holder (a "Compelled Sale"). Subject to the terms and conditions set
forth below, the Remaining Holders shall (and hereby agree to) sell such Shares
on the same terms and conditions and for the same per Share consideration as
the Controlling Stockholders sell their Shares.
As soon as is reasonably practicable after the commencement of
material discussions regarding a proposed sale of the Company (whether through
a merger, sale of stock or assets or otherwise), business combination, or
similar transaction, the Controlling Stockholders shall provide each of the New
Nominees with notice thereof, which shall include reasonable details with
respect thereto. The Controlling Stockholders shall provide each of the New
Nominees with prompt notice of all material developments in such discussions.
(b) Within two Business Days following execution of
any Compelled Sale Agreement, the Controlling Stockholders shall provide each
Remaining Holder with written notice thereof (the "Compelled Sale Notice").
The Compelled Sale Notice shall attach a copy of the Compelled Sale Agreement
and shall set forth: (i) the name and address of the Third Party; (ii) the
amount of consideration to be paid per Share and the terms and conditions of
payment offered by the Third Party; and (iii) all other material terms of such
Compelled Sale, including the proposed date of the Compelled Sale (the
"Compelled Sale Date"), which shall be not less than 20 days following the
delivery of the Compelled Sale Notice, and the outside termination date of the
Compelled Sale Agreement (the "Compelled Sale Termination Date"), which shall
be not more than 150 days following the delivery of the Compelled Sale Notice.
(c) The provisions of this Section 2.7(c) shall only
apply if the aggregate consideration to be paid for all outstanding Shares in
such Compelled Sale implies an Enterprise Value on the date of delivery of the
Compelled Sale Notice of less than the product of (x) 6.5 times (y) EBITDA of
the Company for the latest four fiscal quarters of the Company for which
information was (or was required to be) provided to Investors pursuant to
Section
20
<PAGE> 24
4.4 hereof (or, if such Compelled Sale Notice is given prior to the date on
which the Company has provided a full year of financial statements pursuant to
Section 4.4 hereof, the annualized EBITDA of the Company based on all periods
beginning on or after the Effective Date for which information was (or was
required to be) so provided).
(i) Upon delivery of an Appraisal Request, Yucaipa
and Apollo, if the Other Purchasers delivered the Appraisal Request or Yucaipa
and the Other Purchasers, if Apollo delivered the Appraisal Request, shall
choose an Appraiser from the list of proposed Appraisers contained in the
Appraisal Request, and notify the party delivering such Appraisal Request of
such choice on or prior to the fifth business day following delivery of the
Appraisal Request. The party or parties making such Appraisal Request shall
retain such Appraiser and cause the Appraiser to calculate an Appraised Value
as promptly as practicable (but in any event prior to the 20th business day
following selection of the Appraiser) and to provide written notice thereof to
the Controlling Stockholders and the Purchasers (the "Appraisal Notice").
If the per Share consideration to be paid in such Compelled
Sale is less than the Appraised Value, then (A) the Controlling Stockholders
shall pay all fees and expenses of the Appraiser arising in connection with the
calculation of the Appraised Value and (B) each Purchaser may elect whether or
not to sell its Shares in such Compelled Sale, provided, that if any Purchaser
elects not to sell its Shares in such Compelled Sale, no Investor shall be
required to sell its Shares in the Compelled Sale. Otherwise, the party or
parties delivering the Appraisal Request pursuant to the preceding paragraph
shall pay all fees and expenses of the Appraiser arising in connection with the
calculation of the Appraised Value and the Investors shall be required to sell
their Shares in the Compelled Sale subject to the terms and conditions of this
Section 2.7.
(ii) If (A)(1) an Appraisal Request is not delivered
on or prior to the fifth business day following delivery of the Compelled Sale
Notice, (2) the per Share consideration to be paid in such Compelled Sale is
not less than the Appraised Value or (3) the per Share consideration to be paid
in such Compelled Sale is less than the Appraised Value, but each Purchaser
elects to sell its Shares in such Compelled Sale and (B) Apollo delivers to
Yucaipa a written notice (a "Compelled Sale Acceptance") within 15 days
following the delivery of the Compelled Sale Notice (or, if an Appraisal
Request was delivered, within 15 days following delivery of the Appraisal
Notice), which Compelled Sale Acceptance sets forth the binding commitment of
Apollo (or its designee) to purchase all of the issued and outstanding Shares
at the price per Share and on all of the other terms and subject to all of the
conditions set forth in the Compelled Sale Agreement and the other terms and
conditions set forth herein (including, without limitation, the condition that
Apollo (or its designee) obtains financing,
21
<PAGE> 25
within the time periods set forth below, on terms and conditions satisfactory
to Apollo (or such designee)), then the Controlling Stockholders and such
Remaining Holders shall, and the Controlling Stockholders shall cause the other
participating stockholders to, sell, and Apollo (or its designee) shall
purchase, such Shares on the terms and subject to the conditions set forth
therein as if Apollo (or its designee) is (and for purposes of this Section 2.7
will be deemed to be) the Third Party, and the Compelled Sale Date is (and for
purposes of this Section 2.7 will be deemed to be) the later of (1) 60 days
following the delivery of the Compelled Sale Notice or the Appraisal Notice, as
the case may be, (2) if on the date of the Compelled Sale Notice, the Company
and its Subsidiaries have, in the aggregate, greater than $500 million of
outstanding Disqualified Indebtedness, 90 days following the delivery of the
Compelled Sale Notice or the Appraisal Notice, as the case may be, and (3) the
Compelled Sale Date specified in the Compelled Sale Notice; provided, that (A)
the right of Apollo (or its designee) to purchase Shares pursuant to this
Section 2.7(c) shall terminate if (x) it has not satisfied or waived its
financing contingencies on or prior to the date all financing contingencies
contained in the Compelled Sale Agreement were required to be so satisfied or
waived (or, if later, on or prior to the date set forth in clause (1) or (2)
above, as applicable) or (y) such purchase has not been consummated on or prior
to the Compelled Sale Termination Date (or, if later, the date set forth in
clause (1) or (2) above, as applicable) and (B) subject to its ability to
obtain financing on satisfactory terms and conditions within the time periods
set forth above, the obligation of Apollo (or its designee) to purchase Shares
shall terminate only in accordance with the terms of the Compelled Sale
Agreement (or similar agreement by which Apollo (or such designee) has become
bound).
If the per Share consideration to be paid in such Compelled
Sale is less than the Appraised Value and any Purchaser elects not to sell its
Shares in such Compelled Sale, Apollo (or its designee) shall nevertheless have
the right (but not the obligation) to purchase all of the Shares owned by the
Controlling Stockholders in the manner otherwise contemplated by this Section
2.7.
(d) Notwithstanding anything contained in this
Agreement to the contrary, in connection with a Transfer (which otherwise
complies with the terms of this Agreement) of at least 66 2/3% of the Shares
held by Apollo on the Effective Date to a single Transferee (whether by a
single transaction or a series of transactions) Apollo may, by written notice
to the Company, assign all of its rights under this Section 2.7 to such
Transferee including, without limitation, the right to purchase all of the
issued and outstanding Shares under this Section 2.7(c).
(e) Subject to the satisfaction or waiver of the
terms and conditions of the Compelled Sale Agreement (other than any condition
relating to
22
<PAGE> 26
the delivery of Shares by the Remaining Holders), the Compelled Sale shall
occur at a closing (the "Compelled Sale Closing") on the Compelled Sale Date
during normal business hours at a time and place reasonably designated by the
Controlling Stockholders and the Third Party; provided, that if the Compelled
Sale Closing has not occurred on or prior to the Compelled Sale Termination
Date, the Remaining Holders will be released from their obligations under this
Section 2.7, unless and until the Controlling Stockholders deliver a new
Compelled Sale Notice in compliance with this Section 2.7.
(f) If any Person fails to deliver certificates
representing its Shares as required by this Section 2.7 and the Compelled Sale
in question is consummated, then such Person (i) shall not be entitled to the
consideration it is to receive under this Section 2.7 until it cures such
failure (provided, that after curing such failure it shall be so entitled to
such consideration without interest), (ii) shall for all purposes be deemed no
longer to be a stockholder of the Company and have no voting rights with
respect to such Shares, (iii) shall not be entitled to any dividends or other
distributions with respect to the Shares held by it, (iv) shall have no other
rights or privileges granted to stockholders under this or any other agreement
and (v) in the event of liquidation of the Company, shall have rights
subordinate to the rights of any equity holder with respect to any
consideration it would have received if it had complied with this Section 2.7,
if any, until it cures such failure (provided, that after curing such failure
it shall be so entitled to such consideration without interest). If any party
so fails to deliver such certificates as so required it shall execute,
acknowledge and deliver all such further agreements and take all such further
actions as may be necessary or desirable to give effect to the provisions of
this Section 2.7(f).
(g) No Remaining Holder shall be required to make
any representations and warranties to any Person in connection with such
Transfer except as to (i) good title and the absence of liens with respect to
such Remaining Holder's Shares, (ii) the corporate or other existence of such
Remaining Holder and (iii) the authority for and the validity and binding
effect of, and the absence of any conflicts under the charter documents and
material agreements of such Remaining Holder as to, any agreements entered into
by such Remaining Holder in connection with such Transfer. The Remaining
Holders shall not be required to provide any indemnities in connection with
such Transfer except for a breach of such representations and warranties.
(h) The Company shall, and shall cause its
Subsidiaries to, use their respective best efforts to ensure that the terms of
all Indebtedness and preferred stock created, incurred, assumed or guaranteed
by the Company or any of its Subsidiaries after the Effective Date (and all
agreements and instruments relating thereto) do not (directly or indirectly)
prohibit, or provide for a default, right to accelerate, acceleration, put,
mandatory redemption, repurchase or
23
<PAGE> 27
repayment, or similar event, directly or indirectly, due to, upon, in
anticipation of, or following, Apollo's exercise of its rights pursuant to this
Section 2.7 or any other transaction pursuant to which Apollo obtains or may
obtain control of the Company. Any Indebtedness or preferred stock containing
any of such terms is referred to herein as "Disqualified Indebtedness."
Section 2.8 Offering Memorandum. The Company shall cooperate
with the Investors and make available on a timely basis such information as the
Investors may reasonably request (to the extent that such information can be
provided without unreasonable expense or disruption of the Company's affairs)
to facilitate (i) the Transfer of 5% or more of the issued and outstanding
Shares to a Third Party or (ii) in the case of Apollo, the financing of a
Compelled Sale, including, in the case of (A) any Transfer of 5% or more of the
issued and outstanding Shares not registered pursuant to the Securities Act or
(B) in the case of Apollo, the financing of a Compelled Sale, (x) at any time
the Company is not filing periodic reports under the Exchange Act, prompt
preparation of an offering memorandum relating to the Shares, the financing (if
applicable) and the Company and its Subsidiaries that contains such information
as is required by the Securities Act and other applicable laws to be provided
to "accredited investors," and such other information reasonably requested by
the Investors, and (y) making available to any proposed purchaser of such
Shares or proposed source of financing reasonable access to management of the
Company and its Subsidiaries.
The Company shall provide customary representations and
warranties to the selling Investors and any purchaser of such Shares or source
of financing, as the case may be, to the effect that the information contained
in any such offering memorandum that has been provided by the Company does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and shall indemnify
each of the Investors, the purchaser or source of financing, as the case may
be, and their respective representatives and agents from and against any loss,
claim, damage, liability or expense incurred by any of them as a result of any
breach of such representation and warranty.
Section 2.9 Deliveries at Closing; Method of Payment of
Purchase Price. Each Tag-Along Stockholder, Controlling Stockholder and
Remaining Holder, as applicable, shall deliver to the Proposed Purchaser,
Apollo or the Third Party, as applicable, against delivery of the purchase
price for the Shares being sold by it, (i) certificates appropriately endorsed
and representing the Shares being sold, free and clear of any lien, claim or
encumbrance, and (ii) such other documents, including, without limitation,
executed stock powers and evidence of ownership and authority, as the
purchasers may reasonably request. The purchase price shall be paid by wire
transfer of immediately available funds
24
<PAGE> 28
to the bank account designated by each Tag-Along Stockholder, Controlling
Stockholder and Remaining Holder, or by certified check if the amount payable
to the recipient thereof is less than $l,000,000.
ARTICLE III
SCOPE OF BUSINESS OF THE COMPANY
Section 3.1 Scope of Business. As of the Effective Date,
after giving effect to the transactions contemplated by the Stock Purchase
Agreement, including, without limitation, the Acquisition (as defined therein)
and the Holdings Merger, the Company legally and beneficially will own 100% of
the outstanding shares of capital stock of RGC. RGC and its Subsidiaries are
engaged primarily in the operation of conventional retail supermarkets,
warehouse format supermarkets and grocery warehouse facilities located
principally in California, Kansas and Missouri.
Section 3.2 Business Opportunities. None of Yucaipa, its
partners nor any Person controlled by any of them (other than the Company or
its Subsidiaries) shall, directly or indirectly, enter into, or agree or commit
to enter into, any material investment in or otherwise exploit any business
opportunity primarily related to the operation of conventional retail
supermarkets, warehouse format supermarkets and grocery warehouse facilities
within the State of California or in any other market in which the Company or
any of its Subsidiaries does business (other than an investment in the shares
of any public company representing less than 5% of such company's fully diluted
common equity) (a "Business Opportunity") except with the approval of Apollo
and the holders of a majority of the Shares held by the Other Purchasers.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS OF
INVESTORS AND THE COMPANY
Section 4.1 Management Fees. Neither the Company nor any of
its Subsidiaries shall pay to Yucaipa or any of its Affiliates compensation for
providing services to the Company and its Subsidiaries (or reimbursement of
expenses in connection therewith) other than pursuant to (a) the Consulting
Agreement, (b) customary compensation and expense reimbursement arrangements
between the Company or its subsidiaries and George G. Golleher, or (c) any
similar agreement or arrangement approved by the Board of Directors and a
majority of the New Nominees.
25
<PAGE> 29
Section 4.2 Investment Banking Services. Neither the Company
nor any of its Subsidiaries may retain or employ Yucaipa or any of its
Affiliates as a financial advisor or investment banker other than solely in
accordance with the terms of the Consulting Agreement or any similar agreement
or arrangement approved by the Board of Directors and a majority of the New
Nominees.
Section 4.3 Access to Information; Confidentiality. Upon the
request of any single Investor owning more than 10% of the outstanding Shares
or of any Purchaser, the Company shall afford such Person and its accountants,
counsel and other representatives reasonable access to all of the properties,
books, contracts, commitments and records (including, but not limited to, tax
returns) of the Company and its Subsidiaries that are reasonably requested.
Such Person will, and will cause its agents to, conduct any such investigations
on reasonable advance notice, during normal business hours, with reasonable
numbers of persons and in such a manner as not to interfere unreasonably with
the normal operations of the Company and its Subsidiaries.
Except as otherwise required by applicable law, neither the
Company nor any of its Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of any customer or other Person, would jeopardize the
attorney-client privilege of the Person in possession or control of such
information, or would contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date
hereof. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
The Investors shall, and shall use their best efforts to cause
their representatives to, keep confidential all such information to the same
extent such information is treated as confidential by the Company, and shall
not directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
not apply to (i) any information that (x) was already in the Investors'
possession prior to the disclosure thereof by the Company (other than through
disclosure by any other Person known by such Investor to be subject to a duty
of confidentiality), (y) was then generally known to the public, or (z) was
disclosed to the Investors by a third party not known by such Investor to be
bound by an obligation of confidentiality or (ii) disclosures made as required
by law or legal process or to any person exercising regulatory authority over
such Investor or its Affiliates. If in the absence of a protective order or
the receipt of a waiver hereunder the Investors are nonetheless, in the opinion
of their counsel, compelled to disclose information concerning the Company to
any tribunal or governmental body or agency or else stand liable for contempt
or suffer other censure or penalty, the
26
<PAGE> 30
Investors may disclose such information to such tribunal or governmental body
or agency without liability hereunder.
Section 4.4 Furnishing of Information. (a) The Company
shall deliver to each Investor, as long as such Investor shall own any Shares:
(i) as promptly as practical, but in no event later
than 60 days after the close of each of its first three quarterly
accounting periods during any fiscal year of the Company, the
consolidated balance sheet of the Company as at the end of such
quarterly period, and the related consolidated statements of
operations, stockholders' equity and cash flows for such quarterly
period, and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, and in each case setting forth
comparative figures for the related periods in the prior fiscal year
(if such comparative figures are available without unreasonable
expense), all of which shall be certified by the chief financial
officer of the Company, to have been prepared in accordance with
generally accepted accounting principles, subject to year-end audit
adjustments, together with an MD&A;
(ii) as promptly as practical, but in no event later
than 105 days after the close of each fiscal year of the Company, the
consolidated balance sheet of the Company as of the end of such fiscal
year and the related consolidated statements of operations,
stockholders' equity and cash flows for such fiscal year, in each case
setting forth comparative figures for the preceding fiscal year, and
certified by independent certified public accountants of recognized
national standing, together with an MD&A; and
(iii) all reports, if any, filed by the Company or
any Subsidiary of the Company with the Commission under the Exchange
Act, as promptly as practical, but in no event later than 15 days
after filing any such reports with the Commission.
(b) The provisions of Sections 4.4(a)(i) and (ii)
above shall be deemed to have been satisfied if the Company delivers the
reports timely filed by the Company with the Commission on Form 10-Q or 10-K,
as applicable, for such periods promptly, but in no event later than 15 days
after filing any such Form with the Commission.
(c) The Company shall deliver to Apollo and each
Other Purchaser holding not less than 500,000 Shares a copy of all notices,
statements and information sent to the Agent or the Lenders pursuant to Section
6.1 of the Credit Agreement, but in no event later than 15 days after each such
delivery to the Agent or Lenders, as the case may be.
27
<PAGE> 31
Section 4.5 Regulatory Problems, etc. (a) Each Investor
that has a potential Regulatory Problem shall notify the Company of the
existence thereof and of the percentage amount of the Company's equity
securities that would cause it to have such Regulatory Problem. A Person shall
be deemed to have a "Regulatory Problem" when such Person and its Affiliates
would own, control or have the power over a greater number or percentage of
securities of any kind issued by the Company or any other Person than are
permitted under any requirement of any governmental authority.
(b) Before the Company or any of its Subsidiaries
redeems, purchases or otherwise acquires, directly or indirectly, or converts
or takes any action with respect to the voting rights of, any shares of any of
its capital stock or any securities convertible into or exchangeable for any
shares of any class of its capital stock, the Company shall give prompt written
notice of such pending action to any Investor that would, according to the
terms of any such prior notice, have a Regulatory Problem as a result of such
action.
(c) Before the Company or any of its Subsidiaries
directly or indirectly takes any action that would result in the Company being
treated as a RPHC, the Company shall give prompt written notice to each
Purchaser that has advised the Company it desires to receive such Notice.
(d) Upon the written request of any Investor so
notified pursuant to clause (b) or (c), above, made within 10 days after its
receipt thereof, the Company shall (or shall cause its Subsidiaries to) defer
taking such action for such period (not to extend beyond 45 days after such
Investor's receipt of the Company's original notice) as such Investor requests.
Section 4.6 Preemptive Rights. (a) If the Company shall
issue any (i) shares of capital stock, (ii) rights, options or warrants
directly or indirectly to purchase shares of its capital stock or (iii)
securities convertible directly or indirectly into such capital stock (other
than any bona fide such issuance (A) to employees who are not Controlling
Stockholders, (B) pursuant to the exercise or exchange of rights, options,
warrants or convertible securities that are outstanding on the Effective Date
or issued thereafter in accordance with the terms of this Agreement, (C)
pursuant to the Holdings Merger, (D) pursuant to a Public Offering, (E) for
consideration other than cash and/or indebtedness or (F) pursuant to the
Preferred Preemptive Purchase), then Ronald W. Burkle, George G. Golleher and
each Investor shall be entitled to participate in such issuance on the same
terms and conditions, on a pro rata basis in respect of such Person's Shares,
so that following such issuance, each such Person, if it has elected to acquire
the new securities to be issued, will have (or in the case of the issuance of
options, warrants, rights or convertible securities, have the right to acquire)
28
<PAGE> 32
the same percentage of the equity ownership of the Company as such Person had
by reason of its ownership of Shares immediately prior to such issuance.
(b) The Company shall provide a written notice (the
"Offering Notice") of any such issuance to the Investors, and the Investors may
elect to purchase securities in any such issuance by giving a notice to the
Company within 20 days following the date of the Offering Notice. The closing
of any purchase by the Investors shall be made no later than 60 days following
the date of the Offering Notice or such other date as the Company and the
Investors may mutually agree. If, subsequent to the date of the Offering
Notice, the Company alters the price or other significant terms and conditions
of the offering that a reasonable investor would consider material to the
decision to purchase such securities, or the Company has not sold such
securities within 60 days after the date of the Offering Notice, the Company
shall provide another Offering Notice to the Investors with respect to any
subsequent issuance and will otherwise comply with the provisions of this
Section 4.6 to the extent applicable to such issuance.
(c) Notwithstanding anything contained in this
Section 4.6 to the contrary, if the Company issues any shares of capital stock
that have voting rights, or any rights, options or warrants directly or
indirectly to purchase shares of such voting capital stock, or securities
directly or indirectly convertible into shares of such voting capital stock,
then at any Investor's request, in lieu of the shares, rights, options,
warrants or convertible securities that such Investor otherwise has the right
to purchase pursuant to this Section 4.6, the Company shall issue to such
Investor other shares of its capital stock (or, as the case may be, equivalent
rights, options or warrants to purchase other shares of its capital stock, or
equivalent securities convertible into other shares of its capital stock) that
have no voting rights or limited voting rights, are convertible into such
voting stock on the same terms as Series B Preferred Stock is convertible into
Common Stock or Series A Preferred Stock, and are otherwise identical to such
voting stock (and, as the case may be, to the rights, options, warrants or
convertible securities relating to such voting stock) in all respects.
(d) The rights set forth in this Section 4.6 shall
terminate upon the consummation of a Qualified IPO.
Section 4.7 Earthquake Losses. If the Company shall
determine that recording a reserve for non-cash charges in connection with
earthquake losses or other natural disasters ("Earthquake Reserve") is
appropriate, within ten (10) business days of making such determination, it
shall provide each Investor with written notice thereof (the "Reserve Notice").
The Reserve Notice shall set forth the amount of such Earthquake Reserve and a
reasonable itemization of the assumptions and estimates comprising the basis
for such Earthquake Reserve. If
29
<PAGE> 33
holders of a majority of the Shares held by the Investors on such date deliver
to Yucaipa a written notice (an "Audit Request") within twenty (20) business
days following delivery of the Reserve Notice that such Investors believe, in
good faith, that such Earthquake Reserve is, or the assumptions or estimates
relating thereto are, unreasonable or not determined in accordance with GAAP,
then the Investors delivering such Audit Request shall retain an independent,
nationally recognized accounting firm, reasonably acceptable to the Company
(the "Reviewer"), and cause the Reviewer to analyze such Earthquake Reserve and
the assumptions and estimates relating thereto as promptly as practicable (but
in any event prior to the twentieth (20th) business day following delivery of
the Audit Request).
If the Reviewer determines that all or any portion of the
Earthquake Reserve is unreasonable or not determined in accordance with GAAP
(i) the Controlling Stockholders shall pay all fees and expenses of the
Reviewer arising in connection with the analysis of such Earthquake Reserve
(otherwise, the party or parties delivering the Audit Request pursuant to the
preceding paragraph shall pay all such fees and expenses) and (ii) if the
Company does not correspondingly adjust the Earthquake Reserve, such amount
shall be referred to herein as the "Disallowed Reserve."
ARTICLE V
CORPORATE GOVERNANCE AND VOTING
Section 5.1 Boards of Directors of the Company and RGC. (a)
The Board of Directors and the RGC Board shall be composed of nine and ten
members, respectively (or such lesser number of members as actually shall have
been designated by the parties hereto in accordance with the provisions of this
Section 5.1). Yucaipa shall be entitled, but not required, to designate six
members to the Board of Directors and seven members to the RGC Board
(collectively, the "Yucaipa Nominees"). Apollo (or any representative thereof
designated by Apollo) shall be entitled, but not required, to designate two
members to each of the Board of Directors and the RGC Board (collectively, the
"Apollo Nominees"). The holders of a majority of the Shares (other than
Warrants, or shares of Series B Preferred Stock or Non-Voting Stock) held by
the Other Purchasers (or any representative thereof designated by the holders
of a majority of the Shares (other than Warrants or shares of Series B
Preferred Stock or Non-Voting Stock) held by the Other Purchasers) shall be
entitled, but not required, to designate one member to each of the Board of
Directors and the RGC Board (collectively, the "Other Purchasers Nominees" and,
together with the Apollo Nominees, the "New Nominees").
30
<PAGE> 34
(b) The Controlling Stockholders shall take
appropriate actions to cause the appointment of the New Nominees to become
effective upon the Effective Date. The Investors and the Controlling
Stockholders shall vote all of the Shares (other than Warrants or shares of
Series B Preferred Stock or Non-Voting Stock) owned or held of record by them
at all regular and special meetings of the stockholders of the Company called
or held for the purpose of filling positions on the Board of Directors, and in
each written consent executed in lieu of such a meeting of stockholders, and
each party hereto shall take all actions otherwise necessary, to ensure (to the
extent within the parties' collective control) the election to the Board of
Directors and the RGC Board of the Yucaipa Nominees, the Apollo Nominees and
the Other Purchasers Nominees.
(c) The Company, RGC, the Controlling Stockholders
and the Investors shall use their respective best efforts to call, or cause the
appropriate officers and directors of the Company or RGC, as applicable, to
call, a special meeting of stockholders of the Company or RGC, as applicable,
and to vote all of the Shares (other than Warrants or shares of Series B
Preferred Stock or Non-Voting Stock) or shares of RGC, as applicable, owned or
held of record by them for, or to take all actions by written consent in lieu
of any such meeting necessary to cause, the removal (with or without cause) of
(A) any Yucaipa Nominee if Yucaipa requests such director's removal in writing
for any reason, (B) any Apollo Nominee if Apollo requests such director's
removal in writing for any reason, and (C) the Other Purchasers Nominee if the
holders of a majority of the Shares (other than Warrants or shares of Series B
Preferred Stock or Non-Voting Stock) held by the Other Purchasers request such
director's removal in writing for any reason. Yucaipa, Apollo, and the holders
of a majority of the Shares (other than Warrants or shares of Series B
Preferred Stock or Non-Voting Stock) held by the Other Purchasers,
respectively, shall have the right to designate a new nominee in the event any
Yucaipa Nominee, Apollo Nominee or Other Purchasers Nominee, respectively,
shall be so removed under this Section 5.1(c) or shall vacate his directorship
for any reason.
Except as provided in this Section 5.1(c), each party hereto
agrees that, at any time that it is then entitled to vote for the election or
removal of directors, it will not vote in favor of the removal of any Yucaipa
Nominee, Apollo Nominee or Other Purchasers Nominee unless (i) such removal
shall be at the request of the party who nominated such director pursuant to
the provisions of Section 5.1(a) or (ii) the right of the party who nominated
such director to do so has terminated in accordance with clause (f) below.
(d) The Company shall not, and shall not permit any
of its Subsidiaries to, without the consent of holders of a majority of the
Shares (other than Warrants or shares of Series B Preferred Stock or Non-Voting
Stock) held by Yucaipa, Apollo, or the Other Purchasers, as the case may be,
take any action
31
<PAGE> 35
that under the Charter Documents or this Agreement requires the approval of one
or more Yucaipa Nominees, Apollo Nominees or Other Purchasers Nominee, as the
case may be, if any of the Yucaipa Nominees, Apollo Nominees or Other
Purchasers Nominee, as the case may be, approving such action are Persons whose
removal from the Board of Directors has been requested at or prior to the time
of such action by the party who nominated such director pursuant to Section
5.1(a). Each party hereto shall use reasonable efforts to prevent any action
from being taken by the Board of Directors or the RGC Board, as the case may
be, during the pendency of any vacancy due to death, resignation or removal of
a director, unless the Person entitled to have a person nominated by it elected
to fill such vacancy shall have failed, for a period of 10 days after notice of
such vacancy, to nominate a replacement; provided that the provisions of this
Section 5.1(d) shall not apply in circumstances in which action must be taken
by the Board of Directors or the RGC Board, as the case may be, to protect the
best interests of the Company or the RGC, as the case may be.
(e) The initial Yucaipa Nominees shall be Ronald W.
Burkle, Byron E. Allumbaugh, George G. Golleher, Joe S. Burkle, Patrick L.
Graham and Mark A. Resnik and with respect to the RGC Board only, Alfred A.
Marasca. The initial Apollo Nominees shall be designated by Apollo on or prior
to the Effective Date. The initial Other Purchasers Nominee shall be
designated by the Other Purchasers on or prior to the Effective Date.
(f) (i) The right of Yucaipa to designate members
to the Board of Directors and to the RGC Board under this Section 5.1 shall (A)
be decreased by three (with respect to each Board) if Ronald W. Burkle ceases
to beneficially own at least 3,587,230 Shares (33 1/3% of the Shares
beneficially owned by the Yucaipa Affiliates on the Effective Date) and (B)
shall terminate if Ronald W. Burkle ceases to beneficially own at least
2,690,422 Shares (25% of the Shares beneficially owned by the Yucaipa
Affiliates on the Effective Date); provided, that if the termination of
Yucaipa's rights pursuant to this Section 5.1(f) is due to the death of Ronald
W. Burkle, such termination will not become effective until 60 days after the
date thereof.
(ii) The right of Apollo to designate
members to the Board of Directors and to the RGC Board under this Section 5.1
shall (A) be decreased by one (with respect to each Board) if Apollo ceases to
beneficially own at least 4,086,490 Shares (33 1/3% of the Shares beneficially
owned by Apollo on the Effective Date) and (B) shall terminate if Apollo ceases
to beneficially own at least 3,064,868 Shares (25% of the Shares beneficially
owned by Apollo on the Effective Date).
(iii) The right of the Other Purchasers to
designate a member to the Board of Directors and to the RGC Board under this
Section 5.1
32
<PAGE> 36
shall terminate if such Persons cease to beneficially own at least 3,016,667
Shares (33 1/3% of the Shares beneficially owned by the Other Purchasers on the
Effective Date).
(g) (i) Notwithstanding anything in this Agreement
to the contrary, in connection with a Transfer of at least 66 2/3% of the
Shares held by Apollo on the Effective Date to a single Transferee (other than
any of the Yucaipa Affiliates) whether by a single transaction or a series of
transactions, Apollo may, by written notice to the Company, assign all of its
rights under this Section 5.1 to such Transferee and, without limiting the
foregoing, such Transferee's rights to designate directors under this Section
5.1 shall not be reduced until such Transferee and its Permitted Transferees
collectively cease to beneficially own at least 33 1/3% or 25%, as the case may
be, of the number of Shares beneficially owned by Apollo on the Effective Date;
provided, that such directors shall not be deemed New Nominees unless Apollo
has provided Yucaipa the opportunity to purchase such Shares pursuant to clause
(ii) below and such Shares are transferred to a Transferee other than any of
the Yucaipa Affiliates.
(ii) Apollo may (but shall not be required
to) provide Yucaipa with written notice of its desire to effect a proposed
Transfer of at least 66 2/3% of the Shares beneficially owned by Apollo on the
Effective Date (the "ROFO Notice"), which notice shall set forth: (1) the
proposed price to be paid per Share; (2) the minimum number of Shares proposed
to be Transferred (the "ROFO Shares"); and (3) the names of up to five proposed
Transferees. If Apollo delivers a ROFO Notice and Yucaipa delivers to Apollo,
within 15 days following the delivery thereof, a written acceptance setting
forth the binding commitment (subject to the receipt of all required
governmental approvals and financing on terms and conditions satisfactory to
Yucaipa) of Yucaipa to purchase all (but not less than all) of the ROFO Shares
at the price per Share set forth in the ROFO Notice (a "ROFO Acceptance"), then
Apollo shall sell, and Yucaipa shall purchase, all the ROFO Shares on a date no
later than 90 days after delivery of the ROFO Notice (the "ROFO Closing Date").
If Yucaipa timely elects not to purchase the ROFO Shares, fails to deliver a
ROFO Acceptance within 15 days following delivery of the ROFO Notice, or fails
to purchase the ROFO Shares on or prior to the ROFO Closing Date (which failure
shall not relieve Yucaipa of its binding commitment, subject to the receipt of
all required governmental approvals and financing on terms and conditions
satisfactory to Yucaipa, to purchase such Shares), then in connection with a
Transfer by Apollo of a number of Shares not less than the number of ROFO
Shares to any one of the Transferees specified in the ROFO Notice for a price
per Share not less than that specified in the ROFO Notice, Apollo may assign
its rights to designate directors in accordance with the terms of clause (i)
above, and thereafter directors designated by such Transferee under Section 5.1
shall be deemed New Nominees; provided that, if Yucaipa has timely elected not
to purchase the ROFO Shares or failed to deliver a ROFO
33
<PAGE> 37
Acceptance within 15 days following delivery of the ROFO Notice, such Transfer
is consummated on or before the later of (i) the 90th day following delivery of
the ROFO Notice and (ii) if Apollo and such Transferee have entered into a
binding agreement with respect to such Transfer on or prior to such 90th day,
the date on which all regulatory approvals with respect to such Transfer have
been obtained.
(h) (i) The By-Laws of each of the Company and RGC
shall authorize the establishment of an Executive Committee of the Board of
Directors and the RGC Board, and may authorize the establishment of other
committees of the Board of Directors or the RGC Board, as the case may be,
comprised in any case of such persons as a majority of the Board of Directors
or the RGC Board, as the case may be, shall approve, and having authority,
subject to applicable law, to take all actions that (A) are ancillary to or
arise in the normal course of the businesses of the Company or RGC, as the case
may be, or (B) implement and are consistent with resolutions of the Board of
Directors or the RGC Board as the case may be, provided, however, that such
Executive Committee or other committee shall not be authorized to take any
action which, if proposed to be taken by the full Board of Directors or RGC
Board, as the case may be, would require the affirmative vote of a majority (or
all) of the New Nominees. Any other delegations of authority to the Executive
Committee or any other committee of the Board of Directors or RGC Board, as the
case may be, shall require the prior written approval of a majority of the New
Nominees.
(ii) The By-Laws of the Company and RGC shall
authorize the establishment of an Audit Committee of the Board of Directors and
the RGC Board, respectively. Yucaipa shall cause the Yucaipa Nominees to
approve the formation of such an Audit Committee which shall be comprised of at
least one of the Apollo Nominees, if any (or if none, the Other Purchasers
Nominee, if any), and at least one other director designated by the Board of
Directors or the RGC Board, as the case may be. Each Audit Committee's duties
shall include, but not be limited to, reviewing both the audit and other work
of the Company's independent accountants or RGC's independent accountants, as
the case may be, recommending to the Board of Directors or the RGC Board, as
the case may be, the independent accountants to be retained and reviewing
generally the maintenance and safekeeping of the records and documents of the
Company or RGC, as the case may be.
(iii) Each committee of the Board of Directors or
the RGC Board, as the case may be, to which authority has been delegated, shall
keep complete and accurate minutes and records of all actions taken by such
committee, prepare such minutes and records in a timely fashion and promptly
distribute such minutes and records to each member of the Board of Directors or
the RGC Board, as the case may be.
34
<PAGE> 38
Section 5.2 Action by the Board of Directors. All decisions
of the Board of Directors shall require the affirmative vote of a majority of
the directors of the Company then in office, or a majority of the members of an
Executive Committee of the Board of Directors, to the extent such decisions may
be lawfully delegated to an Executive Committee pursuant to Section 5.1(h).
The Company shall cause the RGC Board not to take any action unless such action
is approved by the affirmative vote of a majority of the directors of RGC then
in office, including a number of directors who are also directors of the
Company that would be sufficient to approve such action if it were taken by the
Board of Directors.
Prior to the consummation of a Qualified IPO, neither the
Company nor RGC shall, and the Company and RGC shall cause each of their
respective Subsidiaries not to, take (or agree to take) any action regarding
the following matters without the affirmative vote of a majority of the
directors then in office and the affirmative vote of a majority (or, in the
case of clauses (c), (h) and (k) below, the unanimous approval) of the New
Nominees, if any, that are members of the Board of Directors:
(a) any merger or consolidation of the Company or
its successors or any Subsidiary or its successors, other than (i) the Holdings
Merger, (ii) any merger between the Company and any direct or indirect wholly
owned Subsidiary, or between direct or indirect wholly owned Subsidiaries, or
(iii) any merger subject to the drag along rights set forth in Section 2.7
hereof;
(b) any Transfer of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, or of a
geographic division of the Company (but excluding any pledge, hypothecation or
encumbrance of such assets to provide security for any bona fide debt);
(c) any entry into a line of business that is
unrelated to the supermarket business (whether by stock or asset purchase or
otherwise) by the Company or a Subsidiary;
(d) any acquisition of assets other than in the
ordinary course of business, pursuant to a single transaction or series of
related transactions, if the purchase price therefor (including any debt
assumed in connection therewith) exceeds $50 million;
(e) any adoption or material amendment of an
employee or similar plan under which capital stock, or rights, options or
warrants to acquire capital stock, of the Company or a Subsidiary may be
issued;
35
<PAGE> 39
(f) any issuance or sale of capital stock or rights,
options or warrants to acquire capital stock of the Company or any Subsidiary
(other than (1) issuances by the Company pursuant to a Qualified IPO with a per
share offering price equal to or greater than the exercise price of the Yucaipa
Warrant immediately following such sale, (2) the issuance of capital stock of
the Company or rights, options or warrants to acquire capital stock of the
Company under Employee Plans, (3) any such issuance or sale by a Subsidiary to
the Company or a wholly owned Subsidiary of the Company, (4) the issuance of
any Shares upon the exercise or conversion of any option, warrant or other
convertible security (including the Series A Preferred Stock and Series B
Preferred Stock, the Warrants, the Yucaipa Warrant, and management stock
options) outstanding on the Effective Date or issued thereafter in accordance
with the terms of this Agreement or (5) any such issuance pursuant to the
Preferred Preemptive Purchase);
(g) declaration or payment of any dividend on,
distributions with respect to, or repurchase or redemption of capital stock
(other than (1) pro rata dividends on the Shares (other than the Warrants) paid
from current earnings, (2) payments of dividends on or repurchases of shares of
wholly owned Subsidiaries' capital stock or (3) repurchases of Shares held by
bona fide, full-time employees of the Company or its Subsidiaries (other than
Ronald W. Burkle or any other partner of Yucaipa) in connection with the death,
disability or termination of such employees in accordance with the terms of any
Employee Plan, provided that the aggregate amount of all such repurchases shall
not exceed $10,000,000 per fiscal year plus, commencing as of the second full
fiscal year of the Company after the date hereof, any unused portion of such
$10,000,000 amount from the prior fiscal year up to a maximum amount of
$20,000,000 in any fiscal year);
(h) any amendment of the charter documents of the
Company or any Subsidiary, except (A) as necessary to accommodate a Qualified
IPO and (B) as contemplated by Section 5.12 of the Stock Purchase Agreement;
(i) any dissolution, liquidation or bankruptcy
filing of the Company or any Subsidiary;
(j) any replacement of independent accountants;
(k) any Affiliate Transaction other than a Permitted
Affiliate Transaction;
(l) any action that would result in the Company
being treated as a RPHC;
36
<PAGE> 40
(m) any increase or reduction in the number of
authorized members of the Board of Directors or the RGC Board or any creation
of or appointment of members to a committee of the Board of Directors or the
RGC Board, or any direct or indirect payment to, or on behalf of, any member of
such board, as compensation for serving thereon or as a member of any committee
thereof (other than (i) reimbursement of expenses in accordance with the
expense reimbursement policy of the Company from time to time in effect or (ii)
payments pursuant to the Consulting Agreement).
Prior to the consummation of a Qualified IPO, all decisions of
the Board of Directors with respect to a Purchaser Transaction shall require
the affirmative vote of a majority of directors of the Company then in office
who are disinterested with respect to such transaction (or of a majority of the
members of an Executive Committee of the Board of Directors who are
disinterested with respect to such transaction, to the extent such decisions
may be lawfully delegated to an Executive Committee pursuant to Section
5.1(h)).
Section 5.3 Charter Documents. (a) Exhibits A and B set
forth copies of the Charter Documents, each in the form in which it is to be in
effect on the Effective Date, except that the Company's Restated Certificate of
Incorporation shall also include, in addition to the terms of Exhibit A hereto,
the Certificates of Designation, which shall have been filed with the Secretary
of State of Delaware as part of the Company's Restated Certificate of
Incorporation on or prior to the Effective Date.
(b) The Company covenants that it will act, and each
Controlling Stockholder and Investor agrees to use its best efforts to cause
the Company to act, in accordance with its Charter Documents and Certificates
of Designation in all material respects. Each Controlling Stockholder and
Investor shall vote all the Shares (other than Warrants or shares of Series B
Preferred Stock or Non-Voting Stock) owned or held of record by it at any
regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders, and shall take all
action necessary, to ensure (to the extent within the parties' collective
control) that (i) the Charter Documents and Certificates of Designation of the
Company do not, at any time, conflict with the provisions of this Agreement,
and (ii) unless an amendment is approved by the Board of Directors and, if
required under Section 5.2(h), each of the New Nominees, the Charter Documents
of the Company continue to be in effect in the form attached hereto as Exhibits
A and B and the Certificates of Designation continue to be in effect in the
forms attached as exhibits to the Stock Purchase Agreement.
Section 5.4 Appointment of Representative. Until the
termination of this Agreement, each Other Investor shall and shall cause its
Permitted
37
<PAGE> 41
Transferees (jointly with the transferor, if it retains any Shares) to appoint
one proxy to vote all Shares owned by such Other Investor and its Permitted
Transferees. If requested by the Company, Apollo, the Yucaipa Affiliates, and
the Controlling Stockholders shall each designate one Person (which designated
Person may be changed from time to time by notice to the Company) to make, on
their respective behalf, any and all elections and designations and to give and
receive any and all notices required or permitted hereunder.
Section 5.5 Board Visitation Rights. The Company shall (a)
provide notice of each meeting of the Board of Directors and of the RGC Board
concurrently with, and in the same manner as, the notice of such meeting
provided to the members of such board (but not less than one Business Day prior
to such meeting) to (i) each Purchaser, as long as such Purchaser shall
beneficially own at least 250,000 Shares, and (ii) each Investor owning more
than 10% of the outstanding Shares, (b) provide each such Person a copy of all
materials and written information provided to members of each such board and
any committee thereof in connection with any such meeting concurrently with the
distribution thereof to such members, and (c) permit a single representative of
each such Person to attend and observe each such board meeting (in person or
telephonically); provided, that (x) the Company may redact or withhold all or
any portion of such materials and/or (y) exclude any such representative from
all or any portion of any such meeting if the members of such board or
committee reasonably determine in good faith that such redaction, withholding
or exclusion is required in order to preserve the attorney client privilege
with respect to any matter before the Board of Directors or the RGC Board, as
the case may be.
ARTICLE VI
TERMINATION
Section 6.1 Termination. Except as otherwise provided herein
with respect to certain specific provisions, this Agreement shall terminate
upon the earlier to occur of:
(i) the mutual agreement of the parties hereto,
(ii) with respect to any party hereto other than the
Company, such party (or its Permitted Transferees) ceasing to own any
Shares,
(iii) such time as less than 10% of the Shares
continue to be subject to the provisions of this Agreement or
38
<PAGE> 42
(iv) on the tenth anniversary of the Effective Date.
If this Agreement has not otherwise terminated prior to the
eighth anniversary of the date hereof, the Investors and the Controlling
Stockholders shall undertake to renew provisions of this Agreement relating to
the voting of Shares for a successive ten-year period, or such shorter period
as this Agreement is in effect. Notwithstanding the foregoing, Section 4.3
shall survive to the later of the tenth anniversary of the Effective Date or
the termination of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Inconsistent Agreements. Each party hereto
hereby consents to the termination of each Existing Stockholders Agreement to
which it is a party and of any other prior written or oral agreement or
understanding restricting, conditioning or limiting the ability of any party to
transfer or vote Shares and of any registration rights agreements entered into
pursuant to or in connection therewith, other than (i) the Registration Rights
Agreement, the Warrant Registration Rights Agreement and that certain
Management Stockholder Voting Agreement and Proxy, originally dated as of
December 31, 1992 and (ii) the obligations of such holders under Section 2.7 of
the 1991 Stockholders Agreement and Section 8 of the Warrantholders Agreement.
To the extent that less than all of the parties bound by the 1991 Stockholders
Agreement, the 1991 Registration Rights Agreement and the Warrantholders
Agreement have become parties to this Agreement (or otherwise have consented to
the termination of such agreements), each party hereto who is or was bound by
the 1991 Stockholders Agreement, the 1991 Registration Rights Agreement or the
Warrantholders Agreement hereby agrees to the amendment of the 1991
Stockholders Agreement, the 1991 Registration Rights Agreement and the
Warrantholders Agreement to eliminate all contractual obligations of the
Company and its stockholders or warrantholders under each of such agreements
(other than the obligations of such holders under Section 2.7 of the 1991
Stockholders Agreement and Section 8 of the Warrantholders Agreement). The
Company acknowledges that such amendments will (to the extent satisfying the
requirements for amendment of each such agreement) be binding upon it and all
other parties to each of the 1991 Stockholders Agreement, the 1991 Registration
Rights Agreement and the Warrantholders Agreement.
Each of the Company and the Controlling Stockholders
represents and agrees that, as of the Effective Date, there is no (and from and
after the Effective Date they will not, and will cause their respective
Subsidiaries and
39
<PAGE> 43
Affiliates not to, enter into any) agreement with respect to any securities of
the Company or any of its Subsidiaries (and from and after the Effective Date
neither the Company nor any Controlling Stockholder shall take, or permit any
of their Subsidiaries or Affiliates to take, any action) that is inconsistent
in any material respect with the rights granted to the Investors in this
Agreement.
Without limiting the foregoing, the Company represents that,
(a) except for (i) this Agreement, (ii) the Warrant Registration Rights
Agreement, (iii) the Stock Purchase Agreement, dated July 22, 1988, by and
among FFL Partners, Food 4 Less, Inc., Falley's, Inc., and U.S. Trust Company
of California, N.A., as trustee of the Falley's Inc. Employee Stock Ownership
Plan and Trust, as amended, (iv) the Food 4 Less Holdings, Inc. Management
Equity Program initially adopted as of December 31, 1992 (and assumed by the
Company), including those certain Management Stockholders Agreements and
Stockholder Voting Agreement and Proxy entered into from time to time
thereunder, (v) the Company's 1995 Stock Option Plan and those certain
Management Stockholders Agreements entered into thereunder, (vi) the Existing
Stockholders Agreements, and (vii) the Employment Agreement, dated the
Effective Date, by and between the Company and George G. Golleher, there are no
other existing agreements relating to the voting or registration of any equity
securities of the Company or any of its Subsidiaries and (b) except for (i) the
agreements specified in clause (a), above, (ii) the Food 4 Less Supermarkets,
Inc. Teamsters Employee Stock Ownership Plan and related trust agreement, (iii)
the Food 4 Less Supermarkets, Inc. UFCW Employee Stock Ownership Plan and
related trust agreement, (iv) the Revised Employee Profit Sharing and
Retirement Program of Food 4 Less, Inc. and related trust agreement, and (v)
the Falley's Inc. Employee Stock Ownership Plan and Trust, as amended, and
related trust agreement, there are no other existing agreements between the
Company and any other holder of Shares relating to the transfer of any equity
securities of the Company or any of its Subsidiaries.
Section 7.2 No Other Affiliate Stockholders. Each Yucaipa
Affiliate represents to the Investors that, as of the Effective Date, except
for 10,761,688 shares of Common Stock owned collectively by the Yucaipa
Affiliates, 2,263 Shares owned by Darren W. Karst and 262,525 Shares owned by
George Golleher, individually, treasury Shares owned by the Company and its
Subsidiaries and the Yucaipa Warrant, no Yucaipa Affiliate or Affiliate of any
Yucaipa Affiliate is the beneficial or record owner of (or has any pecuniary
interest in) any Shares or any rights, options or warrants to purchase Shares
or securities convertible into Shares.
Section 7.3 Recapitalization, Exchanges, etc. If any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any Shares by reason of any reorganization, recapitalization,
reclassification,
40
<PAGE> 44
merger, consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders or combination
of the Shares or any other change in capital structure of the Company,
appropriate adjustments shall be made with respect to the relevant provisions
of this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties hereto under
this Agreement and the terms "Common Stock," "Series A Preferred Stock,"
"Series B Preferred Stock," "Warrants" and "Shares," each as used herein, shall
be deemed to include shares of such capital stock or other securities, as
appropriate. Without limiting the foregoing, whenever a particular number of
Shares is specified herein, such number shall be adjusted to reflect stock
dividends, stock-splits, combinations or other reclassifications of stock or
any similar transactions.
Section 7.4 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns; provided that (i) neither this
Agreement nor any rights or obligations hereunder may be transferred or
assigned by the Company (except by operation of law in any merger); (ii)
neither this Agreement nor any rights or obligations hereunder may be
transferred or assigned by the Controlling Stockholders or any Investor except
to any Person to whom it has Transferred Shares in compliance with this
Agreement and who has become bound by this Agreement pursuant to Section 2.2
hereof; and (iii) the rights of the parties under Article V hereof may not be
assigned to any Person except as explicitly provided therein. If any party
hereto shall acquire additional Shares, such Shares shall, except as otherwise
expressly provided herein, be held subject to (and entitled to all the benefits
of) all of the terms of this Agreement.
Section 7.5 No Waivers; Amendments. (a) No failure or delay
by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified,
nor may any provision hereof be waived, other than by a written instrument
signed by (x) Yucaipa, (y) the holders of a majority of the Shares held by the
Purchasers and (z) at least two unrelated Purchasers; provided, however, that
(i) so long as Apollo beneficially owns at least 25%
of the Shares beneficially owned by Apollo on the Effective Date,
without the consent of Apollo, no amendment, modification or waiver of
Section 2.6, 4.6 or 5.2 that adversely affects the rights or duties of
Apollo thereunder, and no amendment, modification or waiver of Section
5.1 that decreases
41
<PAGE> 45
the number of directors that may be designated by Apollo thereunder,
may be effected,
(ii) so long as Apollo beneficially owns at least
10% of the Shares beneficially owned by Apollo on the Effective Date,
without the consent of Apollo, no amendment, modification or waiver of
Section 2.7, 6.1 or this Section 7.5 that adversely affects the rights
or duties of Apollo thereunder may be effected,
(iii) so long as the Other Purchasers beneficially
own at least 25% of the Shares beneficially owned by such Persons on
the Effective Date, without the consent of a majority of the Shares
held by the Other Purchasers, no amendment, modification or waiver of
Section 2.6, 2.7, 4.6, 5.2, 6.1 or this Section 7.5 that adversely
affects the rights or duties of such Other Purchasers thereunder, and
no amendment, modification or waiver of Section 5.1 that decreases the
number of directors that may be designated by the Other Purchasers
thereunder, may be effected,
(iv) so long as the Investors, in the aggregate,
beneficially own at least 25% of the Shares beneficially owned by such
Persons on the Effective Date, without the consent of a majority of
the Shares then held by the Investors no amendment, modification or
waiver that adversely affects the rights or duties of the Investors
hereunder may be effected, and
(v) without the consent of each Investor adversely
affected thereby, no amendment, modification or waiver of Sections
4.5, 4.6(c), 7.5(b)(v) or 7.15 may be effected.
The parties hereto shall use their best efforts not to effect
any amendments to the Charter Documents that would circumvent the provisions of
this Section 7.5(b).
Section 7.6 Notices. All notices, demands, requests,
consents or approvals (collectively, "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and shall be personally delivered or mailed, registered or certified,
return receipt requested, postage prepaid (or by a substantially similar
method), or delivered by a reputable overnight courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or such other address (and with such other copy)
as such party shall have specified most recently by written notice. Notice
shall be deemed given or
42
<PAGE> 46
delivered on the date of service or transmission if personally served or
transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given or delivered on the third business day following
the date mailed or on the next business day following delivery of such notice
to a reputable overnight courier service.
To the Company or the Controlling Stockholders:
Food 4 Less Holdings, Inc.
1100 West Artesia Boulevard
Compton, California 90220
Attention: Byron E. Allumbaugh
Fax: (213) 884-4024
and
The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attn: Mark A. Resnik, Esq.
Fax: (310) 789-7201
with a copy (which shall not constitute notice) to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Attn: Thomas C. Sadler, Esq.
Fax: (213) 891-8763
To the Purchasers:
To the address specified on the signature page executed by
each such Purchaser.
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attn: Michael A. Woronoff, Esq.
Fax: (213) 687-5600
43
<PAGE> 47
To the Other Investors:
To the address specified on the signature page executed by
each such Other Investor.
Section 7.7 Inspection. So long as this Agreement shall be
in effect, this Agreement and any amendments hereto and waivers hereof shall be
distributed to all parties hereto after becoming effective and shall be made
available for inspection at the principal office of the Company by any
Investor.
SECTION 7.8 GOVERNING LAW. THIS AGREEMENT 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 CONFLICT OF LAWS, EXCEPT AS TO MATTERS OF CORPORATE
GOVERNANCE, WHICH SHALL BE INTERPRETED IN ACCORDANCE WITH THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE.
Section 7.9 Section Headings. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
Section 7.10 Entire Agreement. This Agreement, together with
the Stock Purchase Agreement and the Registration Rights Agreement attached as
Exhibit C hereto, constitutes the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and thereof and
supersedes any and all prior agreements and understandings, written or oral,
relating to the subject matter hereof.
Section 7.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the parties hereunder shall
be enforceable to the fullest extent permitted by law.
Section 7.12 Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
Section 7.13 Required Approvals. If approval of this
Agreement or any of the transactions contemplated hereby shall be required by
any governmental or supra-governmental agency or instrumentality or is
considered to
44
<PAGE> 48
be necessary or advisable to all the parties hereto, all parties hereto shall
use their best efforts to obtain such approval. If any required approval is
not obtained or it becomes clear that such approval will not be granted, any
party shall immediately give the other parties hereto notice and the parties
hereto shall promptly meet and negotiate in good faith to modify their
respective obligations as necessary.
Section 7.14 Consistency. In the event of a conflict between
this Agreement on the one hand and the Charter Documents or any agreement
relating to the securities of the Company or its Subsidiaries on the other
hand, the terms and provisions of this Agreement shall be deemed to set forth
the true intentions of the parties (to the extent permitted by applicable law)
and shall supersede the terms of any other agreement.
Section 7.15 Public Disclosure. The Company shall not, and
shall not permit any of its Subsidiaries to, make any public announcements or
disclosures relating or referring to any Investor, any of its affiliates, or
any of their respective directors, officers, partners, employees or agents
(including, without limitation, any Person designated as a director of the
Company or RGC pursuant to the terms hereof) unless such Investor has consented
to the form and substance thereof, which consent shall not be unreasonably
withheld except to the extent such disclosure is, in the opinion of counsel,
required by law or by stock exchange regulation, provided that (i) any such
required disclosure shall only be made, to the extent consistent with the law,
after consultation with such Investor and (ii) no such announcement or
disclosure (except as required by law or by stock exchange regulation) shall
identify any such Person without such Investor's prior consent.
45
<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FOOD 4 LESS HOLDINGS, INC.
By: /s/ Mark A. Resnik
--------------------------
Name: Mark A. Resnik
Title: Secretary
RALPHS GROCERY COMPANY
By: /s/ Jan Charles Gray
--------------------------
Name: Jan Charles Gray
Title: Senior Vice
President,
General Counsel
and Secretary
46
<PAGE> 50
THE YUCAIPA AFFILIATES
THE YUCAIPA COMPANIES
By: /s/ Ronald W. Burkle
---------------------------------
Name: Ronald W. Burkle
Title: Managing Partner
Number of Shares of Common Stock:
FFL PARTNERS
By: /s/ Ronald W. Burkle
---------------------------------
Name: Ronald W. Burkle
Title: Managing Partner
Number of Shares of Common Stock:
YUCAIPA CAPITAL FUND, L.P.
By: Yucaipa Capital Advisors, Inc.,
as general partner
By: /s/ Ronald W. Burkle
---------------------------------
Name: Ronald W. Burkle
Title: President
Number of Shares of Common Stock:
47
<PAGE> 51
F4L EQUITY PARTNERS, L.P.
By: Yucaipa Capital Advisors, Inc.,
as general partner
By: /s/ Ronald W. Burkle
--------------------------------
Name: Ronald W. Burkle
Title: President
Number of Shares of Common Stock:
YUCAIPA/F4L PARTNERS
By: The Yucaipa Companies,
as general partner
By: /s/ Ronald W. Burkle
--------------------------------
Name: Ronald W. Burkle
Title: Managing Partner
By: Yucaipa Capital Fund, L.P.,
as general partner
By: Yucaipa Capital Advisors, Inc.,
as general partner
By: /s/ Ronald W. Burkle
--------------------------------
Name: Ronald W. Burkle
Title: President
Number of Shares of Common Stock:
48
<PAGE> 52
/s/ Ronald W. Burkle
-----------------------------------
Ronald W. Burkle
Number of Shares of Common Stock:
/s/ George G. Golleher
-----------------------------------
George G. Golleher
Number of Shares of Common Stock:
49
<PAGE> 53
THE PURCHASERS
APOLLO
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Peter P. Copses
------------------------------
Name: Peter P. Copses
Title: Vice President
Address for notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred
Stock: 9,150,091
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
50
<PAGE> 54
APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:/s/ Peter P. Copses
-----------------------------
Name: Peter P. Copses
Title: Vice President
Address for notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred Stock: 605,355
Number of Shares of Series B Preferred Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
51
<PAGE> 55
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Peter P. Copses
-----------------------------------
Name: Peter P. Copses
Title: Vice President
Address for notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred
Stock: 977,798
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
52
<PAGE> 56
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.
Its Managing General Partner
By: Apollo Capital Management, Inc.
Its General Partner
By: /s/ Peter P. Copses
------------------------------
Name: Peter P. Copses
Title: Vice President
Address for notice:
c/o Apollo Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock:
Number of Warrants:
53
<PAGE> 57
FL ADVISORS, L.P. (for the benefit of
an account under management)
By: FL Management, Inc.,
Its General Partner
By: /s/ Peter P. Copses
--------------------------
Name: Peter P. Copses
Title: Vice President
Address for notice:
c/o Lion Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock:
Number of Warrants: 0
54
<PAGE> 58
F4L/AB INVESTORS
By: /s/ John J. Hannan
--------------------------
Name: John J. Hannan
Title:
Address for notice:
c/o Lion Advisors, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock:
Number of Warrants: 0
55
<PAGE> 59
OTHER PURCHASERS
BT INVESTMENT PARTNERS, INC.
By: /s/ Joseph T. Wood
Name: Joseph T. Wood
Title: Managing Director
Address for notice:
130 Liberty Street
25th Floor
New York, New York 10006
Attn: Brian Talbot
Fax: (212) 250-7651
Number of Shares of Series A Preferred
Stock: 900,000
Number of Shares of Series B Preferred
Stock: 3,100,000
Number of Shares of Common Stock: 0
Number of Warrants: 0
56
<PAGE> 60
BANKERS TRUST NEW YORK
CORPORATION
By: /s/ Joseph T. Wood
----------------------------
Name: Joseph T. Wood
Title: Senior Vice President
Address for notice:
130 Liberty Street
25th Floor
New York, New York 10006
Attn: Brian Talbot
Fax: (212) 250-7651
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock:
Number of Warrants: 0
57
<PAGE> 61
BT SECURITIES CORPORATION
By: /s/ Geralyn A. Fitzgerald
-------------------------------
Name: Geralyn A. Fitzgerald
Title: Managing Director
Address for notice:
130 Liberty Street
25th Floor
New York, New York 10006
Attn: Brian Talbot
Fax: (212) 250-7651
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock:
Number of Warrants: 0
58
<PAGE> 62
HWH INVESTMENT PTE LTD
By: /s/ Kunnasagaran Chinniah
--------------------------
Name: Kunnasagaran Chinniah
Title: Director
Address for notice:
255 Shoreline Drive
Suite 600
Redwood City, California 94065
Attn: Kunna Chinniah
Fax: (415) 802-1213
Number of Shares of Series A Preferred
Stock: 1,500,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
59
<PAGE> 63
MERCHANT GP, INC.
By: /s/ Mark Patterson
----------------------------
Name: Mark Patterson
Title: Vice President
Address for notice:
c/o CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Agnes Reicke
Fax: (212) 753-2390
Number of Shares of Series A Preferred
Stock: 1,000,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
60
<PAGE> 64
CRESCENT/MACH I PARTNERS, L.P.,
a Delaware limited partnership
By: Crescent Capital Corporation,
as investment manager and
attorney-in-fact
By: /s/ Mark Attanasio
------------------------------
Name: Mark L. Attanasio
Title: President
Address for notice:
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attn: Mark Gold
Fax: (212) 245-2488
Number of Shares of Series A Preferred
Stock: 500,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
61
<PAGE> 65
CRESCENT SHARED OPPORTUNITY
FUND II, L.P.
By: Crescent Capital
Corporation, as investment
manager and attorney-in-fact
By: Mark L. Attanasio
-----------------------------
Name: Mark L. Attanasio
Title: President
Address for notice:
11100 Santa Monica Boulevard
Suite 2050
Los Angeles, California 90025
Attn: John Rocchio
Fax: (310) 575-1997
Number of Shares of Series A Preferred
Stock: 0
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants:
62
<PAGE> 66
DLJ CAPITAL CORPORATION
By: /s/ Claire M. Power
-------------------------------
Name: Claire M. Power
Title: Assistant Secretary
Address for notice:
140 Broadway
New York, New York 10005
Attn: Edward Poletti
Fax: (212) 504-4991
Number of Shares of Series A Preferred
Stock: 1,000,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
63
<PAGE> 67
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By: /s/ Michael McLaughlin
------------------------------
Name: Michael McLaughlin
Title: Vice President
Address for notice:
1 Chase Plaza
8th Floor
New York, New York 10081
Attn: Michael McLaughlin
Fax: (212) 552-1159
Number of Shares of Series A Preferred
Stock: 1,000,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
64
<PAGE> 68
THE RAPAPORT FAMILY TRUST U/A/D 4/12/90
By: /s/ Marc Rapaport
------------------------------
Marc Rapaport
Trustee
Address for notice:
11625 Moraga Lane
Los Angeles, California 90049
Attn: Marc Rapaport
Fax: (310) 472-0259
Number of Shares of Series A Preferred
Stock: 50,000
Number of Shares of Series B Preferred
Stock: 0
Number of Shares of Common Stock: 0
Number of Warrants: 0
65
<PAGE> 1
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
June 14, by and among Food 4 Less Holdings, Inc., a Delaware corporation (the
"Company"), and each other person executing this Agreement (the "Investors").
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein
and not otherwise defined herein have the meanings ascribed to them in the
Stockholders Agreement (the "Stockholders Agreement") dated as of the date
hereof among the Company, Ralphs Grocery Company, a Delaware corporation, the
Investors and certain other stockholders of the Company. In addition, the
following terms shall have the meanings ascribed to them below:
"Demanding Holder" means any Holder who has initiated a
registration request in compliance with Section 2.1(a); provided, that if such
request was initiated by Other Purchasers or their transferees, (i) "Demanding
Holders" shall include each Other Purchaser and each such transferee who has
requested to have included in a Demand Registration Registrable Securities
pursuant to the notice provision of Section 2.1(a) and (ii) any action required
or permitted to be taken under this Agreement by any Demanding Holders shall be
taken by action of the holders of a majority of the Registrable Securities held
by such Demanding Holders.
"Demand Registration" means a registration of Registrable
Securities under the Securities Act pursuant to a request made under Section
2.1.
"Holder" means each Investor that holds Registrable Securities
and any party who shall hereafter acquire from an Investor and hold Registrable
Securities pursuant to the provisions of, and subject to the rights and
restrictions set forth in, the Stockholders Agreement.
<PAGE> 2
"Registrable Security" means each Share until (i) it has been
effectively registered under the Securities Act and disposed of pursuant to an
effective registration statement (other than the Registration Statement on Form
S-4 filed in connection with the Holdings Merger), (ii) it is sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, including a
sale pursuant to the provisions of Rule 144(k) or (iii) it has been otherwise
Transferred and the certificate or other evidence of ownership for it is not
required to bear the legend required pursuant to the Stockholders Agreement and
it may be resold by the person receiving such certificate without registration
under the Securities Act.
"Requisite Share Number" on any date means a number of
Registrable Securities representing not less than 40% of the issued and
outstanding Registrable Securities held in the aggregate on such date by the
Other Purchasers and their transferees.
"Selling Holder" means a Holder who sells or proposes to sell
Registrable Securities pursuant to a registration statement under the
Securities Act.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration. (a) Request for
Registration by the Purchasers. At any time and from time to time on or after
the earlier of (i) the second anniversary of the Effective Date and (ii) the
consummation of a Qualified IPO, (A) the Other Purchasers and transferees of
Other Purchasers owning, individually or in the aggregate, at least the
Requisite Share Number may make a total of two written requests for a Demand
Registration of not less than 10% of the Registrable Securities held by all
Other Purchasers and transferees of Other Purchasers and (B) Apollo may make a
total of two written requests for a Demand Registration of not less than 10%
of its Registrable Securities; provided, that (1) the Company shall in no
event be obligated to effect more than two Demand Registrations in any 12-month
period, and (2) if any request for a Demand Registration pursuant to (A) or (B)
above shall be made prior to the earliest to occur of an Initial Public
Offering or a Qualified IPO, then
2
<PAGE> 3
the Company shall not be obligated to effect such Demand Registration unless
the Shares to be included therein (including those sold for the account of the
Company, any Piggy-Back Holders and all other Persons) equals or exceeds 5% (on
a fully diluted basis) of the outstanding Shares. Each such request will
specify the number of Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof.
The Company shall give written notice of any registration
request by Other Purchasers and transferees of Other Purchasers, which request
complies with this Section 2.1(a), within 10 days after the receipt thereof, to
each Other Purchaser and transferee of an Other Purchaser who did not initially
join in such request. Within 20 days after receipt of such notice, any such
Other Purchaser or transferee may request in writing that Registrable
Securities be included in such registration, and the Company shall include in
the Demand Registration the Registrable Securities of each such Other Purchaser
and transferee of an Other Purchaser requested to be so included, subject to
the provisions of Section 2.3. Each such request shall specify the number of
shares of Registrable Securities proposed to be sold and the intended method of
disposition thereof.
(b) Effective Registration. A registration will not be
deemed to have been effected as a Demand Registration unless it has been
declared effective by the Commission and the Company has complied in all
material respects with its obligations under this Agreement with respect
thereto; provided that if, after it has become effective, the offering of
Registrable Securities pursuant to such registration is or becomes the subject
of any stop order, injunction or other order or requirement of the Commission
or any other governmental or administrative agency, or if any court prevents or
otherwise limits the sale of Registrable Securities pursuant to the
registration (for any reason other than the acts or omissions of the Holders),
such registration will be deemed not to have been effected. If (i) a
registration requested pursuant to this Section 2.1 is deemed not to have been
effected or (ii) the registration requested pursuant to this Section 2.1 does
not remain effective for a period of at least 200 days beyond the effective
date thereof or until the consummation of the distribution by the Holders of
the Registrable Securities included in such registration statement, then such
registration statement shall not count as one of the two Demand Registrations
that may be requested by the Demanding Holder(s) in question and the Company
shall continue to be obligated to effect a registration pursuant to this
Section 2.1.
The Demanding Holders may withdraw all or any part of the
Registrable Securities from a Demand Registration at any time (whether before
or after the filing or effective date of such Demand Registration), and if all
such
3
<PAGE> 4
Registrable Securities are withdrawn, to withdraw the demand related thereto.
If at any time a registration statement is filed pursuant to a Demand
Registration, and subsequently a sufficient number of Registrable Securities
are withdrawn from the Demand Registration so that such registration statement
does not cover at least the required amounts specified by Section 2.1(a), and
an additional number of Registrable Securities is not so included, the Company
may (or shall, if requested by the Demanding Holders) withdraw the registration
statement, provided that if the Demanding Holders bear the expenses associated
with such withdrawn registration statement, such registration statement will
not count as a Demand Registration and the Company shall continue to be
obligated to effect a registration pursuant to this Section 2.1. If the
Demanding Holders determine to bear such expenses, such expenses shall be borne
by the Demanding Holder(s) whose withdrawal of Registrable Securities resulted
in such registration statement not covering the specified required amounts.
(c) Selection of Underwriter. If the Demanding Holders so
elect, the offering of Registrable Securities pursuant to a Demand Registration
shall be in the form of an underwritten offering. The Demanding Holders shall
select one or more nationally recognized firms of investment bankers to act as
the book-running managing Underwriter or Underwriters in connection with such
offering and shall select any additional investment bankers and managers to be
used in connection with the offering; provided that such investment bankers and
managers must be reasonably satisfactory to the Company.
Section 2.2 Piggy-Back Registration. If at any time the
Company proposes to file a registration statement under the Securities Act
with respect to an offering of equity securities by the Company for its own
account or for the account of any securityholders of any class of its equity
securities (other than (i) a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the Commission) or (ii) a registration
statement filed in connection with an exchange offer or offering of securities
solely to the Company's existing securityholders), including a registration
statement relating to a Demand Registration, then the Company shall give
written notice of such proposed filing to the Holders as soon as practicable
(but in no event less than 20 days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to register such number
of shares of Registrable Securities as each such Holder may request (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder and the intended method of distribution thereof) (a "Piggy-Back
Registration").
4
<PAGE> 5
The Company shall use its best efforts to cause the managing
Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested by the Holders thereof to be included in a
Piggy-Back Registration (the "Piggy-Back Holders") to be included on the same
terms and conditions as any similar securities of the Company or any other
securityholder included therein and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method of
distribution thereof. Any Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw. Subject to the provisions of Section 2.1, the Company may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective, provided that the Company shall reimburse the Piggy-Back Holders for
all reasonable out-of-pocket expenses (including counsel fees and expenses)
incurred prior to such withdrawal.
No registration effected under this Section 2.2, and no
failure to effect a registration under this Section 2.2, shall relieve the
Company of its obligations pursuant to Section 2.1, and no failure to effect a
registration under this Section 2.2 and to complete the sale of Shares in
connection therewith shall relieve the Company of any other obligation under
this Agreement (including, without limitation, the Company's obligations under
Sections 3.2 and 4.1).
Section 2.3 Reduction of Offering. (a) Demand
Registration. The Company may include in a Demand Registration shares of
Common Stock for the account of the Company and Registrable Securities for the
account of the Piggy- Back Holders and Shares for the account of other holders
thereof exercising contractual piggy-back rights, on the same terms and
conditions as the Registrable Securities to be included therein for the account
of the Demanding Holders; provided, however, that (i) if the managing
Underwriter or Underwriters of any underwritten offering described in Section
2.1 have informed the Company in writing that it is their opinion that the
total number of shares which the Demanding Holders, the Company, any Piggy-Back
Holders and any such other holders intend to include in such offering is such
as to materially and adversely affect the success of such offering, then (x)
the number of Shares to be offered for the account of the Company (if any)
shall be reduced (to zero, if necessary) and (y) thereafter, if necessary, the
number of Shares to be offered for the account of such Piggy-Back Holders and
such other holders shall be reduced (to zero, if necessary), in the case of
this clause (y) pro rata in proportion to the respective number of Shares
requested to be registered to the extent necessary to reduce the total number
of Shares requested to be included in such offering to the number of Shares, if
any, recommended by such managing Underwriters (and if the number
5
<PAGE> 6
of Shares to be offered for the account of each such Person has been reduced to
zero, and the number of Shares requested to be registered by the Demanding
Holders exceeds the number of Shares recommended by such managing Underwriters,
then the number of Shares to be offered for the account of the Demanding
Holders shall be reduced pro rata in proportion to the respective number of
Shares requested to be registered by the Demanding Holders) and (ii) if the
offering is not underwritten, no other party (other than Piggy-Back Holders and
any other holders exercising contractual piggy-back rights not subject to the
reduction contemplated by this clause (ii)), including the Company, shall be
permitted to offer securities under any such Demand Registration unless a
majority of the Shares held by the Demanding Holder or Holders consent to the
inclusion of such shares therein.
(b) Piggy-Back Registration. (i) Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.2 have informed, in writing, the
Piggy-Back Holders that it is their opinion that the total number of Shares
that the Company and Holders of Registrable Securities and any other Persons
desiring to participate in such registration intend to include in such offering
is such as to materially and adversely affect the success of such offering,
then the number of Shares to be offered for the account of the Piggy-Back
Holders and all such other Persons (other than the Company) participating in
such registration shall be reduced (to zero, if necessary) or limited pro rata
in proportion to the respective number of Shares requested to be registered to
the extent necessary to reduce the total number of Shares requested to be
included in such offering to the number of Shares, if any, recommended by such
managing Underwriters; provided, however, that (A) if such offering is effected
for the account of Demanding Holders pursuant to Section 2.1, then the number
of Shares to be offered for the account of each Person shall be reduced in
accordance with Section 2.3(a), and (B) if such offering is effected for the
account of any other securityholder of the Company, pursuant to the demand
registration rights of such securityholder, then (x) the number of Shares to be
offered for the account of the Company (if any) shall be reduced (to zero, if
necessary) and (y) thereafter, if necessary, the number of Shares to be offered
for the account of the Piggy-Back Holders and any other holders that have
requested to include Shares in such registration (but not such securityholders
who have exercised their demand registration rights) shall be reduced (to zero,
if necessary), in the case of this clause (y) pro rata in proportion to the
respective number of Shares requested to be registered, to the extent necessary
to reduce the total number of Shares requested to be included in such offering
to the number of Shares, if any, recommended by such managing Underwriters.
6
<PAGE> 7
(ii) If the managing Underwriter or Underwriters of any
underwritten offering described in Section 2.2 notify the Piggy-Back Holders or
other Persons requesting inclusion in such offering that the kind of securities
that the Piggy-Back Holders, the Company and any other Persons desiring to
participate in such registration intend to include in such offering is such as
to materially and adversely affect the success of such offering, then (A) the
Company shall afford the Piggy-Back Holders the opportunity to exercise,
convert or exchange such securities for or into Common Stock concurrently with
the consummation of such offering and include such shares of Common Stock in
such offering, subject to clause (i) above, and (B) if one or more Piggy-Back
Holders do not so exercise, convert or exchange such securities, the Shares to
be included in such offering by such Piggy-Back Holders shall be reduced as
described in clause (i) above or if such reduction would, in the judgment of
the managing Underwriter or Underwriters, be insufficient to substantially
eliminate the adverse effect that inclusion of the Shares requested to be
included would have on such offering, such Shares will be excluded from such
offering.
ARTICLE III
REGISTRATION PROCEDURES
Section 3.1 Filings; Information. Whenever the Company is
required to effect or cause the registration of Registrable Securities
pursuant to Section 2.1, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof as quickly as practicable, and in
connection with any such request:
(a) The Company will as expeditiously as possible prepare
and file with the Commission a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 200 days (or such
shorter period as is required to complete the distribution of the shares);
provided that the Company may postpone the filing of a registration statement
for a period of not more than 135 days from the date of receipt of the request
in accordance with Section 2.1 if the Company reasonably determines that such a
filing would adversely affect any proposed financing or acquisition by the
Company and
7
<PAGE> 8
furnishes to the Demanding Holder a certificate signed by an executive officer
of the Company to such effect; provided that the Company shall only be entitled
to postpone any such filing one time in any twelve-month period. If the
Company postpones the filing of a Registration Statement, it shall promptly
notify the Purchasers in writing when the events or circumstances permitting
such postponement have ended.
(b) The Company will as expeditiously as possible prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement continuously effective
(subject to the penultimate paragraph of this Section 3.1) for a period of not
less than 200 days or such shorter period which will terminate when all
securities covered by such registration statement have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable) and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by each Selling Holder
thereof set forth in such registration statement.
(c) The Company will, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Selling Holder, counsel representing such Selling Holders, and each
Underwriter, if any, of the Registrable Securities covered by such registration
statement copies of such registration statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review and
comment by the foregoing within five days after delivery, and thereafter
furnish to such Selling Holder, counsel and Underwriter, if any, for their
review and comment such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents or information as such Selling Holder, counsel or Underwriter
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder.
(d) After the filing of the registration statement, the
Company will promptly notify each Selling Holder of Registrable Securities
covered by such registration statement, and (if requested by any such Selling
Holder) confirm such notice in writing, (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed and, with respect to a
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any
8
<PAGE> 9
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a registration statement or related prospectus
or for additional information, (iii) of the issuance by the Commission or any
other Federal or state governmental authority of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceedings
for that purpose, (iv) 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 Section 3.1(h) (including any underwriting agreement)
cease to be true and correct in all material respects, (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any event which makes any
statement made in such registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in a
registration statement, prospectus or documents incorporated therein by
reference so that, in the case of the 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, and (vii) of the Company's reasonable determination
that a post- effective amendment to a registration statement would be
necessary.
(e) The Company will use its best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States as any Selling Holder
reasonably (in light of such Selling Holder's intended plan of distribution)
requests, and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities in the United
States as may be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Selling Holder to consummate the
disposition of the Registrable Securities owned by such Selling Holder;
provided that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (e), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction.
9
<PAGE> 10
(f) The Company will take all reasonable actions required
to prevent the entry, or obtain the withdrawal, of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of any Registrable
Securities for sale in any jurisdiction, at the earliest moment.
(g) Upon the occurrence of any event contemplated by
paragraph 3.1(d)(vi) or 3.1(d)(vii) above, the Company will (i) prepare a
supplement or post-effective amendment to such registration statement or a
supplement to 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 being sold thereunder, such
prospectus will not 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, in light of the circumstances under which they were made,
not misleading, and (ii) promptly make available to each Selling Holder any
such supplement or amendment.
(h) The Company will enter into customary agreements
(including, if applicable, an underwriting agreement in customary form and
which is reasonably satisfactory to the Company) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities (the Selling Holders may, at their option, require
that any or all of the representations, warranties and covenants of the Company
to or for the benefit of such Underwriters also be made to and for the benefit
of such Selling Holders).
(i) The Company will make available to each Selling Holder
(and will deliver to their counsel) and each Underwriter, if any, subject to
restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all correspondence between the Commission
and the Company, its counsel or auditors and will also make available for
inspection by any Selling Holder, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers and employees to
supply all information reasonably requested by any Inspectors in connection
with such registration statement. Records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or
10
<PAGE> 11
omission in such registration statement or (ii) the disclosure or release of
such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors
shall provide the Company with prompt notice of any such request or requirement
so that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and, provided further,
that if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the Inspectors may
disclose that portion of the Records which counsel has advised the Inspectors
that the Inspectors are compelled to disclose. Each Selling Holder agrees that
information obtained by it solely as a result of such inspections (not
including any information obtained from a third party who, insofar as is known
to the Selling Holder after reasonable inquiry, is not prohibited from
providing such information by a contractual, legal or fiduciary obligation to
the Company) shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company or its
Affiliates unless and until such information is made generally available to the
public. Each Selling Holder further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(j) The Company will furnish to each Selling Holder and to
each Underwriter, if any, a signed counterpart, addressed to such Selling
Holder or Underwriter, of (i) an opinion or opinions of counsel to the Company,
and (ii) a comfort letter or comfort letters from the Company's independent
public accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case may be, as
the Selling Holders or the managing Underwriter therefor reasonably requests.
(k) The Company will otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(l) The Company will use its best efforts (a) to cause any
class of Registrable Securities to be listed on a national securities exchange
(if such shares
11
<PAGE> 12
are not already so listed) and on each additional national securities exchange
on which similar securities issued by the Company are then listed (if any), if
the listing of such Registrable Securities is then permitted under the rules of
such exchange or (b) to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the National Association of Securities Dealers, Inc. (the "NASD").
(m) The Company will appoint a transfer agent and registrar
for all such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement.
(n) Prior to the effective date of the first Demand
Registration or the first Piggy-Back Registration, whichever shall occur first,
(i) provide the transfer agent with printed certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company,
and (ii) provide a CUSIP number for the Registrable Securities.
(o) In connection with an underwritten offering, the
Company will participate, to the extent reasonably requested by the managing
Underwriter for the offering or the Selling Holders, in customary efforts to
sell the securities under the offering, including, without limitation,
participating in "road shows"; provided that the Company shall not be obligated
so to participate in more than one such offering in any 12-month period.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution
of the Registrable Securities by such Selling Holder as the Company may from
time to time reasonably request and such other information as may be legally
required in connection with such registration including, without limitation,
all such information as may be requested by the Commission or the NASD. The
Company may exclude from such registration any Holder who fails to provide such
information.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Sections 3.1(d)(iii), (v), (vi) and (vii) hereof, such Selling Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Selling
Holder's receipt of the
12
<PAGE> 13
copies of the supplemented or amended prospectus contemplated by Section 3.1(g)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies, then in such Selling
Holder's possession of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company
shall give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section
3.1(d)(iii), (v), (vi) or (vii) hereof to the date when the Company shall make
available to the Selling Holders a prospectus supplemented or amended to
conform with the requirements of Section 3.1(g) hereof.
In connection with any registration of Registrable Securities
pursuant to Section 2.2, the Company will take the actions contemplated by
paragraphs (c), (d), (e), (i), (j), (k), (l) and (n) above.
Section 3.2 Registration Expenses. In connection with the
Demand Registrations pursuant to Section 2.1 hereof, and any registration
statement filed pursuant to Section 2.2 hereof, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) printing
expenses, (iv) the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties) and all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 3.1(j) hereof), (vii) the
reasonable fees and expenses of any special experts retained by the Company in
connection with such registration, and (viii) reasonable fees and expenses of
one firm of counsel for the Holders (together with necessary local counsel fees
and expenses), which counsel shall be chosen by the Demanding Holders or, if
none, by the Holders of a majority of the Registrable Securities being included
in such Registration Statement. The Company shall have no
13
<PAGE> 14
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
Section 4.1 Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Selling Holder, its partners,
officers, directors, employees and agents, and each Person, if any, who
controls such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
officers, directors, employees and agents of such controlling Person
(collectively, the "Controlling Persons"), from and against any loss, claim,
damage, liability, reasonable attorneys' fee, cost or expense and costs and
expenses of investigating and defending any such claim (collectively, the
"Damages"), joint or several, and any action in respect thereof to which such
Selling Holder, its partners, officers, directors, employees and agents, and
any such Controlling Person may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in respect thereof) arise
out of, or are based upon, any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus relating
to the Registrable Securities or any preliminary prospectus, or arises out of,
or are based upon, any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are based upon information furnished
in writing to the Company by a Selling Holder or Underwriter expressly for use
therein, and shall reimburse each Selling Holder, its partners, officers,
directors, employees and agents, and each such Controlling Person for any legal
and other expenses reasonably incurred by that Selling Holder, its partners,
officers, directors, employees and agents, or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable to any
Selling Holder to the extent that (a) any such Damages arise out of or are
based upon an untrue statement or omission made in any preliminary prospectus
if (i) such Holder failed to send or deliver a copy of the final prospectus
with or prior to the delivery of written confirmation of the sale by such
Selling Holder to the Person asserting the claim from which such Damages arise,
and (ii) the final prospectus would have corrected such untrue statement or
such omission; or (b) any such Damages arise out of or are based upon an untrue
statement or omission in any prospectus if (x) such untrue statement or
omission is corrected in an
14
<PAGE> 15
amendment or supplement to such prospectus, and (y) having previously been
furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such
prospectus as so amended or supplemented prior to or concurrently with the sale
of a Registrable Security to the Person asserting the claim from which such
Damages arise. The Company also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.1.
Section 4.2 Indemnification by Holders of Registrable
Securities. Each Selling Holder agrees, severally but not jointly, to
indemnify and hold harmless the Company, its officers, directors, employees and
agents and each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, together
with the partners, officers, directors, employees and agents of such
controlling Person, to the same extent as the foregoing indemnity from the
Company to such Selling Holder, but only with reference to information related
to such Selling Holder, or its plan of distribution, furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case
any action or proceeding shall be brought against the Company or its officers,
directors, employees or agents or any such controlling Person or its partners,
officers, directors, employees or agents, in respect of which indemnity may be
sought against such Selling Holder, such Selling Holder shall have the rights
and duties given to the Company, and the Company or its officers, directors,
employees or agents, controlling Person, or its partners, officers, directors,
employees or agents, shall have the rights and duties given to such Selling
Holder, under Section 4.1. Each Selling Holder also agrees to indemnify and
hold harmless each other Selling Holder and any Underwriters of the Registrable
Securities, and their respective officers and directors and each Person who
controls each such other Selling Holder or Underwriter on substantially the
same basis as that of the indemnification of the Company provided in this
Section 4.2. 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 registration statement. In no
event shall the liability of any Selling Holder be greater in amount than the
dollar amount of the proceeds (net of payment of all expenses) received by
such Selling
15
<PAGE> 16
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
Section 4.3 Conduct of Indemnification Proceedings.
Promptly after receipt by any Person in respect of which indemnity may be
sought pursuant to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any
claim or the commencement of any action, the Indemnified Party shall, if a
claim in respect thereof is to be made against the Person against whom such
indemnity may be sought (an "Indemnifying Party") notify the Indemnifying Party
in writing of the claim or the commencement of such action, provided that the
failure to notify the Indemnifying Party shall not relieve it from any
liability except to the extent of any material prejudice resulting therefrom.
If any such claim or action shall be brought against an Indemnified Party, and
it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be
entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party;
provided, that the Indemnifying Party acknowledges, in a writing in form and
substance reasonably satisfactory to such Indemnified Party, such Indemnifying
Party's liability for all Damages of such Indemnified Party to the extent
specified in, and in accordance with, this Article IV. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
have the right to employ separate counsel to represent the Indemnified Party
and its controlling Persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable judgment of the Indemnifying Party and such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest between them, it
being understood, however, that the Indemnifying Party shall not, in connection
with any one such claim or action or separate but substantially similar or
related claims or actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnified Parties, or for fees and expenses that
are not reasonable. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement
16
<PAGE> 17
of any claim or pending or threatened proceeding in respect of which the
Indemnified Party is or could have been 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 arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
Section 4.4 Contribution. If the indemnification provided
for in this Article IV is unavailable to the Indemnified Parties in respect of
any Damages referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between
the Company and the Selling Holders on the one hand and the Underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Holders on the one hand and the
Underwriters on the other from the offering of the Registrable Securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such Damages, as well as any other relevant equitable
considerations, and (ii) as between the Company on the one hand and each
Selling Holder on the other, in such proportion as is appropriate to reflect
the relative fault of the Company and of each Selling Holder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company
and the Selling Holders on the one hand and of the Underwriters on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to informa-
17
<PAGE> 18
tion supplied by the Company and the Selling Holders or by the
Underwriters. The relative fault of the Company on the one hand and of each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 4.4 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the Damages referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Selling Holder were offered
to the public (less underwriting discounts and commissions) exceeds the amount
of any damages which such Selling Holder has otherwise been required to pay by
reason 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. Each
Selling Holder's obligation to contribute pursuant to this Section 4.4 is
several and not joint.
The indemnity, contribution and expense reimbursement
obligations contained in this Article IV are in addition to any liability any
Indemnifying Party may otherwise have to an Indemnified Party or otherwise.
The provisions of this Article IV shall survive, notwithstanding any transfer
of the Registrable Securities by any Holder or any termination of this
Agreement.
18
<PAGE> 19
ARTICLE V
MISCELLANEOUS
Section 5.1 Participation in Underwritten Registrations.
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,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and these registration
rights; provided that (i) no Selling Holder shall be required to make any
representations or warranties except those which relate solely to such Holder
and its intended method of distribution, and (ii) the liability of each such
Holder to any Underwriter under such underwriting agreement will be limited to
liability arising from misstatements or omissions regarding such Holder and its
intended method of distribution and any such liability shall not exceed an
amount equal to the amount of net proceeds such Holder derives from such
registration; provided, however, that in an offering by the Company in which
any Holder requests to be included in a Piggy-Back Registration, the Company
shall use its best efforts to arrange the terms of the offering such that the
provisions set forth in clauses (i) and (ii) of this Section 5.1 are true;
provided further, that if the Company fails in its best efforts to so arrange
the terms, the Holder may withdraw all or any part of its Registrable
Securities from the Piggy-Back Registration and the Company shall reimburse
such Holder for all reasonable out-of-pocket expenses (including counsel fees
and expenses) incurred prior to such withdrawal.
Section 5.2 Rules 144 and 144A. The Company covenants that
it will file any reports required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as any Holder
may reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
or Rule 144A under the Securities Act, as such Rules may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such
requirements.
Section 5.3 Holdback Agreements. (a) Restrictions on
Public Sale by Holder of Registrable Securities. Each Holder agrees not to
effect any public sale or distribution of the issue being registered or of a
similar security of
19
<PAGE> 20
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, including a sale pursuant to Rule 144 or Rule 144A under
the Securities Act, during the 14 days prior to, and during the 90-day period
beginning on, the effective date of any registration statement filed by the
Company (except as part of such registration), in the case of an underwritten
public offering, if, and to the extent, requested by the managing underwriter
or underwriters.
The foregoing provisions shall not apply to any Holder that is
prevented by applicable statute or regulation from entering into any such
agreement; provided, however, that any such Holder shall undertake not to
effect any public sale or distribution of the class of securities covered by
such registration statement (except as part of such underwritten offering)
during such period unless it has provided 60 days' prior written notice of such
sale or distribution to the managing underwriter.
(b) Restrictions on Sale by the Company and Others. The
Company agrees and it shall use its best efforts to cause its Affiliates to
agree (i) not to effect any public sale or distribution of any securities
similar to those being registered in accordance with Section 2.1 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 14 days prior to, and during the 90-day period beginning on, the
effective date of any registration statement (except as part of such
registration statement), in the case of an underwritten offering, if, and to
the extent, reasonably requested by the managing Underwriter or Underwriters,
and (ii) to use its best efforts to ensure that any agreement entered into
after the date of the Stockholders Agreement pursuant to which the Company
issues or agrees to issue any privately placed securities (other than to
officers or employees) shall contain a provision under which holders of such
securities agree not to effect any sale or distribution of any such securities
during the periods described in (i) above, in each case including a sale
pursuant to Rule 144 or Rule 144A under the Securities Act (except as part of
any such registration, if permitted); provided, however, that the provisions of
this paragraph (b) shall not prevent (x) the conversion or exchange of any
securities pursuant to their terms into or for other securities or (y) the
issuance of any securities to employees of the Company or pursuant to any
employee plan.
Section 5.4 Amendment and Modification. Any provision of
this Agreement may be waived, provided that such waiver is set forth in a
writing executed by the party against whom the enforcement of such waiver is
sought. This Agreement may not be amended, modified or supplemented other
than by a written instrument signed by (a) the Company, (b) the holders of a
majority of
20
<PAGE> 21
the Registrable Securities held by the Purchasers and (c) at least two
unrelated Purchasers; provided, however, that (i) so long as Apollo
beneficially owns at least 25% of the Registrable Securities held by Apollo on
the Effective Date, without the consent of Apollo, no amendment or modification
which adversely affects the rights or duties of Apollo hereunder may be
effected, (ii) so long as the Other Purchasers beneficially own at least 25% of
the Registrable Securities held by such Persons on the Effective Date, without
the consent of a majority of the Registrable Securities held by the Other
Purchasers, no amendment or modification which adversely affects the rights or
duties of such Other Purchasers hereunder may be effected and (iii) so long as
the Investors beneficially own at least 25% of the Shares beneficially owned by
such Persons on the Effective Date, without the consent of a majority of the
Registrable Securities held by the Investors, no amendment or modification
which adversely affects the rights or duties of such Investors hereunder may be
effected. No course of dealing between or among any Persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any Person
under or by reason of this Agreement.
Section 5.5 Successors and Assigns; Entire Agreement. (a)
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns and executors, administrators and heirs; provided, that (i) except as
otherwise specifically permitted pursuant to this Agreement, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by the Company without the prior written consent of each of the
Holders and (ii) Apollo may assign a right to request a Demand Registration
solely in connection with a Transfer to any single Person or group of
affiliated Persons (in a single transaction or series of related transactions)
of at least 25% of the Registrable Securities held by it on the date hereof.
(b) This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges
and supersedes all prior discussions, agreements and understandings of any and
every nature among them.
Section 5.6 Separability. In the event that any provision
of this Agreement or the application of any provision hereof is declared to be
illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except to
the extent necessary to delete such illegal, invalid or unenforceable
provision unless that provision
21
<PAGE> 22
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
Section 5.7 Notices. All notices, demands, requests,
consents or approvals (collectively, "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and shall be personally delivered or delivered by a reputable
overnight courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or such
other address as such party shall have specified most recently by written
notice. Notice shall be deemed given or delivered on the date of service or
transmission if personally served or transmitted by telegram, telex or
facsimile. Notice otherwise sent as provided herein shall be deemed given or
delivered on the next business day following delivery of such notice to a
reputable overnight courier service.
To the Company:
Food 4 Less Holdings, Inc.
1100 West Artesia Boulevard
Compton, California 90220
Attn: Byron E. Allumbaugh
Fax: (213) 884-4024
with a copy (which shall not constitute notice) to:
The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attn: Mark A. Resnik, Esq.
Fax: (310) 789-7201
and
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Attn: Thomas C. Sadler, Esq.
Fax: (213) 891-8763
22
<PAGE> 23
To Apollo:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Fax: (914) 694-8032
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
34th Floor
Los Angeles, California 90071
Attn: Michael A. Woronoff, Esq.
Fax: (213) 687-5600
To the Other Purchasers or the Other Investors:
To the address specified on the signature page of the
Stockholders Agreement executed by such Other
Purchaser.
Section 5.8 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal law of the State of
New York, without giving effect to principles of conflicts of law.
Section 5.9 Headings. The headings in this Agreement are
for convenience of reference only and shall not constitute a part of this
Agreement, nor shall they affect their meaning, construction or effect.
Section 5.10 Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute one and the same
instrument.
Section 5.11 Further Assurances. Each party shall
cooperate and take such action as may be reasonably requested by another party
in order to carry out the provisions and purposes of this Agreement and the
transactions contemplated hereby.
Section 5.12 Termination. Unless sooner terminated in
accordance with its terms or as otherwise herein provided, this Agreement shall
23
<PAGE> 24
terminate upon the earlier to occur of (i) the mutual agreement by the parties
hereto, (ii) with respect to any Holder, such Holder ceasing to own any
Registrable Securities or (iii) the fifteenth anniversary of the Effective
Date.
Section 5.13 Remedies. In the event of a breach or a
threatened breach by any party to this Agreement of its obligations under this
Agreement, any party injured or to be injured by such breach will be entitled
to specific performance of its rights under this Agreement or to injunctive
relief, in addition to being entitled to exercise all rights provided in this
Agreement and granted by law. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties
that the remedy at law, including monetary damages, for breach of any such
provision will be inadequate compensation for any loss and that any defense or
objection in any action for specific performance or injunctive relief that a
remedy at law would be adequate is waived.
Section 5.14 Pronouns. Whenever the context may require,
any pronouns used herein shall be deemed also to include the corresponding
neuter, masculine or feminine forms.
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FOOD 4 LESS HOLDINGS, INC.
/s/ Mark A. Resnik
------------------------------------
Name: Mark A. Resnik
Title: Vice President and Secretary
25
<PAGE> 26
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Peter P. Copses
----------------------------------
Name: Peter P. Copses
Title: Vice President
APOLLO UK PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Peter P. Copses
----------------------------------
Name: Peter P. Copses
Title: Vice President
26
<PAGE> 27
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Peter P. Copses
----------------------------------
Name: Peter P. Copses
Title: Vice President
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.
Its Managing General Partner
By: Apollo Capital Management, Inc.
Its General Partner
By: /s/ Peter P. Copses
----------------------------------
Name: Peter P. Copses
Title: Vice President
27
<PAGE> 28
FL ADVISORS, L.P. (for the benefit of an
account under management)
By: FL Management, Inc.
Its General Partner
By: /s/ Peter P. Copses
---------------------------------
Name: Peter P. Copses
Title: Vice President
F4L/AB INVESTORS
By: /s/ John J. Hannan
---------------------------------
Name: John J. Hannan
Title:
28
<PAGE> 29
BT INVESTMENT PARTNERS, INC.
By: /s/ Joseph T. Wood
-----------------------------------
Name: Joseph T. Wood
Title: Managing Director
BANKERS TRUST NEW YORK
CORPORATION
By: /s/ Joseph T. Wood
-----------------------------------
Name: Joseph T. Wood
Title: Senior Vice President
BT SECURITIES CORPORATION
By: /s/ Geralyn A. Fitzgerald
-----------------------------------
Name: Geralyn A. Fitzgerald
Title: Managing Director
29
<PAGE> 30
HWH INVESTMENT PTE LTD
By: /s/ Kunnasagaran Chinniah
-----------------------------
Name: Kunnasagaran Chinniah
Title: Director
30
<PAGE> 31
CHASE MANHATTAN INVESTMENT
HOLDINGS, INC.
By: /s/ Michael McLaughlin
------------------------------
Name: Michael McLaughlin
Title: Vice President
31
<PAGE> 32
MERCHANT GP, INC.
By: /s/ Mark Patterson
--------------------------
Name: Mark Patterson
Title: Vice President
32
<PAGE> 33
CRESCENT/MACH I PARTNERS, L.P.
By: Crescent Capital Corporation,
as investment manager and
attorney in fact
By: /s/ Mark Attanasio
-----------------------------
Name: Michael Attanasio
Title: President
CRESCENT SHARED OPPORTUNITY
FUND II, L.P.
By: Crescent Capital Corporation,
as investment manager and
attorney-in-fact
By: /s/ Mark Attanasio
-----------------------------
Name: Michael Attanasio
Title: President
33
<PAGE> 34
DLJ CAPITAL CORPORATION
By: /s/ Claire M. Power
----------------------------------
Name: Claire M. Power
Title: Assistant Secretary
34
<PAGE> 35
THE RAPAPORT FAMILY
TRUST U/A/D 4/12/90
By: /s/ Marc Rapaport
-----------------------------------
Name: Marc Rapaport
Title: Trustee
35
<PAGE> 36
/s/ Ronald W. Burkle
---------------------------------------
Ronald W. Burkle
/s/ George G. Golleher
---------------------------------------
George G. Golleher
36
<PAGE> 1
Exhibit 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made and
entered into as of June 14, 1995 by and among THE YUCAIPA COMPANIES, a
California general partnership ("Yucaipa"), FOOD 4 LESS HOLDINGS, INC., a
Delaware corporation ("F4L Holdings"), and RALPHS GROCERY COMPANY, a Delaware
corporation ("RGC"), as successor to Food 4 Less Supermarkets, Inc., a Delaware
corporation ("F4L Supermarkets").
W I T N E S S E T H:
WHEREAS, RGC and its subsidiaries are in the business of
operating supermarkets;
WHEREAS, Yucaipa has the ability to provide certain general
business and financial consultation and advice to RGC in connection with the
operation of its business;
WHEREAS, F4L Supermarkets, Yucaipa and Yucaipa Management
Company are parties to that certain Amended and Restated Consulting Agreement
dated as of June 17, 1991 (the "Old Consulting Agreement");
WHEREAS, to the date hereof Yucaipa has provided services to
F4L Supermarkets pursuant to the Old Consulting Agreement;
WHEREAS, RGC is the successor to F4L Supermarkets, and the
wholly-owned subsidiary of F4L Holdings, by operation of merger effective the
date hereof (the "Effective Date"); and
WHEREAS, the parties desire to terminate the Old Consulting
Agreement and to replace it in its entirety by this Agreement;
NOW, THEREFORE, in consideration of the premises, and the
mutual covenants of the parties hereto and other good and valuable
consideration had and received by each of the parties to this Agreement,
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
<PAGE> 2
SECTION 1. CONSULTING.
RGC hereby engages Yucaipa as an independent contractor and
consultant, to provide general business consultation and advice to RGC and its
subsidiaries in connection with the operation of their businesses.
SECTION 2. CONSULTING SERVICES.
Yucaipa through its partners and/or employees shall provide
RGC with consultation and advice, when and as requested by RGC, in such fields
as supermarket operations, planning and development, budgeting, accounting,
general business management, and legal matters. All partners and employees of
Yucaipa or any of its affiliates (other than F4L Holdings and its subsidiaries)
who serve RGC or any subsidiary of RGC as an officer, director or employee
shall do so without charge during the term of this Agreement, except for the
fees and charges specifically provided for herein.
SECTION 3. CONSULTING FEES.
RGC shall pay the following consulting fees to Yucaipa in
consideration of the services rendered by Yucaipa pursuant to Section 2 above:
(a) RGC shall pay to Yucaipa a consulting fee of
$4,000,000 in cash, on the Effective Date, in consideration of the consulting
services to be rendered by Yucaipa during the period commencing on July 1, 1995
and ending June 30, 1996.
(b) To the extent not previously paid, on the Effective
Date RGC shall pay to Yucaipa a consulting fee with respect to the partial
month commencing on the Effective Date and ending June 30, 1995 equal to
$11,111.11 times the number of days remaining in such current calendar month
(from and including the Effective Date), provided that RGC may credit against
such payment a prorated portion of the $166,666.67 consulting fee that was paid
by F4L Supermarkets to Yucaipa on June 1, 1995 pursuant to the Old Consulting
Agreement (such prorated portion to equal $5,555.55 times the number of days
remaining in the current calendar month, from and including the Effective
Date).
(c) Commencing July 1, 1996, RGC shall pay to Yucaipa a
periodic consulting fee equal to $333,333.33 per month, payable in cash on the
first day of each calendar month and past due on the fifteenth day of such
calendar month.
2
<PAGE> 3
(d) To the extent not previously paid, on the Effective
Date RGC shall pay to Yucaipa a prorated portion of the 2-1/2% Fee (as defined
in the Old Consulting Agreement) that would have been payable by F4L
Supermarkets under Section 3(b) of the Old Consulting Agreement for F4L
Supermarkets' fiscal year ending June 24, 1995, with such prorated portion to
equal (i) 2-1/2% of the excess of F4L Supermarkets' EBITDA (as defined in the
Old Consulting Agreement) for the last thirteen four-week fiscal reporting
periods ("Fiscal Periods") of F4L Supermarkets completed prior to the Effective
Date and for which financial data are available (which financial data need not
be audited, but which financial data must be prepared in accordance with
generally accepted accounting principles in a manner consistent with the
financial statements contained in F4L Supermarkets' quarterly and annual
reports on Forms 10-Q and 10-K filed with the Securities and Exchange
Commission for periods included within such last thirteen Fiscal Periods), over
the Minimum Threshold (as defined in the Old Consulting Agreement), times (ii)
the number of days elapsed from June 25, 1994 to the Effective Date, divided by
(iii) 365. The fee payable under this Section 3(c) shall be in lieu of all or
any portion of the 2-1/2% Fee that might otherwise remain payable under the Old
Consulting Agreement but for its termination pursuant to Section 12 hereof.
SECTION 4. INVESTMENT BANKING SERVICES.
F4L Holdings, RGC and their respective subsidiaries (or any
one of them) may retain or employ Yucaipa as a financial advisor and/or
investment banker in connection with any acquisition or disposition transaction
by F4L Holdings, RGC or any of their respective subsidiaries other than a sale
of all of the outstanding capital stock of, or all or substantially all of the
assets of, F4L Holdings or RGC. The parties expressly agree that the services
contemplated by this Section 4 shall not include financial advisory or
investment banking services in connection with debt or equity financings or
equipment lease arrangements. If any retention of Yucaipa by F4L Holdings, RGC
or any of their respective subsidiaries pursuant to this Section 4 is made
pursuant to a retention or engagement agreement containing terms varying from
or in addition to the terms contained in this Agreement, such agreement shall
be reasonably acceptable to a majority of the disinterested members of the
Board of Directors of F4L Holdings or RGC, as the case may be, that are neither
affiliates of Yucaipa nor designated or nominated to such Board of Directors by
Yucaipa or any of its affiliates.
SECTION 5. INVESTMENT BANKING FEES.
F4L Holdings or RGC, as applicable, shall pay to Yucaipa a
cash fee for providing any financial advisory or investment banking services
pursuant to Section 4 above in connection with the acquisition or disposition
transactions specified therein (other
3
<PAGE> 4
than disposition transactions with respect to (i) any of the up to 48 stores
designated for divestiture or closing in connection with the Merger (as defined
herein) or (ii) any other stores designated for divestiture or closing in the
ordinary course of business), equal to 1% of the amount or value of all cash
and noncash consideration actually paid or received (including assumed
indebtedness) by F4L Holdings, RGC or any of their respective subsidiaries, as
the case may be, in connection therewith.
SECTION 6. REIMBURSEMENT OF EXPENSES.
RGC shall reimburse Yucaipa for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the performance of
its obligations under this Agreement. Yucaipa shall bill RGC for the amount of
all such expenses monthly, and shall provide RGC with a reasonable itemization
of such expenses. Notwithstanding the foregoing, the aggregate amount of such
costs and expenses for which Yucaipa may be reimbursed in connection with the
rendering of consulting services under Section 2 hereof shall not exceed
$300,000 in any fiscal year of RGC (which maximum amount shall be prorated for
the period beginning the Effective Date and ending on the last day of RGC's
current fiscal year). In addition to the foregoing, RGC shall reimburse
Yucaipa for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the rendering by Yucaipa of financial advisory or investment
banking services to F4L Holdings, RGC and/or their subsidiaries, in connection
with any acquisition or disposition transaction, debt or equity financing or
equipment leasing arrangement, whether or not Yucaipa is obligated to render
such services or has a right to be paid any fee relating thereto under Sections
4 or 5 of this Agreement.
SECTION 7. TERM OF AGREEMENT.
The term of this Agreement shall be for a period of five (5)
years commencing on the Effective Date; provided, however, that the term shall
be automatically renewed annually for a term of five (5) years on July 1 of
each year, unless at least ninety (90) days prior notice is given by either
party electing not to so renew this Agreement.
SECTION 8. TERMINATION.
8.1 Termination at Will. RGC and F4L Holdings, acting
jointly, may terminate this Agreement at any time by giving Yucaipa at least
ninety (90) days written notice of such termination.
4
<PAGE> 5
8.2 Termination for Cause.
(a) RGC and F4L Holdings on the one hand, or Yucaipa on
the other hand, may terminate this Agreement if the other party shall fail to
reasonably perform any material covenant, agreement, term or provision of this
Agreement to be kept, observed or performed by it and such failure shall
continue for a period of sixty (60) days after written notice from the other
party, which notice shall describe the alleged failure with particularity;
provided that Yucaipa shall use its best efforts to cause RGC and F4L Holdings
to perform each material covenant, agreement, term and provision of this
Agreement. Notwithstanding the foregoing, any failure or alleged failure of
RGC, F4L Holdings or Yucaipa to perform any material covenant, agreement, term
or provision of this Agreement shall not constitute cause for termination of
this Agreement if the same shall be occasioned by or result from force majeure,
directly or indirectly.
(b) Yucaipa may terminate this Agreement if RGC or F4L
Holdings shall fail to make any payment due to Yucaipa hereunder, if such
payment is not made in full within twenty (20) days after written notice of
such failure; provided that Yucaipa shall use its best efforts to cause RGC and
F4L Holdings to make all such payments in a timely manner.
8.3 Termination for Change of Control. This Agreement
may be terminated, at the election of Yucaipa or RGC, if during the term hereof
there shall have been a change in control of F4L Holdings or RGC, which for
purposes of this Agreement shall be deemed to have occurred upon any of the
following events: (a) the acquisition after the Effective Date, in one or more
transactions, of "beneficial ownership" (within the meaning of Rule 13d-3(a)(1)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) by
any person (other than Yucaipa or any of its partners or affiliates) or any
group of persons (excluding any group which includes Yucaipa or any of its
partners or affiliates) who constitute a group (within the meaning of Section
13(d)(3) of the Exchange Act) of any securities of F4L Holdings or RGC such
that, as a result of such acquisition, such person or group beneficially owns
(within the meaning of Rule 13d-3(a)(1) under the Exchange Act) 51% or more of
F4L Holdings' or RGC's then outstanding voting securities entitled to vote on a
regular basis for a majority of the Board of Directors of F4L Holdings or RGC;
or (b) the sale of all or substantially all of the assets of F4L Holdings or
RGC (including, without limitation, by way of merger, consolidation, lease or
transfer) in a transaction where F4L Holdings or RGC or the beneficial owners
of common stock of F4L Holdings or RGC do not receive (i) voting securities
representing a majority of the voting power entitled to vote on a regular basis
for the Board of Directors of the acquiring entity or of an affiliate which
controls the acquiring entity, or (ii) securities representing a majority of
the equity interest in the
5
<PAGE> 6
acquiring entity or of an affiliate which controls the acquiring entity, if
other than a corporation; provided, however, that no change in control shall be
deemed to have occurred under (a) or (b) above upon any transfer, sale or
disposition of shares of common stock of F4L Holdings or RGC in any transaction
between F4L Holdings or RGC and any person or persons who are affiliates of F4L
Holdings on the Effective Date.
8.4 Payments upon Termination.
(a) In the event of any termination pursuant to Section
8.1 or Section 8.2(b) (if Yucaipa has elected to terminate because of a failure
to pay by RGC or F4L Holdings), RGC shall pay to Yucaipa an amount equal to the
total consulting fees that would have been earned by Yucaipa under Section 3
hereof during the remaining term of this Agreement as if the Agreement had not
been terminated; provided that a discount rate of 10% shall be applied in
valuing, for purposes of such payment, the consulting fees otherwise payable
during the remaining term of this Agreement.
(b) In the event of any termination prior to June 30,
1996 pursuant to Section 8.2(a) if RGC and F4L Holdings have elected to
terminate because of a material failure of performance by Yucaipa, Yucaipa
promptly shall refund to RGC a prorated portion of the $4,000,000 fee received
by it under Section 3(a), with such refunded portion to equal $4,000,000 times
(i) the number of days remaining from the date of such termination to June 30,
1996 divided by (ii) 365.
(c) In the event of any termination pursuant to Section
8.3, RGC shall pay to Yucaipa an amount equal to the total consulting fees that
would have been earned by Yucaipa under Section 3 hereof during the period
commencing on the date of such change of control and ending on the fifth
anniversary of the Effective Date, as if the Agreement had not been terminated;
provided that (i) a discount rate of 10% shall be applied in valuing, for
purposes of such payment, the consulting fees otherwise payable during such
period and (ii) if such termination occurs on or after the fifth anniversary of
the Effective Date, no payment shall be due to Yucaipa as a result of such
termination.
(d) Such amount, if any, which shall be due Yucaipa
pursuant to this Section 8.4 in the event of any such termination shall be due
and payable to Yucaipa, in full, as of the date of such termination. The
parties intend that should the foregoing payments be determined to constitute
liquidated damages, such payments shall in all events be deemed reasonable.
6
<PAGE> 7
SECTION 9. MERGER ADVISORY FEES.
(a) On the Effective Date, (i) RGC shall be obligated to
pay Yucaipa an advisory fee with respect to the transactions contemplated by
that certain Agreement and Plan of Merger dated as of September 14, 1994 (the
"Merger Agreement") by and among Food 4 Less, Inc., F4L Holdings, F4L
Supermarkets, Ralphs Supermarkets, Inc. ("Ralphs") and the stockholders of
Ralphs, in the amount of $21,500,000; provided that $17,500,000 of such fee
will be satisfied through the issuance by F4L Holdings to Yucaipa of
$17,500,000 initial accreted value of its 13-5/8% Senior Discount Debentures
due 2005 (the "Debentures"), and the remaining $4,000,000 of such fee will be
paid by RGC in cash, and (ii) RGC will reimburse Yucaipa for all reasonable
out-of-pocket costs and expenses incurred in connection with such transactions
(including, without limitation, all such costs and expenses incurred by Yucaipa
in connection with the Merger and the Financing (each as defined in the Merger
Agreement)).
(b) Yucaipa hereby represents and warrants that none of
F4L Holdings, RGC or any of their respective subsidiaries has paid or is
obligated to pay, directly or indirectly, any consideration (including, without
limitation, any consulting or other fees) to George Soros or any of his
affiliates for advisory or similar services, for the purchase of equity
interests in F4L Holdings owned by George Soros and his affiliates, or
otherwise in connection with the Merger or the Financing.
SECTION 10. REIMBURSEMENT UPON RESALE OF DEBENTURES.
10.1 RGC shall reimburse Yucaipa (or its designee) a cash
amount equal to (i) any loss incurred by Yucaipa (or its designee) upon the
resale to any unaffiliated third party of the $10,000,000 aggregate principal
amount of 13-5/8% Senior Subordinated Pay-in- Kind Debentures due 2007 (the
"Seller Debentures") of F4L Holdings which may be acquired by Yucaipa (or its
designee) on the Effective Date pursuant to the terms of that certain Put
Agreement dated as of June 14, 1995 (the "Put Agreement") between The Edward J.
DeBartolo Corporation and Yucaipa, (ii) without duplication of the foregoing,
all reasonable out-of-pocket costs and expenses incurred by Yucaipa (or its
designee) in connection with the resale (whether or not consummated) of the
Seller Debentures, and (iii) the net amount of any liability for federal or
state taxes incurred by Yucaipa (or its designee) in its current tax year with
respect to the reimbursement provided for in this Section 10.1; provided,
however, that Yucaipa (or its designee) shall refund to RGC an amount equal to
any tax benefit available to Yucaipa (or its designee) as a result of the
resale of the Seller Debentures to the extent that, and at the time that,
Yucaipa (or its designee) realizes such tax benefit (whether by offset against
additional taxes or otherwise).
7
<PAGE> 8
10.2 Yucaipa (or its designee) shall contribute to the
capital of F4L Holdings the net amount of any gain (after provision for federal
and state taxes) realized by Yucaipa (or its designee) upon the resale to any
unaffiliated third party of the Seller Debentures (less any amounts due and
payable by RGC to Yucaipa (or its designee) pursuant to clause (ii) of Section
10.1 hereof). Immediately following any such capital contribution to F4L
Holdings, F4L Holdings will in turn contribute to the capital of RGC the
amounts received by it under this Section 10.2.
SECTION 11. NOTICES.
11.1 Manner of Notice. All notices, statements or other
documents which any party shall be required or shall desire to give to the
others hereunder shall be in writing and shall be given by the parties hereto
only as follows: (a) by personal delivery, (b) by addressing it as indicated
below, and by depositing it certified mail, postage prepaid, in the U.S. mail,
first class (airmail if the address is outside of the country in which such
notice is deposited), or (c) by addressing it as indicated below, and by
delivering it toll prepaid to a telegraph, cable company or courier service
(e.g., Federal Express).
11.2 Delivery of Notice; Addresses. If so delivered,
mailed, telegraphed, cabled or couriered, each such notice, statement or other
document shall, except as herein expressly provided, be conclusively deemed to
have been given when personally delivered, or on the third business day after
the date of mailing, or on the date of delivery to a telegraph or cable company
or on the first business day after delivery to a courier service, as the case
may be. The addresses of the parties shall be those of which the other parties
actually receives written notice pursuant to this Section 11 and until further
notice are:
If to Yucaipa: The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, CA 90067
Attention: Mark A. Resnik
If to RGC: Ralphs Grocery Company
1100 West Artesia Boulevard
Compton, California 90220
Attention: Chief Executive Officer
8
<PAGE> 9
If to F4L Food 4 Less Holdings, Inc.
Holdings: c/o Ralphs Grocery Company
1100 West Artesia Boulevard
Compton, California 90220
Attention: Chief Executive Officer
SECTION 12. MISCELLANEOUS.
12.1 Termination of Old Consulting Agreement. The parties to
this Agreement hereby acknowledge and agree that, effective the date hereof,
the Old Consulting Agreement shall be terminated and superseded in its entirety
by this Agreement, and that no party thereto has any obligations thereunder,
including without limitation, the payment of any termination fees or other
amounts, except as specifically provided for herein; provided that any costs
and expenses incurred prior to the date hereof, and as to which Yucaipa is
entitled to reimbursement under Section 6 of the Old Consulting Agreement, or
any loss, cost or liability as to which Yucaipa is entitled to indemnity under
Section 10.8 of the Old Consulting Agreement, shall remain subject to such
reimbursement or indemnity in accordance with the terms thereof.
12.2 Contingent Liability of F4L Holdings. The parties to
this Agreement hereby acknowledge and agree that RGC shall be the primary
obligor with respect to its obligations hereunder and that F4L Holdings shall
be contingently liable for the performance of any and all obligations of RGC
hereunder.
12.3 Entire Agreement; Amendments. This Agreement contains
all of the terms and conditions agreed upon by the parties hereto in connection
with the subject matter hereof. This Agreement may not be amended, modified or
changed except by written instrument signed by all of the parties hereto.
12.4 Assignment; Successors. This Agreement shall not be
assigned and is not assignable by any party without the prior written consent
of each of the other parties hereto; provided, however, that Yucaipa may
assign, without the prior consent of F4L Holdings or RGC, its rights and
obligations under this Agreement to any of its affiliates controlled by Ronald
Burkle, and provided further, that (i) Yucaipa may assign the right to receive
any payment hereunder to any other person or entity as security for a bona fide
obligation, and (ii) Yucaipa may assign the right to receive the Debentures to
Yucaipa RGC L.L.C., a Delaware limited liability company. Subject to the
preceding sentence, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted successors and assigns.
9
<PAGE> 10
12.5 Captions. All captions and headings are inserted for
the convenience of the parties, and shall not be used in any way to modify,
limit, construe or otherwise affect this Agreement.
12.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal domestic laws of the State of
California, without reference to the choice of law principles thereof.
12.7 Attorneys' Fees. If any legal action is brought
concerning any matter relating to this Agreement, or by reason of any breach of
any covenant, condition or agreement referred to herein, the prevailing party
shall be entitled to have and recover from the other party to the action all
costs and expenses of suit, including attorneys' fees.
12.8 Severability. If any term, provision or condition of
this Agreement is determined by a court or other judicial or administrative
tribunal to be illegal, void or otherwise ineffective or not in accordance with
public policy, the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect.
12.9 Interpretation. In the event of a dispute hereunder,
this Agreement shall be interpreted in accordance with its fair meaning and
shall not be interpreted for or against any party hereto on the ground that
such party drafted or caused to be drafted this Agreement or any part hereof.
12.10 Indemnity. The parties to this Agreement shall
indemnify and hold one another and their respective officers, directors,
employees and agents, harmless from any and all loss, cost, liability and
damage (including attorneys' fees) arising out of or connected with, or claimed
to arise out of or be connected with, any act performed or omitted to be
performed under this Agreement, provided such act or omission was taken in good
faith, and in the event of criminal proceedings that the indemnitee had no
reasonable cause to believe his conduct was unlawful. An adverse judgment or
plea of nolo contendere shall not, of itself, create a presumption that the
indemnitee did not act in good faith or that he had reasonable cause to believe
his conduct was unlawful. Expenses incurred in defending a civil or criminal
action shall be paid by the indemnitor upon receipt of an undertaking by or on
behalf of the indemnitee to repay such amount if it be later shown that such
person was not entitled to indemnification.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
THE YUCAIPA COMPANIES
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Managing Partner
FOOD 4 LESS HOLDINGS, INC.
By: /s/ George G. Golleher
------------------------------
Name: George G. Golleher
Title: Vice Chairman of the
Board
RALPHS GROCERY COMPANY
By: /s/ George G. Golleher
------------------------------
Name: George G. Golleher
Title: Vice Chairman of the
Board
CONSENT TO TERMINATION
OF OLD CONSULTING AGREEMENT
Yucaipa Management Company ("YMC") hereby acknowledges and
agrees that, effective as of the date written above, that certain Amended and
Restated Consulting
11
<PAGE> 12
Agreement dated as of June 17, 1991 to which it was a signatory shall be
terminated as contemplated by Section 12.1 of the foregoing Agreement.
YUCAIPA MANAGEMENT COMPANY
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Partner
12
<PAGE> 1
Exhibit 10.5
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY
IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
HOLDER OF THIS WARRANT OR ANY SUCH SHARES MAY BE REQUIRED TO DELIVER
TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL
(REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
(OR QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH
RESPECT TO ANY TRANSFER OF THIS WARRANT OR THESE SHARES THAT HAS NOT
BEEN SO REGISTERED (OR QUALIFIED).
THIS WARRANT AND ANY SHARES OF THE COMPANY ACQUIRED UPON THE EXERCISE
OF THIS WARRANT ALSO ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AND OBLIGATIONS, TO WHICH ANY TRANSFEREE AGREES BY HIS
ACCEPTANCE HEREOF, AS SET FORTH HEREIN AND IN THE STOCKHOLDERS
AGREEMENT OF THE COMPANY, DATED AS OF JUNE 14, 1995, COPIES OF WHICH
MAY BE OBTAINED FROM THE COMPANY. NO TRANSFER OF THIS WARRANT OR SUCH
SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY
EVIDENCE OF COMPLIANCE WITH THE TERMS HEREOF AND OF SUCH STOCKHOLDERS
AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE
RESTRICTIONS SET FORTH HEREIN AND IN THE STOCKHOLDERS AGREEMENT.
FOOD 4 LESS HOLDINGS, INC.
Common Stock Purchase Warrant
No. W-1 8,000,000 shares
June 14, 1995
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation (together
with any corporation that shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 4, the "Company"), for value
received, hereby certifies that THE YUCAIPA COMPANIES, a California general
partnership, or its registered permitted assigns (the "Holder"), is entitled to
purchase from the Company an aggregate of 8,000,000 shares of Common
Stock (as defined below), at the Exercise Price (as defined below) per share,
<PAGE> 2
subject to the terms, conditions and adjustments set forth below, (i) in whole
or in part, at any time or from time to time from and after the occurrence of a
Qualified IPO (as defined below) and on or prior to 5:00 P.M., New York City
time, on the Expiration Date (as defined below) or (ii) in whole, concurrently
with any Qualified Sale Event (as defined below) occurring on or prior to the
Expiration Date.
1. Definitions. Capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in the Stockholders
Agreement (the "Stockholders Agreement"), dated as of June 14, 1995, among the
Company, Ralphs Grocery Company, a Delaware corporation, and certain
stockholders of the Company. In addition, the following terms shall have the
meanings ascribed to them below:
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company and any stock into which such Common Stock shall have
been changed or any stock resulting from any reclassification of such Common
Stock.
"Enterprise Value" shall mean (without duplication) the sum of
(a) the aggregate value of the fully diluted common equity of the Company,
based on an assumed price per Share equal to the Exercise Price, net of the
exercise, exchange or conversion price, if any, with respect to any security
exercisable or exchangeable for or convertible into Common Stock, plus (b) the
aggregate principal amount of all Indebtedness of the Company and its
consolidated Subsidiaries and the aggregate liquidation preference of all
preferred stock of the Company (other than preferred stock convertible into
Common Stock included in clause (a) above), in each case as reflected on the
Company's most recent consolidated balance sheet that was (or was required to
be) provided pursuant to Section 4.4 of the Stockholders Agreement on or prior
to June 14, 2000, less (c) all cash and cash equivalents of the Company and its
consolidated Subsidiaries as reflected on such balance sheet.
"Expiration Date" initially shall mean June 14, 2000;
provided, that if, on such date, the product of (i) 6 times (ii) EBITDA for the
latest four Fiscal Quarters of the Company for which information was (or was
required to be) provided pursuant to Section 4.4 of the Stockholders Agreement
exceeds the Enterprise Value, then "Expiration Date" shall mean June 14, 2002.
2
<PAGE> 3
"Fiscal Quarter" shall mean the twelve-week, thirteen-week and
sixteen-week fiscal periods of the Company as observed for financial reporting
purposes; provided that when and if the fiscal calendar of the Company includes
four consecutive Fiscal Quarters that include 53 weeks in the aggregate, the
calculation of EBITDA for such four Fiscal Quarter period, for any purpose
hereunder, shall be taken as 52/53ds of actual EBITDA for such four Fiscal
Quarter period.
"Market Price" shall mean the average closing sale price of a
share of Common Stock, regular way, for the period of 20 consecutive trading
days ending on the trading day immediately preceding the date of such exercise
or, in case no such sale takes place on any such day, the average of the
reported closing bid and asked prices, regular way, in each case on a Permitted
Exchange or, if not so available, as such Market Price may be determined by a
nationally recognized investment bank selected by a majority of the
disinterested members of the Board of Directors of the Company that are neither
Affiliates of the Holder nor designated or nominated by the Holder or any of
its Affiliates (the "Disinterested Directors"); provided, that if the Warrant
is exercised (i) on or prior to the 20th trading day following consummation of
a Qualified IPO, "Market Price" shall mean the price to the public in such
Qualified IPO or (ii) concurrently with a Qualified Sale Event, "Market Price"
shall mean the price per share of Common Stock paid in such Qualified Sale
Event.
"Preferred Shares" shall mean shares of the Company's Series A
Preferred Stock and Series B Preferred Stock.
"Qualified Sale Event" shall mean a sale of all, but not less
than all, of the issued and outstanding shares of capital stock of the Company
to a Third Party in a bona fide transaction; provided, that from and after June
14, 2000, such term shall only include a Compelled Sale.
2. Exercise of Warrant.
2.1. Manner of Exercise. Subject to the foregoing, this
Warrant may be exercised by the Holder hereof, in whole or in part, during
normal business hours on any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the City of New York are authorized by
law to be closed (a "Business Day"), by surrender of this Warrant to the
Company at its office maintained pursuant to Section 9.2, accompanied by a
subscription in substantially the form attached to this Warrant (or a
reasonable facsimile thereof),
3
<PAGE> 4
duly executed by such Holder. Payment of the aggregate Exercise Price of the
number of shares of Common Stock designated in such subscription shall be made
by the Company withholding therefrom that number of shares of Common Stock with
an aggregate Market Price as of the date of exercise equal to such aggregate
Exercise Price.
2.2. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant and the accompanying
subscription shall have been duly surrendered to the Company as provided in
Section 2.1, and at such time the Holder shall be deemed to have become the
holder of record of a number of shares of Common Stock equal to the number of
shares designated in such subscription less the number of shares withheld by
the Company as payment therefor.
2.3. Delivery of Stock Certificates, etc. As soon as
practicable after each exercise of this Warrant, in whole or in part, in
accordance with the terms of Section 2.1, the Company will cause to be issued
in the name of, and delivered to the Holder hereof,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock to which such Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash in an amount equal to the same fraction of
the Market Price per share on the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant of
like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal to the number of such
shares called for on the face of this Warrant (after giving effect to
any adjustment thereof after the date hereof) minus the number of such
shares designated by the Holder upon such exercise as provided in
Section 2.1.
3. Adjustments.
3.1. General. (a) The number of shares of Common Stock that
the Holder shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 3) be issuable upon such
exercise, by a fraction (i) the numerator of which is the Warrant Price (as
defined below) and (ii) the denominator of which is the Exercise Price, in each
case in effect on the date of such exercise.
4
<PAGE> 5
Each of the "Exercise Price" and the "Warrant Price" shall
initially be $30.50 per share; provided, that the Exercise Price shall be
adjusted and readjusted from time to time as provided in Section 3 and the
Warrant Price shall be adjusted and readjusted from time to time as provided in
Sections 3.1(b) and (c).
(b) From and after June 14, 2000, the Exercise Price
and the Warrant Price shall each be increased daily at a rate of 25% per annum,
compounded annually.
(c) Each of the Exercise Price and the Warrant Price
shall be adjusted from time to time after the date hereof by multiplying such
Exercise Price and Warrant Price by a fraction (i) the numerator of which shall
be 40,000,000 and (ii) the denominator of which shall be the sum of (x)
20,216,756 plus (y) the number of shares of Common Stock issued prior to such
adjustment upon conversion of Preferred Shares plus (z) the number of shares of
Common Stock then issuable upon conversion of all then outstanding Preferred
Shares. Whenever a particular number of shares of Common Stock is specified
herein, such number shall be adjusted to reflect stock dividends, stock-
splits, combinations or other reclassifications of stock or any similar
transactions.
3.2. Treatment of Stock Dividends. If, after the date
hereof, the Company shall declare or pay any dividend on the Common Stock
payable in Common Stock, then, and in each such case, the Exercise Price in
effect immediately after the close of business on the record date for the
determination of holders entitled to receive such dividend, shall be reduced by
multiplying such Exercise Price by a fraction (a) the numerator of which shall
be the number of shares of Common Stock outstanding at the close of business on
such record date and (b) the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution.
3.3. Adjustments for Stock-Splits, Combinations. If, after
the date hereof, the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock or combined into a smaller
number of shares of Common Stock by stock split, combination, reclassification
or otherwise, the Exercise Price in effect immediately prior to such
subdivision or combination shall, concurrently with the effectiveness of such
subdivision or combination, be proportionately reduced or increased.
3.4. Minimum Adjustment of Warrant Price. If the amount of
any adjustment of the Exercise Price required pursuant to Section 3.1(c), 3.2
or 3.3 would be less than one percent (1%) of the Exercise Price in effect at
the time such adjustment is otherwise so required to be made, such amount shall
be carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and
5
<PAGE> 6
any other amount or amounts so carried forward, shall aggregate at least one
percent (1%) of such Exercise Price, provided, that all such adjustments
required pursuant to Sections 3.1(c), 3.2 and 3.3 and carried forward under
this Section 3.4 shall be made upon (and in connection with) any exercise of
the Warrant.
3.5 Form of Warrants. Irrespective of any adjustments in the
Exercise Price or the number of shares of Common Stock purchasable upon the
exercise of this Warrant, this Warrant (and any Warrant hereafter issued) may
continue to express the same price and number and kind of shares as are stated
in the Warrant initially issued.
4. Consolidation, Merger, etc.
If, after the date hereof, the Company shall
(a) consolidate with or merge into any other Person
and shall not be the continuing or surviving corporation of such consolidation
or merger, or
(b) permit any other Person to consolidate with or
merge into the Company and the Company shall be the continuing or surviving
Person but, in connection with such consolidation or merger, the Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(c) effect a capital reorganization or
reclassification of the Common Stock
(other than (i) a Qualified Sale Event or (ii) in the cases for which an
adjustment has been or is to be made pursuant to Section 3), then proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant, upon the exercise hereof
after the consummation of such transaction, shall be entitled to receive, in
lieu of the Common Stock issuable upon such exercise, the kind and amount of
securities, cash or other property to which such Holder would actually have
been entitled upon such consummation if such Holder had exercised the rights
represented by this Warrant in full (giving effect to the payment of the
aggregate Exercise Price) immediately prior thereto.
5. Certain Covenants. The Company shall (a) not permit the
par value of any shares of stock receivable upon the exercise of this Warrant
to exceed the amount payable therefor upon such exercise, and (b) take all such
reasonable action as may be necessary or appropriate in order that the Company
6
<PAGE> 7
may validly and legally issue fully paid and nonassessable shares of stock on
the exercise of this Warrant.
6. Accountants' Report as to Adjustments. Upon the
occurrence of any event requiring adjustment or readjustment in the Exercise
Price (other than by operation of Section 3.1(b) or (c)) or the shares of
Common Stock issuable upon the exercise of this Warrant, the Company will
promptly compute such adjustment or readjustment in accordance with the terms
of this Warrant and cause independent certified public accountants of
recognized national standing (which may be the regular auditors of the Company)
selected by a majority of the Disinterested Directors to verify such
computation and prepare a report setting forth such adjustment or readjustment
and showing in reasonable detail the method of calculation thereof and the
facts upon which such adjustment or readjustment is based. The Company will
promptly mail a copy of each such report to the Holder.
7. Restrictions on Transfer.
(a) Legends. This Warrant (and any Warrant
hereafter issued) shall be stamped or otherwise imprinted with a legend in
substantially the form set forth hereon. Each certificate for shares of Common
Stock issued upon the exercise of this Warrant, and each certificate issued
upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the form set forth in Section 2.3 of
the Stockholders Agreement.
(b) No Transfer. Neither this Warrant nor any
interest herein may be directly or indirectly transferred or assigned by the
Holder other than to Ronald W. Burkle or a Controlling Stockholder controlled
by Ronald W. Burkle and, the equity holders of which consist solely of Ronald
W. Burkle and Yucaipa Individuals.
8. Reservation of Stock, etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
this Warrant, the number of shares of Common Stock from time to time issuable
upon exercise of this Warrant. All shares of Common Stock issuable upon
exercise of this Warrant shall be duly authorized and, when issued upon such
exercise in accordance with the terms hereof, shall be validly issued, fully
paid and nonassessable, with no liability on the part of the holders thereof.
9. Ownership and Transfer.
9.1. Ownership of Warrants. The Company shall treat the
person in whose name this Warrant is registered on the register kept at the
office of the
7
<PAGE> 8
Company maintained pursuant to Section 9.2(a) as the owner and Holder hereof
for all purposes, notwithstanding any notice to the contrary.
9.2. Office; Transfer and Exchange of Warrants.
(a) The Company will maintain an office at 1100 West
Artesia Boulevard, Compton, California 90220, until such time as the Company
shall notify the Holder of this Warrant of any change of location of such
office.
(b) Subject to Section 7, upon the surrender of this
Warrant, properly endorsed, for registration of transfer or for exchange at the
office of the Company maintained pursuant to Section 9.2(a), the Company will
execute and deliver to or upon the order of the Holder a new Warrant or
Warrants of like tenor, in the name of such Holder or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of this Warrant or the Warrants so
surrendered.
10. No Rights or Liabilities as Stockholder. Nothing
contained in this Warrant shall be construed as conferring upon the Holder any
rights as a stockholder of the Company or as imposing any obligation on such
Holder to purchase any securities or as imposing any liabilities on such Holder
as a stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
11. Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder
or which are given with respect to this Warrant shall be in writing and shall
be personally served or delivered by a reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed (a) if to the Holder, at the registered address of such Holder as set
forth in the register kept at the principal office of the Company, or (b) if to
the Company, to the attention of its Chief Executive Officer at its office
maintained pursuant to Section 9.2(a), provided that the exercise of this
Warrant shall be effective only in the manner provided in Section 2. Notice
shall be deemed given on the date of service or confirmation of receipt of
transmission if personally served or transmitted by telegram, telex or
facsimile. Notice otherwise sent as provided herein shall be deemed given on
the next Business Day following delivery of such notice to a reputable air
courier service.
12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. THIS WARRANT SHALL BE GOVERNED BY, INTERPRETED
8
<PAGE> 9
UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW PROVISIONS THEREOF. Titles and
headings of sections of this Warrant are for convenience only and shall not
affect the construction of any provision of this Warrant.
13. Expiration. The right to exercise this Warrant shall
expire at 5:00 P.M., New York City time, on the Expiration Date.
FOOD 4 LESS HOLDINGS, INC.
By: /s/ George G. Golleher
----------------------------------
Name: George G. Golleher
Title: Vice Chairman of the Board
9
<PAGE> 10
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To: FOOD 4 LESS HOLDINGS, INC.
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, ______*
shares of Common Stock of FOOD 4 LESS HOLDINGS, INC. and requests that the
certificates for such shares be issued in the name of, and delivered to the
undersigned, whose address is set forth below. In payment therefor, the
Company may withhold therefrom, and the undersigned holder hereby surrenders
its right to, that number of shares of Common Stock with an aggregate Market
Price as of the date of exercise equal to the aggregate Exercise Price for the
shares designated for purchase in the preceding sentence.
Dated: ______________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
_____________________________________
(Street Address)
_____________________________________
(City) (State) (Zip Code)
___________________
* Insert here the number of shares called for on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to
which the Warrant is being exercised), in either case after making any
adjustment for additional shares of Common Stock which, pursuant to
the adjustment provisions of the Warrant, may be delivered upon
exercise. In the case of a partial exercise, a new Warrant or
Warrants will be issued and delivered, representing the unexercised
portion of the Warrant, to the holder surrendering the Warrant.
10
<PAGE> 1
Exhibit 10.6
FOOD 4 LESS HOLDINGS, INC.
1995 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PURPOSE OF PLAN; ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . 3
2. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Exercise of Options; Continuation of
Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Transferability of Options . . . . . . . . . . . . . . . . . . . . 6
2.5 Limitation on Exercise of Incentive Stock Options . . . . . . . . 7
2.6 Disqualifying Dispositions of Incentive
Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Certain Timing Requirements . . . . . . . . . . . . . . . . . . . 7
2.8 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.9 Conditions to Issuance of Stock Certificates . . . . . . . . . . . 8
3. OTHER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Sick Leave and Leaves of Absence . . . . . . . . . . . . . . . . . 9
3.2 Termination of Employment. . . . . . . . . . . . . . . . . . . . . 9
3.3 Issuance of Stock Certificates . . . . . . . . . . . . . . . . . . 10
3.4 Terms and Conditions of Options and
Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Adjustments Upon Changes in Capitalization;
Merger and Consolidation . . . . . . . . . . . . . . . . . . . . 10
3.6 Rights of Participants and Beneficiaries . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
3.7 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Time of Grant and Exercise of Options . . . . . . . . . . . . . . . . 13
3.10 Privileges of Stock Ownership; Non-Distributive
Intent; Reports to Option Holders . . . . . . . . . . . . . . . . . . 13
3.11 Legending Share Certificates . . . . . . . . . . . . . . . . . . . . . 13
3.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Changes in Capital Structure; No Impediment
to Corporate Transactions . . . . . . . . . . . . . . . . . . . . . . 14
3.14 Effective Date of the Plan . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.17 Effect of Plan Upon Options and Compensation
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE> 4
1. PURPOSE OF PLAN; ADMINISTRATION
1.1 Purpose.
The Food 4 Less Holdings, Inc. 1995 Stock Option Plan (hereinafter,
the "Plan") is hereby established to grant to officers and other key employees
of Food 4 Less Holdings, Inc. ("FFL") or of its parent or subsidiaries (as
defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code
of 1986, as amended (the "Code")), if any (individually and collectively, the
"Company"), a favorable opportunity to acquire common stock, $.01 par value
("Common Stock"), of Food 4 Less, Inc. and, thereby, to create an incentive for
such persons to remain in the employ of or provide services to the Company and
to contribute to its success.
The Company may grant under the Plan both incentive stock options
within the meaning of Section 422 of the Code ("Incentive Stock Options") and
stock options that do not qualify for treatment as Incentive Stock Options
("Nonstatutory Options"). Unless expressly provided to the contrary herein,
all references herein to "options" shall include both Incentive Stock Options
and Nonstatutory Options.
1.2 Administration.
The Plan shall be administered by a committee (the "Committee"), which
shall consist of two or more non-employee members of the Board of Directors of
FFL (the "Board") designated from time to time by the Board; provided, however,
that each such member shall be a "disinterested person" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-
3"). Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.
A majority of the members of the Committee shall constitute a quorum
for the purposes of the Plan. Provided a quorum is present, the Committee may
take action by affirmative vote or consent of a majority of its members present
at a meeting. Meetings may be held telephonically as long as all members are
able to hear one another, and a member of the Committee shall be deemed to be
present for this purpose if he or she is in simultaneous communication by
telephone with the other members who are able to hear one another. In lieu of
action at a meeting, the Committee may act by written consent of a majority of
its members.
1.
<PAGE> 5
Subject to the express provisions of the Plan, the Committee shall
have the authority to construe and interpret the Plan and all Stock Option
Agreements entered into pursuant hereto and to define the terms used therein,
to prescribe, adopt, amend and rescind rules and regulations relating to the
administration of the Plan and to make all other determinations necessary or
advisable for the administration of the Plan; provided, however, that the
Committee may delegate nondiscretionary administrative duties to such employees
of the Company as it deems proper except with respect to matters which under
Rule 16b-3 are required to be determined in the sole discretion of the
Committee; and, provided, further, in its absolute discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Committee under the Plan except with respect to matters which under Rule 16b-3
are required to be determined in the sole discretion of the Committee. Subject
to the express limitations of the Plan, the Committee shall designate the
individuals from among the class of persons eligible to participate as provided
in Section 1.3 who shall receive options, whether an optionee will receive
Incentive Stock Options or Nonstatutory Options, or both, and the amount,
price, restrictions and all other terms and provisions of such options (which
need not be identical).
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. No members of the Committee or
Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, options and all
members of the Committee shall be fully protected by the Company in respect of
any such action, determination or interpretation.
1.3 Participation.
Officers and other key employees of the Company shall be eligible for
selection to participate in the Plan upon approval by the Committee; provided,
however, that only "employees" (within the meaning of Section 3401(c) of the
Code) of the Company shall be eligible for the grant of Incentive Stock Options
unless and until the Code permits otherwise. An individual who has been
granted an option may, if otherwise eligible, be granted additional options if
the Committee shall so determine. No person is eligible to participate in the
Plan by matter of right; only those eligible persons who are
2.
<PAGE> 6
selected by the Committee in its discretion shall participate in the Plan.
1.4 Stock Subject to the Plan.
Subject to adjustment as provided in Section 3.5, the stock to be
offered under the Plan shall be shares of authorized but unissued Common Stock,
including any shares repurchased under the terms of the Plan, any Stock Option
Agreement (as defined in Section 3.4) or any stockholders agreement entered
into pursuant hereto or pursuant to the terms of the Management Equity Program
of Food 4 Less Holdings, Inc., a California corporation ("Holdings
California"), adopted December 31, 1992, as amended, (the "Holdings Management
Equity Program"). The cumulative aggregate number of shares of Common Stock to
be issued under the Plan shall not exceed the sum of 3,000,000 plus any shares
of Common Stock acquired by the Company or its subsidiaries by repurchase under
the Holdings Management Equity Program, subject to adjustment as set forth in
Section 3.5. The cumulative aggregate number of shares of Common Stock which
may be subject to Incentive Stock Options granted under the Plan shall not
exceed 3,000,000, subject to adjustment as set forth in Section 3.5.
If any option granted hereunder shall expire or terminate for any
reason without having been fully exercised, the unpurchased shares subject
thereto shall again be available for the purposes of the Plan. For purposes of
this Section 1.4, where the exercise price of options is paid by means of the
grantee's surrender of previously owned shares of Common Stock, only the net
number of additional shares issued and which remain outstanding in connection
with such exercise shall be deemed "issued" for purposes of the Plan.
2. STOCK OPTIONS
2.1 Option Price.
The exercise price of each Incentive Stock Option granted under the
Plan shall be determined by the Committee, but shall not be less than 100% of
the "Fair Market Value" (as defined below) of Common Stock on the date of
grant. If an Incentive Stock Option is granted to an employee who at the time
such option is granted owns (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of capital
stock of the Company, the option exercise price shall be at least 110% of the
Fair Market Value of Common Stock on the date of grant. The exercise price of
each Nonstatutory Option shall be any amount determined by the Committee in its
discretion. The status of each option granted under the Plan as either an
Incentive Stock Option or a Nonstatutory Stock Option shall be determined by
the
3.
<PAGE> 7
Committee at the time the Committee acts to grant the option, and shall be
clearly identified as such in the Stock Option Agreement relating thereto.
"Fair Market Value" for purposes of the Plan shall mean: (i) the
closing price of a share of Common Stock on the principal exchange on which
shares of Common Stock are then trading, if any, on the day previous to such
date, or, if shares were not traded on the day previous to such date, then on
the next preceding trading day during which a sale occurred; or (ii) if Common
Stock is not traded on an exchange but is quoted on NASDAQ or a successor
quotation system, (1) the last sales price (if Common Stock is then listed on
the Nasdaq Stock Market) or (2) the mean between the closing representative bid
and asked price (in all other cases) for Common Stock on the day prior to such
date as reported by NASDAQ or such successor quotation system; or (iii) if
there is no listing or trading of Common Stock either on a national exchange or
over-the-counter, that price determined in good faith by the Committee to be
the fair value per share of Common Stock, based upon such evidence as it deems
necessary or advisable.
In the discretion of the Committee exercised at the time the option is
exercised, the exercise price of any option granted under the Plan shall be
paid in full in cash, by check or by the optionee's interest-bearing full
recourse promissory note (subject to any limitations of applicable state
corporations law) delivered at the time of exercise; provided, however, that
subject to the timing requirements of Section 2.7, in the discretion of the
Committee and upon receipt of all regulatory approvals, the person exercising
the option may deliver as payment in whole or in part of such exercise price
certificates for Common Stock of the Company (duly endorsed or with duly
executed stock powers attached), which shall be valued at its Fair Market Value
on the day of exercise of the option, or other property deemed appropriate by
the Committee; and, provided further, that subject to Section 422 of the Code
so-called cashless exercises as permitted under applicable rules and
regulations of the Securities and Exchange Commission and the Federal Reserve
Board shall be permitted in the discretion of the Committee. Without limiting
the Committee's discretion in this regard, so-called pyramiding, or consecutive
book entry stock-for-stock exercises of options, also is permitted in the
Committee's discretion.
Irrespective of the form of payment, the delivery of shares pursuant
to the exercise of an option shall be conditioned upon payment by the optionee
to the Company of amounts sufficient to enable the Company to pay all federal,
state, and local withholding taxes applicable, in the Company's judgment, to
the exercise. In the discretion of the Committee, such payment to the Company
may be effected through
4.
<PAGE> 8
(i) the Company's withholding from the number of shares of Common Stock that
would otherwise be delivered to the optionee by the Company on exercise of the
option a number of shares of Common Stock equal in value (as determined by the
Fair Market Value of Common Stock on the date of exercise) to the aggregate
withholding taxes, (ii) payment by the optionee to the Company of the aggregate
withholding taxes in cash, (iii) dwithholding by the Company from other amounts
contemporaneously owed by the Company to the optionee, or (iv) any combination
of these three methods, as determined by the Committee in its discretion.
2.2 Option Period.
(a) Each option and all rights or obligations thereunder
shall expire on such date as the Committee shall determine as set forth in the
Stock Option Agreement, but in no event shall any option granted hereunder
expire prior to the first to occur of the following events:
(i) Except as required by Section 422(c)(6) of
the Code, the expiration of ten years from the date the option was granted; or
(ii) Except in the case of any optionee who is
disabled (within the meaning of Section 22(e)(3) of the Code), the expiration
of three months from the date of the optionee's Termination of Employment (as
defined in Section 3.2) for any reason other than such optionee's death unless
the optionee dies within said three-month period; or
(iii) In the case of an optionee who is disabled
(within the meaning of Section 22(e)(3) of the Code), the expiration of six
months from the date of the Optionee's Termination of Employment by reason of
such disability, unless the Optionee dies within said six-month period; or
(iv) The expiration of six months from the date of
the optionee's death.
(b) Subject to the provisions of Section 2.2(a), the
Committee shall provide, in the terms of each Stock Option Agreement, when the
option subject to such agreement expires and becomes unexercisable; and
(without limiting the generality of the foregoing) the Committee may provide in
the Stock Option Agreement that the option subject thereto expires 30 days
following a Termination of Employment for any reason other than death or
disability or six months following a Termination of Employment for disability
or following an optionee's death.
5.
<PAGE> 9
(c) Outside Date for Exercise. Notwithstanding any
provision of this Section 2.2, in no event shall any option granted under the
Plan be exercised after the expiration date of such option set forth in the
applicable Stock Option Agreement.
2.3 Exercise of Options.
Each option granted under the Plan shall become exercisable and the
total number of shares subject thereto shall be purchasable, in a lump sum or
in such installments, which need not be equal, as the Committee shall
determine; provided, however, that each option shall become exercisable in full
no later than five years after such option is granted, and each option shall
become exercisable as to at least 20% of the shares of Common Stock covered
thereby on each anniversary of the date such option is granted; and provided,
further, that if the holder of an option shall not in any given installment
period purchase all of the shares which such holder is entitled to purchase in
such installment period, such holder's right to purchase any shares not
purchased in such installment period shall continue until the expiration or
sooner termination of such holder's option. The Committee may, at any time
after grant of the option and from time to time, increase the number of shares
purchasable in any installment, subject to the total number of shares subject
to the option and the limitations set forth in Section 2.5. At any time and
from time to time prior to the time when any exercisable option or exercisable
portion thereof becomes unexercisable under the Plan or the applicable Stock
Option Agreement, such option or portion thereof may be exercised in whole or
in part; provided, however, that the Committee may, by the terms of the option,
require any partial exercise to be with respect to a specified minimum number
of shares. No option or installment thereof shall be exercisable except with
respect to whole shares. Fractional share interests shall be disregarded,
except that they may be accumulated as provided above and except that if such a
fractional share interest constitutes the total shares of Common Stock
remaining available for purchase under an option at the time of exercise, the
optionee shall be entitled to receive on exercise a certified or bank cashier's
check in an amount equal to the Fair Market Value of such fractional share of
stock.
2.4 Transferability of Options.
An option granted under the Plan shall, by its terms, be
non-transferable by the optionee other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order (as defined by
the Code or Title 1 of the Employee Retirement Income Securities Act, or the
rules thereunder), and shall be exercisable during the optionee's lifetime only
by the optionee or by his or her guardian or
6.
<PAGE> 10
legal representative. More particularly, but without limiting the generality
of the immediately preceding sentence, an option may not be assigned,
transferred (except as provided in the preceding sentence), pledged or
hypothecated (whether by operation of law or otherwise), and shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of any option contrary to
the provisions of the Plan and the applicable Stock Option Agreement, and any
levy of any attachment or similar process upon an option, shall be null and
void, and otherwise without effect, and the Committee may, in its sole
discretion, upon the happening of any such event, terminate such option
forthwith.
2.5 Limitation on Exercise of Incentive Stock Options.
To the extent that the aggregate Fair Market Value (determined at the
time an option is granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an optionee in any calendar
year under the Plan (and all other Incentive Stock Option plans of the Company)
exceeds $100,000, such options shall be treated as Nonstatutory Options to the
extent required by Section 422 of the Code. The rule set forth in the
preceding sentence shall be applied by taking options into account in the order
in which they were granted.
2.6 Disqualifying Dispositions of Incentive Stock Options.
If Common Stock acquired upon exercise of any Incentive Stock Option
is disposed of in a disposition that, under Section 422 of the Code,
disqualifies the option holder from the application of Section 421(a) of the
Code, the holder of the Common Stock immediately before the disposition shall
comply with any requirements imposed by the Company in order to enable the
Company to secure the related income tax deduction to which it is entitled in
such event.
2.7 Certain Timing Requirements.
At the discretion of the Committee, shares of Common Stock issuable to
the optionee upon exercise of an option may be used to satisfy the option
exercise price or the tax withholding consequences of such exercise, in the
case of persons subject to Section 16 of the Securities Exchange Act of 1934,
as amended, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
optionee to use shares of Common Stock issuable to the optionee upon exercise
of the option to pay all or part of the
7.
<PAGE> 11
option price or the withholding taxes made at least six months prior to the
payment of such option price or withholding taxes.
2.8 No Affect on Employment.
Nothing in the Plan or in any Stock Option Agreement hereunder shall
confer upon any optionee any right to continue in the employ of the Company,
any Parent Corporation or any Subsidiary or shall interfere with or restrict in
any way the rights, if any, of the Company, its Parent Corporation and its
Subsidiaries, which are hereby expressly reserved, to discharge any optionee at
any time for any reason whatsoever, with or without cause, subject to the terms
of any employment agreement.
For purposes of the Plan, "Parent Corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if
each of the corporations other than the Company 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. For purposes of the Plan, "Subsidiary"
shall mean any corporation in an unbroken chain of corporations beginning with
the Company 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.
2.9 Conditions to Issuance of Stock Certificates.
The Company shall not be required to issue or deliver any certificate
or certificates for shares of Common Stock purchased upon the exercise of any
option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other
qualification of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or Board shall, in its
absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Committee or Board shall, in
its absolute discretion, determine to be necessary or advisable;
8.
<PAGE> 12
(d) The lapse of such reasonable period of time following
the exercise of the option as the Committee or Board may establish from time to
time solely for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
3. OTHER PROVISIONS
3.1 Sick Leave and Leaves of Absence.
Unless otherwise provided in the Stock Option Agreement, and to the
extent permitted by Section 422 of the Code, an optionee's employment shall not
be deemed to terminate by reason of sick leave, military leave or other leave
of absence approved by the Company if the period of any such leave does not
exceed a period approved by the Company, or, if longer, if the optionee's right
to reemployment by the Company is guaranteed either contractually or by
statute. A Stock Option Agreement may contain such additional or different
provisions with respect to leave of absence as the Committee may approve,
either at the time of grant of an option or at a later time.
3.2 Termination of Employment.
For purposes of the Plan, "Termination of Employment" shall mean the
time when the employee-employer relationship between the optionee and the
Company, any Subsidiary or any Parent Corporation is terminated for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations
where there is a simultaneous reemployment or continuing employment of an
optionee by the Company, any Subsidiary or any Parent Corporation, (ii) at the
discretion of the Committee, terminations which result in a temporary severance
of the employee-employer relationship, and (iii) at the discretion of the
Committee, terminations which are followed by the simultaneous establishment of
a consulting relationship by the Company, a Subsidiary or any Parent
Corporation with the former employee. Subject to Section 3.1, the Committee,
in its absolute discretion, shall determine the affect of all matters and
questions relating to Termination of Employment; provided, however, that, with
respect to Incentive Stock Options, a leave of absence or other change in the
employee- employer relationship shall constitute a Termination of Employment
if, and to the extent that, such leave of absence or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the
then-applicable regulations and revenue rulings under said Section.
9.
<PAGE> 13
3.3 Issuance of Stock Certificates.
Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common
Stock acquired upon exercise. Notwithstanding the foregoing, the Committee in
its discretion may require the Company to retain possession of any certificate
evidencing stock acquired upon exercise of an option which remains subject to
repurchase under the provisions of the Stock Option Agreement or any other
agreement signed by the optionee in order to facilitate such repurchase
provisions.
3.4 Terms and Conditions of Options and Restricted Stock.
Each option granted under the Plan shall be evidenced by a written
Stock Option Agreement ("Stock Option Agreement") between the option holder and
the Company providing that the option is subject to the terms and conditions of
the Plan and to such other terms and conditions not inconsistent therewith as
the Committee may deem appropriate in each case.
3.5 Adjustments Upon Changes in Capitalization; Merger and
Consolidation.
If the outstanding shares of Common Stock are changed into, or
exchanged for cash or a different number or kind of shares or securities of the
Company or of another corporation through reorganization, merger,
recapitalization, reclassification, stock split-up, reverse stock split, stock
dividend, stock consolidation, stock combination, stock reclassification or
similar transaction, an appropriate adjustment shall be made by the Committee
in the number and kind of shares as to which options and restricted stock may
be granted. In the event of such a change or exchange, other than for shares
or securities of another corporation or by reason of reorganization, the
Committee shall also make a corresponding adjustment changing the number or
kind of shares and the exercise price per share allocated to unexercised
options or portions thereof, which shall have been granted prior to any such
change, shall likewise be made. Any such adjustment, however, shall be made
without change in the total price applicable to the unexercised portion of the
option but with a corresponding adjustment in the price for each share (except
for any change in the aggregate price resulting from rounding-off of share
quantities or prices).
In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Common Stock, the Committee shall make such an adjustment
to the exercise prices of options then outstanding under the Plan as
10.
<PAGE> 14
the Committee determines, in its discretion, is appropriate and equitable to
reflect such diminution.
Where an adjustment under this Section 3.5 of the type described above
is made to an Incentive Stock Option, the adjustment will be made in a manner
which will not be considered a "modification" under the provisions of
subsection 424(b)(3) of the Code.
In connection with the dissolution or liquidation of FFL or a partial
liquidation involving 50% or more of the assets of FFL, a reorganization of FFL
in which another entity is the survivor, a merger or reorganization of FFL
under which more than 50% of the Common Stock outstanding prior to the merger
or reorganization is converted into cash or into another security, a sale of
more than 50% of the Company's assets, or a similar event that the Committee
determines, in its discretion, would materially alter the structure of FFL's or
its ownership, the Committee, upon 30 days prior written notice to the option
holders, may, in its discretion, do one or more of the following: (i) shorten
the period during which options are exercisable (provided they remain
exercisable for at least 30 days after the date the notice is given); (ii)
accelerate any vesting schedule to which an option is subject; (iii) arrange to
have the surviving or successor entity grant replacement options with
appropriate adjustments in the number and kind of securities and option prices;
or (iv) cancel options upon payment to the option holders in cash, with respect
to each option to the extent then exercisable (including any options as to
which the exercise has been accelerated as contemplated in clause (ii) above),
of any amount that is the equivalent of the Fair Market Value of the Common
Stock (at the effective time of the dissolution, liquidation, merger,
reorganization, sale of other event) or the fair market value of the option.
In the case of a change in corporate control, the Committee may, in considering
the advisability or the terms and conditions of any acceleration of the
exercisability of any option pursuant to this Section 3.5, take into account
the penalties that may result directly or indirectly from such acceleration to
either the Company or the option holder, or both, under Section 280G of the
Code, and may decide to limit such acceleration to the extent necessary to
avoid or mitigate such penalties or their effects.
No fractional share of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 3.5.
3.6 Rights of Participants and Beneficiaries.
Nothing contained in the Plan (or in any Stock Option Agreement
entered into pursuant to the Plan) shall confer upon any option holder any
right to continue in the employ of the
11.
<PAGE> 15
Company or constitute any contract or agreement of employment that interferes
in any way with the right of the Company to reduce such option holder's
compensation from the rate in existence at the time of the grant of an option
or to terminate such option holder's employment.
The Company shall pay all amounts payable hereunder only to the
optionee holder or beneficiaries entitled thereto pursuant to the Plan. The
Company shall not be liable for the debts, contracts or engagements of any
optionee or his or her beneficiaries, and rights to cash payments under the
Plan may not be taken in execution by attachment or garnishment, or by any
other legal or equitable proceeding while in the hands of the Company.
3.7 Government Regulations.
The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under Options granted hereunder, shall be
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.
3.8 Amendment and Termination.
The Board or the Committee may at any time suspend, amend or terminate
the Plan and may, with the consent of the option holder, make such
modifications of the terms and conditions of such option holder's option as it
shall deem advisable; provided, however, that, without approval of the
Company's stockholders given within twelve months before or after the action by
the Committee, no action of the Committee may, except as provided in Section
3.5, increase any limit imposed in Section 1.4 on the maximum number of shares
which may be issued on exercise of options, materially modify the eligibility
requirements of Section 1.3, reduce the minimum stock option exercise price
requirements of Section 2.1, extend the limit imposed in this Section 3.8 on
the period during which options may be granted or amend or modify the Plan in a
manner requiring stockholder approval under Rule 16b-3.. No option may be
granted during any suspension of the
12.
<PAGE> 16
Plan or after such termination. The amendment, suspension or termination of
the Plan shall not, without the consent of the option holder affected thereby,
alter or impair any rights or obligations under any option theretofore granted
under the Plan. No option may be granted during any period of suspension nor
after termination of the Plan, and in no event may any option be granted under
the Plan after the expiration of ten years from the date the Plan is adopted by
the Board.
3.9 Time of Grant and Exercise of Options.
An option shall be deemed to be exercised when the Secretary of the
Company receives written notice from an option holder of such exercise, payment
of the purchase price determined pursuant to Section 2.1 of the Plan and set
forth in the Stock Option Agreement, and all representations, indemnifications
and documents reasonably requested by the Company.
3.10 Privileges of Stock Ownership; Non-Distributive Intent;
Reports to Option Holders.
A participant in the Plan shall not be entitled to the privilege of
stock ownership as to any shares of Common Stock not actually issued to him.
Upon exercise of an option at a time when there is not in effect under the
Securities Act of 1933, as amended, a Registration Statement relating to the
Common Stock issuable upon exercise or payment therefor and available for
delivery a Prospectus meeting the requirements of Section 10(a)(3) of said Act,
the grantee of the option shall represent and warrant in writing to the Company
that the shares purchased are being acquired for investment and not with a view
to the distribution thereof. No shares shall be issued upon the exercise of
any option unless and until there shall have been full compliance with any
then-applicable requirements of the Securities and Exchange Commission, the
California Department of Corporations and other regulatory agencies having
jurisdiction, and any exchanges upon which the Common Stock may be listed.
The Company shall furnish to each optionee under the Plan the
Company's annual report and such other periodic reports, if any, as are
disseminated by the Company in the ordinary course to its stockholders.
3.11 Legending Share Certificates.
In order to enforce any restrictions imposed upon Common Stock issued
upon exercise of an option granted under the Plan or to which such Common Stock
may be subject, the Committee may cause a legend or legends to be placed on any
share certificates representing such Common Stock, which legend or legends
shall make appropriate reference to such restrictions,
13.
<PAGE> 17
including, but not limited to, a restriction against sale of such Common Stock
for any period of time as may be required by applicable laws or regulations.
If any restriction with respect to which a legend was placed on any certificate
ceases to apply to Common Stock represented by such certificate, the owner of
the Common Stock represented by such certificate may require the Company to
cause the issuance of a new certificate not bearing the legend.
Additionally, and not by way of limitation, the Committee may impose
such restrictions on any Common Stock issued pursuant to the Plan as it may
deem advisable, including, without limitation, restrictions under the
requirements of any stock exchange upon which Common Stock is then traded.
3.12 Use of Proceeds.
Proceeds realized pursuant to the exercise of options under the Plan
shall constitute general funds of the Company.
3.13 Changes in Capital Structure; No Impediment to Corporate
Transactions.
The existence of outstanding options under the Plan shall not affect
the Company's right to effect adjustments, recapitalizations, reorganizations
or other changes in its or any other corporation's capital structure or
business, any merger or consolidation, any issuance of bonds, debentures,
preferred or prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company's or any other corporation's assets
or business, or any other corporate act, whether similar to the events
described above or otherwise.
3.14 Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the
stockholders of FFL within twelve months after the date of the Board's initial
adoption of the Plan. Options may be granted but not exercised prior to
stockholder approval of the Plan. If any options are so granted and
stockholder approval shall not have been obtained within twelve months of the
date of adoption of this Plan by the Board of Directors, such options shall
terminate retroactively as of the date they were granted.
3.15 Termination.
The Plan shall terminate automatically as of the close of business on
the day preceding the tenth anniversary date of its adoption by the Board or
earlier as provided in Section 3.8. Unless otherwise provided herein, the
termination of the
14.
<PAGE> 18
Plan shall not affect the validity of any option agreement outstanding at the
date of such termination.
3.16 Governing Law.
The Plan shall be governed by, and construed in accordance with the
laws of the State of California (without giving effect to conflicts of law
principles).
3.17 Effect of Plan Upon Options and Compensation Plans.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the Company, any Subsidiary or any Parent Corporation or (ii) to
grant or assume options or other rights otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.
* * *
15.
<PAGE> 1
Exhibit 10.7
=========================================================
STOCK PURCHASE AND EXCHANGE AGREEMENT
among
FOOD 4 LESS HOLDINGS, INC., a Delaware corporation
FOOD 4 LESS SUPERMARKETS, INC., a Delaware corporation
CLH SUPERMARKET CORP., a Delaware corporation
and
THE PURCHASERS LISTED ON SCHEDULE I HERETO
___________________________
Dated
June 14, 1995
___________________________
=========================================================
<PAGE> 2
STOCK PURCHASE AND EXCHANGE AGREEMENT
STOCK PURCHASE AND EXCHANGE AGREEMENT (this "Agreement"),
dated as of June 14, 1995, by and among Food 4 Less Holdings, Inc., a Delaware
corporation (the "Company"), Food 4 Less Supermarkets, Inc., a Delaware
corporation ("Supermarkets"), CLH Supermarket Corp., a Delaware corporation
("CLH"), and each of the purchasers listed on Schedule 1 hereto (the
"Purchasers").
NOW, THEREFORE, the parties hereto hereby agree as follows.
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms
shall have the following meanings:
"Acquisition" means the acquisition of the stock of Ralphs
pursuant to the Acquisition Agreement, the merger of Supermarkets with and into
Ralphs and the merger of Ralphs Grocery with and into the surviving corporation
of such merger.
"Acquisition Agreement" means the Agreement and Plan of
Merger, dated as of September 14, 1994, by and among Food 4 Less, Holdings, the
Company, Supermarkets, Ralphs and the stockholders of Ralphs, as amended by
Amendment No. 1 thereto, dated as of January 12, 1995, Amendment No. 2 thereto,
dated as of February 24, 1995, Amendment No. 3 thereto, dated as of April 26,
1995, and Amendment No. 4 thereto, dated as of June 14, 1995.
"Acquisition Documents" shall mean (i) the Commitment Letter,
(ii) this Agreement, (iii) the Acquisition Agreement, (iv) the Financing
Documents and (v) all other documents and agreements referred to in Section
7.2(d) and (e) that have been executed on or prior to the date hereof.
"Affiliate" means, with respect to any person means any other
person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such 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
<PAGE> 3
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" shall have the meaning set forth in the Preamble.
"Applicable Law" means, with respect to any person, any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
Governmental Authority to which such person or any of its subsidiaries is bound
or to which any of their respective properties is subject.
"Certificate" means the Certificate of Incorporation of the
Company in the form attached as Exhibit A to the Stockholders Agreement.
"Charter" with respect to any corporation means the
certificate of incorporation or articles of incorporation of such corporation.
"CLH" shall have the meaning set forth in the Preamble.
"Commission" means the United States Securities and Exchange
Commission.
"Commitment Letter" means the letter agreement, dated August
31, 1994 and amended on January 15, 1995 and April 27, 1995, by and among
Apollo Advisors, L.P., on behalf of one or more managed entities, Yucaipa, Food
4 Less, Holdings and Supermarkets.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Company" shall have the meaning set forth in the Preamble.
"Dealer Manager Agreement" means the Dealer Manager Agreement,
dated January 25, 1995, as amended on May 12 and May 31, 1995, by and among
Food 4 Less, Holdings, Supermarkets and its subsidiaries, Ralphs, BT Securities
Corporation, CS First Boston Securities Corporation and Donaldson, Lufkin and
Jenrette Securities Corporation.
"Debt Partnership" means RGC Partners, L.P., a Delaware
limited partnership, formed for the purpose of acquiring $193,363,570 principal
amount (at maturity) of Discount Debentures.
"Debt Partnership Letter" means the letter agreement, dated
April 26, 1995, by and among Yucaipa RGC L.L.C., FFL Investors L.L.C., BT
Investment Partners, Inc.,
2
<PAGE> 4
CS First Boston Securities Corp., DLJ Capital Corporation, Apollo Advisors,
L.P., on behalf of one or more entities managed by it or its affiliates, the
Edward J. DeBartolo Corporation, Camdev Properties, Inc., Bank of Montreal,
Banque Paribas, Federated Department Stores, Inc., and RGC Investment Co.
"Discount Debentures" means the Company's 13-5/8% Senior
Discount Debentures due 2005.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means with respect to any person (within the
meaning of section 3(9) of ERISA) any other person that would be regarded
together with such person as a single employer under Section 414(b), (c), (m)
or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financing" means (i) the exchange of New F4L Notes for Old
F4L Notes, (ii) the exchange of Supermarkets' 11% Senior Subordinated Notes due
2005 for Old RGC Notes, (iii) the acquisition of the Discount Debentures by the
Debt Partnership, (iv) the amendment of the terms of the indenture under which
the 15.25% Senior Discount Notes due 2004 of Holdings were issued, (v) the
extension of credit under the New Credit Facility and (vi) the issuance of the
New Notes including up to $350 million of New Senior Notes and up to $100
million of Supermarket's 11% Senior Subordinated Notes due 2005.
"Financing Documents" means the agreements relating to the
Financing including, without limitation, (i) the Dealer Manager Agreement, (ii)
the New Credit Facility, (iii) the Underwriting Agreement, (iv) the Debt
Partnership Letter, (v) the subscription agreement with respect to the purchase
of interests in the Debt Partnership, (vi) the indenture relating to the
Discount Debentures and (iii) the indentures relating to the New F4L Notes, the
New Notes, the Old F4L Notes, the Old RGC Notes and the 15.25% Senior Discount
Notes due 2004 of Holdings.
"Food 4 Less" means Food 4 Less, Inc., a Delaware corporation
and predecessor of the Company.
"Food 4 Less Entities" means the Company and its Subsidiaries.
"GAAP" means generally accepted accounting principles
consistently applied.
3
<PAGE> 5
"Governmental Authority" means any Federal, state or local
court or governmental or regulatory authority.
"Holdings" means Food 4 Less Holdings, Inc., a California
corporation and predecessor of the Company.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and applicable rules and regulations and any similar
state acts.
"Interim Financial Statements" means the unaudited
consolidated balance sheets of Holdings and its consolidated subsidiaries and
Supermarkets and its consolidated subsidiaries, in each case as of April 23,
1995, together with the related unaudited consolidated statements of
operations, stockholders' equity and cash flows for the 12 weeks then ended,
and the notes thereto, included in the reports on Form 10-Q filed on June 7,
1995 with the Securities and Exchange Commission by Holdings and Supermarkets,
respectively.
"Lien" means any pledge, lien, claim, restriction, charge or
encumbrance of any kind.
"Material Adverse Effect" means, a material adverse effect (i)
on the business, operations, prospects, properties, earnings, assets,
liabilities or condition (financial or other) of the Company and its
Subsidiaries and the Ralphs Entities, taken as a whole, or (ii) on the ability
of the Company or any of its Subsidiaries to perform its obligations hereunder
or under any of the Acquisition Documents, or (iii) on the value of the
Purchasers' investment in the Shares.
"Mergers" means the merger of Food 4 Less with and into
Holdings and the merger of Holdings with and into the Company.
"New Credit Facility" means the Credit Agreement, dated as of
the Closing Date, among the Company, as guarantor, Supermarkets, as borrower,
Bankers Trust Company, as administrative agent, and the lenders, co-agents and
co-arrangers named therein.
"New F4L Notes" means the New Senior Notes and Supermarkets'
13-3/4% Senior Subordinated Notes due 2005.
"New Notes" means the New Senior Notes and Supermarkets' 11%
Senior Subordinated Notes due 2005.
4
<PAGE> 6
"New Senior Notes" means Supermarkets' 10.45% Senior Notes
due 2004.
"Non-Voting Common Stock" means the Non-Voting Common Stock,
par value $.01 per share, of the Company.
"Old F4L Notes" means Supermarkets' 10.45% Senior Notes due
2000 and Supermarkets' 13-3/4% Senior Subordinated Notes due 2001.
"Old RGC Notes" means Ralphs Grocery's 9% Senior Subordinated
Notes due 2003 and Ralphs Grocery's 10-1/4% Senior Subordinated Notes due 2002.
"Permitted Liens" means any Liens arising as a result of the
New Credit Facility or permitted to be incurred or to exist under the New
Credit Facility.
"person" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
"Preferred Stock" means, collectively, the Series A Stock and
the Series B Stock.
"Prospectuses" means (i) the Amended and Restated Prospectus
and Solicitation Statement, dated May 12, 1995, as supplemented by the
Supplement to Amended and Restated Prospectus and Solicitation Statement, dated
May 31, 1995, pursuant to which Supermarkets offered to exchange New F4L Notes
for Old F4L Notes, (ii) the Amended and Restated Prospectus and Solicitation
Statement, dated May 12, 1995, as supplemented by the Supplement to Amended and
Restated Prospectus and Solicitation Statement, dated May 31, 1995, pursuant to
which Supermarkets offered to exchange its 11% Senior Subordinated Notes due
2005 for Old RGC Notes, (iii) the Offer to Purchase and Solicitation Statement,
dated May 12, 1995, as supplemented by the Supplement to Offer to Purchase and
Solicitation Statement, dated May 31, 1995, pursuant to which Holdings offered
to purchase its 15.25% Senior Discount Notes due 2004 from the holders thereof
and solicited consents from such holders to certain amendments to the indenture
under which such notes were issued, (iv) the Prospectus and Solicitation
Statement, dated May 19, 1995, as supplemented by the Supplement to Prospectus
and Solicitation Statement, dated June 1, 1995, pursuant to which Holdings
solicited consents from its stockholders to the merger of Food 4 Less with and
into Holdings and the merger of Holdings with and into the Company, and (v) the
Prospectus pursuant to which Supermarkets offered up to $350 million of its New
Senior Notes and up to $100 million of its 11% Senior Subordinated Notes due
2005.
5
<PAGE> 7
"Public Debt Refinancing" means the defeasance, amendment,
repurchase, exchange or other acquisition or retirement by Supermarkets or the
Company of the existing public debt securities of Ralphs Grocery, Supermarkets
and Holdings to the extent that such transactions are necessary in order to
permit the consummation of the Acquisition and the other transactions
contemplated by the Acquisition Documents (including the incurrence of any
additional indebtedness constituting part of the Financing), or as may
otherwise be required by the banks, underwriters or other responsible financial
institutions or other responsible persons providing the Financing.
"Purchasers" shall have the meaning set forth in the Preamble.
"Ralphs" means Ralphs Supermarkets, Inc. a Delaware
corporation.
"Ralphs Entities" means Ralphs and its subsidiaries.
"Ralphs Grocery" means Ralphs Grocery Company, a Delaware
corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement to be entered into among the Company, the Purchasers and certain
other stockholders of the Company concurrently with the Closing, in the form
attached as Exhibit A hereto.
"Series A Stock" means the Series A Preferred Stock, $.01 par
value per share, of the Company.
"Series B Stock" means the Series B Preferred Stock, $.01 par
value per share, of the Company.
"Shares" means the shares of Preferred Stock to be issued and
sold by the Company to the Purchasers under Section 2.1(b) hereof.
"Stockholders Agreement" means the Stockholders Agreement to
be entered into among the Company and its stockholders concurrently with the
Closing, together with the exhibits thereto, in the form attached as Exhibit B
hereto.
"subsidiary" means, with respect to any person (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by a subsidiary of such person, or by such person and one or
more subsidiaries of such person, (b) a partnership in which such person or a
subsidiary of such person is, at the date of determination, a general partner
of such partnership, or (c) any other person (other than a corporation) in
which such person, a
6
<PAGE> 8
subsidiary of such person or such person and one or more subsidiaries of such
person, directly or indirectly, at the date of determination thereof, has (i)
at least a majority ownership interest or (ii) the power to elect or direct the
election of the directors or other governing body of such person.
"Subsidiary" means a subsidiary of the Company.
"Supermarkets" shall have the meaning set forth in the
Preamble.
"Taxes" means all taxes, however denominated, including any
interest, penalties or additions to tax that may become payable in respect
thereof, imposed by any governmental body, which taxes shall include, without
limiting the generality of the foregoing, all income taxes, payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, franchise taxes, gross receipts taxes, occupation
taxes, real and personal property taxes, stamp taxes, transfer taxes, workmen's
compensation taxes and other obligations of the same or a similar nature,
whether arising before, on or after the Closing Date.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes.
"Underwriting Agreement" means the Underwriting Agreement
dated May 30, 1995 by and among Supermarkets and its subsidiaries, Ralphs, BT
Securities Corporation, CS First Boston Securities Corporation and Donaldson,
Lufkin & Jenrette Securities Corporation.
"WARN Act" means the Worker Adjustment and Retraining
Notification Act of 1988, as amended, and any applicable state or local law
with regard to "plant closings" or "mass layoffs" as such terms are defined in
the WARN Act or applicable state or local law.
7
<PAGE> 9
(b) As used in this agreement, the following terms shall have
the meanings given thereto in the Sections set forth opposite such terms:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Audited Financial Statements 3.7
Bankruptcy Code 3.20
Benefit Arrangement 3.9
Closing 2.2
Closing Date 2.2
CLH Sale 2.1
Code 3.9
Commitment 3.19
Dow 7.2
Employee Benefit Plan 3.9
Environmental Laws 3.15
F4L Financial Statements 3.7
Foreign Government 5.10
Indemnified Party 8.1
Indemnifying Party 8.1
Intellectual Property 3.16
Issuance 2.1
Leases 3.11
Multiemployer Plan 3.9
Nonperforming Purchaser 8.4
Notices 8.2
Opening Dow 7.2
PBGC 3.9
Performing Purchasers 8.4
Related Person 8.12
SEC Documents 3.7
Securities Act 3.17
Substitute Purchaser Undertaking 8.4
Supplying Purchasers 8.18
Unaudited Financial Statements 3.7
Yucaipa 7.2
</TABLE>
8
<PAGE> 10
ARTICLE II
SALE AND PURCHASE
SECTION 2.1. Agreement to Sell and to Purchase; Purchase
Price. On the Closing Date, and upon the terms and subject to the conditions
set forth in this Agreement:
(a) CLH shall sell to each Purchaser, and
each Purchaser, severally and not jointly, shall purchase and accept from CLH,
such number of shares of Common Stock as is indicated on such Purchaser's
signature page attached hereto (the "CLH Sale") for a purchase price, payable
in immediately available funds, equal to $10 per share.
(b) Immediately after the CLH Sale, the
Company shall issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, shall purchase and accept from the Company, such number of
shares of each series of Preferred Stock, for the purchase price payable in a
number of shares of Common Stock and a cash amount in immediately available
funds, as is indicated on such Purchaser's signature page attached hereto
(the "Issuance").
SECTION 2.2. Closing. The closing of the CLH Sale and the
Issuance (the "Closing") shall take place at 8:00 a.m., local time, on June 14,
1995, or such other date as promptly thereafter as of which all of the
conditions set forth in Article VII hereof shall have been satisfied or duly
waived 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, Suite 4000, Los Angeles, California 90071 or at such other
place as the parties hereto shall agree in writing.
At the Closing (a) each Purchaser shall (i) deposit into bank
accounts, designated by the Company and CLH, respectively, not later than one
business day prior to the Closing Date, by wire transfer of immediately
available funds, an amount equal to the aggregate cash portion of the purchase
price of the Shares and the aggregate purchase price of the Common Stock being
purchased by such Purchaser from the Company and CLH, respectively, and (ii)
deliver to the Company a stock certificate or certificates representing the
Common Stock being delivered by such Purchaser pursuant to Section 2.1(b) and
(b) CLH and the Company shall, respectively, deliver to each Purchaser, against
payment of the purchase price therefor, certificates representing the Shares
and the Common Stock, respectively, being purchased by such Purchaser pursuant
to Section 2.1(a) and (b).
The Shares shall be in definitive form and registered in the
name of the Purchaser or its nominee or designee and in a single certificate or
in such other denomina-
9
<PAGE> 11
tions (including fractional shares) as such Purchaser shall request not later
than one business day prior to the Closing Date. The Common Stock
certificates, when transferred by CLH to the Purchasers pursuant to Section
2.1(a) and by the Purchasers to the Company pursuant to Section 2.1(b), shall
be duly endorsed by the person or persons in whose name a stock certificate is
registered, in blank, or accompanied by a duly executed stock assignment
separate from such certificate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, SUPERMARKETS AND CLH
Each of the Company and Supermarkets (and with respect to
Sections 3.23 and 3.24, CLH) hereby represents and warrants, jointly and
severally, to each Purchaser as follows:
SECTION 3.1. Organization and Standing. The Company is
duly incorporated, validly existing and in good standing as a domestic
corporation under the laws of the State of Delaware and 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 and as proposed to be conducted. The
Company is duly qualified to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the properties
owned or leased by it or the nature of its business makes such qualification
necessary, except where the failure to so qualify or be in good standing could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Mergers have been consummated in accordance with
the requirements of all Applicable Laws and the Certificate is the certificate
of incorporation of the Company.
SECTION 3.2. Capital Stock. Immediately following the
Closing, (a) the authorized capital stock of the Company will consist solely of
60,000,000 shares of Common Stock, of which 17,207,882 shares will be issued
and outstanding, 50,000,000 shares of Preferred Stock, of which 16,683,244
shares of Series A Stock and 3,100,000 shares of Series B Stock will be issued
and outstanding, and 25,000,000 shares of Non-Voting Common Stock, $.01 par
value per share, of which no shares will be issued and outstanding and (b)
each share of capital stock of the Company that is issued and outstanding will
be duly authorized, validly issued, fully paid and nonassessable. Except as
set forth on Schedule 3.2(i), at the date hereof there are, and except as set
forth on Schedule 3.2(ii), immediately following the Closing there will be (i)
no outstanding options, warrants, agreements, conversion rights, preemptive
rights or other rights to subscribe for, purchase or
10
<PAGE> 12
acquire any issued or unissued shares of capital stock of the Company and (ii)
no restrictions upon the voting or transfer of any shares of capital stock of
the Company pursuant to its Charter, By-Laws or other governing documents or
any agreement or other instruments to which it is a party or by which it is
bound.
The holders of the Series A Preferred Stock and the Series B
Preferred Stock will, upon issuance thereof, have the rights set forth in the
Certificates of Designations for each such series, in the forms attached hereto
as Exhibits C and D, respectively.
SECTION 3.3. Subsidiaries.
(a) Schedule 3.3 sets forth a complete and
correct list of each Subsidiary, including the respective percentage of the
fully diluted capital stock of each such Subsidiary owned, directly or
indirectly, by the Company immediately following the Mergers. Immediately
prior to the Acquisition, the only direct subsidiary of the Company is
Supermarkets. Immediately following the Acquisition, Ralphs will be the only
direct wholly owned subsidiary of the Company.
(b) Each of the Subsidiaries is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted and as proposed to be conducted. Each Subsidiary is duly qualified
to do business as a foreign corporation in every jurisdiction in which the
character of the properties owned or leased by it or the nature of the business
conducted by it makes such qualifica- tion necessary, except where the failure
to so qualify could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) The outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth on Schedule 3.3, immediately following
the Acquisition, (i) all of the shares of each of the Subsidiaries (and, to the
best knowledge of the Food 4 Less Entities, after due inquiry, of each of the
Ralphs Entities) will be owned of record and beneficially, directly or
indirectly, by the Company, free and clear of all Liens (other than Permitted
Liens) and (ii) there will be no outstanding options, warrants, agreements,
conversion rights, preemptive rights or other rights to subscribe for, purchase
or otherwise acquire any issued or unissued shares of capital stock of the
Subsidiaries or, to the best knowledge of the Food 4 Less Entities, after due
inquiry, any of the Ralphs Entities.
SECTION 3.4. Authorization; Enforceability. Each of the
Food 4 Less Entities has the corporate power to execute, deliver and perform
the terms and provisions of
11
<PAGE> 13
each of the Acquisition Documents to which it is a party and each has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of the Acquisition Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby. No other
corporate proceedings on the part of any Food 4 Less Entity is necessary
therefor. Each of the Company and Supermarkets has duly executed and delivered
this Agreement and, at the Closing, each of the Food 4 Less Entities will have
duly executed and delivered each of the Acquisition Documents to which it is a
party. This Agreement constitutes, and each of the Acquisition Documents, when
executed and delivered by each of the Food 4 Less Entities which is a party
thereto and, assuming due execution by the other parties hereto and thereto,
will constitute, legal, valid and binding obligations of each of the Food 4
Less Entities enforceable against each of them in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
SECTION 3.5. No Violation; Consents.
(a) The execution, delivery and performance by
each of the Food 4 Less Entities of each of the Acquisition Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby does not and will not contravene any Applicable Law, except for any
such contraventions that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set forth
on Schedule 3.5, the execution, delivery and performance by each of the Food 4
Less Entities of each of the Acquisition Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby (i) will
not (after giving effect to all amendments or waivers obtained on or prior to
the Closing Date) (x) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which any of them is a party or by which any of them is bound or
to which any of their respective properties or assets is subject (except with
respect to any indebtedness that will be repaid in full at the Closing), or (y)
result in the creation or imposition of any Lien (other than Permitted Liens)
upon any of the properties or assets of any of them, except for any such
defaults or Liens that could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, and (ii) will not violate any
provision of the Charter or By-Laws of any of them.
(b) Except as set forth on Schedule 3.5, no
consent, authorization or order of, or filing or registration with, any
Governmental Authority or other person is required to be obtained or made by
any of the Food 4 Less Entities for the execution,
12
<PAGE> 14
delivery and performance of any of the Acquisition Documents to which any of
them is a party, or the consummation of any of the transactions contemplated
hereby or thereby, except (i) for those consents or authorizations that will
have been obtained or made on or prior to the Closing Date or (ii) where the
failure to obtain such consents, authorizations or orders, or make such filings
or registrations, could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 3.6. Litigation. Except as set forth in the
Prospectuses, there are no pending or, to the best knowledge of the Food 4 Less
Entities, threatened claims, actions, suits, labor disputes, grievances,
administrative or arbitration or other proceedings or, to the best knowledge of
the Food 4 Less Entities, investigations against the Food 4 Less Entities or
their respective assets or properties before or by any Governmental Authority
or before any arbitrator that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. None of the
transactions contemplated by any of the Acquisition Documents is restrained or
enjoined (either temporarily, preliminarily or permanently), and no material
adverse conditions have been imposed thereon by any Governmental Authority or
arbitrator. None of the Food 4 Less Entities or any of their respective assets
or properties, is subject to any order, writ, judgment, award, injunction or
decree of any Governmental Authority or arbitrator, that could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.7. SEC Documents; Financial Statements.
(a) The Prospectuses contain (i) copies of the
audited consolidated balance sheets of Holdings and its consolidated
subsidiaries and Supermarkets and its consolidated subsidiaries, in each case
as of January 29, 1995, together with the related audited consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
year then ended, and the notes thereto, accompanied by the reports thereon of
Arthur Andersen LLP, and (ii) copies of the audited balance sheet of the
Company as of January 4, 1995, accompanied by the report thereon of Arthur
Andersen LLP (all the financial statements referred to in clauses (i) and (ii)
above are hereinafter collectively referred to as the "F4L Financial
Statements"). Each of (i) the F4L Financial Statements and (ii) the Interim
Financial State- ments, including the respective notes thereto, were prepared
in accordance with GAAP and present fairly the consolidated financial position
of the Company, or the consolidated financial position, results of operations
and changes in financial position of Holdings and its consolidated
subsidiaries, or Supermarkets and its consolidated subsidiaries, as the case
may be, as of such dates and for the periods then ended (subject, in the case
of the Interim Financial Statements, to normal year end audit adjustments
consistent with prior periods).
13
<PAGE> 15
(b) As of the date of the Interim Financial
Statements, Food 4 Less had no assets or liabilities that would have been
required to be reflected in consolidated financial statements of Food 4 Less
prepared in accordance with GAAP, including notes thereto and that are not
reflected in the F4L Financial Statements. Prior to the Mergers, Food 4 Less
did not conduct any portion of its business operations other than through
Holdings and its subsidiaries.
(c) Each of Holdings and Supermarkets has filed all
required forms, reports and documents with the Commission since January 1,
1993, including all exhibits thereto (collectively, the "SEC Documents"), each
of which complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act as in effect on the dates so filed.
None of (i) the SEC Documents (as of their respective filing dates) or (ii) the
Prospectuses (as of the date hereof or as of the Closing Date) contained or
will contain any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading. Food 4 Less has heretofore furnished to each
of the Purchasers copies of each of the SEC Documents.
(d) The pro forma financial statements contained in
the Prospectuses have been prepared on a basis consistent with the F4L
Financial Statements and in accordance with the applicable requirements of
Regulation S-X promulgated under the Exchange Act and have been properly
computed on the bases described therein, the assumptions used in the
preparation thereof are reasonable, and the adjustments used therein are
appropriate to give effect to the transactions contemplated by the Acquisition
Documents and all other transactions and circumstances referred to therein.
The other pro forma financial information included in the Prospectuses has been
derived from such pro forma financial statements. Such pro forma financial
statements fairly present, on a pro forma basis, the financial position and
results of operations of the Company on the dates and for the periods specified
therein, assuming that the events and assumptions specified therein had
actually occurred or been true, as the case may be.
(e) The projections dated April 21, 1995, titled
"Model 43" and previously delivered to the Purchasers, were prepared (or
reviewed) by an officer of the Company and of Ralphs and were prepared in good
faith on the basis of information and assumptions that the Company and Ralphs
believe to be fair, complete and reasonable as of the date of such information,
and as of the date hereof (except to the extent the actual capitalization of
the Company as of the Closing Date differs from the assumptions, including the
interest rate assumptions, upon which such projections were based). No
representation or warranty of the Food 4 Less Entities contained in any
document, certificate or written statement furnished to the Purchasers by or at
the direction of Yucaipa, any Food 4 Less
14
<PAGE> 16
Entity or any Ralphs Entiy for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state any material fact (known to any of the Food 4 Less Entities,
in the case of information not furnished by them) necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. There are no facts known (or which
should upon the reasonable exercise of diligence be known) to the Company or
the other Food 4 Less Entities (other than matters of a general economic
nature) that could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and that have not been disclosed in the
Prospectuses, in this Agreement or in such other documents, certificates and
statements furnished to the Purchasers for use in connection with the
transactions contemplated by the Acquisition Documents.
SECTION 3.8. Change in Condition.
(a) Since June 25, 1994, there has been no
material adverse change in the business, operations, properties, prospects or
condition (financial or other) of Food 4 Less or any of its subsidiaries,
whether or not arising in the ordinary course of business except (i) as
contemplated by the Acquisition Documents (including the schedules hereto or
thereto) or (ii) any such change identified in the Form 10-Q of Holdings for
the quarter ended January 7, 1995.
(b) Except as set forth in the Prospectuses, to
the best knowledge of the Food 4 Less Entities, there is no event, condition,
circumstance or prospective development which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 3.8 or in the
Prospectuses or as contemplated by the Acquisition Documents, since June 25,
1994, none of the Food 4 Less Entities has taken any actions of a type referred
to in Section 5.1 that would have required the consent of the Purchasers if
such action were to have been taken during the period between the date hereof
and the Closing Date.
SECTION 3.9. Employee Benefit Plans and Labor Matters.
(a) Set forth on Schedule 3.9 is a list of
(i) each employee benefit plan (as
defined in section 3(3) of ERISA) maintained or contributed to
by or on behalf of any of the Food 4 Less Entities or any of
their ERISA Affiliates (each an "Employee Benefit Plan"),
15
<PAGE> 17
(ii) each Employee Benefit Plan that
is a multiemployer plan (as defined in section 4001(a)(3) of
ERISA) to which contributions are made by any of the Food 4
Less Entities or any of their ERISA Affiliates (each a
"Multiemployer Plan"),
(iii) each collective bargaining
agreement to which any of the Food 4 Less Entities is a party,
and
(iv) each other employment contract
or arrangement providing benefits to employees of any of the
Food 4 Less Entities and each other employee benefit plan (as
defined in section 3(3) of ERISA) or related trust that is
subject to Title I of ERISA with respect to which any Food 4
Less Entity is a "party in interest" or "disqualified person"
(as defined below) (each a "Benefit Arrangement").
(b) Except as set forth on Schedule 3.9:
(i) The Food 4 Less Entities and all
Employee Benefit Plans, Multiemployer Plans and Benefit
Arrangements required to be disclosed on Schedule 3.9 are in
compliance in all material respects with all applicable
provisions of ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"). For each Employee Benefit Plan that is
intended to be qualified under Code section 401(a) either a
favorable determination letter has been issued by the Internal
Revenue Service or a timely application for such a letter has
been or will be submitted and there is no fact known to the
Food 4 Less Entities that would jeopardize the qualified
status of such plans.
(ii) No Employee Benefit Plan (other
than the Multiemployer Plans) (A) is the subject of
termination proceedings under ERISA section 4041, 4041A or
4042, (B) has been or will have been, within 5 years prior to
the Closing Date, completely or partially terminated, (C) is
or has been, within 5 years prior to the Closing Date, the
subject of a reportable event as to which notice would be
required to be filed with the Pension Benefit Guaranty
Corporation ("PBGC"), (D) has incurred or is expected to incur
any liability to the PBGC, other than for premiums pursuant to
ERISA Section 4007 that are not yet due, that could result in
any material liability or (E) is subject to Title IV of ERISA
or the minimum funding standards of section 412 of the Code or
section 302 of ERISA.
16
<PAGE> 18
(iii) Neither the Food 4 Less
Entities nor any of their ERISA Affiliates has incurred or
could reasonably be expected to incur any withdrawal liability
(within the meaning of Part I of Subtitle E of Title IV of
ERISA) with respect to any Multiemployer Plan that has or
could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(iv) All material contributions or
payments required to be made by any of the Food 4 Less
Entities, any of their ERISA Affiliates or, prior to the
Closing Date, to any Employee Benefit Plan or Multiemployer
Plan have been paid or made by the due date. To the best
knowledge of the Food 4 Less Entities, all contributions,
transfers and payments in respect of any Employee Benefit Plan
for which a deduction or credit has been claimed have been or
are fully deductible or allowable as a credit under the Code,
except where the failure for such contributions, transfers or
payments to be deductible or allowable as a credit could not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(v) Since June 25, 1994, there has
been no (i) change in any Employee Benefit Plan (other than
amendments required by Applicable Law to be made on or prior
to December 31, 1994) or (ii) adoption of a new Employee
Benefit Plan that, in either case (i) or (ii), materially
increases benefits to any employee of any of the Food 4 Less
Entities.
(vi) With respect to each Employee
Benefit Plan that is a "group health plan" within the meaning
of ERISA section 607(1) or that is subject to Code section
4980B, each Food 4 Less Entity and each ERISA Affiliate of a
Food 4 Less Entity has complied in all material respects with
the continuation coverage requirements of Code section 4980B
and Part 6 of Title 1 of ERISA. No Food 4 Less Entity
maintains or contributes to a "nonconforming group health
plan," as defined in section 5000(c) of the Code, that,
individually or in the aggregate, has or could reasonably be
expected to have a Material Adverse Effect.
(vii) No Employee Benefit Plan that
is a "welfare benefit plan" as defined in section 3(1) of
ERISA provides benefits, including without limitation, death
or medical benefits, beyond termination of service or
retirement other than coverage mandated by law.
(c)(i) No material labor dispute exists with
any of the Food 4 Less Entities and, to the best knowledge of
the Food 4 Less Entities, none is threatened.
17
<PAGE> 19
No Food 4 Less Entity has experienced any concerted work
stoppages during the preceding five years that, individually
or in the aggregate, had or could reasonably be expected to
have a Material Adverse Effect.
(ii) To the best knowledge of the
Food 4 Less Entities, there are no union organizing activities
or questions of representation taking place that could,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(iii) There is no unfair labor
practice charge or complaint against any of the Food 4 Less
Entities which is served and pending, or to the best knowledge
of the Food 4 Less Entities, otherwise pending or threatened
before the National Labor Relations Board that could,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(iv) To the best knowledge of the
Food 4 Less Entities, there are no charges or investigations
with respect to or relating to any Food 4 Less Entity pending
before the Equal Employment Opportunity Commission or any
state or local agency responsible for the prevention of
unlawful employment practices that could, individually or in
the aggregate, reasonably be expected to have a Material
Adverse Effect.
(v) The Food 4 Less Entities have
complied with the WARN Act and any similar state or local law.
No employee of any Food 4 Less Entity has suffered an
"employment loss" as that term is defined in the WARN Act
since six (6) months prior to the Closing Date.
SECTION 3.10. Interests in Real Property.
(a) Schedule 3.10 sets forth a true and complete
list of all real properties owned and all material real property leased by each
of the Food 4 Less Entities. Each Food 4 Less Entity has good and marketable
title in fee simple to all real properties owned by it and valid and
enforceable leasehold interests in all real estate leased by it, except where
the lack of such title or the invalidity or unenforceability of such leasehold
interests could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) Immediately following the Acquisition, none
of the real properties owned by or the leasehold estates of any Food 4 Less
Entity will be subject to (i) any Liens other than Permitted Liens or (ii) any
easements, rights of way, licenses, grants, building or
18
<PAGE> 20
use restrictions, exceptions, reservations, limitations or other impediments
that, in either case (i) or (ii), will materially adversely affect the value
thereof for their present use, taken as a whole, or that interfere with or
impair the present and continued use thereof, taken as a whole, in the usual
and normal conduct of the business of any such person.
(c) To the best knowledge of the Food 4 Less
Entities, all improvements on such real properties and the operations therein
conducted conform in all material respects to all applicable health, fire,
environmental, safety, zoning and building laws, ordinances and administrative
regulations (whether through grandfathering provisions, permitted use
exceptions, variances or otherwise), except for possible nonconforming uses or
violations that do not and will not interfere with the present use, operation
or maintenance thereof as now used, operated or maintained or access thereto,
and that do not and will not materially affect the value thereof for their
present use. No Food 4 Less Entity has received notice of any violation of or
noncompliance with any such laws, ordinances or administrative regulations from
any applicable governmental or regulatory authority, except for notices of
violations or failures so to comply, if any, that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(d) Immediately following the Closing and the
Acquisition, the Shares will not be a "United States real property interest"
within the meaning of section 897 of the Code.
SECTION 3.11. Leases.
(a) (i) No Food 4 Less Entity is in breach of or
default (and no event has occurred which, with due notice or lapse of time or
both, may constitute a material breach or default) under any of the leases
required to be set forth on Schedule 3.10 (the "Leases") and (ii) no party to
any Lease has given any Food 4 Less Entity written notice of or made a claim
with respect to any breach or default, the consequences of which, in either
case (i) or (ii) could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 3.10 hereto,
after taking into account the exercise of any options (which are exercisable
solely at the discretion of one of the Food 4 Less Entities), none of the
Leases terminates by its terms before January 1, 2000.
(c) None of the Leases require a consent to be
obtained for the execution, delivery and performance of any of the Acquisition
Documents or the consummation of any of the transactions contemplated hereby or
thereby.
19
<PAGE> 21
SECTION 3.12. Compliance with Law. The operations of the
Food 4 Less Entities have been conducted in accordance with all Applicable
Laws, including, without limitation, all such Applicable Laws relating to
consumer protection, currency exchange, employment (including, without
limitation, equal opportunity and wage and hour), safety and health,
environmental protection, conservation, wetlands, architectural barriers to the
handicapped, fire, zoning and building, occupation safety, pension and
securities, except for violations or failures so to comply, if any, that could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No Food 4 Less Entity has received notice of any
violation of or noncompliance with any Applicable Laws, except for notices of
violations or failures so to comply, if any, that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.13. Representations and Warranties in the
Acquisition Documents. The representations and warranties of the Company, Food
4 Less, Holdings, Supermarkets, Ralphs and Ralphs Grocery in the Acquisition
Agreement and the other Acquisition Documents (including, without limitation,
those made on the Closing Date both immediately before and immediately after
giving effect to the Acquisition and regardless of whether any such
representations or warranties survive beyond the Closing Date) were (or will
be) true in all material respects as of the date thereof, are true in all
material respects on the date hereof and will be true in all material respects
on the Closing Date (after giving effect to the Acquisition), in each case with
any such representation and warranty that was made as to the knowledge of
Ralphs or Ralphs Grocery being made herein as to the knowledge of the Food 4
Less Entities.
SECTION 3.14. Tax Matters.
(a) The Food 4 Less Entities have duly and
properly filed, or will duly and properly file, on a timely basis, all Tax
Returns which were or will be required to be filed by them for all periods
ending on or before the Closing Date or including the Closing Date. All such
Tax Returns of the Food 4 Less Entities were (or will be) true, correct and
complete in all material respects when filed. The Food 4 Less Entities have
paid all Taxes required to be paid by them in respect of the periods covered by
such filed Tax Returns other than (i) those being contested in good faith or
those currently payable without penalty or interest, in each case for which an
adequate reserve or accrual has been established in the Financial Statements in
accordance with GAAP, or (ii) where failure so to pay could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) All Taxes payable with respect to Tax Returns
for periods ending on or before the Closing Date, or, with respect to the
period that ends after the Closing Date, the portion of such period up to and
including the Closing Date, have been properly
20
<PAGE> 22
reserved or accrued on the books of the appropriate persons. All Taxes that
the Food 4 Less Entities are or were required by law to withhold or collect
through the Closing Date have been duly withheld or collected and, to the
extent required, have been paid to the proper governmental body. There are no
Liens with respect to Taxes upon any of the properties or assets, real or
personal, tangible or intangible, of any Food 4 Less Entity except for
statutory liens for Taxes not yet due or delinquent.
(c) Except as set forth on Schedule 3.14, since
June 25, 1994, no waivers or extensions have been requested or granted with
respect to any Tax Returns of the Food 4 Less Entities and no such Tax Returns
for any taxable year are currently under audit.
SECTION 3.15. Environmental Matters.
(a) Each Food 4 Less Entity and its operations
has obtained and maintained in effect all licenses, permits and other
authorizations required under all Applicable Laws relating to pollution or to
the protection of the environment ("Environmental Laws") and is in compliance
with all Environmental Laws and with all such licenses, permits and
authorizations, except where the failure to obtain and maintain such licenses,
permits and other authorizations or any such noncompliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Except as set forth in the Prospectuses:
(i) no Food 4 Less Entity has (A)
performed or suffered any act which could give rise to, or has
otherwise incurred or expressly assumed by contract or
operation of law, liability to any person (governmental or
not) under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq. or any other Environmental Laws, or (B) received notice
of any such liability or any claim therefor or submitted
notice pursuant to Section 103 of such Act to any governmental
agency with respect to any of their respective assets, except
for such liability as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect;
(ii) no hazardous substance,
hazardous waste, contaminant, pollutant or toxic substance (as
such terms are defined in any applicable Environmental Law)
and no asbestos containing material has been released, placed,
dumped or otherwise come to be located on, at, beneath or near
any of the assets or properties owned, leased or otherwise
operated by any Food 4 Less Entity or any surface waters or
groundwaters thereon or thereunder,
21
<PAGE> 23
except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(iii) no Food 4 Less Entity owns or
operates an underground storage tank containing a regulated
substance, as such term is defined in Subchapter IX of the
Resource Conservation and Recovery Act, 42 U.S.C. Section
6991 et seq. except as in accordance with Applicable Law; and
(iv) no Food 4 Less Entity has
Treated, Stored or Disposed of any Hazardous Waste (as such
capitalized terms are respectively defined in (x) the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.
or (y) Chapter 6.5 (Hazardous Waste Control) of the California
Health and Safety Code) excluding any substance customarily
Treated, Stored or Disposed of in the retail grocery business,
except where such Treatment, Storage or Disposal could not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
SECTION 3.16. Intellectual Property.
(a) Immediately following the Closing, the Food 4
Less Entities will own or be licensed or have the right to use, free and clear
of all Liens (other than Permitted Liens), (i) all letters patent, patent
applications, inventions on which patent applications have not been filed,
trademarks, service marks, trade names (whether registered or unregistered) and
the registrations or applications for registration therefor, logos, symbols,
brands, copyrights (whether registered or unregistered) and registrations
therefor, both United States and foreign, and all renewals, renewal rights,
reissues, modifications or extensions thereof, and know-how, trade secrets,
formulae, research and development data, new product research data and
manufacturing processes that are material to their business as currently
conducted (collectively, the "Intellectual Property"), and (ii) all computer
software presently utilized in the operation of their businesses, except where
the absence of such software could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) To the best knowledge of the Food 4 Less
Entities all state registrations, renewals and other filings relating to any of
the Intellectual Property (other than the Intellectual Property registered in
the United States Patent and Trademark Office) that is material to the business
of any Food 4 Less Entity each as currently conducted, have been filed in all
appropriate state offices.
22
<PAGE> 24
(c) To the best knowledge of the Food 4 Less
Entities (i) no claim has been asserted by any person challenging or
questioning the validity or the right of any Food 4 Less Entity to use the
Intellectual Property, nor is there any valid basis for any such claim, (ii)
the use of any item of Intellectual Property by any Food 4 Less Entity does not
infringe and will not infringe on any right, title or interest held by any
other entity or person in any intellectual property and (iii) the use of any
intellectual property by any other person or entity does not infringe on the
Intellectual Property or on the rights of any Food 4 Less Entity in any of the
Intellectual Property.
(d) No Food 4 Less Entity is a party to any
license agreement or any other agreement to use, sell, assign or encumber any
of the Intellectual Property that is material to its business as currently
conducted except those agreements set forth in Schedule 3.16. Such agreements
are in full force and effect, and, to the best knowledge of the Food 4 Less
Entities, each party to such agreements has complied with the requirements of
such agreements. No notice of termination has been given pursuant to any of
such agreements. As of the Closing, (i) all notices required by such
agreements in order to renew, or to extend the term of, such agreements have
been properly given in accordance with any requirements relating thereto set
forth in such agreements and (ii) to the best knowledge of the Food 4 Less
Entities (A) there are no existing or threatened bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other
similar proceedings relating to any of the parties to any of such agreements,
(B) there are no defaults by any party to such agreements and (C) there exist
no events, or failures to act, which, with the passage of time or the giving of
notice, or both, will constitute an event of default under any of such
agreements.
SECTION 3.17. Registration Rights. Except as set forth on
Schedule 3.17, no Food 4 Less Entity is under any obligation to register any of
its outstanding securities pursuant to the Securities Act of 1933, as amended
(the "Securities Act").
SECTION 3.18. Insurance. The Food 4 Less Entities
maintain, with reputable insurers, insurance in such amounts, including
deductible arrangements, and of such a character as is usually maintained by
reasonably prudent managers of companies engaged in the same or similar
business. All policies of title, fire, liability, casualty, business
interruption, workers' compensation and other forms of insurance including, but
not limited to, directors and officers insurance, held by the Food 4 Less
Entities as of the date hereof, are in full force and effect in accordance with
their terms. No Food 4 Less Entity is in default under any provisions of any
such policy of insurance and no Food 4 Less Entity has received notice of
cancellation of any such insurance.
23
<PAGE> 25
SECTION 3.19. Contracts. All contracts and other instruments
to which any Food 4 Less Entity is a party that are material to the business,
operations, properties, prospects or financial condition of any of them
(collectively, the "Commitments") are in full force and effect on the date
hereof. No Food 4 Less Entity is in default in respect of any Commitment, and
no event has occurred which, with due notice or lapse of time or both, would
constitute such a default, except for any such defaults that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Food 4 Less Entities, after due
inquiry, no other party to any Commitment is in default in respect thereof, and
no event has occurred which, with due notice or lapse of time or both, would
constitute such a default.
SECTION 3.20. Solvency. No Food 4 Less Entity is, or
after giving effect to the transactions contemplated by the Acquisition
Documents and other obligations in connection therewith, will be, (a)
"insolvent" (as defined in Section 101(31) of the Bankruptcy Code of 1978, as
amended (the "Bankruptcy Code")), (b) engaged in business with unreasonably
small capital or assets (as contemplated by the Bankruptcy Code, the Uniform
Fraudulent Conveyance Act, as amended, the Uniform Fraudulent Transfer Act, as
amended, or other similar laws) or (c) unable to pay or provide for the payment
of such liabilities and obligations as and when due.
SECTION 3.21. Use of Financing. The proceeds received
under or as a result of the Acquisition Documents will solely be used directly
or indirectly for the consummation of the transactions contemplated by the
Acquisition Documents, including the payment of related fees and expenses, and
for working capital of the Company and its Subsidiaries.
SECTION 3.22. Accuracy of Information. None of the
representations, warranties or statements of the Company and Supermarkets
contained in this Agreement or in the exhibits hereto contains any untrue
statement of a material fact or, taken as a whole together with the
Prospectuses, omits to state any material fact necessary in order to make any
of such representations, warranties or statements not misleading. All
information relating to the Food 4 Less Entities that may be material to a
purchaser for value of the Shares has been disclosed to the Purchasers and any
such information arising on or before the Closing Date will forthwith be
disclosed to the Purchasers.
SECTION 3.23. Private Offering. Based, in part, on the
Purchasers' representations in Section 4.3, the sale of the Shares by the
Company pursuant to the Issuance, and the sale of the Common Stock by CLH
pursuant to the CLH Sale, are exempt from the registration and prospectus
delivery requirements of the Securities Act. Neither CLH nor any of the Food 4
Less Entities, nor anyone acting on their respective behalf, has
24
<PAGE> 26
offered or sold or will offer or sell any securities, or has taken or will take
any other action, which would subject the offer, issuance or sale of the Shares
or Common Stock as contemplated hereby to the registration provisions of the
Securities Act.
SECTION 3.24. CLH Sale.
(a) CLH is duly incorporated, validly existing
and in good standing as a domestic corporation under the laws of the State of
Delaware and 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. CLH has the corporate power to execute, deliver and perform the
terms and provisions of the Acquisition Documents to which it is a party and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of such Acquisition Documents and to consummate the
transactions contemplated hereby and thereby. No other corporate proceedings
on the part of CLH is necessary therefor.
(b) The execution, delivery and performance by
CLH of the terms and provisions of the Acquisition Documents to which it is a
party and the consummation of the transactions contemplated hereby and thereby
do not and will not violate any provision of any agreement or instrument to
which CLH is a party or by which it is bound, or to which any of its properties
or assets is subject, or of any Applicable Law. CLH has duly executed and
delivered this Agreement and, at the Closing, will have duly executed and
delivered the Acquisition Documents to which it is a party. This Agreement
constitutes, and the Acquisition Documents to which CLH is a party when
executed and delivered by CLH, and, assuming the due execution by the other
parties hereto and thereto, will constitute the legal, valid and binding
obligations of CLH, enforceable against CLH in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(c) No consent, authorization or order of, or
filing or registration with, any Governmental Authority or other person is
required to be obtained or made by CLH for the execution, delivery and
performance by CLH of this Agreement or any Acquisition Documents to which it
is a party or the consummation of any of the transactions contemplated hereby
or thereby except for those that will have been made or obtained on or prior to
the Closing Date.
(d) The Common Stock to be delivered by CLH to
the Purchasers will be, at the time of such delivery, owned by CLH, of record
and beneficially, free and clear of any Lien, and upon delivery of the duly
endorsed certificates representing such Common
25
<PAGE> 27
Stock, all of CLH's right, title and interest in and to such Common Stock shall
have been contributed, transferred and assigned to the Purchasers, free and
clear of all Liens.
SECTION 3.25. Related Party Transactions. Except as set
forth on Schedule 3.25 or as disclosed in the Prospectuses, no Food 4 Less
Entity or Ralphs Entity is, or immediately following the Closing and the
Acquisition will be, a party to any agreement or arrangement (which will
continue to be in effect after giving effect to the transactions contemplated
by the Acquisition Documents) with or for the benefit of any person who is a
holder of equity securities of the Company (other than employees who are not
Affiliates of the Company) or any officer, director, partner or Affiliate of
any such person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly,
hereby represents and warrants to the Company, Supermarkets and CLH as follows:
SECTION 4.1. Authorization; Enforceability; No Violations.
(a) Each Purchaser is duly organized and validly
existing, in each case, in good standing as a domestic corporation or
partnership under the laws of its jurisdiction of organization and has all
requisite corporate or partnership power and authority to own its properties
and assets and to carry on its business as it is now being conducted. Each
Purchaser has the corporate or partnership power to execute, deliver and
perform the terms and provisions of the Acquisition Documents to which it is a
party and has taken all necessary corporate or partnership action to authorize
the execution, delivery and performance by it of such Acquisition Documents and
to consummate the transactions contemplated hereby and thereby. No other
corporate or partnership proceedings on the part of any such Purchaser is
necessary therefor.
(b) The execution, delivery and performance by
such Purchaser of the terms and provisions of the Acquisition Documents to
which it is a party and the consummation of the transactions contemplated
hereby and thereby do not and will not violate, in any material respect, any
provision of the Charter, bylaws, partnership agreement or other governing
documents of such Purchaser, or of any other agreement or instrument to which
such Purchaser is a party or by which it is bound, or to which any of its
properties or assets is subject, or of any Applicable Law. Each such Purchaser
has duly executed and delivered this Agreement and, at the Closing, will have
duly executed and delivered the Acquisition
26
<PAGE> 28
Documents to which it is a party. This Agreement constitutes, and the
Acquisition Documents to which each such Purchaser is a party when executed and
delivered by such Purchaser, and, assuming the due execution by the other
parties hereto and thereto, will constitute the legal, valid and binding
obligations of such Purchaser, enforceable against such Purchaser in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
SECTION 4.2. Consents. No consent, authorization or order
of, or filing or registration with, any Governmental Authority or other person
is required to be obtained or made by such Purchaser for the execution,
delivery and performance by such Purchaser of this Agreement or any Acquisition
Documents to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby other than those that will have been made or
obtained on or prior to the Closing Date.
SECTION 4.3. Private Placement.
(a) Such Purchaser understands that (i) the
offering and sale of the Shares in the Issuance by the Company and the offering
and sale of the Common Stock by CLH in the CLH Sale are intended to be exempt
from registration under the Securities Act pursuant to Section 4(2) thereof,
and (ii) there is no existing public or other market for the Shares or the
Common Stock.
(b) The Shares and the Common Stock to be
acquired by such Purchaser pursuant to this Agreement are being acquired for
its own account and without a view to making a distribution thereof in
violation of the Securities Act or any state securities laws which may be
applicable.
(c) Such Purchaser has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Shares and the Common Stock and
such Purchaser is capable of bearing the economic risks of such investment,
including a complete loss of its investment in the Shares or the Common Stock.
(d) Such Purchaser is (i) an "accredited
investor" as such term is defined in Regulation D under the Securities Act,
and (ii) a "qualified institutional buyer" as such term is defined in Rule 144A
under the Securities Act, if so indicated on such Purchaser's signature page
attached hereto.
27
<PAGE> 29
(e) Such Purchaser acknowledges that
Supermarkets, the Company and CLH and, for purposes of the opinions to be
delivered to the Purchasers pursuant to Section 7.2(o) hereof, Latham &
Watkins, will rely on the accuracy and truth of its representations in this
Section 4.3, and such Purchaser hereby consents to such reliance.
SECTION 4.4. Ownership of Common Stock Delivered in
Exchange. Assuming the accuracy of the representation contained in Section
3.24 hereof, the Common Stock to be delivered by such Purchaser to the Company
pursuant to the Issuance will be, at the time of such delivery, beneficially
owned by such Purchaser, free and clear of any Lien, and upon delivery of the
duly endorsed certificates representing such Common Stock, all of the
Purchaser's right, title and interest in and to such Common Stock shall have
been contributed, transferred and assigned to the Company free and clear of any
Lien.
SECTION 4.5. Absence of General Solicitation. Neither
such Purchaser nor anyone acting on its behalf has offered or sold or will
offer or sell any securities, or has taken or will take any other action that
would subject the offer or sale of the Common Stock by such Purchaser to the
Company as contemplated hereby to the registration provisions of the Securities
Act.
SECTION 4.6. Prohibited Transactions. No part of the
funds to be used to purchase the Shares or the Common Stock to be purchased by
such Purchaser pursuant to Section 2.1 constitutes assets of any employee
benefit plan (as defined in section 3(3) of ERISA) maintained or contributed to
by or on behalf of any of the Food 4 Less Entities or Ralphs Entities or any of
their respective ERISA Affiliates or any related trust or any multiemployer
plan (as defined in section 4001(a)(3) of ERISA) to which contributions are
made by any of the Food 4 Less Entities or the Ralphs Entities or any of their
respective ERISA Affiliates or any related trust or any other employee benefit
plan (as defined in section 3(3) of ERISA) or any related trust with respect to
which any Food 4 Less Entity or any Ralphs Entity is a party in interest or a
disqualified person. This representation is made in reliance upon and is
subject to the accuracy and completeness of the representations set forth in
Section 3.9(a)(i), (ii) and (iv) hereof and Section 4.18 of the Acquisition
Agreement, and assumes that except for the employee benefit plans disclosed
pursuant to Section 4.18 of the Acquisition Agreement none of the Ralphs
Entities is a party in interest or disqualified person with respect to any
employee benefit plan (as defined in section 3(3) of ERISA) or related trust
that is subject to Title I of ERISA. As used in this Agreement, the terms
"party in interest" and "disqualified person" shall have the meanings assigned
to such terms in Section 3 of ERISA and Section 4975 of the Code, respectively.
Such Purchaser is not an insurance company.
28
<PAGE> 30
ARTICLE V
COVENANTS OF THE COMPANY, SUPERMARKETS AND CLH
SECTION 5.1. Operation of Business.
(a) From the date hereof until the Closing Date,
except as contemplated by the Acquisition Documents (including the schedules
hereto or thereto), the Company shall, and shall cause each of the Subsidiaries
to:
(i) operate its business in the
normal course and use its reasonable best efforts to preserve
its present business organization intact and its present
relationships with persons having material business dealings
with it; and
(ii) continue to maintain, in all
material respects, its assets and properties and keep its
books in accordance with present practices in a condition
suitable for its current use.
(b) From the date hereof until the Closing Date,
except as provided for in, or contemplated by, the Acquisition Documents
(including the schedules hereto or thereto), and except as consented to or
approved by the Purchasers, the Company shall not, and shall not permit any of
the Subsidiaries to:
(i) take any action regarding any
matter described in Section 5.2(a) of the Stockholders
Agreement; or
(ii) take any action that would
cause any of the representations and warranties made by the
Company or Supermarkets in this Agreement not to remain true
and correct as if made at and as of the Closing Date.
SECTION 5.2. Access to Books and Records. The Company and
Supermarkets shall afford, and shall cause each of the Subsidiaries to afford,
to each of the Purchasers and the Purchasers' accountants, counsel and
representatives full access during normal business hours throughout the period
prior to the Closing Date (or the earlier termination of this Agreement
pursuant to Section 8.5) to all the Company's, Supermarkets' and the
Subsidiaries' properties, books, contracts, commitments and records (including,
but not limited to, tax returns) and, during such period, shall furnish
promptly to each of the Purchasers (a) a copy of each report, schedule and
other document filed or received by the
29
<PAGE> 31
Company, Supermarkets or any of the Subsidiaries pursuant to the requirements
of federal or state securities laws, and (b) all other information concerning
the Company's, Supermarkets' and the Subsidiaries' business, properties and
personnel as the Purchasers may reasonably request, provided that no
investigation or receipt of information pursuant to this Section 5.2 shall
affect any representation or warranty of the Company or Supermarkets or the
conditions to the obligations of the Purchasers.
SECTION 5.3. Amendment or Modification of or Waivers under
Acquisition Agreement. Each of the Company and Supermarkets agrees that,
without the prior written consent of the Purchasers, it will not consent to any
amendment or modification to, or waive any of its rights under, the Acquisition
Agreement, which amendment, modification or waiver would have a material
adverse effect on the rights of the Company, Supermarkets or the Purchasers
with respect to the business, assets, operations and properties of the Company,
the Subsidiaries and the Ralph Entities.
SECTION 5.4. Notices Under the Acquisition Agreement. The
Company shall promptly provide the Purchasers with such notices and reports as
any Food 4 Less Entity may send to or receive from Ralphs or the stockholders
of Ralphs pursuant to the terms of or relating to the Acquisition Agreement.
SECTION 5.5. Agreement to Take Necessary and Desirable
Actions. CLH, the Company and Supermarkets shall, and shall cause each Food 4
Less Entity to, execute and deliver the Acquisition Documents to which each is
a party and such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary, desirable or reasonably
requested by the Purchasers in order to consummate or implement expeditiously
the transactions contemplated hereby.
SECTION 5.6. Compliance with Conditions; Best Efforts.
The Company, Supermarkets and CLH shall use their best efforts to cause all of
the obligations imposed upon each of them in this Agreement to be duly complied
with and to cause all conditions precedent to the obligations of the Company,
Supermarkets, CLH and the Purchasers to be satisfied. Upon the terms and
subject to the conditions of this Agreement, the Company, Supermarkets and CLH
will use their best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby.
SECTION 5.7. HSR Act Filings. Each of the Company, each
of its Subsidiaries, and CLH have filed all reports and documents as may be
necessary to comply with the HSR Act and Food 4 Less is in full compliance with
Section 6.3 of the Acquisition
30
<PAGE> 32
Agreement. Each of the Company, Supermarkets and CLH shall cooperate with and
assist the other parties hereto and take such action as may be reasonably
required and as permitted under law in connection with such filings (including
cooperating with additional requests for information, documents and interviews
of officers and personnel by either of the antitrust enforcement agencies).
SECTION 5.8. Consents and Approvals. The Company,
Supermarkets and CLH (a) shall use their best efforts to obtain all necessary
consents, waivers, authorizations and approvals of all Governmental Authorities
and of all other persons, firms or corporations required in connection with the
execution, delivery and performance by them of this Agreement, any other
Acquisition Document or any of the transactions contemplated hereby or thereby,
and (b) shall diligently assist and cooperate with the Purchasers in preparing
and filing all documents required to be submitted by the Purchasers to any
Governmental Authority in connection with such transactions and in obtaining
any governmental consents, waivers, authorizations or approvals which may be
required to be obtained by the Purchasers in connection with such transactions
(which assistance and cooperation shall include, without limitation, timely
furnishing to the Purchasers all information concerning the Food 4 Less
Entities that counsel to the Purchasers determines is required to be included
in such documents or would be helpful in obtaining any such required consent,
waiver, authorization or approval).
SECTION 5.9. Preferred Preemptive Purchase. The Company
shall, in connection with any purchase of Preferred Stock by any Person
pursuant to a Preferred Preemptive Purchase (as defined in the Stockholders
Agreement), cause such Person to become a party to the Stockholders Agreement,
or an agreement substantially similar to the Stockholders Agreement.
SECTION 5.10. Tax Withholdings. Solely for United States
Federal income tax purposes, the Company shall not withhold any amount from
distributions to any Purchaser that is a foreign government or a controlled
entity thereof ("Foreign Government") in any taxable year of the Company,
provided that (i) the Foreign Government delivers to the Company a properly
executed Withholding Tax Exemption Certificate (or such other form as the
Internal Revenue Service may require) in a form reasonably acceptable to the
Company and (ii) there is no change in law regarding withholding obligations
with respect to foreign persons which, in the opinion of counsel to the
Company, would require withholding with respect to the Foreign Government.
Solely for California income and franchise tax purposes, the Company shall
withhold any and all amounts from distributions to the Foreign Government as
are required by California law unless and until (i) the Foreign Government
notifies the Company that there has been a change in law regarding the
withholding obligations with respect to foreign persons which, in the opinion
of counsel to the Foreign Government
31
<PAGE> 33
reasonably acceptable to the Company, provides an exemption from withholding on
distributions by the Company to the Foreign Government, and (ii) the Foreign
Government delivers to the Company any form or other certification reasonably
requested by the Company to establish such exemption from withholding.
SECTION 5.11. Other Activities of Purchasers. Nothing
contained in this Agreement or any other agreement of the Company, Supermarkets
or CLH shall be deemed to prohibit the Purchasers or any of their respective
Affiliates from forming or investing in other entities engaged in activities
similar to those of the Company.
SECTION 5.12. Amendment of Charter. Each party hereto shall,
and shall cause the Company to, take all necessary corporate action to adopt,
ratify and file and cause to become effective on or prior to June 28, 1995, a
certificate of amendment to the Company's Charter, which amendment shall permit
the conversion of Common Stock into Non-Voting Common Stock and of Non-Voting
Common Stock into Common Stock in a manner similar to the manner by which
Series A Stock is convertible into Series B Stock and Series B Stock is
convertible into Series A Stock, respectively.
ARTICLE VI
COVENANTS OF THE PURCHASERS
SECTION 6.1. Agreement to Take Necessary and Desirable
Actions. Each Purchaser agrees to execute and deliver each of the Acquisition
Documents to which it may be a party and such other documents, certificates,
agreements and other writings and to take such other actions as may be
necessary, desirable or reasonably requested by the Company, Supermarkets or
CLH in order to consummate or implement expeditiously the transactions
contemplated hereby.
SECTION 6.2. Compliance with Conditions; Best Efforts.
Each Purchaser will use its best efforts to cause all of the obligations
imposed upon it in this Agreement to be duly complied with, and to cause all
conditions precedent to the obligations of the Company, Supermarkets, CLH and
the Purchasers to be satisfied. Upon the terms and subject to the conditions
of this Agreement, each Purchaser will use its best efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby.
SECTION 6.3. HSR Act Filings. Each Purchaser has filed,
or caused to be filed, all reports and documents as may be necessary to comply
with the HSR Act.
32
<PAGE> 34
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
SECTION 7.1. Conditions to the Company's, CLH's and
Supermarkets' Obligations. The obligations of the Company, CLH and
Supermarkets hereunder required to be performed on the Closing Date shall be
subject, at their election, to the satisfaction or waiver (which waiver, if so
requested by the Purchasers, shall be made in writing), at or prior to the
Closing, of the following conditions:
(a) The representations and warranties of each
Purchaser contained in this Agreement shall have been true and correct in all
material respects when made and, in addition, shall be repeated and true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
(b) Each Purchaser shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement, to be performed and
complied with by such Purchaser at or prior to the Closing Date. In lieu of a
certificate from each Purchaser to the Company, Supermarkets and CLH certifying
that the conditions specified in this Section 7.1 have been satisfied with
respect to such Purchaser, payment of the purchase price for the Common Stock
and for the Shares shall be deemed to be the certification by such Purchaser of
the satisfaction of each of the conditions specified in this Section 7.1 with
respect to such Purchaser.
(c) All conditions precedent to the consummation
of the transactions contemplated by the Acquisition Documents shall have been
satisfied or waived.
SECTION 7.2. Conditions to Purchasers' Obligations. The
obligations of each Purchaser hereunder required to be performed at the Closing
shall be subject, at its election, to the satisfaction or waiver (which waiver,
if so requested by the Company, Supermarkets or CLH, shall be made in writing),
at or prior to the Closing, of the following conditions:
(a) The representations and warranties of the
Company, Supermarkets and CLH contained in this Agreement shall have been true
and correct in all material respects when made and, in addition, shall be
repeated and true and correct in all material respects on and as of the Closing
Date (after giving effect to the transactions contemplated hereby) with the
same force and effect as though made on and as of the Closing Date.
33
<PAGE> 35
(b) The Company, Supermarkets and CLH shall have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, contained in this Agreement, to be
performed and complied with by them at or prior to the Closing Date.
(c) No waiver of any of the conditions of, or
amendment entered into after the date hereof to, or the initiation by The
Yucaipa Companies, a California general partnership ("Yucaipa"), the Company,
CLH or Supermarkets of (or consent to) any termination of, any Acquisition
Document shall have occurred except such as shall have been consented to in
writing by the Purchasers representing a majority in interest of the Shares,
which consent shall not be unreasonably withheld, and, with respect to any
conditions thereunder the fulfillment of which is or may be determined by
Yucaipa, the Company, CLH or Supermarkets, as the case may be, in its judgment
or discretion, such conditions shall not be deemed fulfilled unless the
Purchasers representing a majority in interest of the Shares, in their
reasonable judgment, shall also be satisfied that such conditions are
fulfilled. No party to any Acquisition Document shall be in breach of or in
default thereunder and no event or circumstance shall have occurred which, with
or without the giving of notice or lapse of time or both, could result in a
right of termination in respect thereof.
(d) (i) The terms and conditions of the
Financing, including, without limitation, the Public Debt Refinancing and any
other refinancings, amendments and consents made at or obtained in connection
with the Closing or the transactions contemplated by the Acquisition Documents
shall be reasonably satisfactory to the Purchasers; and the Financing shall
have been consummated pursuant to definitive agreements in form and substance
reasonably satisfactory to the Purchasers and no party thereto shall be in
default thereunder.
(ii) The legal, management and capital
structure of the Company, after giving effect to the transactions contemplated
by the Acquisition Documents, shall be as set forth herein and in the
Stockholders Agreement.
(iii) Following the date hereof neither
Holdings nor the Company shall have entered into agreements (other than the
Stockholders Agreement) with any other investors in equity of the Company other
than the Purchasers.
(iv) The Company and its Subsidiaries shall
have received, simultaneously with the receipt of the proceeds of the sale of
the Shares hereunder, proceeds under or as a result of the Financing which
shall be sufficient to consummate the Acquisition and the Public Debt
Refinancing, including payment of fees and expenses in respect thereof.
34
<PAGE> 36
(v) Ralphs shall have assumed all of the
rights and obligations of Supermarkets under the New Credit Facility.
(vi) The Purchasers and the Company shall have
entered into or caused to become effective the Stockholders Agreement and such
other agreements and governing documents (including, without limitation,
Charter and By-laws of the Company) as the Purchasers and the Company may deem
reasonably appropriate to effect the provisions of the Stockholders Agreement,
and each of such agreements and documents shall be in full force and effect
and, except as contemplated by the Stockholders Agreement, all existing
stockholders or similar agreements relating to the Company or Ralphs shall have
been terminated.
(e) All documents, instruments, agreements and
arrangements relating to the transactions contemplated by the Acquisition
Documents shall be reasonably satisfactory to the Purchasers, shall have been
executed and delivered by the parties thereto and no party to any of the
foregoing shall have breached any of its material obligations thereunder.
(f) Since January 29, 1995, no change shall have
occurred or have been threatened in the business, operations, prospects,
properties or condition (financial or other) of Food 4 Less, Ralphs or any of
their respective subsidiaries, which, in the reasonable judgment of the
Purchasers, is or may be materially adverse to Food 4 Less, Ralphs and their
respective subsidiaries, taken as a whole, or the transactions contemplated by
the Acquisition Documents; provided, that the transactions contemplated by the
Acquisition Documents shall not be deemed to be such a materially adverse
change.
(g) The Purchasers shall have received a copy of
the letter delivered in connection with the Acquisition and the Financing with
respect to the solvency and financial condition of Ralphs, after giving effect
to the Acquisition and the transactions contemplated by the Acquisition
Documents and other obligations in connection therewith, which letter need not
be addressed to the Purchasers.
(h) There shall be no litigation, proceeding or other
action seeking an injunction or other restraining order, damages or other
relief from a Governmental Authority pending or threatened which, in the
reasonable judgment of the Purchasers, would materially adversely affect the
consummation of the transactions contemplated by the Acquisition Documents on
the terms contemplated thereby and there shall be no litigation, proceeding or
other action (including, without limitation, relating to environmental and
pension matters) pending or threatened against the Company, Ralphs or their
respective subsidiaries which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
35
<PAGE> 37
(i) (x) During the seven-calendar-day period
ending on the Closing Date, (A) trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or the over-the-counter market
shall not have been suspended and minimum prices shall not have been
established on either of such exchanges or such market by such exchange or by
the Commission, (B) a general banking moratorium shall not have been declared
by Federal or New York or California authorities, and (C) no change (or any
condition, event or development involving a prospective change) shall have
occurred or be threatened that, in the reasonable judgment of the Purchasers,
has had or could, individually or in the aggregate, reasonably be expected to
have a material adverse effect upon the prices or trading of securities
generally traded on financial markets in the United States, and (y) the Dow
Jones Industrial Average (the "Dow") on the business day immediately preceding
the Closing Date shall not be more than 20% lower than the Dow on the date of
this Agreement (the "Opening Dow") and the Dow on any business day between the
date of this Agreement and the Closing Date shall not have been more than 20%
lower than the Opening Dow.
(j) All corporate and other proceedings taken or
to be taken by the parties to the Acquisition Documents in connection with the
transactions contemplated thereby shall be in form and substance reasonably
satisfactory to the Purchasers as being consistent with satisfaction of the
foregoing conditions.
(k) All governmental and regulatory approvals and
clearances and all third-party consents necessary for the consummation of the
transactions contemplated by the Acquisition Documents shall have been obtained
and shall be in full force and effect, including (without limitation)
expiration of the applicable waiting periods under the HSR Act, and the
Purchasers and the Company shall be reasonably satisfied that the consummation
of such transactions does not and will not contravene any Applicable Law,
except to the extent any contravention or contraventions, individually or in
the aggregate, could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(l) The Purchasers shall have completed their
legal and business due diligence relating to environmental matters and shall be
reasonably satisfied with the results thereof.
(m) All conditions precedent to the consummation
of the transactions contemplated by the Acquisition Documents shall have been
satisfied or waived and all fees and expenses due to any Purchaser or its
Affiliates shall have been paid in accordance with the terms of the Acquisition
Documents.
(n) The Company shall have delivered to the
Purchasers a certificate executed by it or on its behalf by a duly authorized
representative, dated the Closing Date, to
36
<PAGE> 38
the effect that each of the conditions (other than any condition the
fulfillment of which is subject to the reasonable satisfaction of the
Purchasers) specified in this Section 7.2 has been satisfied.
(o) Latham & Watkins, counsel to the Company,
Supermarkets and CLH, shall have delivered to the Purchasers an opinion, dated
the Closing Date, addressed to the Purchasers, in the form attached hereto as
Exhibit E.
(p) The Purchasers shall have received copies of,
and reliance letters, in form and substance reasonably satisfactory to the
Purchasers, dated the Closing Date, addressed to the Purchasers with respect
to:
(i) opinion of Wilkie Farr & Gallagher
delivered pursuant to Section 2.8(a)(iv) of the Acquisition Agreement;
(ii) opinion of Troy & Gould delivered
pursuant to Section 2.8(a)(iv) of the Acquisition Agreement;
(iii) opinions of Latham & Watkins delivered
pursuant to Section 2.8(b)(iv) of the Acquisition Agreement, Section
4.10(i) of the New Credit Facility, Sections 6(d) and 6(e) of the
Dealer Manager Agreement, and Section 7(ii)(a) of the Underwriting
Agreement;
(v) opinions of the Senior Vice President,
General Counsel and Secretary of Ralphs delivered pursuant to Section
4.1O(ii) of the New Credit Facility, Sections 6(d) and 6(e) of the
Dealer Manager Agreement, and Sections 7(ii)(c) of the Underwriting
Agreement; and
(vi) opinions of Irwin, Clutter & Severson
delivered pursuant to Sections 6(d) and 6(e) of the Dealer Manager
Agreement, and Section 7(ii)(b) of the Underwriting Agreement.
(q) All proceeds received by the Company on the
Closing Date under or as a result of the transactions contemplated by the
Acquisition Documents shall be used (or shall be usable) solely to consummate
the transactions contemplated by the Acquisition Documents, including payment
of fees and expenses thereof, and to provide working capital to the Company and
its Subsidiaries.
(r) Apollo Advisors, L.P. or its designees shall
have received a commitment fee in the amount of $5 million, $2.5 million of
which shall have been paid by
37
<PAGE> 39
Supermarkets by wire transfer of immediately available funds to a bank account
designated by it (such designation to be made not later than three business
days prior to the Closing Date) and the remainder of which shall be satisfied
through the issuance by the Company of $2.5 million initial accreted value of
Discount Debentures to be contributed to the Debt Partnership in accordance
with the terms of the Debt Partnership Letter and the subscription agreement
relating thereto.
(s) The Purchasers shall have received delivery
of the Shares as set forth hereunder.
(t) The Purchasers shall have received such other
certificates, instruments and documents in furtherance of the transactions
contemplated by this Agreement as they may reasonably request.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Survival; Indemnification.
(a) All representations, warranties, covenants
and agreements (except covenants and agreements which are expressly required to
be performed and are performed in full on or before the Closing Date) contained
in this Agreement shall be deemed made at the Closing as if made at such time
and shall survive the Closing for two years, except that (i) with respect to
claims asserted pursuant to this Section 8.1 before the expiration of the
applicable representation or warranty, such claims shall survive until the date
they are finally liquidated or otherwise resolved, (ii) Sections 3.14 and 3.15
shall survive until the end of the applicable statute of limitations, and (iii)
Section 3.2 and this Section 8.1 shall survive indefinitely. All statements as
to factual matters contained in any certificate executed and delivered by the
parties pursuant hereto, as well as the certification by each Purchaser in lieu
of a certificate as provided in Section 7.1(b), shall be deemed to be
representations, warranties and covenants by such party hereunder. No claim
may be commenced under this Section 8.1 (or otherwise) following expiration of
the applicable period of survival, and upon such expiration the Indemnifying
Party shall be released from all liability with respect to claims under each
such section not theretofore made by the Indemnified Party. No right of
indemnity against any claim of a third party shall arise from any
representation, warranty or covenant of an Indemnifying Party herein contained,
unless such third-party claim is filed or lodged against the Indemnified Party
on or prior to the expiration of the applicable period of survival provided
above, and all other conditions hereunder are satisfied. A claim shall be
38
<PAGE> 40
made or commenced hereunder by the Indemnified Party delivering to the
Indemnifying Party a written notice specifying in reasonable detail the nature
of the claim, the amount claimed (if known or reasonably estimable), and the
factual basis for the claim. The indemnification provided for in this Section
8.1 shall be the exclusive remedy for breach of any such representations,
warranties or covenants contained in this Agreement or given hereunder.
(b) Each of the Company and Supermarkets agrees
to indemnify and hold harmless each of the Purchasers and their respective
partners, affiliates, officers, directors, employees and duly authorized agents
and each of their affiliates and each other person controlling the Purchasers
or any of their affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and any partner of any of them
from and against any loss, claim, liability, cost, expense or damage
(including, without limitation, reasonable counsel fees and disbursements and
court costs) accruing from or resulting by reason of (i) the breach of any of
the representations or warranties made in Article III of this Agreement or in
any certificate furnished by the Company or Supermarkets pursuant to this
Agreement or (ii) the breach or failure of the Company or Supermarkets duly to
perform or observe any covenant or agreement.
(c) The Purchasers, severally and not jointly,
agree to indemnify and hold harmless each of the Company and its partners,
affiliates, officers, directors, employees and duly authorized agents and each
of their affiliates and each other person controlling the Company or any of
their affiliates within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and any partner of any of them from and
against any loss, claim, liability, cost, expense or damage (including, without
limitation, reasonable counsel fees and disbursements and court costs) accruing
from or resulting by reason of (i) the breach of any of the representations or
warranties made by such Purchaser in Article IV of this Agreement or in any
certificate furnished by the Purchaser pursuant to this Agreement (or the
certification in lieu of a certificate as provided in Section 7.1(b)) or (ii)
the breach or failure of the Purchaser duly to perform or observe any covenant
or agreement on the part of the Purchaser to be performed or observed.
(d) If a person entitled to indemnity hereunder
(an "Indemnified Party") asserts that any party hereto (the "Indemnifying
Party") has become obligated to the Indemnified Party pursuant to Section
8.1(b) or (c), or if any suit, action, investigation, claim or proceeding is
begun, made or instituted as a result of which the Indemnifying Party may
become obligated to the Indemnified Party hereunder, the Indemnified Party
agrees to notify the Indemnifying Party promptly and to cooperate with the
Indemnifying Party, at the Indemnifying Party's expense, to the extent
reasonably necessary for the resolution of such claim or in the defense of such
suit, action or proceeding, including making available any
39
<PAGE> 41
information, documents and things in the possession of the Indemnified Party
which are reasonably necessary therefor.
Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or
delay in giving, notice unless, and only to the extent that, the rights and
remedies of the Indemnifying Party shall have been prejudiced as a result of
such failure or delay.
(e) In fulfilling its obligations under this
Section 8.1, after providing each Indemnified Party with a written
acknowledgement of any liability under this Section 8.1 as between such
Indemnified Party and the Indemnifying Party, the Indemnifying Party shall have
the right to investigate, defend, settle or otherwise handle, with the
aforesaid cooperation, any claim, suit, action or proceeding brought by a third
party in such manner as the Indemnifying Party may in its sole discretion deem
appropriate; provided that the Indemnifying Party will not consent to any
settlement imposing any material obligations on any other party hereto other
than financial obligations for which such party will be indemnified hereunder,
unless such party has consented in writing to such settlement. Notwithstanding
anything to the contrary contained herein, the Indemnifying Party may retain
one firm of counsel to represent all Indemnified Parties in such claim, action
or proceeding; provided, however, that in the event that the defendants in, or
targets of, any such claim, action or proceeding include more than one
Indemnified Party, and any Indemnified Party shall have reasonably concluded,
based on the opinion of its own counsel, that there may be one or more legal
defenses available to it which are in conflict with those available to any
other Indemnified Party, then such Indemnified Party may employ separate
counsel to represent or defend it or any other person entitled to
indemnification and reimbursement hereunder with respect to any such claim,
action or proceeding in which it or such other person may become involved or is
named as defendant and the Indemnifying Party shall pay the reasonable fees and
disbursement of such counsel. Notwithstanding the Indemnifying Party's
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel at the expense of the Indemnifying Party and to (i) direct the defense
or investigation of such claim, action or proceeding, if (A) in the written
opinion of counsel to the Indemnified Party use of counsel of the Indemnifying
Party's choice could reasonably be expected to give rise to a conflict of
interest or (B) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party within a reasonable time after notice of the assertion of any such claim
or institution of any such action or proceeding or (ii) participate in the
defense or investigation of such claim, action or proceeding if the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense.
40
<PAGE> 42
SECTION 8.2. Notices. All notices, demands, requests,
consents, approvals or other communications (collectively, "Notices") required
or permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business
day following delivery of such notice to a reputable air courier service.
To the Company, Supermarkets or CLH:
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attn: Mark A. Resnik, Esq.
Fax: (310) 789-7201
with a copy (which shall not constitute notice) to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Attn: Thomas C. Sadler, Esq.
Fax: (213) 891-8763
To the Purchasers:
To the address specified on the signature page executed by
each such Purchaser,
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
41
<PAGE> 43
Attn: Michael A. Woronoff, Esq.
Fax: (213) 687-5600
SECTION 8.3. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
PROVISIONS THEREOF.
SECTION 8.4. Termination.
(a) This Agreement may be terminated (i) at any time
prior to the Closing Date by mutual agreement of the parties, (ii) in the event
one or more Purchasers fails to perform its obligation to purchase the Shares
as provided for herein (the "Nonperforming Purchaser"), by the Company, CLH and
Supermarkets and one or more Purchasers who are not Nonperforming Purchasers if
the Closing shall not have occurred on the Closing Date unless the Company, CLH
and Supermarkets shall have received a Substitute Purchaser Undertaking or
(iii) if the Closing shall not have occurred on or prior to June 30, 1995, by
either the Company, CLH and Supermarkets, on the one hand, or any Purchaser, on
the other hand, at any time after June 30, 1995. Termination pursuant to the
foregoing clauses (i), (ii) or (iii) notwithstanding, Sections 8.1 and 8.11
hereof shall remain in effect.
(b) In the event one or more Purchasers becomes a
Nonperforming Purchaser, the remaining Purchaser or Purchasers (the "Performing
Purchasers") shall have the right, exercisable as provided below, to purchase
the Shares to have been purchased by the Nonperforming Purchaser on the same
terms and conditions provided for herein (in ratable shares, if there are two
or more Performing Purchasers each of whom so elects), unless the Nonperforming
Purchaser shall have theretofore performed its obligations hereunder and
purchased its Shares. Such right shall be irrevocably exercised by each
Performing Purchaser who elects to do so at the Closing by delivery of a
written notice (a "Substitute Purchaser Undertaking") to such effect to the
Company and Supermarkets, which notice shall constitute the binding obliga-
tion of such Performing Purchaser.
SECTION 8.5. Entire Agreement. This Agreement and the
Stockholders Agreement (including all agreements entered into pursuant hereto
and all certificates and instruments delivered pursuant hereto and thereto)
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof
other than the provisions set forth in Sections 2, 6 and 9 of the Commitment
Letter which remain in full force and effect.
42
<PAGE> 44
SECTION 8.6. Modifications and Amendments. No amendment,
modification or termination of this Agreement shall be binding upon any other
party unless executed in writing by the parties hereto intending to be bound
thereby.
SECTION 8.7. Waivers and Extensions. Any party to this
Agreement may waive any right, breach or default which such party has the right
to waive, provided that such waiver will not be effective against the waiving
party unless it is in writing, is signed by such party, and specifically refers
to this Agreement. Waivers may be made in advance or after the right waived
has arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision herein contained. No waiver or
extension of time for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other obligations or
acts.
SECTION 8.8. Titles and Headings. Titles and headings of
sections of this Agreement are for convenience only and shall not affect the
construction of any provision of this Agreement.
SECTION 8.9. Exhibits and Schedules. Each of the exhibits
and schedules referred to herein and attached hereto is an integral part of
this Agreement and is incorporated herein by reference.
SECTION 8.10. Expenses; Brokers. The Company and
Supermarkets shall pay or cause to be paid, whether or not the Closing occurs
hereunder, all reasonable out-of-pocket fees and expenses incurred by the
Purchasers and their affiliates in connection with the transactions
contemplated by this Agreement, the Acquisition Documents and all matters
related thereto (including, without limitation, HSR Act filing fees, and
reasonable fees and disbursements of counsel and consultants). Each of the
parties represents to the others that neither it nor any of its affiliates has
used a broker or other intermediary, other than Yucaipa, in connection with the
transactions contemplated by this Agreement for whose fees or expenses any
other party will be liable and respectively agrees to indemnify and hold the
others harmless from and against any and all claims, liabilities or obligations
with respect to any such fees or expenses asserted by any person on the basis
of any act or statement alleged to have been made by such party or any of its
affiliates.
SECTION 8.11. Press Releases and Public Announcements. No
public announcement or disclosure relating to the transactions contemplated by
the Acquisition Documents shall identify any Purchaser without such Purchaser's
prior consent except to the extent that such disclosure is, in the opinion of
counsel, required by law or by stock ex-
43
<PAGE> 45
change regulation, provided that any such required disclosure shall only be
made, to the extent consistent with law, after consultation with such
Purchaser.
SECTION 8.12. Assignment; No Third Party Beneficiaries.
This Agreement and the rights, duties and obligations hereunder may not be
assigned or delegated by either the Company, CLH or Supermarkets, on the one
hand, or the Purchasers, on the other hand, without the prior written consent
of the other; provided that each Purchaser may assign or delegate its rights,
duties and obligations hereunder to a Permitted Transferee (as defined in the
Stockholder Agreement). Except as provided in the preceding sentence, any
assignment or delegation of rights, duties or obligations hereunder made
without the prior written consent of the other party hereto shall be void and
of no effect. This Agreement and the provisions hereof shall be binding upon
and shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any persons that are not party hereto other than as
expressly set forth in Section 8.1 and 8.12.
SECTION 8.13. 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 8.14. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 8.15. Further Assurances. Each party hereto, upon
the request of any other party hereto, shall do all such further acts and
execute, acknowledge and deliver all such further instruments and documents as
may be necessary or desirable to carry out the transactions contemplated by
this Agreement, including, in the case of the Company, such acts, instruments
and documents as may be necessary or desirable to convey and transfer to each
of the Purchasers the Shares to be purchased by it hereunder.
SECTION 8.16. Remedies Cumulative. The remedies provided
herein shall be cumulative and shall not preclude the assertion by any party
hereto of any other rights or the seeking of any remedies against the other
party hereto, except as provided in Section 8.1.
44
<PAGE> 46
SECTION 8.17. Several Liability of the Purchasers.
Nothing in this Agreement shall be construed to impose on any Purchaser any
liability for any action or failure to act of any other Purchaser.
SECTION 8.18. No Duty to Other Purchasers. Each Purchaser
confirms with each other Purchaser that each Purchaser has conducted its own
due diligence in connection with its investment in the Shares and the other
Purchasers may therefore have information different from, or additional to, the
information possessed by such Purchaser. In addition, although certain of the
other Purchasers (the "Supplying Purchasers") may have shared information
received by them (including information contained in third party reports
prepared for such other Purchasers) with such Purchaser, no representation or
warranty is being made with respect to such information by any Supplying
Purchaser or any such third party. Nothing in this Section 8.18 is meant to
limit any duty, obligation or liability Food 4 Less, Holdings or Supermarkets
may have to any Purchaser under this Agreement or otherwise.
45
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FOOD 4 LESS HOLDINGS, INC.,
a Delaware corporation
/s/ Mark A. Resnik
-----------------------------------
Name: Mark A. Resnik
Title: Secretary
FOOD 4 LESS SUPERMARKETS, INC.
/s/ Mark A. Resnik
-----------------------------------
Name: Mark A. Resnik
Title: Vice President and Secretary
CLH SUPERMARKET CORP.
/s/ Mark A. Resnik
-----------------------------------
Name: Mark A. Resnik
Title: Vice President and Secretary
46
<PAGE> 48
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Peter P. Copses
----------------------------
Name: Peter P. Copses
Title: Vice President
Purchaser is X is not a qualified institutional buyer
--- ----
Address for Notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Telephone: (914) 694-8000
Telecopy: (914) 694-8032
Nominee (if different
than name of Purchaser)
Atwell & Co.
--------------------------------
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 2,674,850 Shares
Number of Shares
being purchased from the Company: 9,150,091 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $64,752,410
<PAGE> 49
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Peter P. Copses
-----------------------------
Name: Peter P. Copses
Title: Vice President
Purchaser is X is not a qualified institutional buyer
--- ----
Address for Notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Telephone: (914) 694-8000
Telecopy: (914) 694-8032
Nominee (if different
than name of Purchaser)
Atwell & Co.
--------------------------------
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 285,840 Shares
Number of Shares
being purchased from the Company: 977,798 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $6,919,580
<PAGE> 50
APOLLO U.K. PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.,
Its General Partner
By: /s/ Peter P. Copses
------------------------------
Name: Peter P. Copses
Title: Vice President
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
c/o Apollo Advisors II, L.P.
2 Manhattanville Road
Purchase, New York 10577
Attn: Tony Tortorelli
Telephone: (914) 694-8000
Telecopy: (914) 694-8032
Nominee (if different
than name of Purchaser)
Atwell & Co.
--------------------------------
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 176,964 Shares
Number of Shares
being purchased from the Company: 605,355 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $4,283,910
<PAGE> 51
BT INVESTMENT PARTNERS, INC.
By: /s/ Joseph T. Wood
--------------------------------
Name: Joseph T. Wood
Title: Managing Director
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
130 Liberty Street
25th Floor
New York, New York 10006
Attn: Brian Talbot
Telephone: (212) 250-9571
Telecopy: (212) 250-7651
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 1,169,322 Shares
Number of Shares
being purchased from the Company: 900,000 Series A Preferred Stock
3,100,000 Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $28,306,780
<PAGE> 52
HWH INVESTMENT PTE LTD
By: /s/ Kunnasagaran Chinniah
----------------------------------
Name: Kunnasagaran Chinniah
Title: Director
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
255 Shoreline Drive, Suite 600
Redwood City, California 94065
Attn: Kunna Chinniah
Telephone: (415) 802-1240
Telecopy: (415) 802-1213
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 438,496 Shares
Number of Shares
being purchased from the Company: 1,500,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $10,615,040
<PAGE> 53
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By: /s/ Michael McLaughlin
--------------------------------
Name: Michael McLaughlin
Title: Vice President
Purchaser is X is not a qualified institutional buyer
--- ----
Address for Notice:
1 Chase Plaza
Eighth Floor
New York, New York 10081
Attn: Michael McLaughlin
Telephone: (212) 552-5139
Telecopy: (212) 552-1159
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 292,330 Shares
Number of Shares
being purchased from the Company: 1,000,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $7,076,700
<PAGE> 54
MERCHANT GP, INC.
By: /s/ Mark Patterson
--------------------------------
Name: Mark Patterson
Title: Vice President
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
c/o CS First Boston Corporation
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Agnes Reicke
Telephone: (212) 909-2899
Telecopy: (212) 753-2390
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 292,330 Shares
Number of Shares
being purchased from the Company: 1,000,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $7,076,700
<PAGE> 55
CRESCENT/MACH I PARTNERS, L.P.,
a Delaware limited partnership
By: Crescent Capital Corporation,
as investment manager and
attorney-in-fact
By: /s/ Mark L. Attanasio
------------------------------
Name: Mark L. Attanasio
Title: President
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attn: Mark Gold
Telephone:
Telecopy: (212) 245-2488
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 146,165 Shares
Number of Shares
being purchased from the Company: 500,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $3,538,350
<PAGE> 56
DLJ CAPITAL CORPORATION
By: /s/ Claire M. Power
------------------------------
Name: Claire M. Power
Title: Assistant Secretary
Purchaser is X is not a qualified institutional buyer
--- -----
Address for Notice:
140 Broadway
New York, New York 10005
Attn: Edward Poletti
Telephone: (212) 504-8012
Telecopy: (212) 504-4991
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 292,330 Shares
Number of Shares
being purchased from the Company: 1,000,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $7,076,700
<PAGE> 57
THE RAPAPORT FAMILY TRUST U/A/D 4/12/90
By: /s/ Marc Rappaport
---------------------------
Name: Marc Rappaport
Title: Trustee
Purchaser is is not X a qualified institutional buyer
---- ---
Address for Notice:
11625 Moraga Lane
Los Angeles, California 90049
Attn: Marc Rapaport
Telephone: (310) 476-9280
Telecopy: (310) 785-8550
Nominee (if different
than name of Purchaser)
___________________________________________________
Common Stock
being purchased from CLH for $10 per Share
and contributed to the Company: 14,617 Shares
Number of Shares
being purchased from the Company: 50,000 Series A Preferred Stock
-0- Series B Preferred Stock
Aggregate cash portion of the Purchase Price paid to the Company: $353,830
<PAGE> 58
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Article Page
------- -----
<S> <C> <C>
I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II SALE AND PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1. Agreement to Sell and to Purchase; Purchase Price . . . . . . . . . . . . . . . .
2.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY, SUPERMARKETS AND CLH . . . . . . . . . . . .
3.1. Organization and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2. Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4. Authorization; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5. No Violation; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7. SEC Documents; Financial Statements . . . . . . . . . . . . . . . . . . . . . . .
3.8. Change in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.9. Employee Benefit Plans and Labor Matters . . . . . . . . . . . . . . . . . . . .
3.10. Interests in Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.11. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.12. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.13. Representations and Warranties in the Merger Agreement . . . . . . . . . . . . .
3.14. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.15. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.16. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.17. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.18. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.19. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.20. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.21. Use of Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.22. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.23. Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 59
<TABLE>
<S> <C> <C>
IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS . . . . . . . . . . . . . . . . . . . . . .
4.1. Authorization; Enforceability; No Violations . . . . . . . . . . . . . . . . . .
4.2. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3. Private Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4. Prohibited Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
V COVENANTS OF THE COMPANY, SUPERMARKETS AND CLH . . . . . . . . . . . . . . . . . . . . . . .
5.1. Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2. Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3. Amendment or Modification of or Waivers
under Acquisition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4. Notices Under the Acquisition Agreement . . . . . . . . . . . . . . . . . . . . .
5.5. Agreement to Take Necessary and Desirable Actions . . . . . . . . . . . . . . . .
5.6. Compliance with Conditions; Best Efforts . . . . . . . . . . . . . . . . . . . .
5.7. HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.8. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.9. Merger; Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . .
VI COVENANTS OF THE PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1. Agreement to Take Necessary and Desirable
Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2. Compliance with Conditions; Best Efforts . . . . . . . . . . . . . . . . . . . .
6.3. HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VII CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.1. Conditions to the Company's, CLH's and Supermarkets'
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.2. Conditions to Purchasers' Obligations . . . . . . . . . . . . . . . . . . . . . .
VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1. Survival; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.5. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.6. Modifications and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . .
8.7. Waivers and Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.8. Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 60
<TABLE>
<S> <C> <C>
8.9. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.10. Expenses; Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.11. Press Releases and Public Announcements . . . . . . . . . . . . . . . . . . .
8.12. Assignment; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . .
8.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.15. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.16. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.17. Several Liability of the Purchasers . . . . . . . . . . . . . . . . . . . . .
8.18. No Duty to Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 61
SCHEDULES
---------
<TABLE>
<S> <C>
Schedule 1 List of the Purchasers
Schedule 3.2 Capital Stock
Schedule 3.3 Subsidiaries
Schedule 3.5 No Violation; Consents
Schedule 3.8 Change in Condition
Schedule 3.9 Employee Benefit Plans and Labor Matters
Schedule 3.10 Interests in Real Property
Schedule 3.14 Taxes
Schedule 3.16 Intellectual Property
Schedule 3.17 Registration Rights
</TABLE>
EXHIBITS
--------
<TABLE>
<S> <C>
Exhibit A Registration Rights Agreement
Exhibit B Stockholders Agreement
Exhibit C Certificate of Designation - Series A Preferred Stock
Exhibit D Certificate of Designation - Series B Preferred Stock
Exhibit E Opinion of Latham & Watkins
</TABLE>
<PAGE> 1
Exhibit 10.8
________________________________________________________________________________
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 14, 1995
BY AND AMONG
FOOD 4 LESS HOLDINGS, INC.
FOOD 4 LESS SUPERMARKETS, INC.
AND
THE HOLDER OF THE 13-5/8% SENIOR
DISCOUNT DEBENTURES DUE 2005
OF FOOD 4 LESS HOLDINGS, INC.
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Hold-Back Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Representations and Warranties of the
Partnership, the Company and F4L Supermarkets . . . . . . . . . . . . . . . . . . . . . . 8
7. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11. Participation in Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . 20
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 3
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of June 14, 1995, by and among Food 4 Less Holdings, Inc.,
a Delaware corporation (the "Company"), Food 4 Less Supermarkets, Inc., a
Delaware corporation ("F4L Supermarkets") and RGC Partners, L.P., a Delaware
limited partnership (the "Partnership").
This Agreement is made pursuant to the Subscription Agreement,
dated as of June 2, 1995 (the "Subscription Agreement"), by and among the
Company, F4L Supermarkets, the Partnership and the Partnership Investors listed
on Exhibit A thereto. In order to induce the Partnership to enter into the
Subscription Agreement, 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 Subscription Agreement.
Concurrently with the closing under the Subscription 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 Subscription 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.
Closing Date: The date of closing under the Subscription
Agreement.
Company: As defined in the preamble hereto.
Debentures: The 13-5/8% Senior Discount Debentures due 2005
being issued pursuant to the Indenture and sold pursuant to the Subscription
Agreement in an aggregate principal amount at maturity of $193,363,570, 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).
1
<PAGE> 4
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 June 1, 1995 between the
Company and United States Trust Company of New York, 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).
NASD: National Association of Securities Dealers, Inc.
90-Day Periods: As defined in Section 5(c).
Partnership: As defined in the preamble hereto.
Partnership Investor: As defined in the Subscription
Agreement.
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 or
contributed to the Partnership pursuant to the Subscription Agreement; 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.
2
<PAGE> 5
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from
time to time.
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.
Subscription Agreement: As defined in the preamble hereto.
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 PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT,
AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE HOLDER OF THIS SECURITY MAY BE REQUIRED TO
DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS, A WRITTEN OPINION
OF COUNSEL THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXEMPT FROM THE
3
<PAGE> 6
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER."
If the Partnership or any other Holder 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), the Partnership or such other Holder shall deliver to the
Company, if the Company so requests, 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 is available.
3. Shelf Registration.
(a) Initial Shelf Registration Statement. The Company
has filed a "shelf" registration statement on Form S-1 (No. 33-59851) pursuant
to Rule 415 under the Securities Act (the "Initial Shelf Registration
Statement") relating to the resale by the Partnership of all the Transfer
Restricted Securities. The Initial Shelf Registration Statement was declared
effective by the SEC on June 5, 1995 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) 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.
4
<PAGE> 7
(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. The Company shall provide a
copy of all such supplements and amendments to each Holder, to the Partnership
and to each Partnership Investor.
4. Liquidated Damages.
(a) Each of the Company and the Partnership acknowledge
that the Holders of Registrable Securities will suffer damages if the
effectiveness of the 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 30 Business Days immediately following the occurrence of such
Registration Default, in an amount equal to $50 per Business Day per $1,000,000
principal amount of Registrable Securities held by such Holder for each
Business Day or portion thereof that the Registration Default continues. The
amount of the liquidated damages thereafter shall increase to $75 per Business
Day per $1,000,000 principal amount of Registrable Securities until the
cumulative number of Business Days elapsed following such Registration Default
is equal to 60, and the amount of liquidated damages thereafter shall increase
to $100 per Business Day per $1,000,000 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
5
<PAGE> 8
amount due on the Registrable Securities (the "Liquidated Damages Amount Due")
to the Partnership and any other Holder of Registrable Securities, in sums
sufficient to pay the Liquidated Damages Amount Due with respect to the amount
of Registrable Securities, if any, then held by the Partnership and each such
other Holder. The Liquidated Damages Amount Due shall be payable on or prior
to the fifth day of each calendar month with respect to the preceding calendar
month or that portion of the preceding calendar month during which a
Registration Default was in existence and remained uncured, to the Persons who
were registered Holders of Registrable Securities at the close of business on
the last day of the preceding calendar month, 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.
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 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 the Company's or F4L Supermarkets' marketing activities with
respect to debt securities comprising any portion of the Financing, in either
case during the period commencing on the Acquisition Closing Date and ending on
the 60th day following the Acquisition 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 of at least $50,000,000 accreted value
of Debentures, 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.
6
<PAGE> 9
(c) Each Holder agrees, upon a request of the Company made
after June 30, 1996 (which date shall be extended by each Business 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 or any subsidiary of the Company 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 one such 90-Day Period 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, unless otherwise consented to by
all general partners of the Partnership, or Holders of a majority in principal
amount of Registrable Securities (if other than the Partnership), not to effect
any public sale or distribution of securities, for its own account or for the
account of any securityholder, of any of the issue being registered or a
similar security issued by the Company or any Subsidiary, or any securities
convertible or exchangeable or exercisable for such securities (other than (i)
the Company's 13-5/8% Senior Subordinated Pay-In-Kind Debentures due 2007 (the
"PIK Debentures") sold for the account of (A) any holder thereof on or after
the 90th day following the Closing Date, pursuant to the terms of that certain
Registration Rights Agreement dated the Closing Date among the Company, F4L
Supermarkets and such holders, or (B) The Yucaipa Companies, or its affiliate
or designee, or The Edward J. DeBartolo Corporation, pursuant to the terms of
that certain Senior Subordinated Pay-In-Kind Debenture Put Agreement dated the
Closing Date, provided that the aggregate principal amount of PIK Debentures
sold under this clause (B) shall not exceed $10,000,000, and that any such sale
will be substantially contemporaneous with the closing under the Subscription
Agreement, and (ii) bank borrowings, obligations of the Company with respect to
trade debt and other debt incurred by the Company in the ordinary course of
business), during the Effectiveness Period (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).
7
<PAGE> 10
6. Representations and Warranties of the Partnership,
the Company and F4L Supermarkets.
(a) The Partnership hereby represents and warrants to the
Company and F4L Supermarkets as follows:
(i) The Partnership is duly formed, validly existing
and in good standing under the laws of the State of Delaware. The
execution and delivery of this Agreement, the performance of the
Partnership's obligations hereunder, and the transactions contemplated
hereby have been duly authorized by all necessary partnership action
on the part of the Partnership. This Agreement has been duly executed
and delivered by the Partnership, and, assuming the due execution
hereof by each other party hereto, this Agreement constitutes the
legal, valid and binding obligation of the Partnership, enforceable
against the Partnership 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) The Partnership is purchasing the Debentures for
its own account (or on behalf of managed accounts that are purchasing
for their own accounts), 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 its 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
Debentures being at all times within the Partnership's control.
(b) Each of the Company and F4L Supermarkets hereby
represents and warrants to the Partnership as follows:
(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
8
<PAGE> 11
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;
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; and amend or supplement the Shelf
Registration Statement as necessary to reflect any changes in such intended
methods of distribution as to which the sellers from time to time may notify
the Company;
(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 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 (o) 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 of any event (or the passage of time)
which makes any statement made in the Shelf
9
<PAGE> 12
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, and so
that in either case such Shelf Registration Statement or Prospectus complies
with all applicable requirements of the Securities Act;
(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, each Partnership
Investor 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,
Partnership Investors 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 Partnership Investors, 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 Partnership Investors, 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
10
<PAGE> 13
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 the Partnership Investors, the Holders of
a majority in principal amount of the Registrable Securities 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;
(e) if requested by the managing underwriter or
underwriters or the holders of a majority in aggregate principal amount of
Registrable Securities being sold, 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 or otherwise, the
purchase price being paid therefor by such underwriters or other persons and
with respect to any other terms of the underwritten (or non-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 Partnership Investor and 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 Persons, without change, one copy of all documents incorporated therein by
reference and all exhibits;
(g) deliver to each Partnership Investor, 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 Partnership Investor, 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,
11
<PAGE> 14
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 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
selling holders or managing underwriters may request at least two business days
prior to any sale of Registrable Securities;
(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, and otherwise will comply with all applicable requirements
under the Securities Act;
(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
12
<PAGE> 15
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 Registrable
Securities which are in a form eligible for deposit with the Depository Trust
Company;
(o) in connection with any underwritten offering of
Registrable Securities pursuant to a Shelf Registration Statement, enter into
an underwriting agreement with one or more underwriters designated in
accordance with Section 11 hereof, such agreement to be of 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 underwritten 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 (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 underwriters); (3) obtain "comfort" letters
and updates thereof from the Company's independent certified public accountants
addressed to the underwriters such letters to be in customary form and covering
matters of the type customarily covered in "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
indemnified pursuant to said Section; and (5) the Company shall deliver such
documents 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. Additionally, the opinions and "comfort" letters referred to in
clauses (2) and (3) above shall from time to time be obtained and delivered to
the Holders in connection with sales of Registrable Securities pursuant to the
Shelf Registration Statement, whether or not such sales are underwritten, upon
the reasonable request of the managing general partner of the Partnership, or
the Holders of a majority in principal amount of Registrable Securities (if
other than the Partnership), and in any event shall be obtained and delivered
13
<PAGE> 16
upon cessation or waiver of the holdback period referred to in Section 5(a),
and shall be updated (i) in quarterly intervals thereafter or more frequently
as may be necessary in connection with any sale of Registrable Securities
having an accreted value of $20,000,000 or more, (ii) upon any change in the
managing general partner of the Partnership, and (iii) as necessary in
connection with any amendment or supplement to the Shelf Registration
Statement, provided that any such "comfort" letters shall be required to be
obtained, delivered or updated only to the extent permitted by, and in
accordance with, applicable requirements of the American Institute of Certified
Public Accountants;
(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;
(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;
14
<PAGE> 17
(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; the Company will also make representatives of
management available for conference calls in connection with any underwritten
or non-underwritten public offering upon reasonable advance notice; and
(t) use its best efforts to assist the Partnership in the
resale of the Debentures, including in addition to all of the foregoing, taking
such other actions as may in the reasonable opinion of the managing
underwriter, if any, or the managing general partner of the Partnership, be
necessary or appropriate to facilitate the resale of the Debentures.
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
15
<PAGE> 18
with the NASD (including, if applicable, the fees and expenses of any
"qualified independent 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 Securities 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 Section 8(b) hereof) and of all independent certified public
accountants of the Company (including the expenses of any special audit and
"comfort" letters required by or incident to such performance), underwriters
(including underwriting or brokers' or dealers' discounts, commissions or
mark-ups (or the equivalent); provided that such discounts, commissions or
mark-ups will be reimbursed only to the extent that the aggregate net proceeds
of resale are less than the accreted value of the Debentures being resold by or
through such underwriter, broker or dealer), legal expenses of any Person other
than the Company and the Holders, 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 or, if the holder of a majority in principal amount of such
Registrable Securities is the Partnership, by the holders of a majority of
Partnership interests (excluding interests held by affiliates of The Yucaipa
Companies).
9. Indemnification.
(a) Indemnification by Company and F4L Supermarkets.
Each of the Company and F4L Supermarkets agrees to, jointly and severally,
indemnify and hold harmless, to the full extent permitted by law, each
Partnership Investor, each Holder of Registrable Securities and each Person who
controls each such Partnership Investor or
16
<PAGE> 19
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act), any underwriters participating in the distribution, and the
affiliates of each such Person and their respective partners, members,
representatives, agents, officers, directors and employees, 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 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 or F4L
Supermarkets by such indemnified party or the related Holder of Registrable
Securities expressly for use therein; provided, however, that neither the
Company nor F4L Supermarkets shall 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 neither the Company nor F4L Supermarkets
shall 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 neither the Company nor F4L Supermarkets shall 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 a misstatement or omission in the Prospectus resulting from 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.
17
<PAGE> 20
(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 each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), any
underwriters participating in the distribution, and the affiliates of each such
Person and their respective partners, members, directors, officers and
employees, 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 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
18
<PAGE> 21
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 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
19
<PAGE> 22
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 or F4L Supermarkets 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 or F4L Supermarkets, as the case may
be, 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 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 Partnership or by the Holders
(if other than the Partnership) 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 Holder proposes to sell Registrable
Securities covered by the Shelf Registration Statement in an underwritten
offering, it will so notify the Company
20
<PAGE> 23
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.
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
21
<PAGE> 24
previously entered into any agreement with respect to its debt securities
granting any registration rights to any Person, except as may be disclosed in
the Shelf Registration Statement filed prior to the date hereof. 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. The Company has not
entered into, and will not enter into, any agreement with respect to any of its
securities that will grant to any Person any piggyback or similar registration
rights with respect to any Shelf Registration Statement.
(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 the Partnership, RGC Partners, L.P., c/o Yucaipa RGC
L.L.C., 10000 Santa Monica Boulevard, Fifth Floor, Los Angeles,
California 90067, with a copy to Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, CA 90071, Attention: Thomas C.
Sadler, Esq., provided that if the Partnership is still a Holder of
Debentures on the 180th day following the date the Debentures are
issued under the Indenture, the Partnership address will be RGC
Investors, L.P., c/o FFL Investors L.L.C., Soros Fund Management, 888
Seventh Avenue, New York, New York 10016, with a copy to Akin, Gump,
Strauss, Hauer & Feld, L.L.P., 65 East 55th Street, 33rd Floor, New
York, New York 10022, Attention: Ed Sopher, Esq.
(ii) if to the Company, initially at its address set forth
in the Subscription 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.
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.
22
<PAGE> 25
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.
(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 the
Company with respect to the Debentures. 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.
(m) Securities Held by the Company or Its Subsidiaries.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is
23
<PAGE> 26
required hereunder, Registrable Securities held by the Company or its
Subsidiaries shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
24
<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
FOOD 4 LESS HOLDINGS, INC.
By: /s/ Mark A. Resnik
----------------------------------
Title: Vice President and Secretary
-------------------------------
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
----------------------------------
Title: Vice President and Secretary
-------------------------------
RGC PARTNERS, L.P.,
A DELAWARE LIMITED PARTNERSHIP
By: Yucaipa RGC L.L.C.
Its: General Partner
By: /s/ Mark A. Resnik
----------------------------------
Title: Authorized Member
-------------------------------
25
<PAGE> 1
Exhibit 10.9
================================================================================
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE 14, 1995
BY AND AMONG
FOOD 4 LESS HOLDINGS, INC.
FOOD 4 LESS SUPERMARKETS, INC.
AND
THE HOLDERS OF THE 13-5/8% SENIOR SUBORDINATED
PAY-IN-KIND DEBENTURES DUE 2007
OF FOOD 4 LESS HOLDINGS, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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
</TABLE>
<PAGE> 3
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of June 14, 1995, by and among Food 4 Less Holdings, Inc.,
a Delaware corporation (the "Company"), Food 4 Less Supermarkets, Inc., a
Delaware corporation ("F4L Supermarkets") and the holders of the Company's
13-5/8% Senior Subordinated Pay-in-Kind Debentures due 2007 identified in the
signature pages hereto (the "Selling Debentureholders").
This Agreement is made pursuant to the Merger Agreement, dated
as of September 14, 1994, as amended (the "Merger Agreement"), by and among the
Company, the Selling Debentureholders, Food 4 Less, Inc., a Delaware
corporation ("Food 4 Less"), Food 4 Less Holdings, Inc., a California
corporation, 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 June 15 and December 15, or, if
any such day is not a Business Day, on the next succeeding Business Day.
Debentures: The 13-5/8% Senior Subordinated Pay-in-Kind
Debentures due 2007 being issued pursuant to the Indenture and sold pursuant to
the Merger Agreement in an initial aggregate principal amount of $131,500,000,
and any Secondary Securities issued pursuant to the Indenture, as the
Debentures may be amended or supplemented from
1
<PAGE> 4
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).
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 June 1, 1995 between the
Company and Norwest Bank Minnesota, N.A., 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.
2
<PAGE> 5
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.
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
3
<PAGE> 6
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. It is understood that a pledge to an institution or to an
agent for one or more institutions made at any time while the Shelf
Registration Statement is effective shall be deemed to be a pledge pursuant to
an effective Registration Statement. It is further understood that a gift of
any Debentures by Federated Department Stores, Inc. to Federated Department
Stores Foundation, an Ohio not-for-profit corporation, made at any time while
the Shelf Registration Statement is effective, shall be deemed to be a transfer
pursuant to an effective Registration Statement.
3. Shelf Registration
(a) Initial Shelf Registration Statement. The Company
has filed a "shelf" registration statement on Form S-1 (No. 33-88896) 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 June 5, 1995 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.
4
<PAGE> 7
(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 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
5
<PAGE> 8
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 June 1 or December 1 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 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) Except as contemplated by the Put Agreement, 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.
6
<PAGE> 9
(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 the Company's 13-5/8% Senior Discount Debentures due
2005 sold for the account of RGC Partners, L.P. and 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), 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).
7
<PAGE> 10
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 its 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
Debentures being at all times within such Selling Debentureholder's
control.
(b) Each of the Company and F4L Supermarkets hereby
represents and warrants to the Selling Debentureholders as follows:
(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
8
<PAGE> 11
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
9
<PAGE> 12
the initiation or threatening of any proceeding for such purpose and (6) of the
happening 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 th eoutstanding 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
10
<PAGE> 13
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;
(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
11
<PAGE> 14
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 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 or any of its subsidiaries 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;
12
<PAGE> 15
(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 Registrable
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 underwritten 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 (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
underwriters); (3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
underwriters 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
indemnified pursuant to said Section; and (5) the Company shall deliver such
documents 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
13
<PAGE> 16
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;
(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.
14
<PAGE> 17
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 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 Securities 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 Section
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
15
<PAGE> 18
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
16
<PAGE> 19
alleged omission to state therein a material fact required to be stated therein
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 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
17
<PAGE> 20
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 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
18
<PAGE> 21
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 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
19
<PAGE> 22
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.
20
<PAGE> 23
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 &
21
<PAGE> 24
Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, CA 90071,
Attention: Thomas C. Sadler, Esq.
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.
22
<PAGE> 25
(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 the
Company with respect to the securities sold pursuant to the Merger Agreement
other than that certain Registration Rights Agreement of even date herewith
relating to the Company's 13-5/8% Senior Discount Debentures due 2005. 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.
23
<PAGE> 26
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
FOOD 4 LESS HOLDINGS, INC.
By: /s/ Mark A. Resnik
Title: Vice President and Secretary
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
Title: Vice President and Secretary
SELLING DEBENTUREHOLDERS:
THE EDWARD J. DEBARTOLO CORPORATION
By: /s/ Anthony W. Liberati
Name: Anthony W. Liberati
Title: Executive Vice President
CAMDEV PROPERTIES INC.
By: /s/ Stanley H. Hartt
Name: Stanley H. Hartt
Title: Chairman of the Board, President
and Chief Executive Officer
By: /s/ Randall B. Northey
Vice President, General Counsel
and Secretary
BANK OF MONTREAL
24
<PAGE> 27
By: /s/ E.J.D. Pinder
Name: E.J.D. Pinder
Title: Account Manager
BANQUE PARIBAS
By: /s/ Jeffrey J. Youle
Name: Jeffrey J. Youle
Title: Senior Vice President
By: /s/ MS Alexander
Name: MS Alexander
Title: Managing Director
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Padma Tatta Cariappa
Name: Padma Tatta Cariappa
Title: Associate Counsel
25
<PAGE> 1
Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made and entered into as of
the Commencement Date (as defined below), between RALPHS GROCERY COMPANY, a
Delaware corporation, having its executive offices and a principal place of
business in the City of Compton, California (the "Employer"), FOOD 4 LESS
HOLDINGS INC., a Delaware corporation ("F4L Holdings"), and George G. Golleher
(the "Employee").
RECITALS
A. It is the desire of the Employer to assure itself of the
management services of the Employee by directly engaging the Employee as the
Vice Chairman of the Employer.
B. The Employee desires to commit himself to serve the
Employer on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements set forth below the parties hereto agree as
follows:
ARTICLE I
POSITION AND TERM
1.1 Position. The Employer agrees to and does employ the
Employee and the Employee shall enter the employ of the Employer to perform his
duties as Vice Chairman or such other or additional duties as determined by the
Board of Directors of the Employer (the "Board") or the Chief Executive Officer
of the Employer (the "CEO").
<PAGE> 2
1.2 Period of Contract Employment. The term "Period of
Contract Employment," as used herein, means the period beginning on the date
(the "Commencement Date") of consummation of the Merger (as defined in that
certain Agreement and Plan of Merger, dated as of September 14, 1994, by and
among Food 4 Less Inc., F4L Holdings, Food 4 Less Supermarkets, Inc., Ralphs
Supermarkets, Inc., the Edward J. DeBartolo Corporation, and the other
stockholders of Ralphs Supermarkets, Inc.), and ending on the earlier of the
third anniversary thereof or at the time of the Termination of Contract
Employment (as defined in Article III below).
1.3 Extension of Period of Contract Employment. The
Period of Contract Employment may be extended by a written agreement of the
parties. Notwithstanding the foregoing, neither the Employer nor the Employee
shall have any obligation to extend the Period of Contract Employment. If the
Employee remains in the employ of the Employer following the Period of Contract
Employment and any extension thereof in accordance with this Section 1.3, such
employment shall be at will unless different terms of employment are
established in writing.
1.4 Suspension of Services.
(a) Except in the case of a Termination of Contract
Employment under Article III, in the event that the Employee is advised by the
Employer in writing that his services will no longer be required during the
remainder of the Period of Contract Employment, this shall be treated as a
suspension of services and, except for the purposes set forth in Section 2.4,
and except as prohibited by applicable laws and regulations, the Employee shall
continue to be treated as an employee of the Employer for all purposes
including eligibility for those fringe benefits provided for in Section 2.2,
and shall continue
2
<PAGE> 3
to be compensated by the Employer (subject to the possible offset set forth in
subsection (b) below) during the remainder of the Period of Contract Employment
at the rate of "Total Compensation" to which the Employee was entitled at time
of suspension of services. The portion of the Period of Contract Employment
prior to the suspension of service is referred to herein as the "Period of
Active Employment." For purposes of this Agreement, the term "Total
Compensation" shall mean the Base Salary set forth in Section 2.1, any
increases to such Base Salary granted by the Employer in accordance with
Section 2.1 and any Bonus Compensation earned by the Employee pursuant to
Section 2.3 during the portion of the year of suspension of services of the
Employee which falls within the Period of Active Employment.
(b) In the event of suspension of services in accordance
with subsection (a) above, the Employee shall be free to become engaged with
another business in any capacity but in such event, fifty percent (50%) of the
compensation of any kind (including deferred compensation and compensation
assigned to an entity or individual other than the Employee) received from or
earned with respect to such other business (except compensation from businesses
or investments owned by the Employee before the date of suspension of services
and/or compensation received by the Employee from any affiliate of The Yucaipa
Companies (a "Yucaipa Affiliate") for which there will be no deduction) and one
hundred percent (100%) of the compensation of any kind (including deferred
compensation and compensation assigned to an entity or individual other than
the Employee) received from or earned with respect to a "Competing Business"
(as defined in Section 5.5 below) (except compensation received by the Employee
from any Yucaipa Affiliate), in each case attributable to the Period of
Contract Employment, shall be subtracted from any amounts otherwise due the
Employee
3
<PAGE> 4
from the Employer. The Employee shall not take any actions to prevent
compensation received from or earned with respect to such other business from
being applied pursuant to this Section 1.4(b) to reduce amounts otherwise due
the Employee from the Employer.
ARTICLE II
COMPENSATION
2.1 Annual Base Salary. During the Period of Contract
Employment the Employer agrees to pay the Employee a base salary in the annual
amount of Five Hundred Thousand Dollars ($500,000.00) (the "Base Salary");
provided, however, that the agreement as to said amount shall not preclude or
in any way affect the grant by the Employer or the receipt by the Employee of
increases in the Base Salary, or of Bonus Compensation or other forms of
additional compensation (including insurance and other employee plan benefits),
such increases, contingent or otherwise, to be determined solely in the
discretion of the Board or a committee of the Board to which such authority is
delegated by the Board, and such Bonus Compensation and additional
compensation, contingent or otherwise, to be determined in accordance with
Sections 2.2 and 2.3, respectively. The Base Salary shall be payable as
current salary, in monthly installments subject to all applicable withholding
and deductions, and at the same monthly rate as adjusted for any fraction of a
month unexpired at the Termination of Contract Employment.
2.2 Benefits. During the Period of Contract Employment,
the Employee shall be entitled to participate in or receive benefits under any
employee benefit plan or other arrangement including, but not limited to, any
medical, dental, retirement, disability, life insurance, sick leave and
vacation plans or arrangements generally made available by the
4
<PAGE> 5
Employer to its executive officers, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans or arrangements;
provided, however, that such plans and arrangements are made available at the
discretion of the Employer and nothing in this Agreement establishes any right
of the Employee to the availability or continuance of any such plan or
arrangement, including pursuant to Section 1.4(a).
2.3 Bonus Compensation. In each year of employment under
this Agreement, the Employee will be eligible to receive an annual bonus in an
amount equal to his Base Salary in such year. The benchmarks for earning any
portion of such bonus shall be prescribed in the reasonable discretion of the
Board.
2.4 Expenses and Office Space. The Employer agrees that
during the Period of Active Employment the Employee shall be allowed reasonable
documented traveling expenses directly related to the Employer's business and
shall be furnished office space, assistance and accommodations within the
Employer's place of business suitable to the character of his position with the
Employer and adequate for the performance of his duties hereunder.
ARTICLE III
TERMINATION OF CONTRACT EMPLOYMENT
3.1 Automatic Termination. The Agreement and the
Employee's employment hereunder shall automatically terminate upon the first to
occur of the following circumstances (any such termination and any termination
pursuant to Section 3.2 is referred to herein as a "Termination of Contract
Employment"):
5
<PAGE> 6
(a) Expiration. The failure of the parties prior
to the third anniversary of the Commencement Date to extend the Period of
Contract Employment pursuant to Section 1.3 or the expiration of any extension
of the Period of Contract Employment; provided, however, that notwithstanding
such termination, if the Employee remains an employee of the Employer following
such termination, the provisions of Article IV of this Agreement shall remain
in effect (except that the "Put Termination Date" shall mean the termination of
the Employee's employment with the Employer on account of the Employee's death
or permanent and total disability, and any reference in Article IV to a
Termination of Contract Employment pursuant to Section 3.1(b) and 3.2(a) shall
be deemed to refer to the termination of the Employee's employment with the
Employer due to death or permanent and total disability, respectively) until
the earlier of termination of the Employee's employment with the Employer or
the date on which the Employee sells all of the F4L Holdings Stock (as defined
in Section 4.1) and the provisions of Article VI of this Agreement shall remain
in effect until the termination of the Employee's employment with the Employer;
or
(b) Death. The Employee's death.
3.2 Permissive Termination. The Agreement and the
Employee's employment hereunder may be terminated by the Employer or the
Employee, as applicable, under the following circumstances:
(a) Disability. Upon the failure of the
Employee, during the Period of Contract Employment, to render services to the
Employer for a continuous period of six (6) months, because of the Employee's
physical or mental disability during said period, the Employer, acting through
the Board or a committee of the Board to which such authority is
6
<PAGE> 7
delegated by the Board, may end the Employee's Period of Contract Employment.
If there should be any dispute between the parties as to the Employee's
physical or mental disability at any time, such question shall be settled by
the opinion of an impartial reputable physician agreed upon for the purpose by
the parties or their representatives, or failing agreement within ten (10) days
of a written request therefor by either party to the other, then one designated
by the then president of the Los Angeles Medical Society. The certificate of
such physician as to the matter in dispute shall be final and binding on the
parties; or
(b) Upon Change of Control. The Employee, at the
time and in the manner provided in Section 7.1 hereof, may exercise the option
granted to the Employee pursuant to such Section 7.1; or
(c) Resignation or Retirement. The Employee may
voluntarily resign or retire upon written notice; or
(d) Cause. The Employer may terminate the
Employee's employment based upon (i) the Employee's gross misconduct; (ii) any
felony conviction of the Employee (other than a traffic or moving violation,
such as driving under the influence, except that if the Employee incurs a
driving under the influence violation after incurring two previous driving
under the influence violations during the Period of Contract Employment, the
third such violation will be a felony conviction for purposes of this
subsection (d)(ii)); (iii) any act of fraud or dishonesty by the Employee
materially detrimental to the business or reputation of the Employer as
determined by the Board; (iv) any serious breach of Employer policy by the
Employee as determined by the Board; or (v) any other material breach of the
Agreement by the Employee.
7
<PAGE> 8
ARTICLE IV
OBLIGATION OF F4L HOLDINGS TO PURCHASE
EMPLOYEE'S F4L HOLDINGS STOCK
4.1 In the event that the Employee has a Termination of
Contract Employment pursuant to Section 3.1(b) or 3.2(a) or a suspension of
services pursuant to Section 1.4 (the date of such Termination of Contract
Employment or suspension of services hereinafter referred to as the "Put
Termination Date"), then the Employee or his representative ("Representative")
shall have the option for six (6) months ("Put") to require F4L Holdings to
purchase all or a portion of the 262,526 shares of common stock, par value $.01
per share, of F4L Holdings (the "F4L Holdings Stock") acquired by him on or
about the date of this Agreement, in the manner and on the terms set forth
below; provided, however, that (i) the Employee may exercise the Put in the
event of a Termination of Contract Employment pursuant to Section 3.2(a) only
to the extent that, at the time of such Termination of Contract Employment, F4L
Holdings and the Employer shall be the named beneficiaries of a disability
insurance policy with respect to the Employee, and the benefit payable under
such policy is an amount no less than the amount of the Put Price (as defined
below) payable upon such exercise and (ii) the Representative may exercise the
Put in the event of a Termination of Contract Employment pursuant to Section
3.1(b) only to the extent that, at the time of such Termination of Contract
Employment, F4L Holdings and the Employer shall be the named beneficiaries of a
life insurance policy with respect to the Employee, and the benefit payable
under such policy is an amount no less than the amount of the Put Price (as
defined below) payable upon such exercise. The Employer undertakes to use its
best efforts to obtain and to keep in full force and effect, during the term of
this
8
<PAGE> 9
Agreement, policies of life and disability insurance in amounts sufficient to
fund any Put Price (as defined below) (assuming such insurance is available on
a commercially reasonable basis) with respect to the Employee as described
above and with respect to which F4L Holdings and the Employer shall be the
named beneficiaries. The purchase price for F4L Holdings Stock which F4L
Holdings is required to purchase upon an exercise of the Put ("Put Price")
shall be determined in accordance with the procedure set forth in Section 4.5
hereof.
4.2 The Put shall be deemed to be exercised on the date
written notice is given of such exercise by the Employee or his Representative
(the "Put Notice"), and such exercise shall be irrevocable, except as provided
in Section 4.4 below. Such notice shall specify the name of the Employee and,
shall in the event of the death of the Employee, state facts satisfactory to
F4L Holdings as to the death of the Employee.
4.3 Within five (5) days after the determination of the
Put Price for his F4L Holding Stock, the Employee or his Representative shall
deliver the certificates evidencing his F4L Holdings Stock together with such
endorsements and stock power certificates as F4L Holdings may require and,
subject to Section 4.4 below, F4L Holdings shall deliver a check in the amount
of the Put Price.
4.4 Notwithstanding the foregoing, if F4L Holdings is
prohibited from purchasing the F4L Holdings Stock of the Employee under any
applicable law or agreement relating to indebtedness, the Employee or his
Representative shall have the option to (i) revoke the exercise of the Put or
(ii) not revoke the Put in which event F4L Holdings will endeavor to purchase
his F4L Holdings Stock at the earliest possible time under applicable law or
agreements relating to indebtedness, subject to the provisions of Section 4.1
above.
9
<PAGE> 10
4.5 The Put Price for any shares of F4L Holdings Stock to
be purchased pursuant to the Put shall equal the fair market value of such F4L
Holdings Stock as of the Put Termination Date. F4L Holdings and the Employee
shall attempt to agree on a fair market value for his F4L Holdings Stock. In
the event that they are not able to agree, each party's determination of the
fair market value of his F4L Holdings Stock shall be submitted to an
independent investment banker to be chosen by the Employee and F4L Holdings,
with the fees of such investment banker to be paid by F4L Holdings. The
determination by the investment banker shall be limited solely to the issue of
whether F4L Holdings' or the Employee's fair market value for his F4L Holdings
Stock is the closest to the actual fair market value for his F4L Holdings
Stock. If the Employee and F4L Holdings are unable to agree on an independent
investment banker prior to five (5) days after the date of the Put Notice, each
shall choose an independent investment banker to make the determination of
whether F4L Holdings' or the Employee's fair market value for his F4L Holdings
Stock is the closest to the actual fair market value of his F4L Holdings Stock.
Each party shall bear the fees of the investment banker selected by that party.
If either party fails to choose an independent investment banker within
twenty-five (25) days after the date of the Put Notice, the independent
investment banker chosen by the other party shall make the determination of
whether F4L Holdings' or the Employee's fair market value for his F4L Holdings
Stock is the closest to the actual fair market value for his F4L Holdings
Stock. The two independent investment bankers shall within thirty days of the
appointment of the second investment banker reach a decision as to whether the
parties shall use F4L Holdings' submitted fair market value or the Employee's
submitted fair market value and shall notify F4L Holdings and the Employee
thereof. In the event that the two independent investment bankers are in
10
<PAGE> 11
agreement, the fair market value of F4L Holdings Stock shall be the submitted
fair market value so agreed upon. If the two investment bankers are not in
agreement, the two independent investment bankers shall appoint a third
independent investment banker within ten days of such decision. Such third
independent investment banker shall reach a decision as to whether the parties
shall use F4L Holdings' submitted fair market value or the Employee's submitted
fair market value and shall notify F4L Holdings and the Employee thereof within
thirty (30) days following its appointment. The fees for such third
independent investment banker shall be borne by the party whose submitted fair
market value was not selected by such third independent investment banker.
ARTICLE V
COVENANTS
5.1 Full-Time Employee. The Employee hereby covenants
and agrees that during the Period of Contract Employment he will faithfully and
in conformity with the directions of the Board, or of an officer of the
Employer duly authorized by the Board, perform the duties of his employment
hereunder, and that he shall be a full-time employee of the Employer (together
with, to the extent applicable, any Yucaipa Affiliate) and that he shall devote
to the performance of said duties all such time and attention as they shall
reasonably require, taking, however, from time to time (as the Employer agrees
that he may) reasonable vacations.
5.2 No Detraction From Performance. The Employee hereby
consents and agrees that during the Period of Contract Employment he will not,
without the express consent of the Board or a committee of the Board to which
such authority is delegated by the
11
<PAGE> 12
Board or the Chief Executive Officer of the Employer, become actively
associated with or engaged in any business other than that of the Employer, or
a division, or subsidiary of the Employer or a Yucaipa Affiliate that would
detract from the performance of his duties to the Employer, and he will do
nothing inconsistent with such duties.
5.3 Confidential Information. It is recognized by the
Employee and the Employer that the Employee's duties during the Period of
Contract Employment will entail the receipt of confidential information
concerning not only the Employer's current operations and procedures but also
its short-range and long-range plans. The Employee hereby covenants and agrees
that during the Period of Contract Employment and at any time thereafter, he
will not disclose to anyone outside of the Employer, or use in any activity or
business (other than the Employer's business), Confidential Information (as
defined below) relating to the Employer's business, in any way obtained by him
while employed by the Employer, unless authorized by the Employer in writing.
It is understood that violation of this provision would cause irreparable harm
to the Employer and that the Employer may seek to enjoin any such violation or
to take any other applicable action.
For purposes of this Agreement, the term "Confidential
Information" shall include all information of any nature and in any form which
is owned by the Employer and which is not publicly available or generally known
to persons engaged in businesses similar to that of the Employer, including,
but not limited to, research techniques; patents and patent applications;
inventions and improvements, whether patentable or not; development projects;
computer software and related documentation and materials; designs, practices,
processes, methods, know-how and other facts relating to the business of the
Employer; practices, processes, methods, know-how and other facts related to
sales, advertising, promotions,
12
<PAGE> 13
financial matters, customers, customer lists or customers' purchases of goods
or services from the Employer; industry contracts; and all other secrets and
information of a confidential and proprietary nature.
5.4 Conflict of Interest and Business Ethics Statement.
The Employee hereby covenants and agrees that during the Period of Contract
Employment he will not knowingly engage in any activity which would violate the
Conflict of Interest or Business Ethics Statement signed from time to time by
the Employee; provided, however, that any services that the Employee provides
to a Yucaipa Affiliate shall be deemed not to violate such Conflict of Interest
or Business Ethics Statement.
5.5 Competing Business. The Employee hereby covenants
and agrees that, during the Period of Contract Employment, the Employee will
not have any investment in a Competing Business (as defined below) other than
an equity interest of less than five percent (5%) of any company whose
securities are listed on The New York Stock Exchange, The American Stock
Exchange or NASDAQ and will not render personal services to any Competing
Business in any manner, including, without limitation, as owner, partner,
director, trustee, officer, employee, consultant or advisor thereof.
For purposes of this Agreement, "Competing Business" shall
mean any business which (i) is engaged in the retail supermarket business in
any area where the Employer or any of its subsidiaries presently does business
or, at any time during the Period of Contract Employment, did business; or (ii)
is a supplier, directly or indirectly, to any such retail grocery business;
provided, however that "Competing Business" shall not include any Yucaipa
Affiliate.
13
<PAGE> 14
If the Employee shall breach the agreement contained in this
Section 5.5, such breach may render the Employee liable to the Employer for
damages therefor and entitle the Employer to enjoin the Employee from making
such investment or from rendering such personal services. In addition, the
Employer shall have the right in such event to enjoin the Employee from
disclosing any Confidential Information concerning the Employer to any
competing business, to enjoin any competing business from receiving from the
Employee or using any such Confidential Information and/or to enjoin any
competing business (excluding any Yucaipa Affiliate) from retaining or seeking
to retain any other employees of the Employer.
5.6 No Solicitation. The Employee hereby covenants and
agrees that during the Period of Contract Employment, he will not, for himself
or any third party, directly or indirectly, (i) divert or attempt to divert
from the Employer any business of any kind in which the Employer is engaged,
including, without limitation, the solicitation of its customers or
interference with any of its suppliers or customers; or (ii) employ or solicit
for employment any person employed by the Employer during the period of such
person's employment.
5.7 Remedies. The Employee and the Employer agree that
the Employer will be irreparably harmed by any violation or threatened
violation of any of the foregoing provisions of this Article V if such
provisions are not specifically enforced and therefore that the Employer shall
be entitled to an injunction restraining any violation of such provisions by
the Employee, or any other appropriate decree of specific performance. Such
remedies shall not be exclusive and shall be in addition to any other remedy to
which the Employer may be entitled under this Agreement or at law.
14
<PAGE> 15
ARTICLE VI
BOARD REPRESENTATION
So long as the Employee remains in the employ of the Employer,
F4L Holdings covenants to vote its shares of common stock of the Employer to
cause the election of the Employee to the Board of Directors of the Employer.
ARTICLE VII
MISCELLANEOUS
7.1 Successors. This Agreement shall inure to the
benefit of the Employer and F4L Holdings and their respective successors and
assigns, as applicable. If the Employer and/or F4L Holdings shall merge or
consolidate with or into, or transfer substantially all of its assets,
including goodwill, to another corporation or other form of business
organization, this Agreement shall bind and run to the benefit of the successor
of the Employer or F4L Holdings, respectively, resulting from such merger,
consolidation, or transfer; provided, however, that if any such merger,
consolidation, or transfer by the Employer shall be with, into, or to any
corporation or other form of business organization other than a subsidiary of
the Employer or a corporation having substantially the same common stockholders
as the Employer, the Employee at any time within the period ending one hundred
eighty (180) days thereafter shall have the right, at his option, on not less
than thirty (30) days' written notice to the Employer or its successors, to
terminate the Period of Contract Employment. The Employee shall not assign,
pledge, or encumber his interest in this Agreement, or any part thereof,
without the prior written consent of the Employer and
15
<PAGE> 16
F4L Holdings, and any such attempt to assign, pledge or encumber any interest
in this Agreement shall be null and void and shall have no effect whatsoever.
7.2 Leave of Absence. The Employer agrees that in the
event of war or a national emergency, the Employee will, at his request, be
granted a leave of absence for military or governmental service, and during
said period of leave of absence shall be paid such compensation as may be fixed
by, or with the authority of, the Board. To the extent permitted by applicable
laws and regulations, during any such leave of absence, the Employee shall,
except in respect to his rights to the compensation herein provided and his
obligation to perform active duties of the Employer be deemed, for the purposes
of this Agreement, to be an employee of the Employer.
7.3 Governing Law. This Agreement is being made and
executed in and is intended to be performed in the State of California and
shall be governed, construed, interpreted and enforced in accordance with the
substantive laws of the State of California, without regard to the conflict of
laws principles thereof.
7.4 Entire Agreement. This Agreement comprises the
entire agreement between the parties hereto relating to the subject matter
hereof and as of the Commencement Date, supersedes, cancels and annuls all
previous employment agreements between the Employer (and/or its predecessors,
including Food 4 Less Supermarkets, Inc.; provided, however, that
notwithstanding this Section 7.4, the Employee shall retain his right, upon the
satisfaction of certain conditions as may be established by the Chairman of the
Board of Directors of Food 4 Less Supermarkets, Inc., to receive a special
bonus in the amount of $1,750,000 as consideration for the Employee's
termination of the employment agreement between the Employee and Food 4 Less
Supermarkets, Inc. which is in effect immediately
16
<PAGE> 17
prior to the Commencement Date, which termination shall be effective upon the
consummation of the Merger (as described in Section 1.2 above)) and the
Employee, as the same may have been amended or modified, and any right of the
Employee thereunder other than for compensation accrued thereunder as of the
date hereof, and supersedes, cancels and annuls all other prior written and
oral agreements between the Employee and the Employer or any predecessor to the
Employer. The terms of this Agreement are intended by the parties to be the
final expression of their agreement with respect to the employment of the
Employee by the Employer and may not be contradicted by evidence of any prior
or contemporaneous agreement.
7.5 Gender. Words in the masculine herein may be
interpreted as feminine or neuter, and words in the singular as plural, and
vice versa, where the sense requires.
7.6 Disputes.
(a) Any dispute or controversy arising under, out of, in
connection with or in relation to this Agreement shall be finally determined
and settled by arbitration in Los Angeles, California, in accordance with the
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof.
(b) If any arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief that may be granted.
17
<PAGE> 18
7.7 Severability; Enforceability. If any provision of
this Agreement, or the application thereof to any person, place, or
circumstance, shall be held to be invalid, unenforceable, or void by the final
determination of a court of competent jurisdiction in any jurisdiction and all
appeals therefrom shall have failed or the time for such appeals shall have
expired, as to that jurisdiction and subject to this Section 7.7, such clause
or provision shall be deemed eliminated from this Agreement but the remaining
provisions shall nevertheless be given full force and effect. In the event
this Agreement or any portion hereof is more restrictive than permitted by the
law of the jurisdiction in which enforcement is sought, this Agreement or such
portion shall be limited in that jurisdiction only, and shall be enforced in
that jurisdiction as so limited to the maximum extent permitted by the law of
that jurisdiction.
7.8 Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
7.9 Notices. Any notice, request, claim, demand,
document and other communication hereunder to any party shall be effective upon
receipt (or refusal of receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail, postage
prepaid, as follows:
(a) If to the Employer, addressed to its
principal offices to the attention of the CEO and the General Counsel.
(b) If to F4L Holdings, addressed to its
principal offices to the attention of the CEO and the General Counsel.
18
<PAGE> 19
(c) If to the Employee, to him at the address set
forth below under his signature; or at any other address as any party shall
have specified by notice in writing to the other parties.
7.10 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, but all
of which together will constitute one and the same Agreement.
7.11 Amendments; Waivers. Unless otherwise provided
herein, this Agreement may not be modified, amended, or terminated except by an
instrument in writing, approved by the Board and signed by the Employee, the
Employer and F4L Holdings. By an instrument in writing similarly executed, the
Employee, the Employer or F4L Holdings may waive compliance by the other party
or parties with any provision of this Agreement that such other party was or is
obligated to comply with or perform; provided, however, that such waiver shall
not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any
right, remedy or power hereunder shall preclude any other or further exercise
of any other right, remedy or power provided herein or by law or in equity.
7.12 No Inconsistent Actions. The parties hereto shall
not voluntarily undertake or fail to undertake any action or course of action
inconsistent with, or to avoid or evade, the provisions or essential intent of
this Agreement. Furthermore, it is the intent of the parties hereto to act in
a fair and reasonable manner with respect to the interpretation and application
of the provisions of this Agreement.
19
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
RALPHS GROCERY COMPANY
By: /s/ Byron Allumbaugh
-------------------------
/s/ George G. Golleher
Title: C.E.O. -------------------------------
------------------------- George G. Golleher
Address:
---------------------
---------------------
FOOD 4 LESS HOLDINGS, INC.
By: /s/ Greg Mays
--------------------------
Title:
--------------------------
20
<PAGE> 1
Exhibit 10.11
MANAGEMENT STOCKHOLDERS AGREEMENT
THIS MANAGEMENT STOCKHOLDERS AGREEMENT (this "Agreement") is
made as of June 14, 1995 by and between Food 4 Less Holdings, Inc., a Delaware
corporation ("Food 4 Less"), and each undersigned management employee (the
"Management Employee"), with reference to the following:
RECITALS
A. Food 4 Less Supermarkets, Inc. ("F4L Supermarkets")
has agreed to merge with and into Ralphs Supermarkets, Inc. ("Ralphs") pursuant
to that certain Agreement and Plan of Merger, dated as of September 14, 1994,
as amended, by and among Food 4 Less, Food 4 Less, Inc., F4L Supermarkets,
Ralphs, the Edward J. DeBartolo Corporation and the other stockholders of
Ralphs. Following the merger of F4L Supermarkets with and into Ralphs, Ralphs
will merge with and into Ralphs Grocery Company, Inc., with Ralphs as the
surviving corporation (such mergers, collectively, the "Merger").
B. Food 4 Less has adopted the Food 4 Less Holdings,
Inc. Stock Option Plan (the "1995 Option Plan"), a copy of which has been
furnished to the Management Employee. Pursuant to the 1995 Option Plan, Food 4
Less will issue to key employees of Ralphs and other direct and indirect
subsidiaries of Food 4 Less non-qualified options (the "Non-Qualified Options")
and/or Incentive Stock Options (the "Incentive Options") to purchase Food 4
Less common stock, par value $0.01 (the "F4L Stock").
C. At the time of and immediately prior to the Merger,
certain of the Management Employees, as set forth on their signature pages
hereto, owned certain stock options (the "Ralphs Stock Options") and/or certain
equity appreciation rights (the "Ralphs Equity Rights"), in the amounts set
forth on their signature pages, which were granted under plans of Ralphs in
existence prior to the Merger.
D. Each Management Employee who owned Ralphs Stock
Options or Ralphs Equity Rights previously agreed with Ralphs Grocery Company,
subject to the consummation of the Merger, to cancel the Ralphs Equity Rights,
and/or terminate the Ralphs Stock Options, as applicable, owned by such
Management Employee, in exchange for payment of cash and/or for Non-Qualified
Options granted pursuant to the 1995 Option Plan (the "Replacement Options"),
as set forth on the signature pages hereto, and have entered into a settlement
agreement relating to such exchange (the "Settlement Agreement").
E. In addition, Food 4 Less has granted or may in the
future grant to the foregoing Management Employees or to other Management
Employees who become
<PAGE> 2
party hereto new Non-Qualified Options and/or Incentive Options pursuant to the
1995 Option Plan (the "New Options").
F. The Management Employee and Food 4 Less desire to
provide in this Agreement for certain rights, obligations and restrictions in
respect of transfers of shares of the F4L Stock acquired by the Management
Employee pursuant to the exercise of the New Options, the Replacement Options
and/or other options issued pursuant to the 1995 Option Plan or other option
plans which may be adopted from time to time by Food 4 Less following the date
hereof (collectively, the "Options").
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and conditions contained herein, the parties agree as
follows:
1. SCOPE OF THIS AGREEMENT
The provisions of this Agreement shall apply to the full
extent set forth herein with respect to all shares of F4L Stock acquired by the
Management Employee upon exercise of the Options and any shares acquired as a
result of owning shares acquired upon such exercise (including, without
limitation, additional shares of F4L Stock, or of any successor corporation,
acquired by way of dividend, distribution, exchange, merger, consolidation,
recapitalization, reorganization, stock split or otherwise) (collectively, the
"Option Shares").
2. EXCHANGE OF RALPHS EQUITY RIGHTS AND/OR RALPHS STOCK OPTIONS
FOR REPLACEMENT OPTIONS
Subject to the terms and conditions set forth in the
Settlement Agreement, each Management Employee who owns Ralphs Equity Rights
and/or Ralphs Stock Options has agreed to exchange such Ralphs Equity Rights
and/or Ralphs Stock Options, and Food 4 Less has agreed to pay cash and/or to
issue to the Management Employee Replacement Options to purchase shares of F4L
Stock, as set forth on the signature pages hereto and as provided in the
Settlement Agreement.
3. ISSUANCE OF NEW OPTIONS
Food 4 Less has issued, or may in the future issue, to the
Management Employees referred to in Section 2 above, or to other Management
Employees, New Options and/or other Options to purchase shares of F4L Stock as
set forth on the signature pages hereto.
4. RESTRICTION ON TRANSFER OF OPTION SHARES
During the term of this Agreement, the Management Employee may
not sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of
his Option Shares, or any right or interest therein, except in strict
compliance with the terms and
2
<PAGE> 3
conditions of this Agreement. Any purported sale, transfer (including
involuntary transfers initiated by operation of legal proceeding),
hypothecation or disposition of any of his Option Shares or any right or
interest therein, except in strict compliance with the terms and conditions of
this Agreement, shall be null and void.
5. REPURCHASE OPTION UPON TERMINATION
(a) REPURCHASE OPTION. If (1) the Management Employee's
employment by a direct or indirect subsidiary of Food 4 Less terminates for
Cause (as defined in the employment agreement between the Management Employee
and Ralphs which is in effect immediately prior to such termination or, if no
such employment agreement is in effect at such time, as defined below) or (2)
the Management Employee commences an employment, consulting or similar
relationship with any competitor of Food 4 Less or its subsidiaries (in either
case (1) or (2), a "Trigger Event"), Food 4 Less (as provided for below) shall
have the option (the "Repurchase Option") to purchase from the Management
Employee all or any portion of his Option Shares for a period of six (6) months
after the date of such Trigger Event (or six (6) months after the date the
Management Employee acquired such Option Shares upon exercise of the related
Option, if later).
(b) COMPUTATION OF REPURCHASE PRICE. The purchase price
for any Option Shares purchasable pursuant to the Repurchase Option shall equal
the Fair Market Value (as defined below) of such stock on the date of the
exercise by Food 4 Less of the Repurchase Option (the "Exercise Date"). Such
repurchase price shall be the sole determinant of the amount paid to the
Management Employee in exchange for his Option Shares pursuant to the
Repurchase Option, regardless of any event occurring subsequent to the Exercise
Date which may affect the value of the Option Shares. The Management Employee
acknowledges and agrees that Food 4 Less has no duty to disclose any material
non-public information relating to Food 4 Less, or its stock, including,
without limitation, information with respect to any dividend, distribution,
exchange, merger, consolidation, recapitalization, reorganization, stock split,
acquisition, sale of stock or assets, or otherwise, in connection with any
repurchase of the Option Shares held by such Management Employee.
For purposes of this Agreement,
(i) "Cause" shall mean the (A) the Management
Employee's gross misconduct, (B) any felony conviction of the
Management Employee (other than a traffic or moving violation,
such as driving under the influence, except that if the
Management Employee has a felony conviction for driving under
the influence after incurring two previous driving under the
influence violations during the period of the Management
Employee's employment, the third such violation will
constitute "Cause" for purposes of this subsection (B)), (C)
any act of fraud or dishonesty by the Management Employee
materially detrimental to the business or reputation of Food 4
Less or its subsidiaries as determined by the board of
directors of Food 4
3
<PAGE> 4
Less or Ralphs, or (D) any serious breach of employer policy by the
Management Employee as determined by the board of directors of Food 4
Less or Ralphs;
(ii) "Fair Market Value" as of any date shall mean
a per share amount which implies an Enterprise Value (as
defined below) for Food 4 Less equal to 6 1/2 times EBDIT (as
defined below) of Food 4 Less for its most recent four fiscal
quarters;
(iii) "EBDIT" shall have the meaning given to such
term in the Indenture dated as of June 1, 1995, as amended
from time to time (the "Indenture"), by and between Food 4
Less and U.S. Trust Company of New York, as trustee, relating
to the 13-5/8% Senior Discount Debentures of Food 4 Less; and
(iv) "Enterprise Value" shall mean (without
duplication) the sum of (a) the aggregate value of the fully
diluted common equity of Food 4 Less, net of the exercise,
exchange or conversion price, if any, with respect to any
security exercisable or exchangeable for or convertible into
common stock of Food 4 Less, plus (b) the aggregate principal
amount of all Indebtedness (as defined in the Indenture) of
Food 4 Less and its consolidated subsidiaries and the
aggregate liquidation preference of all preferred stock of
Food 4 Less (other than convertible preferred stock included
in clause (a) above), in each case as reflected on the most
recent consolidated balance sheet of Food 4 Less, less (c) all
cash and cash equivalents of Food 4 Less and its consolidated
subsidiaries as reflected on such balance sheet.
(c) EXERCISE OF REPURCHASE OPTION. Food 4 Less shall
exercise the Repurchase Option by delivery, within the six (6) month period
specified in Paragraph 5(a) above, to the Management Employee of (i) a written
notice specifying the number of shares of Option Shares to be purchased and
(ii) a check in the amount of the purchase price, determined in accordance with
subparagraph (b), for all Option Shares to be purchased. Concurrently with
delivery of the check, the Management Employee shall deliver the Option Shares
properly assigned to Food 4 Less free and clear of any and all claims, liens or
encumbrances. The Management Employee or his representative shall cooperate in
obtaining any necessary court approvals of the transaction.
6. RIGHT OF FIRST REFUSAL
(a) SALES TO THIRD PARTIES; NOTICE. The Management
Employee may sell in a cash sale or otherwise transfer (including by gift) any
or all of his Option Shares to any third party subject to the provisions of
this Paragraph 6. Except for sales made pursuant to Paragraph 7 hereof, the
Management Employee shall first give written notice (the "Notice") to Food 4
Less specifying (i) his bona fide intention to sell or otherwise
4
<PAGE> 5
transfer such Option Shares, (ii) the name and address of the proposed
purchaser(s) or recipient(s), (iii) the number of shares of Option Shares the
Management Employee proposes to sell or otherwise transfer (the "Offered Option
Shares"), (iv) the price for which he proposes to sell or otherwise transfer
the Offered Option Shares, (v) all other material terms and conditions of the
proposed sale or transfer and (vi) a true and correct copy of the offer
document by which such Option Shares are to be sold or transferred.
(b) ELECTION BY FOOD 4 LESS. Within twenty (20) days of
receipt of the Notice, Food 4 Less may elect to purchase any or all of the
Offered Option Shares at the lesser of (i) the price and on the terms and
conditions set forth in the Notice and (ii) if at such time Food 4 Less could
exercise the Repurchase Option, the price payable pursuant to Paragraph 5 at
such time. Food 4 Less shall exercise the election under this Paragraph 6 by
delivery of written notice to the Management Employee. Within five (5) days
after delivery of such notice, Food 4 Less shall deliver to the Management
Employee a check, payable to the Management Employee, in the amount of the
purchase price of the Offered Option Shares to be purchased. The Management
Employee shall be entitled to sell or otherwise transfer any Offered Option
Shares not purchased by Food 4 Less to the purchaser(s) named in the Notice at
the price specified in the Notice or at a higher price and on the terms and
conditions set forth in the Notice; provided, however, that such sale or other
transfer must be consummated within seventy-five (75) days from the date of the
Notice and any proposed sale after such seventy-five (75) day period may be
made only by again complying with the procedures set forth in this Paragraph 6.
7. PERMITTED TRANSFERS
Notwithstanding Paragraph 6, the Management Employee may, at
any time or times, transfer any or all of his Option Shares: (i) inter vivos
to his spouse or issue, or to a trust for their benefit, or, upon the
Management Employee's death, to any person in accordance with the laws of
descent and/or testamentary distribution (collectively, "Permitted
Transferees"); provided, however, that such Option Shares shall not be
transferred until the Permitted Transferee executes a valid undertaking in form
and substance reasonably satisfactory to Food 4 Less to the effect that Option
Shares so transferred shall thereafter remain subject to all of the provisions
of this Agreement (including the Repurchase Option in the event the Management
Employee's employment by Food 4 Less is terminated for Cause or the Management
Employee commences an employment, consulting or similar relationship with a
competitor) as though the Permitted Transferee were a party to this Agreement,
bound in every respect in the same way as the Management Employee; or (ii)
pursuant to an effective registration statement of Food 4 Less under the
Securities Act of 1933, as amended (the "Act"), other than a Registration
Statement on Form S-8, that covers the sale of such Option Shares. In the
event at any time the Company shall determine in its discretion to file a
Registration Statement on Form S-8 under the Act with respect to the Option
Plan, the Company shall include in such Registration Statement the Option
Shares to the extent their inclusion is permitted by applicable rules and
regulations then in effect and is not violative or inconsistent with any
exemption on which the Company may have relied in granting the Options.
Transfers
5
<PAGE> 6
made in accordance with this Paragraph 7 shall not be subject to the provisions
of Paragraph 5 or 6 of this Agreement (but Option Shares once so transferred
will be subject to this Agreement including Paragraphs 5 and 6).
8. VOTING OF SHARES
The Management Employee agrees to vote all Option Shares, in
connection with any regular or special meeting of stockholders called or held
for the purpose of filling positions on the Board of Directors of Food 4 Less,
and in each written consent executed in lieu of such a meeting of stockholders,
in favor of the election to the Food 4 Less Board of Directors of the Yucaipa
Nominees, the Apollo Nominees and the Other Purchasers Nominee (as defined in
that certain Stockholders Agreement of Food 4 Less Holdings, Inc. dated as of
June 14, 1995 (the "Investor Stockholders Agreement")). In addition, subject
to Section 11(d) hereof, each Management Employee otherwise agrees to be bound
by all provisions of Section 5.1 of the Investor Stockholders Agreement
(attached hereto as Exhibit A and relating to the voting of shares and the
corporate governance of Food 4 Less and Ralphs) as fully as if he or she were
an Investor thereunder.
9. OBLIGATION TO SELL STOCK
In the event of a proposed sale for cash of all of the issued
and outstanding shares of capital stock of Food 4 Less pursuant to a Compelled
Sale (as defined in Section 2.7 of the Investor Stockholders Agreement), the
Management Employee agrees, subject to Section 11(d) hereof, to participate in
such sale under the terms of, and otherwise to be bound by all of the
provisions of, Section 2.7 of the Investor Stockholders Agreement (attached
hereto as Exhibit B, and relating to the obligation to participate in certain
sales of capital stock of Food 4 Less) as fully as if he or she were an
Investor thereunder.
10. TAG-ALONG RIGHTS
(a) RIGHT TO PARTICIPATE. In the event that, pursuant to
Section 2.6 of the Investor Stockholders Agreement, the Controlling
Stockholders (as defined in the Investor Stockholders Agreement) are required
to afford to the Investors (as further defined therein) the opportunity to
participate in a Tag-Along Sale (as further defined therein), then the
Management Employee also shall be afforded a right to participate, on the same
basis and to the same extent as the Investors, in such Tag-Along Sale. The
Management Employee's right to participate in such Tag-Along Sale, as provided
herein, shall relate only to his or her Option Shares (and not to unexercised
Options or to any other shares of F4L Stock which the Management Employee may
own). The number of Option Shares which the Management Employee may include in
the Tag-Along Sale shall equal (x) the total number of shares proposed to be
transferred by the Controlling Stockholders multiplied by (y) a fraction, the
numerator of which is the total number of Option Shares then owned by the
Management Employee and the denominator of which is the total number of shares
then owned by the Controlling Stockholders, the Investors, and all other
stockholders of Food 4 Less having tag-along or other contractual rights to
participate in the proposed transfer.
6
<PAGE> 7
(b) TRANSFER NOTICE. At the time any Tag-Along Sale is
proposed, Food 4 Less shall give written notice to the Management Employee of
his or her right to sell Option Shares hereunder (the "Transfer Notice"), which
notice shall identify the proposed purchaser and state the number of shares
proposed to be transferred by the Controlling Stockholders, the proposed
offering price (including the form and terms of any non-cash consideration to
be received in connection therewith), the proposed date of any such transfer
(the "Transfer Date") and any other material terms and conditions of the
proposed transfer. The Transfer Notice shall also contain a complete and
correct copy of any offer to, or agreement with, the Controlling Stockholders
by the proposed purchaser to purchase such shares. Food 4 Less shall use its
best efforts to deliver the Transfer Notice at least 30 days prior to the
Transfer Date and in no event shall Food 4 Less provide such Transfer Notice
later than 21 days prior to the Transfer Date.
(c) TAG-ALONG NOTICE. The Management Employee may elect to
participate in the Tag-Along Sale by providing written notice (or oral notice
confirmed in writing) (the "Tag-Along Notice") to Food 4 Less no less than 7
days prior to the Transfer Date. The Tag-Along Notice shall set forth the
number of Option Shares that the Management Employee elects to include in the
Tag-Along Sale, which shall not exceed the amount specified in subsection (a)
above. The Tag-Along Notice shall constitute the Management Employee's binding
agreement to sell his or her Option Shares on the terms and conditions
applicable to the Investors in the Tag-Along Sale. If a Tag-Along Notice is
not received by Food 4 Less prior to the 7-day period specified above, the
Tag-Along Sale may be consummated, subject to the conditions specified in
Section 2.6(c) of the Investor Stockholders Agreement, without any
participation by the Management Employee.
(d) EXCEPTION FOR CERTAIN SALES. The provisions of this
Paragraph 10 shall not apply to any direct or indirect transfer or sale of F4L
Stock by Ronald W. Burkle, or Controlling Stockholders controlled by Ronald W.
Burkle, if the aggregate number of shares of F4L Stock so transferred or sold
by such persons and entities following the date of this Agreement is less than
2,690,422 (25% of the number of shares of F4L Stock held by Ronald W. Burkle
and the Controlling Stockholders on the date hereof).
11. MISCELLANEOUS
(a) LEGENDS ON CERTIFICATES. Any and all certificates
now or hereafter issued evidencing Option Shares shall have endorsed upon them
a legend substantially as follows:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS UPON TRANSFER AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
EXCEPT IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THAT
CERTAIN MANAGEMENT STOCKHOLDERS
7
<PAGE> 8
AGREEMENT, DATED AS OF JUNE 14, 1995, BETWEEN THE
REGISTERED HOLDER HEREOF AND FOOD 4 LESS HOLDINGS, INC. A
DELAWARE CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICE OF FOOD 4 LESS HOLDINGS, INC."
Such certificates shall also bear such legends and shall be subject to such
restrictions on transfer as may be necessary to comply with all applicable
federal and state securities laws and regulations.
(b) FURTHER ASSURANCES. Each party hereto agrees to
perform any further acts and execute and deliver any document which may be
reasonably necessary to carry out the intent of this Agreement.
(c) BINDING AGREEMENT. Subject to the conditions of
transfer of Option Shares hereunder, this Agreement shall be binding upon and
shall inure to the benefit of the Management Employee and his respective heirs,
executors, administrators, assigns and legal representatives and to Food 4 Less
and its respective successors and assigns by way of merger, consolidation or
operation of law or otherwise. Without limiting the generality of the
foregoing, Food 4 Less may elect in its sole discretion to assign its rights
and obligations under this Agreement, including Paragraphs 5 and 6 hereof, to
an affiliate of Food 4 Less or to any other person; provided that, in the
absence of any such assignment, no affiliate of Food 4 Less shall have any
obligation to purchase Option Shares or to take any other action required of
Food 4 Less hereunder. If Ralphs and Food 4 Less so elect, Ralphs may provide
funds for the repurchase of Option Shares by repurchasing from Food 4 Less, at
the same aggregate price as applicable hereunder to the repurchase of Option
Shares, a number of shares of Ralphs stock which is the economic equivalent of
each Option Share to be repurchased hereunder.
(d) TERMINATION. Notwithstanding any other provision to
the contrary, this Agreement shall terminate in all respects upon the 30th day
following the effective date of a registration statement filed in connection
with a Qualified IPO (as defined in the Investor Stockholders Agreement).
(e) OTHER RESTRICTIONS ON TRANSFERS. The restrictions on
transfer set forth in this Agreement are in addition to any and all
restrictions imposed pursuant to any applicable state or federal law or
regulation.
(f) NOTICES. Unless otherwise provided herein, any
notice, request, instruction or other document to be given hereunder by any
party to the others shall be in writing and delivered in person or by courier,
telegraphed, telexed or by facsimile transmission or mailed by certified mail,
postage prepaid, return receipt requested (such mailed notice to be effective
on the date such receipt is acknowledged), as follows:
8
<PAGE> 9
If to the
Management
Employee: At the address set forth on the
signature page hereof.
If to Food 4 Less: Food 4 Less Holdings, Inc.
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, CA 90067
Attention: Mark A. Resnik
and
Ralphs Grocery Company
P.O. Box 54143
Los Angeles, CA 90054
Attention: Jan Charles Gray
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
(g) AMENDMENTS. This Agreement may be waived, amended,
modified or terminated at any time, as between Food 4 Less and any Management
Employee, by the written agreement of Food 4 Less and such Management Employee
in accordance with the laws of the State of California. The obligations of the
Management Employee under Sections 8 and 9 of this Agreement shall be
enforceable by the Controlling Stockholders (as defined in the Investor
Stockholders Agreement) of Food 4 Less, and may be waived, amended, modified or
terminated only with the consent of the Controlling Stockholders.
(h) DISPUTES. In the event of any dispute among the
parties arising out of this Agreement, the prevailing party shall be entitled
to recover from the nonprevailing party the reasonable expenses of the
prevailing party, including, without limitation, reasonable attorneys' fees.
(i) ENTIRE AGREEMENT. This Agreement, including the
agreements referred to herein, constitute the entire agreement and
understanding among the parties pertaining to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, relating
thereto. Notwithstanding the foregoing, the provisions of that certain
Management Stockholders Agreement and that certain Stockholder Voting Agreement
and Proxy relating to previously-acquired shares of F4L Stock, if applicable to
the Management Employee, shall continue to remain in full force and effect with
respect to such previously-acquired shares.
9
<PAGE> 10
(j) RECAPITALIZATION OR EXCHANGES AFFECTING FOOD 4 LESS
CAPITAL STOCK. The provisions of this Agreement shall apply, to the full
extent set forth herein with respect to Option Shares, to any and all shares of
capital stock of Food 4 Less or any successor or assign of Food 4 Less (whether
by merger, consolidation, sale of assets, or otherwise) which may be issued in
respect of, in exchange for, or in substitution of Option Shares, by reason of
any stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise.
(k) NO RIGHTS AS AN EMPLOYEE. Nothing in this Agreement
shall affect in any manner whatsoever any rights of Food 4 Less or its
affiliates to terminate the Management Employee's employment for any reason,
with or without cause, subject to any written employment agreement to which the
Management Employee may be a party.
(l) FAMILY TRUSTS. Unless the context otherwise
requires, the term "Management Employee" as used herein shall include any inter
vivos trust for the benefit of the Management Employee or his or her family.
If a Management Employee is to acquire any Option Shares through such a trust,
the Management Employee (together with all other trustees) shall execute this
Agreement in his or her capacity as trustee of such a trust, and shall so
indicate when signing.
(m) GENDERS AND PLURALS. Where the context so indicates,
the masculine pronoun shall include the feminine pronoun and the singular shall
include the plural.
(n) HEADINGS. Introductory headings at the beginning of
each section of this Agreement are solely for the convenience of the parties
and shall not be deemed to be a limitation upon or description of the contents
of any such action.
(o) SEVERABILITY. In case any one or more of the
provisions or parts of a provision contained herein shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement or any other
jurisdiction, but this Agreement shall be reformed and construed in any such
jurisdiction as if such invalid or illegal or unenforceable provision or part
of a provision had never been contained herein and such provision or part shall
be reformed so that it would be valid, legal and enforceable to the maximum
extent permitted in such jurisdiction.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
FOOD 4 LESS HOLDINGS, INC. MANAGEMENT EMPLOYEE
<TABLE>
<S> <C>
By: s/ Greg Mays
---------------------------------- ------------------------------------------
Greg Mays Signature
------------------------------------------
Print Name
------------------------------------------
Street Address
------------------------------------------
City State Zip Code
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> JUL-16-1995
<CASH> 51,379
<SECURITIES> 0
<RECEIVABLES> 65,051
<ALLOWANCES> 0
<INVENTORY> 477,209
<CURRENT-ASSETS> 625,298
<PP&E> 1,341,202
<DEPRECIATION> (175,625)
<TOTAL-ASSETS> 3,041,614
<CURRENT-LIABILITIES> 661,357
<BONDS> 2,186,330
<COMMON> 57,762
0
132,832
<OTHER-SE> (206,893)
<TOTAL-LIABILITY-AND-EQUITY> 3,041,614
<SALES> 1,480,942
<TOTAL-REVENUES> 1,480,942
<CGS> 1,212,157
<TOTAL-COSTS> 1,212,157
<OTHER-EXPENSES> 324,669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,807
<INCOME-PRETAX> (114,691)
<INCOME-TAX> 500
<INCOME-CONTINUING> (115,191)
<DISCONTINUED> 0
<EXTRAORDINARY> 35,358
<CHANGES> 0
<NET-INCOME> (150,549)
<EPS-PRIMARY> (6.90)
<EPS-DILUTED> 0
</TABLE>
