INTERCREDITOR AGREEMENT
INTERCREDITOR AND
COLLATERAL AGENCY AGREEMENT
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This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of
March 11, 1998 (as modified, supplemented or amended from time to time, the
"Agreement"), is entered into among BANKERS TRUST COMPANY ("BTCo."), as
Administrative Agent under the Loan Agreement (as hereinafter defined) on behalf
of the lenders party thereto (BTCo. and any successor Administrative Agent, the
"Loan Administrative Agent"), BTCo., as Administrative Agent under the
Synthetic Lease Facility (as hereinafter defined) on behalf of the lenders party
thereto (BTCo. and any successor Administrative Agent, the "Lease Administrative
Agent") (the Loan Administrative Agent and the Lease Administrative Agent,
individually, an "Agent" and collectively, the "Agents"), BTCo., as Collateral
Agent, FMI and the Subsidiary Pledgors (as hereinafter defined). Capitalized
terms used herein without definition herein shall have the meanings provided in
the Loan Agreement.
RECITALS
WHEREAS, FMI, as borrower, the lenders from time to time party thereto
(the "Loan Agreement Lenders"), the Loan Administrative Agent and The Chase
Manhattan Bank, as syndication agent thereunder (the "Syndication Agent") are
parties to that certain Loan Agreement, dated as of the date hereof (as the same
shall be amended, supplemented or otherwise modified from time to time, the
"Loan Agreement");
WHEREAS, FMI, as lessee, FMS Trust 1997-1, as lessor (the "Lessor"),
Wilmington Trust Company, as owner trustee (the "Owner Trustee"), the investors
from time to time party thereto, the Lenders from time to time party thereto (as
the same shall be amended, supplemented or otherwise modified from time to time,
the "Synthetic Lease Facility Lenders" and, collectively with the Loan Agreement
Lenders, the "Lenders"), the Lease Administrative Agent and the Syndication
Agent are parties to that certain participation agreement, dated as of
INTERCREDITOR AGREEMENT
the date hereof (the "Participation Agreement" and, collectively with the other
documents contemplated by the Participation Agreement, the "Synthetic Lease
Facility") (the Synthetic Lease Facility, together with the Loan Agreement and
the other documents contemplated thereby, the "Facility Documents") (the trans-
actions contemplated by the Facility Documents being collectively referred to as
the "Extensions of Credit");
WHEREAS, FMI and each of the Subsidiaries listed on the signature
pages thereof (the "Subsidiary Pledgors") are parties to that certain pledge
agreement, dated as of the date hereof (the "Pledge Agreement"), in favor of the
Collateral Agent for the benefit of the Lenders and the persons who may in the
future become beneficiaries in accordance with the terms of this Agreement and
the Facility Documents (all such beneficially interested parties being the
"Beneficiaries");
WHEREAS, it is a condition precedent to the Extensions of Credit to
FMI that FMI, the Subsidiary Pledgors and the Agents, on behalf of the Lenders,
shall have executed and delivered this Agreement to the Agents; and
WHEREAS, FMI, the Subsidiary Pledgors and the Agents, on behalf of the
Lenders, desire to execute this Agreement to satisfy the condition described in
the preceding paragraph;
NOW, THEREFORE, it is agreed:
1. Appointment. The Agents, on behalf of the Lenders, by their
acceptance of the benefits of the Pledge Agreement, hereby irrevocably designate
BTCo. as Collateral Agent to act as specified herein. The Agents hereby
irrevocably authorize the Collateral Agent to take such action on their behalf
under the provisions of the Pledge Agreement and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Collateral Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Collateral Agent may perform
any of its duties hereunder by or through its agents or employees.
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INTERCREDITOR AGREEMENT
2. Nature of Duties. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth herein and in the Pledge
Agreement. Neither the Collateral Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such under the Pledge Agreement or hereunder or in connection herewith or
therewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Collateral Agent shall be mechanical and administrative in
nature; the Collateral Agent shall not have by reason of this Agreement or the
Pledge Agreement a fiduciary relationship in respect of any Agent or Lender; and
nothing in this Agreement or the Pledge Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon the Collateral Agent any
obligations in respect of the Pledge Agreement except as expressly set forth
herein or therein.
3. Lack of Reliance on the Collateral Agent. Independently and without
reliance upon the Collateral Agent, each Lender, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of FMI and its
Subsidiaries in connection with the Extensions of Credit and the taking or not
taking of any action in connection therewith, and (ii) its own appraisal of the
creditworthiness of FMI and its Subsidiaries, and the Collateral Agent shall
have no duty or responsibility, either initially or on a continuing basis, to
provide any Agent or Lender with any credit or other information with respect
thereto, whether coming into its possession before the extension of any credit
under the Facility Documents, or at any time or times thereafter. The Collateral
Agent shall not be responsible to any Agent or Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement, the Pledge Agreement
or the financial condition of FMI and its Subsidiaries or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of the Pledge Agreement, or the financial condition of
FMI and its Subsidiaries, or the existence or possible existence of any Event of
Default.
4. Certain Rights of the Collateral Agent. No Agent shall have the
right to cause the Collateral Agent to take any action with respect to the
Collateral, with only the Required Lenders (as hereinafter defined) having the
right
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INTERCREDITOR AGREEMENT
to direct the Collateral Agent to take any such action. If the Collateral Agent
shall request instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with the Pledge Agreement, the
Collateral Agent shall be entitled to refrain from such act or taking such
action unless and until it shall have received instructions from the Required
Lenders, and to the extent requested, appropriate indemnification in respect of
actions to be taken; and the Collateral Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Agent
shall have any right of action whatsoever against the Collateral Agent as a
result of the Collateral Agent acting or refraining from acting (x) hereunder in
accordance with the instructions of the Required Lenders or (y) under the Pledge
Agreement as provided for therein. As used herein, the term "Required Lenders"
shall mean Lenders the sum of whose drawn loans and undrawn commitments
represent greater than 50% of the total Extensions of Credit (both drawn and
undrawn); provided, however, that upon termination of any Lender's Commitment,
such Lender may only vote with respect to drawn loans outstanding; provided,
further, that any request to act or refrain from acting which would affect only
the rights and benefits of any Class of Lenders (and not all Lenders in a like
or similar manner) shall require the written authorization of the Lenders of the
affected Class. For the purpose of this Agreement, the term "Class" shall mean
each class of Lenders, i.e., whether (x) Loan Agreement Lenders or (y) the
Synthetic Lease Facility Lenders.
5. Reliance. The Collateral Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
the proper Person or entity, and, with respect to all legal matters pertaining
to the Pledge Agreement and its duties thereunder and hereunder, upon advice of
counsel selected by it.
6. Indemnification. To the extent the Collateral Agent is not
reimbursed and indemnified by FMI, the Agents, on behalf of the Lenders and
solely to the extent of actual receipt of such amounts from the Lenders, will
reimburse and indemnify the Collateral Agent, in proportion to the Lenders'
respective principal amounts of Extensions of Credit (both drawn and undrawn),
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature
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whatsoever which may be imposed on, incurred by or asserted against the Collat-
eral Agent in performing its duties hereunder or under the Pledge Agreement, or
in any way relating to or arising out of this Agreement or the Pledge Agreement
except for those resulting solely from the Collateral Agent's own gross
negligence or willful misconduct. The indemnities set forth in this Section 6
shall survive the repayment of all Extensions of Credit.
7. The Collateral Agent in its Individual Capacity. With respect to
its obligations as a lender under the Facility Documents, the Collateral Agent
shall have the rights and powers specified therein and herein for a "Lender" or
"Agent," as the case may be, and may exercise the same rights and powers as
though it were not performing the duties specified herein; and the term "Lender"
or any similar term shall, unless the context clearly otherwise indicates,
include the Collateral Agent in its individual capacity. The Collateral Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with FMI or any of its affiliates as if it were
not performing the duties specified herein or in the Pledge Agreement, and may
accept fees and other consideration from them for services in connection with
the Facility Documents and otherwise without having to account for the same to
the Agents.
8. Application of Proceeds. (a) Any and all amounts actually received
by the Collateral Agent in connection with the enforcement of the Pledge
Agreement, including the proceeds of any collection, sale or other disposition
of the Collateral or any portion thereof (collectively, "Proceeds") shall first
be applied to the payment of all costs and expenses of such sale, collection or
other realization, and all expenses, liabilities and advances made or incurred
by Collateral Agent in connection therewith and all amounts for which the
Collateral Agent is entitled to indemnification under this Agreement or the
Pledge Agreement and all advances made by the Collateral Agent under the Pledge
Agreement for the account of the Pledgors or for the payment of all costs and
expenses paid or incurred by the Collateral Agent in connection with the
exercise of any right or remedy under the Pledge Agreement, all in accordance
with Section 6 hereof and/or Section 16 of the Pledge Agreement. Until Proceeds
are so applied, the Collateral Agent shall hold such Proceeds in its custody in
accordance with regular procedures for handling deposited funds.
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INTERCREDITOR AGREEMENT
(b) Any Proceeds remaining after application in accordance with clause
(a) above shall be paid to the Agents pro rata in accordance with the aggregate
Extensions of Credit then outstanding under the respective Facility Documents
and the Agents shall apply such Proceeds so that each Lender shall receive
payment of its proportionate amount of all such Proceeds. For the purposes of
determining the proportionate amounts of all Extensions of Credit at the time
any Proceeds are due to be distributed under this Section 8, the amount of the
outstanding Extensions of Credit shall be deemed to be the principal and
interest then due and payable under the Facility Documents. For purposes of
determining the amount payable to each Agent, the Collateral Agent shall be
entitled to request each Agent to furnish it with written notice of the amount
of Extensions of Credit then owed to each Lender under its respective Facility
Documents and shall be entitled to rely upon the amounts stated therein in
making such distribution.
(c) For purposes of applying payments received in accordance with this
Section 8, the Collateral Agent shall be entitled to rely upon the Agents for a
determination (which the Agents by their acceptance of the benefits of this
Agreement shall be obligated to provide upon request of the Collateral Agent)
of the outstanding Extensions of Credit owed to the Lenders. Unless they have
actual knowledge (including by way of written notice from a Lender) to the
contrary, the Agents, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that no obligations other than principal, interest and regularly
accruing fees are owing to any Lender.
9. Joinder of New Subsidiaries. FMI agrees that, promptly after the
acquisition or creation of any new Subsidiary (and in any event within ten days
after the date of such acquisition or creation, as the case may be) it will
cause any such Subsidiary (other than an Insignificant Subsidiary) required to
pledge its capital stock pursuant to the Pledge Agreement to deliver to the
Agents and the Collateral Agent an acknowledgment duly executed by such new
Subsidiary in substantially the form of Exhibit A hereto (an "Intercreditor
Acknowledgment").
10. Definitions. The following terms shall have the meanings herein
specified unless the context otherwise requires. Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.
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INTERCREDITOR AGREEMENT
"Agents" shall have the meaning provided in the first paragraph of
this Agreement.
"Agreement" shall mean this Intercreditor and Collateral Agency
Agreement as modified, supplemented or amended from time to time.
"Beneficiaries" shall have the meaning provided in the third WHEREAS
clause of this Agreement.
"BTCo." means Bankers Trust Company.
"Class" shall have the meaning provided in Section 4.
"Collateral" shall mean the "Pledged Collateral" under, and as defined
in, the Pledge Agreement.
"Collateral Agent" shall mean Bankers Trust Company acting in its
capacity as collateral agent hereunder.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Facility Documents.
"Extensions of Credit" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Facility Documents" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Intercreditor Acknowledgment" shall have the meaning provided in
Section 10.
"Lease Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Lenders" shall have the meaning provided in the second WHEREAS clause
of this Agreement.
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INTERCREDITOR AGREEMENT
"Lessor" shall mean FMS Trust 1997-1, as lessor under the Partici-
pation Agreement.
"Loan Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Loan Agreement" shall have the meaning provided in the first WHEREAS
clause of this Agreement.
"Loan Agreement Lenders" shall have the meaning provided in the first
WHEREAS clause of this Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, as owner trustee
under the Participation Agreement.
"Participation Agreement" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Pledge Agreement" shall have the meaning provided in the third
WHEREAS clause of this Agreement.
"Pledgor" shall mean each "Pledgor" under, and as defined in, the
Pledge Agreement.
"Proceeds" shall have the meaning provided in Section 8.
"Required Lenders" shall have the meaning provided in Section 4.
"Subsidiary Pledgors" shall have the meaning provided in the third
WHEREAS clause of this Agreement.
"Syndication Agent" shall mean The Chase Manhattan Bank, as
syndication agent under the Loan Agreement.
"Synthetic Lease Facility" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
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INTERCREDITOR AGREEMENT
"Synthetic Lease Facility Lenders" shall have the meaning provided in
the second WHEREAS clause of this Agreement.
11. Resignation by the Collateral Agent. (a) The Collateral Agent may
resign from the performance of all its functions and duties hereunder and under
the Pledge Agreement at any time by giving 30 days' prior written notice to FMI,
the Subsidiary Pledgors and the Agents. Such resignation shall take effect upon
the appointment of a successor Collateral Agent pursuant to clauses (b) and (c)
below.
(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor Collateral Agent hereunder who shall be a commercial bank or
trust company; provided that so long as no Default under any of the Facility
Documents shall be in existence such appointment shall be reasonably acceptable
to FMI.
(c) If a successor Collateral Agent shall not have been so appointed
within said 30-day period, the Collateral Agent shall then appoint a successor
Collateral Agent who shall serve as Collateral Agent hereunder or thereunder
until such time, if any, as the Required Lenders appoint a successor Collateral
Agent as provided above.
12. Governing Law. This Agreement and the rights and obligations of
FMI, the Subsidiary Pledgors and the Agents hereunder shall be construed in
accordance with and be governed by the law of the State of New York.
13. Miscellaneous. This Agreement shall be binding upon FMI, each
Subsidiary Pledgor and each Agent, on behalf of the Lenders, and shall inure to
the benefit of and be enforceable by the successors and assigns of the parties
hereto. The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
shall constitute one instrument. In the event that any provision of this
Agreement shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Agreement which shall
remain binding on all parties hereto.
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INTERCREDITOR AGREEMENT
14. Amendment or Waiver of this Agreement and the Pledge Agreement.
None of the terms and conditions of this Agreement or the Pledge Agreement may
be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by (i) with respect to this Agreement, the parties hereto
and (ii) with respect to the Pledge Agreement, the Pledgors and the Collateral
Agent thereunder, in each case with the consent of the Required Lenders;
provided, however, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class of Lenders (and not all Lenders in a
like or similar manner) shall require the written consent of the Required
Lenders of such affected Class.
15. Termination; Release of Collateral and Pledge Agreement. (a) This
Agreement shall terminate on the date upon which the total commitments under the
Facility Documents are terminated, all Letters of Credit issued under the Loan
Agreement are terminated, and when all Extensions of Credit have been
indefeasibly paid in full (other than Extensions of Credit relating to
indemnities to the extent not previously requested at the time of the
termination of the other Extensions of Credit);
(b) The Collateral Agent shall, upon at least ten days' prior notice
and at the request of a Pledgor, release (without recourse and without any
representation or warranty) any or all of the Collateral in accordance with the
terms of the Facility Documents; provided that (x) the sale of the respective
Collateral is permitted under the Facility Documents or such release has been
approved in writing by the requisite Lenders under the Facility Documents and
(y) the proceeds of such Collateral are applied in a manner consistent herewith
and with the Facility Documents. Prior to the release of any Collateral pursuant
to this Section 15, the Collateral Agent shall be entitled to receive a
certificate signed by the chief financial officer or other authorized
representative of the Pledgor (i) identifying any and all financing statements
or other filings or registrations that must be amended or terminated in order to
consummate the sale contemplated in clause (x) of the immediately preceding
sentence and (ii) certifying that the financing statements or other filings or
registrations identified in immediately preceding clause (i) relate exclusively
to the Collateral then being sold.
(c) Not more than ten days after receipt by the Agents from FMI of
evidence satisfactory to it that FMI has received a rating on its senior
unsecured
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INTERCREDITOR AGREEMENT
long-term debt of Baa3 or higher from Moody's and BBB- from S&P, and provided
that no Event of Default shall be in existence, the Pledge Agreement shall
terminate and, at the request and sole expense of FMI, the Agents shall take all
steps necessary to release the Pledged Collateral. Upon such termination any and
all obligations of FMI or the Subsidiaries with respect to such Pledge Agreement
and the transactions contemplated thereby shall terminate.
16. Inconsistent Provisions. If any provision of this Agreement shall
be inconsistent with, or contrary to, any provision in the Facility Documents or
the Pledge Agreement, the provision in this Agreement shall be controlling, and
shall supersede such inconsistent provision to the extent necessary to give full
effect to all provisions contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- --------
One Bankers Trust Plaza BANKERS TRUST COMPANY,
130 Liberty Street as Loan Administrative Agent
New York, NY 10006
Attn: Deal Administrator ANTHONY LO GRIPPO
Telephone: (212) By ------------------------
Telecopy: (212) 250-7351 Anthony Lo Grippo
Title: Vice President
BANKERS TRUST COMPANY, as
Lease Administrative Agent
ANTHONY LO GRIPPO
By ------------------------
Anthony Lo Grippo
Title: Vice President
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BANKERS TRUST COMPANY, as
Collateral Agent
DAVID J. BELL
By ------------------------
Title: Vice President
Acknowledged and Agreed to
this 11th day of March, 1998:
FRED MEYER, INC.,
a Delaware corporation
ROGER A. COOKE
By: ----------------------------
Title: Sr. Vice President & Secretary
FRED MEYER STORES, INC.,
a Delaware corporation
ROGER A. COOKE
By: ----------------------------
Title: Sr. Vice President & Secretary
SMITH'S FOOD & DRUG CENTERS, INC.,
a Delaware corporation
ROGER A. COOKE
By: ----------------------------
Title: Sr. Vice President & Secretary
B&B STORES, INC.,
a Montana corporation
ROGER A. COOKE
By: ----------------------------
Title: Vice President & Secretary
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FM HOLDING CORPORATION,
a Delaware corporation
ROGER A. COOKE
By: ----------------------------
Title: Vice President & Secretary
ROUNDUP CO.,
a Washington corporation
ROGER A. COOKE
By: ----------------------------
Title: Vice President & Secretary
QUALITY FOOD CENTERS, INC.
a Washington corporation
ROGER A. COOKE
By: ----------------------------
Title: Sr. Vice President & Secretary
HUGHES MARKETS, INC.
a California corporation
ROGER A. COOKE
By: ----------------------------
Title: Vice President & Secretary
FOOD 4 LESS HOLDINGS, INC.
a Delaware corporation
ROGER A. COOKE
By: ----------------------------
Title: Sr. Vice President & Secretary
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EXHIBIT A
to the Intercreditor Agreement
[FORM OF INTERCREDITOR ACKNOWLEDGMENT
OF NEW SUBSIDIARY]
Reference is hereby made to the Intercreditor and Collateral Agency
Agreement dated as of March __, 1998 (the "Intercreditor Agreement")
among Fred Meyer, Inc. and its Subsidiaries who are signatories thereto and
Bankers Trust Company, as Loan Administrative Agent,
Lease Administrative Agent and Collateral Agent in
which this Acknowledgment and its attachments are incorporated.
The undersigned is a new Subsidiary (other than an Insignificant
Subsidiary) which is required to pledge capital stock pursuant to the
Pledge Agreement and, as such,
is required to join the Intercreditor Agreement.
The undersigned acknowledges the terms of the Intercreditor Agreement
and agrees to be bound thereby.
[NEW SUBSIDIARY]
By: ----------------------
Name:_______________
Title:______________
Notice Address:
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