EXHIBIT 1
STATER BROS. HOLDINGS INC.
$450,000,000
10 3/4% Senior Notes due 2006
PURCHASE AGREEMENT
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Banc of America Securities LLC
231 S. LaSalle Street
Chicago, Illinois 60697
Dear Sirs:
Stater Bros. Holdings Inc., a Delaware corporation (the "Company"), proposes
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to issue and sell to Banc of America Securities LLC (the "Initial Purchaser") an
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aggregate of $450,000,000 principal amount of its 10 3/4% Senior Notes due 2006
(the "Notes"). Pursuant to terms of an indenture (the "Indenture") to be
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entered into between the Company and IBJ Whitehall Bank & Trust Company as
trustee (the "Trustee"), relating to the Notes, the Company shall issue on the
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Closing Date (as defined below) the Global Note and Definitive Notes (each as
defined below) representing the Notes to be purchased hereunder.
The Notes are being issued and sold in connection with the consummation of the
following series of transactions (collectively, the "Related Transactions" and,
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together with transactions contemplated by the Operative Documents (as defined
below), the "Transactions"): (i) (A) the acquisition by Stater Bros. Markets
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(the "Acquisition") of 43 supermarkets and one future store site (together with
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related inventories, the "Acquired Properties") pursuant to an Asset Purchase
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Agreement, dated as of May 7, 1999 (together with all other documents executed
and delivered pursuant thereto, the "Asset Purchase Agreement"), among
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Albertson's, Inc., Stater Bros. Markets and the Company; (ii) the offer to
purchase and consent solicitation by the Company with respect to its $165.0
million principal amount of 11% Senior Notes due 2001 and $100 million principal
amount of 9% Senior Subordinated Notes due 2004 (collectively, the "Existing
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Notes") pursuant to the Offer to Purchase and Consent Solicitation Statement
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(the "Offer to Purchase") of the Company dated July 1, 1999 (the "Tender Offer")
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and, in connection therewith, the entering into of the supplemental indentures
with respect to the indentures governing the Existing Notes (collectively, the
"Supplemental Indentures"); (iii) the entering into by Stater Bros. Markets of
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the new bank credit facility (the "New Credit Facility" and, together with the
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Asset Purchase Agreement, the Supplemental Indentures and the Promissory Note
(as defined in Section 3(nn) below), the "Related Transaction Documents") with a
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term of three years and consisting of a $50.0 million revolving credit facility
and an additional $25.0 million facility for the issuance of commercial and
standby letters of credit; (iv) the payment to La
Cadena Investments of an amount equal to 1% of the aggregate principal amount of
the Notes sold pursuant to the offering for advisory services rendered in
connection therewith; and (v) the declaration and payment of the Dividend (as
defined in Section 3(nn) below).
The Notes will be dated the Closing Date, will bear interest from the Closing
Date and will be otherwise in the form of Exhibit A to the Indenture.
Capitalized terms used but not defined herein shall have the respective meanings
given to such terms in the Indenture.
The Notes will be offered and sold to the Initial Purchaser pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations (collectively referred to
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as the "Rules and Regulations") of the Securities and Exchange Commission (the
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"Commission") thereunder.
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The Company has prepared a preliminary offering memorandum, dated July 16,
1999 (the "Preliminary Offering Memorandum"), and a final offering memorandum,
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dated August 2, 1999 (the "Offering Memorandum"), setting forth information
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relating to the Company and the sale and issuance of the Notes. Any references
herein to the Preliminary Offering Memorandum and the Offering Memorandum shall
be deemed to include all amendments and supplements thereto and all documents
incorporated therein by reference.
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Act, the Notes (and all
securities issued in exchange therefor or in substitution thereof) shall bear a
legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (i)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
(d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE
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A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM
OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (ii) TO THE
ISSUER OR (iii) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
The Initial Purchaser has advised the Company that it may make offers (the
"Exempt Resales") of the Notes purchased by the Initial Purchaser hereunder
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initially at the prices set forth on the cover page to the Offering Memorandum
and otherwise on the terms set forth in the Offering Memorandum to (i) persons
(each, a "Qualified Institutional Buyer") whom the Initial Purchaser reasonably
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believes to be "qualified institutional buyers" as defined in Rule 144A under
the Act and (ii) outside the United States in reliance on Regulation S
("Regulation S") under the Act (such persons specified in clauses (i) and (ii)
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being referred to herein as the "Eligible Purchasers"). The offering price for
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Exempt Resales may be changed at any time without notice.
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the exchange and registration rights agreement
(the "Registration Rights Agreement"), to be dated the Closing Date, containing
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substantially the same terms as described in the Preliminary Offering Memorandum
and the Offering Memorandum under the heading "Description of the Notes
Registration Rights; Liquidated Damages," for so long as such Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
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Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Commission under the circumstances set forth therein, (i)
a registration statement under the Act (the "Exchange Offer Registration
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Statement") relating to new securities (the "Exchange Notes"), which will have
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terms substantially identical in all material respects to the Notes (except that
the Exchange Notes will not contain terms with transfer restrictions) to be
offered in exchange for the Transfer Restricted Securities (the "Exchange
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Offer") and/or (ii) under certain circumstances, a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement") relating
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to the resale by certain holders of Transfer Restricted Securities. The Company
will also agree to use its best efforts to cause such Registration Statements to
be declared effective by certain dates and/or to remain effective for certain
periods of time, as applicable.
The Purchase Agreement (this "Agreement"), the Indenture and the
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Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents" and the
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Operative Documents and Related Transaction Documents are hereinafter referred
to collectively as the "Transaction Documents".
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The Company hereby confirms its agreement with the Initial Purchaser as
follows:
1. Agreement to Sell and Purchase. Upon the basis of the respective
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representations, warranties and agreements of the parties herein contained and
subject to all the terms and conditions of this Agreement, the Company agrees to
sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from
the Company at the purchase price of 97.500% of the principal amount thereof,
plus accrued interest, if any, an aggregate of $450 million principal amount of
the Notes.
2. Delivery and Payment. Delivery of the Notes shall be made to the Initial
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Purchaser at the office of Banc of America Securities LLC, 231 South LaSalle
Street, 18th Floor, Chicago, Illinois 60697, at 10:00 a.m., New York City time
against payment of the purchase price by wire transfer of Federal or other funds
immediately available in New York City. Delivery of and payment for the Notes
shall occur at 10:00 a.m., New York City time, on the fourth business day
following the date of this Agreement, or at such other place and at such time on
such other date, as may be agreed upon by the Company and the Initial Purchaser
(such date is hereinafter referred to as the "Closing Date").
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One or more Notes in definitive form, registered in the name of Cede & Co.,
as nominee of The Depository Trust Company ("DTC"), or such other names as the
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Initial Purchaser may request upon notice to the Company, in an amount
corresponding to the aggregate principal amount of Notes sold pursuant to Exempt
Resales to Qualified Institutional Buyers (the "Global Note") shall be delivered
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to DTC by the Company. The Global Note in definitive form shall be made
available to the Initial Purchaser for inspection not later than 9:30 a.m. on
the Business Day immediately preceding the Closing Date.
Notes in definitive form, registered in such names and in such
denominations as the Initial Purchaser may request upon notice to the Company,
(respectively, the "Definitive Notes") shall be delivered to the Initial
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Purchaser pursuant to the first paragraph of this Section 2. The Company will
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make such Notes available to the Initial Purchaser for inspection not later than
9:30 a.m. on the Business Day immediately preceding the Closing Date.
3. Representations and Warranties of the Company. The Company represents
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and warrants to the Initial Purchaser that:
(a) A Preliminary Offering Memorandum and an Offering Memorandum with
respect to the Notes have been prepared by the Company in connection with
the Exempt Resales. Copies of such Preliminary Offering Memorandum and
Offering Memorandum and the amendments thereto have been delivered by the
Company to the Initial Purchaser for distribution to potential investors.
No stop order or other similar order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum or any amendment
or supplement thereto, or any order asserting that the
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transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued and no proceeding for that purpose
has commenced or is pending or, to the knowledge of the Company, is
contemplated.
(b) The Preliminary Offering Memorandum, as of the date thereof, and
the Offering Memorandum, as of the date thereof, do not, and any amendment
or supplement thereto 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, in light of the circumstances
under which they were made, not misleading; provided that no representation
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or warranty is made as to information relating to the Initial Purchaser
contained in the Preliminary Offering Memorandum or the Offering Memorandum
in reliance upon and in conformity with written information relating to the
Initial Purchaser furnished to the Company by the Initial Purchaser
specifically for inclusion therein. The Company acknowledges that the
statements set forth in the first sentence of the third paragraph and in
the second sentence of the fourth paragraph under the heading "Plan of
Distribution" in the Offering Memorandum and Preliminary Offering
Memorandum constitute the only information relating to the Initial
Purchaser furnished to the Company by the Initial Purchaser specifically
for inclusion in the Offering Memorandum or the Preliminary Offering
Memorandum. The Company is not required to deliver the information
specified in Rule 144A(d)(4) of the Act in connection with Exempt Resales.
(c) The Offering Memorandum as delivered from time to time shall
incorporate by reference the most recent Annual Report of the Company on
Form 10-K filed with the Commission and each Quarterly Report of the
Company on Form 10-Q and each Current Report of the Company on Form 8-K
filed with the Commission since the filing of the end of the fiscal year to
which such Annual Report relates. The documents incorporated or deemed to
be incorporated by reference in the Offering Memorandum at the time they
were or hereafter are filed with the Commission (collectively, the
"Incorporated Documents") complied and will comply in all material respects
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with the requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
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(d) The only subsidiaries (as defined in the Rules and Regulations)
of the Company are Stater Bros. Markets and Stater Bros. Development, Inc.
(collectively, the "Subsidiaries"). The Company and each of its
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Subsidiaries is, and at the Closing Date will be, a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company and each of its Subsidiaries
has, and at the Closing Date will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Preliminary
Offering Memorandum and the Offering Memorandum. The Company and each of
its subsidiaries has, and at the Closing Date will have, full power and
authority to enter into and perform their respective obligations under the
Transaction Documents. The Company and each of its Subsidiaries is, and at
the Closing Date will be, duly licensed or qualified to do business and in
good standing as a foreign corporation in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets
owned or leased by it (including the Acquired Properties) makes such
licensing or qualification necessary, except where the failure to
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be so licensed or qualified would not have a material adverse effect on the
business, properties, business prospects, condition (financial or
otherwise), net worth or results of operations of the Company and its
Subsidiaries, taken as a whole, or their ability to consummate any of the
Related Transactions (a "Material Adverse Effect"). Other than the stock of
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the Subsidiaries and the limited liability company interests of Santee
Dairies, LLC ("Santee"), the Company does not own, and at the Closing Date-
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will not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other
entity. The outstanding shares of capital stock and other securities of the
Subsidiaries have been duly authorized, validly issued, fully paid and
nonassessable and are not subject to any preemptive or similar right. All
of the outstanding shares of capital stock of the Subsidiaries are
beneficially owned by the Company, except for the ten outstanding shares of
$11.00 Cumulative Preferred Stock of Stater Bros. Markets. Complete and
correct copies of the certificate of incorporation and of the by-laws (or
other comparable documents) of the Company, each of its Subsidiaries and
Santee and all amendments thereto have been delivered to the Initial
Purchaser, and no changes therein will be made subsequent to the date
hereof and prior to the Closing Date.
(e) The outstanding shares of capital stock and other securities of the
Company have been duly authorized, validly issued, fully paid and
nonassessable and, as of the Closing Date, will not be subject to any
preemptive or similar right. The outstanding shares of capital stock of the
Company are beneficially owned by the parties listed in the Preliminary
Offering Memorandum and the Offering Memorandum under the caption "Security
Ownership of Certain Beneficial Owners and Management." Except as set forth
in the Preliminary Offering Memorandum and the Offering Memorandum, there
are not outstanding, and at the Closing Date there will not be outstanding,
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments
to issue or sell, any shares of capital stock of the Company, any shares of
capital stock of any Subsidiary or any such warrants, convertible
securities or obligations.
(f) The consolidated financial statements of the Company and its
Subsidiaries and the Acquired Properties (including all notes and schedules
thereto) included in the Preliminary Offering Memorandum and the Offering
Memorandum present fairly on a consolidated basis the financial position,
the results of operations and cash flows and the changes in stockholders'
equity and the other information purported to be shown therein of each of
the Company and its Subsidiaries, on a consolidated basis, and the Acquired
Properties at the respective dates and for the respective periods to which
they apply; such financial statements and related schedules and notes have
been prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of the
results for such periods have been made, except as disclosed therein and
subject in the case of interim statements to normal year-end audit
adjustments; and the other financial and statistical information and data
set forth in the Preliminary Offering Memorandum and the Offering
Memorandum (and any amendment or supplement thereto) are accurately
presented in all material respects and prepared on a basis
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consistent with such financial statements and the books and records of each
of the Company and its Subsidiaries and the Acquired Properties.
(g) The pro forma financial statements and the related notes thereto
included in the Preliminary Offering Memorandum and the Offering Memorandum
(and in each case any amendment or supplement thereto) have been prepared
on a basis consistent with the historical financial statements and related
notes thereto of Albertson's, Inc. and American Stores Company and the
Company and its Subsidiaries except as specifically referred to therein or
in the notes thereto and give effect to assumptions used in the preparation
thereof on a reasonable basis and in good faith and present fairly the
historical and proposed transactions contemplated by the Preliminary
Offering Memorandum and the Offering Memorandum; and such pro forma
financial statements comply as to form in all material respects with the
requirements applicable to pro forma financial statements included in
registration statements on Form S-1 under the Act. The other pro forma
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, accurately presented and prepared
on a basis consistent with the pro forma financial statements.
(h) (i) Ernst & Young LLP ("E&Y"), who has certified the
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consolidated financial statements of the Company and its Subsidiaries
(including all notes and schedules thereto) included in the Preliminary
Offering Memorandum and the Offering Memorandum, are independent
accountants with respect to the Company and (ii) Deloitte & Touche LLP
("Deloitte" and, together with E&Y, the "Accountants") and E&Y, who have
certified the consolidated financial statements with respect to the
Acquired Properties (including all notes and schedules thereto) used to
calculate the pro forma financial and statistical information and data
included in the Preliminary Offering Memorandum and the Offering
Memorandum, are independent accountants with respect to Albertson's, Inc
and American Stores, respectively.
(i) Subsequent to the respective dates as of which information is
given in the Preliminary Offering Memorandum and the Offering Memorandum
and prior to the Closing Date, except as set forth in or contemplated by
the Preliminary Offering Memorandum and the Offering Memorandum, (1) there
has not been and will not have been any material change in the
capitalization of the Company, or any material adverse change in the
business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries,
taken as a whole, or their ability to consummate any of the Related
Transactions (a "Material Adverse Change"), arising for any reason
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whatsoever, (2) neither the Company nor any of its Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct
or contingent, nor has it entered into nor will it enter into any
transactions material to the business of the Company and its Subsidiaries,
taken as a whole, other than pursuant to the Transaction Documents and (3)
the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock.
(j) Neither the Company nor any of its Subsidiaries is an
"investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an
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"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended.
(k) Except as set forth in the Preliminary Offering Memorandum and
the Offering Memorandum, (1) there are no actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Subsidiaries or any of their respective officers in their capacity as such,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding might have a Material
Adverse Effect and (2) to the knowledge of the Company, no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency or that has been proposed by any governmental body that
could materially adversely affect the issuance of the Notes or the
consummation of any of the transactions contemplated by the Transaction
Documents. The Company has not been served with notice of any injunction,
restraining order or order of any nature by a federal or state court or
other tribunal of competent jurisdiction that would prevent the issuance of
the Notes or the Exchange Notes or the consummation of any of the Related
Transactions.
(l) The Company and each of its Subsidiaries has, and at the Closing
Date will have, (1) all governmental licenses, permits, consents, orders,
approvals and other authorizations, including but not limited to any
necessary approvals or exemptions under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("Licenses") necessary to consummate
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each of the Related Transactions and carry on its business as contemplated
in the Preliminary Offering Memorandum and the Offering Memorandum, except
for such Licenses the absence of which would not have a Material Adverse
Effect, (2) complied in all material respects with all laws, regulations
and orders applicable to it or its business and (3) performed all its
obligations required to be performed by it, and is not, and at the Closing
Date will not be, in default, under any contract or other instrument to
which it is a party or by which its property is bound or affected, except
where such default would not have a Material Adverse Effect. To the best
knowledge of the Company and each of its Subsidiaries, no other party under
any contract or other instrument to which it is a party is in default in
any respect thereunder, except where such default would not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is, nor at
the Closing Date will any of them be, in violation of any provision of its
certificate of incorporation or by-laws.
(m) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
for the consummation by the Company or its Subsidiaries, as the case may
be, of (i) the transactions on its part herein contemplated or (ii) the
Related Transactions, except such as may be required under state securities
or Blue Sky laws. Except as provided in the previous sentence, as of the
Closing Date, the Company and its Subsidiaries will have obtained all
consents or waivers from any person as are required to consummate (i) the
transactions contemplated by the Operative Documents and (ii) the Related
Transactions.
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(n) The Company and each of its Subsidiaries party thereto has full
corporate power and authority to enter into each of the Transaction
Documents. Each of the Transaction Documents have been duly authorized,
executed and delivered by the Company and each of its Subsidiaries party
thereto and constitute a valid and binding agreement of the Company and
such Subsidiaries and are enforceable against the Company and such
Subsidiaries in accordance with the terms thereof, except (A) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to or
affecting creditors' rights generally; (B) that the remedies of specific
performance and injunctive and other forms of relief are subject to general
equitable principles, whether enforcement is sought at law or in equity,
and that such enforcement may be subject to the discretion of the court
before which any proceedings therefore may be brought; and (C) as rights to
indemnity and contribution may be limited by state and federal laws
relating to securities or by the policies underlying such laws. The
performance of each of the Transaction Documents and the consummation of
the transactions contemplated thereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries pursuant to the terms or provisions of,
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate
any of its obligations under, or result in the acceleration of any
obligation under, the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries, any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, lease, contract or other material agreement
or instrument to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of its properties is
bound or affected, or violate or conflict with any judgment, ruling,
decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or properties of the
Company or any of its Subsidiaries.
(o) The Company and each of its Subsidiaries have and, with respect
to the Acquired Properties, upon consummation of the Acquisition the
Company and its Subsidiaries will have, good and marketable title to all
properties and assets described in the Preliminary Offering Memorandum and
the Offering Memorandum as owned by it or to be acquired by it or its
Subsidiaries, in each case free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Preliminary Offering Memorandum and the Offering Memorandum, are Permitted
Liens, or are not material to the business of the Company or its
Subsidiaries. The Company and each of its Subsidiaries has, or, with
respect to the Acquired Properties, upon consummation of the Acquisition
will have, valid, subsisting and enforceable leases for the properties
described in the Preliminary Offering Memorandum and the Offering
Memorandum as leased by it or to be leased by it following the consummation
of the Acquisition, with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such
properties by the Company and such Subsidiaries.
(p) There is no material document or contract concerning the Company
which is not described in the Preliminary Offering Memorandum and the
Offering Memorandum. All such contracts to which the Company or any
Subsidiary is a party
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have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof.
(q) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Initial Purchaser was or will be,
when made, inaccurate, untrue or incorrect.
(r) Neither the Company nor, to the best of the Company's knowledge,
any of its directors, officers or controlling persons has taken, directly
or indirectly, any action designed, or which might reasonably be expected,
to cause or result, under the Act or otherwise, in, or which has
constituted, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Notes. Except as
permitted by the Act, the Company has not distributed the Preliminary
Offering Memorandum or Offering Memorandum or any other offering material
in connection with the Exempt Resales.
(s) Except as disclosed in the Preliminary Offering Memorandum and
Offering Memorandum, there are no holders of securities of the Company (and
the issuance of the Notes hereunder will not create any such holders), who,
by reason of the execution by the Company of any of the Transaction
Documents or the filing of any Registration Statement pursuant thereto,
have the right to request or demand that the Company register under the
Act, securities held by them.
(t) The Company and each of its Subsidiaries are in compliance with
all local, state and federal laws, ordinances and regulations applicable to
their properties (whether owned or leased) and their businesses, with the
exception of violations of such laws, ordinances and regulations which
would not have a Material Adverse Effect.
(u) The issuance and sale of the Notes and the Exchange Notes have
been duly authorized by the Company, and all legally required corporate
proceedings by the Company in connection with the issuance and sale thereof
have been taken; each of the Notes and the Exchange Notes when delivered to
and paid for by the Initial Purchaser or upon consummation of the Exchange
Offer, in accordance with the Operative Documents, as applicable (assuming
the due authorization and authentication of the Notes and the Exchange
Notes by the Trustee), will be a legal, valid and binding obligation of the
Company entitled to the benefits provided by the Indenture, enforceable in
accordance with their terms, except (A) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws now
or hereafter in effect relating to or affecting creditors' rights
generally; (B) that the remedies of specific performance and injunctive and
other forms of relief are subject to general equitable principles, whether
enforcement is sought at law or in equity, and that such enforcement may be
subject to the discretion of the court before which any proceedings
therefore may
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be brought; and (C) as rights to indemnity and contribution may be limited
by state and federal laws relating to securities or by the policies
underlying such laws.
(v) The Indenture complies as to form in all material respects with
the requirements of the Trust Indenture Act of 1939, as amended (the "Trust
-----
Indenture Act"), and the rules and regulations of the Commission
-------------
thereunder. Upon effectiveness of the applicable registration statement to
be filed pursuant to the Registration Rights Agreement, the Indenture will
be duly qualified under the Trust Indenture Act.
(w) On the Closing Date, (1) the Indenture will have been duly and
validly authorized, executed and delivered by the Company and will
constitute a valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, (2) the
Registration Rights Agreement will have been duly authorized by the Company
and, when executed by the Company in accordance with the terms hereof, will
be validly executed and delivered and will be the legally valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, (3) the Indenture, the Registration Rights Agreement, the
Asset Purchase Agreement, the New Credit Facility and the Notes will
conform in all material respects to the descriptions thereof contained in
the Preliminary Offering Memorandum and the Offering Memorandum, except
with respect to clauses (1), (2) and (3), (A) as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally; (B) that the remedies of specific performance and injunctive and
other forms of relief are subject to general equitable principles, whether
enforcement is sought at law or in equity, and that such enforcement may be
subject to the discretion of the court before which any proceedings
therefore may be brought; and (C) as rights to indemnity and contribution
may be limited by state and federal laws relating to securities or by the
policies underlying such laws.
(x) All tax returns required to be filed by the Company and its
Subsidiaries, in all jurisdictions, have been so filed. All taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities or that are due
and payable have been paid, other than those being contested in good faith
by appropriate proceedings and for which adequate reserves have been
provided or those currently payable without penalty or interest. The
Company does not know of any material proposed additional tax assessments
against it or any of its Subsidiaries.
(y) Except as disclosed in the Preliminary Offering Memorandum and
Offering Memorandum, neither the Company nor any of its Subsidiaries has
incurred, individually or in the aggregate, any material liabilities or
obligations as a result of any casualty loss, whether insured or uninsured.
(z) Except as disclosed in the Preliminary Offering Memorandum and
the Offering Memorandum, there are no contracts, agreements or
understandings between the Company and any person that would give rise to a
valid claim against the Company or
-11-
the Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the transactions contemplated by this Agreement.
(aa) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange
Act, or that are quoted in a United States automated interdealer quotation
system. No securities of the same class as the Notes have been issued or
sold by the Company within the six-month period immediately prior to the
date hereof.
(bb) Assuming (1) that the Initial Purchaser's representations and
warranties in Section 4 are true and (2) that each of the Eligible
---------
Purchasers is a Qualified Institutional Buyer, the purchase and resale of
the Notes pursuant hereto (including pursuant to the Exempt Resales) is
exempt from the registration requirements of the Act. No form of general
solicitation or general advertising was used by the Company or any of its
representatives (other than the Initial Purchaser, as to whom the Company
makes no representation) in connection with the offer and sale of the
Notes, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any such general solicitation or general
advertising.
(cc) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to be purchased by the
Eligible Purchasers will not result in the occurrence of any non-exempt
prohibited transaction within the meaning of Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") with respect to employee
----
benefit plans maintained or contributed to by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has ever
maintained or contributed to any employee pension benefit plan, including
any multiemployer plan, or to any employee welfare benefit plan that
provides health or welfare benefits to any retired or former employee of
the Company or any Subsidiary, except as set forth in the Preliminary
Offering Memorandum or the Offering Memorandum or to the extent required
under the provisions of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended. Each of the Company and its Subsidiaries is in
compliance in all material respects with any applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
-----
the Code and regulations and published interpretations thereunder with
respect to all employee welfare benefit plans maintained or contributed to
by the Company or any of its Subsidiaries. As used in this paragraph, the
terms "employee benefit plan," "employee pension benefit plan", "employee
welfare benefit plan" and "multiemployer plan" shall have the meanings
assigned to such terms in ERISA.
(dd) Neither the Company nor any agent thereof acting on its behalf
has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Notes or the Exchange Notes or the
application of proceeds thereof to violate
-12-
Section 7 of the Exchange Act or any regulation issued pursuant thereto,
including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect now or
as the same may hereafter be in effect on the Closing Date.
(ee) The Company causes to be maintained insurance covering the
properties, operations, personnel and businesses of the Company and its
Subsidiaries in such amounts and against such losses and risks as are
adequate in accordance with customary industry practice to protect the
Company and its Subsidiaries and their businesses. Neither the Company nor
any Subsidiary has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will
have to be made in order to continue such insurance. All such insurance is
outstanding and duly in force on the date hereof and will be outstanding
and duly in force
on the Closing Date.
(ff) Except as disclosed in the Preliminary Offering Memorandum and
Offering Memorandum, (A) (1) neither the Company nor any of its
Subsidiaries is involved in any unfair labor practice, (2) there is no
unfair labor practice complaint pending or, to the Company's best
knowledge, threatened against the Company or any of its Subsidiaries before
the National Labor Relations Board and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is
pending or, to the Company's best knowledge, threatened against the Company
or any of its Subsidiaries, (3) there is no strike, labor dispute, slowdown
or stoppage pending or, to the Company's best knowledge, threatened against
the Company or any of its Subsidiaries and (4) no outstanding dispute with
any union representing the employees of the Company or any of its
Subsidiaries exists with respect to representation of the employees of the
Company or any of its Subsidiaries and, to the best knowledge of the
respective managements of the Company or any of its Subsidiaries, no union
organizing activities are taking place other than activities by unions
disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum as currently representing the Company or any of its
Subsidiaries, and (B) there has been no violation of any federal, state or
local law relating to discrimination in the hiring, promotion or pay of
employees, of any applicable wage or hour laws, nor any provisions of ERISA
or the rules and regulations promulgated thereunder except any violation
that may exist in connection with any case disclosed in the Preliminary
Offering Memorandum or the Offering Memorandum and which violation, if any,
will not result in a Material Adverse Effect.
(gg) Except as disclosed in the Preliminary Offering Memorandum and
Offering Memorandum, there are no business relationships or related party
transactions which, if subject to Item 404 of Regulation S-K under the Act,
would be required to be disclosed therein.
(hh) To the best knowledge of each of the Company and its
Subsidiaries, each of the Company and its Subsidiaries has obtained all
permits, licenses and other authorizations that are required under, and is
otherwise in compliance with, all environmental laws, including but not
limited to the Federal Water Pollution Control Act (33 U.S.C. (S) 1251 et
seq.), Resource Conservation & Recovery Act (42 U.S.C. (S) 6901 et
-13-
seq.), Safe Drinking Water Act (21 U.S.C. (S) 349, 42 U.S.C. (S)(S) 201,
300f), Toxic Substances Control Act (15 U.S.C. (S) 2601 et seq.), Clean Air
Act (42 U.S.C. (S) 7401 et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. (S) 9601 et seq.), other
appropriate California laws and any other laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes or under any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder (collectively, the "Environmental
Laws"), except as otherwise set forth in the Preliminary
------------------
Offering Memorandum or the Offering Memorandum or to the extent failure to
have any such permit, license or authorization, individually or in the
aggregate, does not have a Material Adverse Effect. Except as described in
the Offering Memorandum, each of the Company and its Subsidiaries is in
compliance with all terms and conditions of any required permits, licenses
and authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws,
except to the extent failure to comply would not have a Material Adverse
Effect.
(ii) To the best knowledge of each of the Company and its
Subsidiaries, (1) there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans relating
to the business as presently being conducted by the Company or its
Subsidiaries that interfere with or prevent compliance or continued
compliance with the Environmental Laws, or which would be reasonably likely
to give rise to any legal liability (whether statutory or common law) or
otherwise would be reasonably likely to form the basis of any claim,
action, demand, suit, proceeding, hearing, notice of violation, study,
investigation, remediation or cleanup based on or related to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release into
the workplace, the community or the environment of any pollutant,
contaminant, chemical or industrial, toxic, or hazardous substance or
waste, except for any liabilities or any claims, demands or other actions
specified above that will not individually or in the aggregate have a
Material Adverse Effect, and (2) except as previously disclosed in the
Preliminary Offering Memorandum or the Offering Memorandum, no asbestos-
containing material and no underground or above-ground tanks are located on
property owned or leased by the Company or its Subsidiaries and none have
been previously removed or filled by the Company or its Subsidiaries or, to
the best of their knowledge, any predecessor of the Company or its
Subsidiaries.
(jj) None of the Company, its Subsidiaries or any of their
respective "affiliates" (as defined in Rule 501(b) under the Act) or any
person authorized to act on their respective behalf (excluding the Initial
Purchaser, as to which no representation is made) has sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect
-14-
of any security (as such term is defined in the Act) of the Company in a
manner which would require registration under the Act.
(kk) The Company and its Subsidiaries own, possess or currently have
the right to use the trademarks, service marks, trade names, patent rights,
copyrights, licenses, inventions, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) (collectively, "Intellectual Property")
---------------------
presently employed by them in connection with, or necessary for the conduct
of, the businesses now operated by them or to be operated by them as
contemplated in the Offering Memorandum, and none of the Company or its
Subsidiaries has received any notice of, or is otherwise aware of, any
infringement of, or conflict with, asserted rights of others with respect
to the foregoing.
(ll) The Company and its affiliates and all persons acting on their
behalf (other than the Initial Purchaser, as to whom the Company makes no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Notes outside the United States and, in connection therewith, the
Offering Memorandum will contain the disclosure required by Rule 902(g)(2)
under the Securities Act.
(mm) The Company is a "reporting issuer", as defined in Rule 902
under the Securities Act.
(nn) Stater Bros. Markets has declared and paid to the Company, as a
dividend (the "Dividend"), a demand promissory note in the amount of $50
--------
million (the "Promissory Note"). Under the terms of the New Credit
---------------
Facility, Stater Bros. Markets will be permitted to borrow up to $50
million to pay all or a portion of the Promissory Note ("Borrowing"). The
---------
execution and delivery of the Promissory Note, the Dividend, any such
Borrowing, the repayment of the Promissory Note, and any subsequent
contribution by the Company to Stater Bros. Markets of the proceeds of such
repayment will not result in the creation or imposition of any lien, charge
or encumbrance upon any of the assets of the Company or any of its
Subsidiaries pursuant to the terms or provisions of, or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, the
certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other material agreement or
instrument to which the Company or any of its Subsidiaries is a party as of
the date hereof or by which the Company or any of its Subsidiaries or any
of its properties is bound or affected as of the date hereof, or violate or
conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to
the business or properties of the Company or any of its Subsidiaries.
4. Representations and Warranties of the Initial Purchaser. The Initial
-------------------------------------------------------
Purchaser represents and warrants to the Company that:
-15-
(a) It is a Qualified Institutional Buyer with such knowledge and
experience in financial and business matters as are necessary to evaluate
the merits and risks of an investment in the Notes. It is acquiring its
interest in the Notes for its own account as principal for the purpose of
investment and not with a view to the distribution or resale thereof,
except resales in compliance with the registration requirements or
exemption provisions of the Act and that neither it, nor anyone acting on
its behalf, will offer the Notes so as to bring the issuance and sale of
the Notes within the provisions of Section 5 of the Act.
(b) The Initial Purchaser (1) is not acquiring the Notes with any
present intention of offering or selling any of the Notes in a transaction
that would violate the Act or the securities laws of any state of the
United States or any other applicable jurisdiction, (2) will be re-offering
and reselling the Notes only to Qualified Institutional Buyers in reliance
on the exemption from the registration requirements of the Act provided by
Rule 144A under the Act and outside the United States in reliance on
Regulation S of the Act, and (3) has used no form of general solicitation
or general advertising in connection with the offer and sale of the Notes.
(c) In connection with the Exempt Resales, the Initial Purchaser
will solicit offers to buy the Notes only from, and will offer to sell the
Notes only to, the Eligible Purchasers. The Initial Purchaser will offer to
sell the Notes only to, and will solicit offers to buy the Notes only from,
persons who in purchasing such Notes will be deemed to have represented and
agreed that (1) if such Eligible Purchaser is a Qualified Institutional
Buyer, it is purchasing the Notes for its own account or an account with
respect to which it exercises sole investment discretion and it or such
accounts are Qualified Institutional Buyers, (2) such Notes have not been
registered under the Act or any securities laws of any jurisdiction and
that the Notes may be offered, resold, pledged or otherwise transferred
only (i) to a person who the seller reasonably believes is a Qualified
Institutional Buyer in a transaction meeting the requirements of Rule 144A,
in a transaction meeting the requirements of Rule 144, outside the United
States to a non-U.S. person in a transaction meeting the requirements of
Rule 904 under the Act, to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of the Act), that, prior to such
transfer, furnishes the Trustee a signed letter containing certain
representations and agreements and, if such transfer is in an aggregate
principal amount of less than $100,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Act, or in
accordance with another exemption from the registration requirements of the
Act (and based upon an opinion of counsel if the Company so requests), (ii)
to the Company, (iii) pursuant to an effective registration statement and,
in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction, (3) such
Eligible Purchaser will, and each subsequent holder will be required to,
notify any purchaser of any security from it of the resale restrictions set
forth in (2) above, and (4) the Notes acquired by such Eligible Purchasers
in certificated form will bear the legends set forth in the preamble of
this Agreement.
-16-
The Initial Purchaser also understands that the Company and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Sections
--------
6(d) and 6(e) hereof, counsel to the Company and counsel to the Initial
- -------------
Purchaser, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchaser hereby consents to such
reliance.
5. Agreements of the Company. The Company agrees with the Initial
-------------------------
Purchaser as follows:
(a) The Company will not amend or supplement the Offering Memorandum,
unless a copy thereof first shall have been submitted to the Initial
Purchaser within a reasonable period of time prior thereto and the Initial
Purchaser shall not have objected thereto in good faith. The Company will
prepare promptly upon the Initial Purchaser's request, any amendment to the
Preliminary Offering Memorandum or the Offering Memorandum that may be
necessary or advisable in connection with the Exempt Resales.
(b) The Company will advise the Initial Purchaser promptly, and will
confirm such advice in writing (unless the Initial Purchaser advises the
Company in each instance that such written confirmation is unnecessary) of
the happening of any event that makes any statement of a material fact made
in the Preliminary Offering Memorandum or the Offering Memorandum untrue or
that requires the making of any additions to or changes in the Preliminary
Offering Memorandum or Offering Memorandum. If, prior to the completion of
the placement of the Notes by the Initial Purchaser with the Eligible
Purchasers, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Offering Memorandum in order to
make the statements therein, in the light of the circumstances when the
Offering Memorandum is delivered to a purchaser, not misleading, or if in
the reasonable opinion of the Initial Purchaser or counsel for the Initial
Purchaser it is otherwise necessary to amend or supplement the Offering
Memorandum or any Incorporated Document to comply with law, the Company
agrees to promptly prepare (subject to Section 5(a) hereof), file with the
Commission, in the case of any Incorporated Document, and furnish at its
own expense to the Initial Purchaser, amendments or supplements to the
Offering Memorandum and such Incorporated Document so that the statements
in the Offering Memorandum and the Incorporated Documents as so amended or
supplemented will not, in the light of the circumstances when the Offering
Memorandum is delivered to a purchaser, be misleading or so that the
Offering Memorandum, as amended or supplemented, will comply with law.
(c) From time to time, the Company will deliver to the Initial
Purchaser, without charge, as many copies of the Preliminary Offering
Memorandum and Offering Memorandum or any amendment or supplement thereto
as the Initial Purchaser may reasonably request. The Company consents to
the use of the Preliminary Offering Memorandum and the Offering Memorandum
and any amendment or supplement thereto by the Initial Purchaser, both at
the time of the offering or sale of the Notes and for such period of time
thereafter as the Offering Memorandum may be delivered in connection
therewith. If during such period of time any event shall occur which in the
judgment of
-17-
the Company or counsel to the Initial Purchaser should be set forth in the
Offering Memorandum in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Offering Memorandum to comply with
law, the Company will forthwith prepare an appropriate supplement or
amendment thereto, and will deliver to the Initial Purchaser, without
charge, such number of copies thereof as the Initial Purchaser may
reasonably request.
(d) Prior to the Exempt Resales, and from time to time, the Company
will take such action as the Initial Purchaser may reasonably request to
cooperate with the Initial Purchaser and its counsel in connection with the
registration or qualification of the Notes for offer and sale by the
Initial Purchaser under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may reasonably designate, and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary for the
distribution and resale of the Notes and the Exchange Notes as contemplated
by the Preliminary Offering Memorandum, the Offering Memorandum and the
Operative Documents; provided, that in no event shall the Company be
--------
obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Notes or the Exchange Notes, in any jurisdiction where it is not now so
subjected.
(e) During the five years after the date of this Agreement, the
Company will furnish without charge to the Initial Purchaser, as soon as
available, a copy of each report of the Company or other publicly available
information that the Company shall mail or otherwise make available to the
holders of common stock of the Company or shall file with the Commission
and such other publicly available information concerning the Company or its
Subsidiaries as the Initial Purchaser may reasonably request.
(f) For so long as any of the Notes remain outstanding and are
Transfer Restricted Securities, and during any period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, the Company
agrees to make available to any Eligible Purchaser or beneficial owner of
the Notes in connection with any sale thereof, and any prospective
purchaser of such Notes from such Eligible Purchaser or beneficial owner,
the information required by Rule 144A(d)(4) under the Act or any successor
provision under the Act.
(g) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, the
Company will pay all costs, expenses and fees (including fees and
disbursements of the Accountants and counsel to the Company) incident to
and in connection with (1) the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements and
exhibits) and all amendments and supplements thereto, (2) the preparation,
printing (including, without limitation, word processing and duplication
costs) and delivery of the Operative Documents, all Blue Sky Memoranda and
all other agreements, memoranda,
-18-
correspondence and other documents printed and delivered in connection
herewith and with the Exempt Resales (including reasonable fees and
disbursements of the Initial Purchaser's counsel incurred in connection
with the preparation, printing and delivery of such Blue Sky Memoranda),
(3) the preparation, issuance and delivery by the Company of the Notes and
the Exchange Notes (including, without limitation, printing and engraving
thereof), (4) the qualification of the Notes and the Exchange Notes for
offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the reasonable fees and disbursements of
the Initial Purchaser's counsel relating to such registration or
qualification), (5) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the
Exempt Resales, (6) the application for quotation of the Notes in the
Private Offerings, Resales and Trading Through Automated Linkages market of
the National Association of Securities Dealers, Inc. ("PORTAL"), (7) fees
------
and expenses of the Trustee, including fees and expenses of counsel
thereto, (8) any fees charged by investment rating agencies for the rating
of the Notes and (9) the performance by the Company of its other
obligations under the Operative Documents.
(h) The Company will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Notes or the Exchange Notes. Except
as permitted by the Act, the Company will not distribute any offering
material in connection with the Exempt Resales.
(i) The Company will apply the net proceeds from the sale of the
Notes in accordance with the description set forth in the Preliminary
Offering Memorandum and the Offering Memorandum under the caption "Use of
Proceeds."
(j) The Company will use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by it prior to the Closing Date and to satisfy all conditions precedent to
the delivery of the Notes.
(k) The Company agrees not to sell, offer for sale or solicit
offers to buy or otherwise negotiate with respect to any security (as
defined in the Act) that would be integrated with the sale of the Notes in
a manner that would require the registration under the Act of the sale to
the Initial Purchaser or the Eligible Purchasers of the Notes.
(l) The Company agrees to comply with its agreements in the
Registration Rights Agreement and all agreements set forth in any
representation letter of the Company to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer. The Company agrees to use its best
efforts to cause the Notes to be eligible for clearance and settlement
through DTC.
(m) The Company agrees to use its best efforts, as requested by the
Initial Purchaser, to enable the Initial Purchaser to effect the inclusion
of the Notes in PORTAL.
-19-
(n) If the Initial Purchaser surrenders any Note or Exchange Note to
the Company or to the Trustee for any reason, the Company will pay the cost
of delivering to the home office of the Initial Purchaser or to the office
of the Initial Purchaser's designee from the Company or such Trustee,
insured to the Initial Purchaser's satisfaction, each security issued in
substitution or replacement for the surrendered security.
(o) The Company will pay all stamp, transfer or similar taxes (other
than any taxes that are based upon the Initial Purchaser's net or gross
income, assets or capital) in connection with (1) the issuance, sale to the
Initial Purchaser and delivery of the Notes and Exchange Notes and the
execution and delivery of the Operative Documents and any other agreements
and instruments contemplated thereby and (2) any modification of any of
such Notes, Exchange Notes, Operative Documents or such other agreements
and instruments and will hold the Initial Purchaser harmless without
limitation as to time against any and all liabilities with respect to all
such taxes.
(p) The Company will pay or cause to be paid all amounts payable
with respect to any Notes or Exchange Notes held by the Initial Purchaser
or the Initial Purchaser's nominee (without any presentment of such Notes
or Exchange Notes and without any notation of such payment being made
thereon) by crediting the Initial Purchaser's or such other holder's (as
the case may be) account in any bank in the United States as may be
designated and specified in writing by the Initial Purchaser or such holder
before 11:00 a.m. local time by federal funds bank wire transfer.
(q) The Company will not voluntarily claim, and will resist actively
any attempts to claim, the benefits of any usury laws against the holders
of any Notes or any Exchange Notes.
(r) The Company will take all reasonable actions necessary to keep
the Initial Purchaser's identity confidential, and will not disclose the
Initial Purchaser's identity as an investor in the Company in any public
announcement, governmental filing or otherwise (other than in connection
with the consummation of the transactions contemplated hereby) without the
Initial Purchaser's prior written consent unless such disclosure is
required by law or compelled by order of a court of competent jurisdiction,
in which case prior to making such disclosure the Company will give written
notice to the Initial Purchaser describing in all reasonable detail the
proposed content of such disclosure and will afford the Initial Purchaser
in good faith an opportunity to suggest modifications in the form and
substance of such proposed disclosure.
(s) The Company will cooperate and assist in any filings required to
be made with the National Association of Securities Dealers, Inc. and in
the performance of any due diligence investigation by any broker-dealer
participating in the sale of the Notes.
(t) During the period from the Closing Date to one year after the
Closing Date, the Company will not, and will not permit any of its
"affiliates" (as defined in Rule 144 under the Act) to, resell any of the
Notes that have been reacquired by them, except
-20-
for Notes purchased by the Company or any of such affiliates and resold in
a transaction registered under the Act or exempt from such registration
requirements under the Act.
(u) The Company will take all necessary action to consummate each of
the Related Transactions.
6. Conditions of the Obligations of the Initial Purchaser. The
------------------------------------------------------
obligations of the Initial Purchaser hereunder are subject to the following
conditions:
(a) Since the respective dates as of which information is given in
the Preliminary Offering Memorandum and the Offering Memorandum, (1) there
shall not have been a Material Adverse Change, whether or not arising from
transactions in the ordinary course of business, in each case other than as
set forth in or contemplated by the Preliminary Offering Memorandum and the
Offering Memorandum, (2) neither the Company nor any of its Subsidiaries
shall have sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree, which is not set forth in
the Preliminary Offering Memorandum and the Offering Memorandum, and (3)
there shall not have been any material adverse change in the capital stock
or debt of the Company and Subsidiaries taken as a whole, if in the
judgment of the Initial Purchaser any such development makes it
impracticable or inadvisable to consummate the sale and delivery of the
Notes by the Initial Purchaser at the purchase price.
(b) Since the respective dates as of which information is given in
the Preliminary Offering Memorandum and the Offering Memorandum, there
shall have been no litigation or other proceeding instituted against the
Company or any of its Subsidiaries or any of their respective officers or
directors in their capacities as such, before or by any Federal, state or
local court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, in which litigation or proceeding
an unfavorable ruling, decision or finding would have a Material Adverse
Effect.
(c) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date, as if made at the Closing Date, and all covenants and
agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the
Company at or prior to the Closing Date shall have been duly performed,
fulfilled or complied with.
(d) The Initial Purchaser shall have received an opinion, dated the
Closing Date, satisfactory in form and substance to counsel for the Initial
Purchaser, from Varner, Saleson & Dobler LLP, counsel to the Company, as to
the matters set forth in Exhibit A-1, and from Gibson, Dunn & Crutcher LLP,
counsel to the Company, as to the matters set forth in Exhibit A-2. In
addition, the Initial Purchaser shall have received a reliance letter,
dated on or prior to the Closing Date, from Gibson, Dunn & Crutcher
-21-
LLP, counsel to the Company, with respect to the Articles of Incorporation
of Stater Bros. Markets, which opinion shall be satisfactory in all
respects to the Initial Purchaser.
(e) The Initial Purchaser shall have received an opinion, dated the
Closing Date, from Milbank, Tweed, Hadley & McCloy LLP, counsel for the
Initial Purchaser, with respect to the validity of the Notes and such other
matters as are customarily covered in such opinions, which opinion shall be
satisfactory in all respects to the Initial Purchaser.
(f) Concurrently with the execution and delivery of this Agreement,
(i) E&Y shall have furnished to the Initial Purchaser a letter, dated the
date of its delivery, addressed to the Initial Purchaser and in form and
substance satisfactory to the Initial Purchaser, confirming that they are
independent accountants with respect to the Company and with respect to the
financial and other statistical and numerical information contained in the
Preliminary Offering Memorandum and the Offering Memorandum and (ii)
Deloitte and E&Y shall have each furnished to the Initial Purchaser a
letter, dated the date of its delivery, addressed to the Initial Purchaser
and in form and substance satisfactory to the Initial Purchaser, confirming
that they are independent accountants with respect to Albertson's, Inc. and
American Stores, respectively, and with respect to the financial and other
statistical and numerical information delivered to the Company by each of
Deloitte and E&Y with respect to the Acquired Properties. At the Closing
Date, each of the Accountants shall have furnished to the Initial Purchaser
a letter, dated the date of its delivery, which shall confirm, on the basis
of a review in accordance with the procedures set forth in the letter from
the Accountants, that nothing has come to their attention during the period
from the date of the letter referred to in the prior sentence to a date
(specified in the letter) not more than five days prior to the Closing Date
which would require any change in their letter dated the date hereof if it
were required to be dated and delivered at the Closing Date.
(g) Concurrently with the execution and delivery of this Agreement
and at the Closing Date, there shall be furnished to the Initial Purchaser
an accurate certificate, dated the date of its delivery, signed by each of
the Chief Executive Officer and the Chief Financial Officer of the Company,
in form and substance satisfactory to the Initial Purchaser, to the effect
that:
(1) Each signer of such certificate has carefully examined the
Preliminary Offering Memorandum and the Offering Memorandum and (A) as
of the date of such certificate, such documents are true and correct
in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not untrue or misleading and (B) in the case of the
certificate delivered at the Closing Date, since the date hereof, no
event has occurred as a result of which it is necessary to amend or
supplement the Offering Memorandum in order to make the statements
therein not untrue or misleading in any material respect.
-22-
(2) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct in all
material respects.
(3) Each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(h) Concurrently with the execution and delivery of this Agreement
and at the Closing Date, there shall be furnished to the Initial Purchaser
an accurate certificate, dated the date of its delivery, signed by the
Secretary of the Company, in form and substance satisfactory to the Initial
Purchaser, and attaching the Company's articles of incorporation, by-laws,
resolutions, a specimen of the Notes and such other documents or records as
the Initial Purchaser may reasonably request.
(i) The Notes shall be qualified for sale in such states as the
Initial Purchaser may reasonably request, each such qualification shall be
in effect and not subject to any stop order or other proceeding on the
Closing Date.
(j) The Notes shall have been duly authorized for quotation in
PORTAL.
(k) The Company shall have furnished to the Initial Purchaser such
certificates, in addition to those specifically mentioned herein, as the
Initial Purchaser may have reasonably requested as to the accuracy and
completeness at the Closing Date of any statement in the Preliminary
Offering Memorandum or the Offering Memorandum, as to the accuracy at the
Closing Date of the representations and warranties of the Company herein,
as to the performance by the Company of its obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Initial Purchaser.
(l) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by the Board of
Governors of the Federal Reserve System or any other governmental agency as
of the Closing Date that would prevent the issuance of the Notes. No
injunction, restraining order or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing
Date that would prevent the issuance of the Notes or the consummation of
the Exempt Resales. The purchase of and payment for the Notes to be
purchased by the Initial Purchaser shall not subject the Initial Purchaser
to any penalty or, in the Initial Purchaser's reasonable judgment, other
onerous conditions under or pursuant to any applicable law or governmental
regulation. On the Closing Date, no action, suit or proceeding shall be
pending against or, to the knowledge of the Company, affecting or
threatened against, the Company or any of its Subsidiaries before any
court, arbitrator or governmental body, agency or official that would
interfere with or adversely affect the
-23-
issuance of the Notes or in any manner draw into question the validity of
this Agreement or the Notes.
(m) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchaser not later than 9:00 a.m., New York
City time, on the date one Business Day after the date of this Agreement or
at such later date and time as the Initial Purchaser may approve in
writing.
(n) The Company shall have entered into the Registration Rights
Agreement in form and substance acceptable to the Initial Purchaser, and
the Initial Purchaser shall have received an original, duly executed by the
Company, of the Registration Rights Agreement.
(o) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchaser shall have received counterparts,
confirmed as executed, thereof. The Notes shall have been issued.
(p) Subsequent to the date hereof, there shall not have been any
decrease in the rating of any of the Company's or any of its Subsidiaries'
debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of
a possible change in any such rating that does not indicate the direction
of the possible change.
(q) The Company shall have furnished to the Initial Purchaser such
further information, certificates and documents as the Initial Purchaser
may reasonably request.
(r) The following events shall have taken place at the time of the
purchase of the Notes by the Initial Purchaser: (i) each of the conditions
precedent to the Company's and Stater Bros. Markets' obligations under the
Asset Purchase Agreement shall have been satisfied and not waived by the
Company or Stater Bros. Markets, (ii) the Company and IBJ Whitehall Bank &
Trust Company (the "11% Note Trustee"), as successor in interest to IBJ
----------------
Schroder Bank & Trust Company, shall have entered into the Second
Supplemental Indenture in substantially the form attached as Appendix B-1
to the Offer to Purchase amending the Indenture dated as of March 8, 1994
between the Company and the 11% Note Trustee (as amended by the First
Supplemental Indenture dated as of July 22, 1997 between the Company and
the 11% Note Trustee) and the Initial Purchaser shall have received
counterparts, confirmed as executed, thereof, (iii) the Company and US Bank
National Association (the "9% Note Trustee"), as successor in interest to
---------------
First Trust of New York National Association, shall have entered into the
First Supplemental Indenture in substantially the form attached as Appendix
B-2 to the Offer to Purchase amending the Indenture dated as of July 24,
1997 between the Company and the 9% Note Trustee and the Initial Purchaser
shall have received counterparts, confirmed as executed, thereof, (iv) the
Company shall have consummated the Tender Offer and (v) the Company and
Bank of America shall have entered into the New Credit Facility.
-24-
All opinions, certificates, letters and other documents required by this
Section 6 to be delivered by the Company will be in compliance with the
- ---------
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchaser. The Company will furnish to the Initial Purchaser,
without charge, such conformed copies of such opinions, certificates, letters
and other documents as the Initial Purchaser shall reasonably request.
If any of the conditions specified in this Section 6 shall not have been
---------
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchaser and their counsel, this Agreement and all
obligations of the Initial Purchaser hereunder may be canceled on the Closing
Date by the Initial Purchaser. Notice of such cancellation shall be given to
the Company in writing or by telephone or telegraph confirmed in writing.
7. Indemnification.
---------------
(a) The Company will indemnify and hold harmless the Initial
Purchaser, the directors, officers, employees and agents of the Initial
Purchaser and each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act from and against any and all losses, claims, liabilities, expenses and
damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which they,
or any of them, may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum or the Preliminary
Offering Memorandum or any amendment or supplement thereto or the omission
or alleged omission to state in such document a material fact required to
be stated in it or necessary to make the statements in it not misleading;
provided, however, that the Company will not be liable to the extent that
-------- -------
such loss, claim, liability, expense or damage arises from the sale of the
Notes to any person by the Initial Purchaser and is based on an untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Initial
Purchaser furnished in writing to the Company by the Initial Purchaser
expressly for inclusion in the Offering Memorandum or the Preliminary
Offering Memorandum; and provided, further, that the Company will not be
-------- ------
liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Notes to any person by the Initial Purchaser
and is based on an untrue statement or omission or alleged untrue statement
or omission made in the Preliminary Offering Memorandum that is corrected
in the Offering Memorandum if the person asserting any such loss, claim,
liability, expense or damage purchased the Notes from the Initial Purchaser
in reliance upon the Preliminary Offering Memorandum but was not sent or
given a copy of the Offering Memorandum at or prior to the written
confirmation of the sale of such Notes to such person, unless the failure
to deliver the Offering Memorandum was a result of noncompliance by the
Company with Section 6(m) of this Agreement. The Company acknowledges that
-----------
the statements set forth in the first sentence of the third
-25-
paragraph and in the second sentence of the fourth paragraph under the
heading of "Plan of Distribution" in the Preliminary Offering Memorandum
and the Offering Memorandum constitute the only information furnished in
writing to the Company by the Initial Purchaser expressly for inclusion
therein. This indemnity agreement will be in addition to any liability that
the Company might otherwise have.
(b) The Initial Purchaser will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, each director
of the Company and each officer of the Company to the same extent as the
foregoing indemnity from the Company to the Initial Purchaser, but only
insofar as losses, claims, liabilities, expenses or damages arise out of or
are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating
to the Initial Purchaser furnished in writing to the Company by the Initial
Purchaser expressly for use in the Offering Memorandum or the Preliminary
Offering Memorandum. The Company acknowledges that the statements set forth
in the first sentence of the third paragraph and in the second sentence of
the fourth paragraph under the heading of "Plan of Distribution" in the
Preliminary Offering Memorandum and the Offering Memorandum constitute the
only information furnished in writing to the Company by the Initial
Purchaser expressly for inclusion therein. This indemnity will be in
addition to any liability that the Initial Purchaser might otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement
---------
of any action against such party in respect of which a claim is to be made
against an indemnifying party or parties under this Section 7, notify each
---------
such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party (i) will not relieve it from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 7 unless,
---------
and only to the extent that such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party and (ii) will not,
in any event, relieve the indemnifying party from any obligation to an
indemnified party other than the indemnification obligation provided in
paragraphs (a) and (b) above. If any such action is brought against any
indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in
and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement of
the action from the indemnified party, jointly with any other indemnifying
party similarly notified, to assume the defense of the action, with counsel
satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will have the
right to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified
party has been authorized in writing by the indemnifying party, (2) the
-26-
indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party
and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the
indemnified party) or (4) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases
the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified parties. All such fees, disbursements and other charges will be
reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or
claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but
---------
for any reason is held to be unavailable from the Company or the Initial
Purchaser, the Company and the Initial Purchaser will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted, but after deducting any contribution received by the
Company from persons other than the Initial Purchaser, such as persons who
control the Company within the meaning of the Act, officers of the Company
and directors of the Company, who also may be liable for contribution) to
which the Company and the Initial Purchaser may be subject in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on the
other. The relative benefits received by the Company on the one hand and
the Initial Purchaser on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and
commissions received by the Initial Purchaser, in each case as set forth in
the table on the cover page of the Offering Memorandum. If, but only if,
the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the
Company on the one hand and the Initial Purchaser on the other, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the Company or
the Initial Purchaser, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent
-27-
such statement or omission. The Company and the Initial Purchaser agree
that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by any other
------------
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section
-------
7(d) shall be deemed to include, for purpose of this Section 7(d), 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 7(d), the Initial Purchaser
------------
shall not be required to contribute any amount in excess of the discounts
received by it, and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), any person who
------------
controls a party to this Agreement within the meaning of the Act will have
the same rights to contribution as that party, and each officer of the
Company will have the same rights to contribution as the Company, subject
in each case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 7(d), will notify any such party or parties from whom contribution
------------
may be sought, but the omission so to notify will not relieve the party or
parties from whom contribution may be sought from any other obligation it
or they may have under this Section 7(d). No party will be liable for
-----------
contribution with respect to any action or claim settled without its
written consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained
---------
in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Initial
Purchaser, (ii) acceptance of any of the Notes and payment therefor or
(iii) any termination of this Agreement.
8. Termination. The obligations of the Initial Purchaser under this
-----------
Agreement may be terminated at any time prior to the Closing Date by notice to
the Company from the Initial Purchaser without liability on the part of the
Initial Purchaser to the Company, if, prior to delivery and payment for the
Notes, in the sole judgment of the Initial Purchaser, (i) any Material Adverse
Effect, whether or not arising in the ordinary course of business, would, in the
sole judgment of the Initial Purchaser, make the offering or the delivery of the
Notes impracticable or the consummation of the Exempt Resales otherwise
impracticable, (ii) trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum or maximum prices shall
have been generally established on such exchange, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchange or by
order of the Commission or any court or other governmental authority, (iii) a
general banking moratorium shall have been declared by either Federal or New
York State authorities or (iv) any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States, any outbreak or material escalation of
hostilities or declaration
-28-
by the United States of national emergency or war or other calamity or crisis
shall have occurred, the effect of any of which is such as to make it, in the
sole judgment of the Initial Purchaser, impracticable or inadvisable to market
the Notes on the terms and in the manner contemplated by the Preliminary
Offering Memorandum and the Offering Memorandum.
9. Miscellaneous. Notice given pursuant to any of the provisions of this
-------------
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered:
(a) to the Company:
Stater Bros. Holdings Inc.
21700 Barton Road
Colton, California 92324
Attention: Chief Financial Officer
with copies to:
Varner, Saleson & Dobler LLP
3750 University Avenue, Suite 610
Riverside, California 92501
Attention: Bruce D. Varner, Esq.
and
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue, Suite 4800
Los Angeles, CA 90071-3197
Attention: Andrew E. Bogen, Esq.
(b) to the Initial Purchaser:
Banc of America Securities LLC
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Bruce R. Thompson
with copies to:
Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
Attention: Eric H. Schunk, Esq.
or in any case to such other address as the person to be notified may have
requested in writing. Any such notice shall be effective only upon receipt.
Any notice may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
-29-
This Agreement has been and is made solely for the benefit of the Initial
Purchaser, the Company and of the controlling persons, directors and officers
referred to in Section 7, and their respective successors and assigns, and no
---------
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Notes from the Initial Purchaser.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts made and to be performed
entirely within such State.
This Agreement may be signed in two or more counterparts with the same effect
as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement 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.
THE COMPANY AND THE INITIAL PURCHASER EACH HEREBY IRREVOCABLY WAIVE ANY RIGHT
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR THE RELATED TRANSACTIONS CONTEMPLATED HEREBY.
[The remainder of this page is intentionally left blank]
-30-
Please confirm that the foregoing correctly sets forth the agreement among
the Company and the Initial Purchaser.
Very truly yours,
STATER BROS. HOLDINGS INC.
By: /s/ Jack H. Brown
--------------------------------
Jack H. Brown
Chairman of the Board, President
and Chief Executive Officer
By: /s/ Bruce D. Varner
--------------------------------
Bruce D. Varner
Secretary
Confirmed as of the date first
above mentioned:
BANC OF AMERICA SECURITIES LLC
By: /s/ Bruce R. Thompson
----------------------------
Bruce R. Thompson
Managing Director
-31-
EXHIBIT A-1
-----------
Form of Opinion of
Varner, Saleson & Dobler LLP
----------------------------
[TO COME]
EXHIBIT A-2
-----------
Form of Opinion of
Gibson, Dunn & Crutcher LLP
---------------------------
[TO COME]