WAIVER AGREEMENT
This Waiver Agreement (this "Waiver Agreement"), dated as of
December __, 1995, is entered into by and among HOMELAND STORES,
INC. ("Homeland") and HOMELAND HOLDING CORPORATION ("Parent"), and
NATIONAL BANK OF CANADA and HELLER FINANCIAL, INC. (together,
"Lenders") and NATIONAL BANK OF CANADA, as agent for Lenders (the
"Agent").
RECITALS
A. Homeland, Parent, Lenders and the Agent have entered into
that certain Amended and Restated Revolving Credit Agreement, dated
as of April 21, 1995 (the "Agreement"), pursuant to which Lenders
agreed to make available to Homeland certain financial
accommodations.
B. Homeland has informed the Agent that Homeland will be
unable to maintain (a) the Consolidated Fixed Charge Coverage Ratio
required under Section 9.16(a) of the Agreement on the last day of
the fiscal quarters ending December 30, 1995, and March 23, 1996,
and (b) the Debt-to-EBITDA Ratio required under Section 9.16(b) of
the Agreement at the end of such fiscal quarters.
C. Homeland and Parent have requested that Lenders waive
compliance with the requirements of Sections 9.16(a) and (b) of the
Agreement through the end of the Waiver Period (as hereinafter
defined), and Lenders are willing to waive compliance with such
sections through the end of the Waiver Period on the terms and
subject to the conditions set forth in this Waiver Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein
contained and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. DEFINITIONS. All capitalized terms used but not otherwise
defined in this Waiver Agreement shall have the meanings ascribed
to them in the Agreement. Unless otherwise specified, all section
references herein refer to sections of the Agreement.
2. WAIVER OF DEFAULTS. From December 30, 1995, through the
earliest to occur of (a) the date of a default under Section
6.01(1) of that certain indenture dated as of March 4, 1992, as
supplemented (the "Indenture"), among Homeland Stores, Inc.,
Homeland Holding Corporation and United States Trust Company of New
York, as trustee (the "Trustee"), (b) the last date through which
the holders of securities issued pursuant to the Indenture have
waived compliance with the requirements of Sections 4.21 and 4.27
of the Indenture, (c) the date of any default by Homeland or Parent
in the performance of their respective obligations under this
Waiver Agreement, and (d) April 15, 1996 (the "Waiver Period"),
Lenders hereby waive any Default, Event of Default or breach of the
terms of the Agreement that would otherwise occur as a result of
Homeland's failure to comply with the requirements of Section
9.16(a) and (b) of the Agreement; provided, however, that such
waiver shall apply only to Homeland's failure to comply with
Section 9.16(a) and (b) of the Agreement, and nothing contained in
this letter or in any other communication between the Lenders or
the Agent and Homeland or Parent shall constitute a waiver of any
other present or future violation, default or breach of Homeland or
Parent under the Agreement (collectively, "Other Violations").
Furthermore, nothing contained in this Waiver Agreement shall
directly or indirectly in any way whatsoever either: (i) impair,
prejudice or otherwise adversely affect Lenders' right at any time
to exercise any right, privilege or remedy in connection with the
Agreement with respect to any Other Violations, (ii) amend or alter
any provision of the Agreement, or (iii) constitute any course of
dealing or other basis for altering any obligation of Homeland or
Parent or any right, privilege or remedy of Lenders under the
Agreement. Except as expressly stated herein, Lender and the Agent
reserve all of their respective rights, privileges and remedies
under the Agreement.
3. COVENANTS. Homeland and Parent covenant and agree that,
unless specifically waived in writing by the Required Lenders:
3.1 As soon as possible following January 31, 1996, but in
any case not later than February 16, 1996, Homeland will provide to
the Agent a copy of the Homeland's 1996 Business Plan.
3.2 During the Waiver Period, neither Homeland nor the Parent
will agree to any written modification to the Indenture as in
effect on the date hereof that would be adverse to the interests of
the Agent or any Lender.
3.3 During the Waiver Period, neither Homeland nor the Parent
will pay any management or other fee to Clayton, Dubilier & Rice,
Inc. ("CD&R Fee").
3.4 During the Waiver Period, Homeland will comply with each
financial maintenance covenant contained in the Indenture Waiver
(as hereinafter defined) as if each such covenant were set forth
herein.
4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Waiver
Agreement is subject to the satisfaction of the following
conditions precedent, unless specifically waived in writing by the
Required Lenders:
4.1. The Agent shall have received (a) this Waiver Agreement,
duly executed by Homeland and Parent; and (b) a copy of the waiver
with respect to Sections 4.21 and 4.27 of the Indenture in the form
attached hereto as Exhibit "A" (the "Indenture Waiver") executed by
Homeland and the Trustee, and each document relating thereto, and
a certificate executed by the Chief Financial Officer of the
Homeland and Parent, respectively, certifying that the attached
documents are true, correct and complete copies of the Indenture
Waiver, and all documents relating thereto.
4.2. The representations and warranties contained herein and
in the Agreement shall be true and correct on and as of the date
hereof.
4.3. No Default or Event of Default under the Agreement shall
have occurred and be continuing, unless such Default or Event of
Default has been specifically waived in writing by the Required
Lenders.
5. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
5.1. The terms and provisions set forth in this Waiver
Agreement shall supersede all inconsistent terms and provisions set
forth in the Agreement and, except as expressly set forth in this
Waiver Agreement, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.
The parties hereto agree that the Agreement shall continue to be
legal, valid, binding and enforceable in accordance with its terms.
5.2. Homeland and Parent hereby represent and warrant to
Lenders and the Agent that (a) the execution, delivery and
performance of this Waiver Agreement and any and all other
agreements executed and/or delivered in connection herewith or
therewith have been authorized by all requisite corporate action on
the part of Homeland and Parent and will not violate the Articles
of Incorporation or Bylaws of Homeland or Parent; (b) the
representations and warranties contained in the Agreement are true
and correct on and as of the date hereof as though made on and as
of such date; (c) no Default or Event of Default under the
Agreement has occurred and is continuing, unless such Default or
Event of Default has been specifically waived in writing by the
Required Lenders; (d) Homeland and Parent are in full compliance
with all covenants and agreements contained in the Agreement, other
than those covenants and agreements expressly waived in this Waiver
Agreement; (e) neither Homeland nor Parent has paid any CD&R Fee
since November 30, 1995; (f) $5,000,000 of the Note Net Proceeds
(as defined in the Indenture) from the AWG Sale were reinvested, or
committed to be reinvested, in Capital Expenditures within 180 days
of the closing date of the AWG Sale; and (g) Homeland's 1995
year-end results will not deviate substantially from the
projections for such period presented to the Lenders at the time
the waiver hereunder was requested pursuant to Homeland's letter to
the Lenders dated December 28, 1995.
6. MISCELLANEOUS.
6.1. Survival of Representations and Warranties. All
representations and warranties made in the Agreement or any other
Loan Document including, without limitation, any document furnished
in connection with this Waiver Agreement, shall survive the
execution and delivery of this Waiver Agreement, and no
investigation by Lenders or the Agent or any closing shall affect
the representations and warranties or the right of Lenders and the
Agent to rely upon them.
6.2. Expenses of Lenders and the Agent. Homeland and Parent
agree to pay on demand all costs and expenses incurred by Lenders
and the Agent in connection with the preparation, negotiation and
execution of this Waiver Agreement and any other agreements
executed pursuant hereto, including, without limitation, the
reasonable costs and fees of the Lenders' and the Agent's legal
counsel.
6.3. Severability. Any provision of this Waiver Agreement
held by a court of competent jurisdiction to be invalid or
unenforceable shall not impair or invalidate the remainder of this
Waiver Agreement and the effect thereof shall be confined to the
provision so held to be invalid or unenforceable.
6.4. Successors and Assigns. This Waiver Agreement will inure
to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
6.5. Headings. The headings of the sections and subsections
of this Waiver Agreement are inserted for convenience only and do
not constitute a part of this Waiver Agreement.
6.6. Counterparts. This Waiver Agreement may be executed in
any number of counterparts, which shall collectively constitute one
agreement.
6.7. Law Governing. THIS WAIVER AGREEMENT SHALL BE DEEMED TO
HAVE BEEN SUBSTANTIALLY NEGOTIATED AND MADE IN THE STATE OF NEW
YORK AND SHALL BE INTERPRETED AND THE RIGHTS OF THE PARTIES
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES
APPLICABLE THERETO AND THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AN AGREEMENT EXECUTED, DELIVERED AND PERFORMED
THEREIN, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW RULES THEREOF
OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
6.8. Waiver; Modification. NO PROVISION OF THIS WAIVER
AGREEMENT MAY BE WAIVED, CHANGED OR MODIFIED, OR THE DISCHARGE
THEREOF ACKNOWLEDGED, ORALLY, BUT ONLY BY AN AGREEMENT IN WRITING
SIGNED BY THE PARTY AGAINST WHOM THE ENFORCEMENT OF ANY WAIVER,
CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.
6.9. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY IRREVOCABLY AND EXPRESSLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS WAIVER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE AGENT IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
6.10. Final Agreement. THIS WAIVER AGREEMENT REPRESENTS THE
ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF ON THE DATE THIS WAIVER AGREEMENT IS EXECUTED. THIS WAIVER
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.11. Release. EACH OF HOMELAND AND PARENT HEREBY
ACKNOWLEDGES THAT AS OF THE DATE HEREOF IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS COMPLAINT, CLAIM OR DEMAND OF ANY KIND
OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE
ALL OR ANY PART OF ITS LIABILITY TO REPAY THE LENDER DEBT OR TO
SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM THE
AGENT OR ANY LENDER. EACH OF HOMELAND AND PARENT HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENT
AND EACH LENDER, THEIR RESPECTIVE PREDECESSORS, AGENTS, OFFICERS,
DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED
OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS WAIVER AGREEMENT IS EXECUTED, WHICH
EITHER HOMELAND OR PARENT MAY NOW OR HEREAFTER HAVE AGAINST THE
AGENT OR ANY LENDER, THEIR RESPECTIVE PREDECESSORS, AGENTS,
OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT,
TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING
FROM THE LENDER DEBT, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE,
THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE AGREEMENT OR
OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
WAIVER AGREEMENT.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Homeland, Parent, Lenders and the Agent
have caused this Waiver Agreement to be executed and delivered as
of the date first written.
HOMELAND:
HOMELAND STORES, INC.
By:
Name:
Title:
PARENT:
HOMELAND HOLDING CORPORATION
By:
Name:
Title:
AGENT:
NATIONAL BANK OF CANADA, as Agent
By:
Name:
Title:
By:
Name:
Title:
LENDERS:
NATIONAL BANK OF CANADA
By:
Name:
Title:
By:
Name:
Title:
HELLER FINANCIAL, INC.
By:
Name:
Title: