1
EXHIBIT 10.4
FFL PARTNERS
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, CA 90067
September 14, 1994
Food 4 Less, Inc.
Food 4 Less Holdings, Inc.
Food 4 Less Supermarkets, Inc.
Falley's, Inc.
777 South Harbor Boulevard
La Habra, CA 90613
Gentlemen:
As you are aware, under Section 10.7 of the Falley's Inc.
Employee Stock Ownership Plan and Trust, as amended (the "ESOP"), ESOP
participants have certain put rights against Falley's, Inc. ("Falley's") with
respect to shares of the common stock, par value $.01, of Food 4 Less, Inc.
("F4L") which may be distributed from the ESOP. Under Section 6.6 of that
certain Stock Purchase Agreement dated July 22, 1988, we undertook on a
contingent basis to purchase F4L shares upon exercise of such put rights in the
event that F4L or Falley's were prohibited by the terms of their charter or
debt instruments from purchasing such shares.
Currently, there are no such prohibitions on the ability of
F4L or Falley's to purchase F4L shares. However, at your request, we have
agreed to waive the conditions precedent to the effectiveness of our obligation
to purchase F4L shares. Accordingly, we agree that, in the event that the put
option contemplated by Section 10.7 of the ESOP is exercised, we will fulfill
the obligations of F4L or Falley's, as the case may be, to purchase F4L shares
in a manner that complies with Section 10.7 of the ESOP and Section 409(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), without regard to
the existence or non-existence of any prohibitions in the charter documents or
debt instruments of F4L or Falley's with respect to the purchase of such
shares. Our obligation hereunder shall be extinguished to the extent of the
exercise by the ESOP trustee of the right of the ESOP trust to repurchase any
F4L shares as contemplated by Section 10.7 of the ESOP.
In consideration of the extension by us of the undertaking set
forth in the foregoing paragraph, F4L and each of its subsidiaries which are
signatories to this letter agree that, in the event that the put option
contemplated by Section 10.7 of the ESOP is exercised, and whether or not there
exist any restrictions on the ability of such parties to fulfill their purchase
obligation under the put, such parties will give to us a right of first refusal
to purchase F4L shares which are the subject of such put exercise. Our right
of first refusal to purchase F4L shares will be on the same terms and
conditions as contemplated by the put option, and any purchase by us of such
shares will be made in a manner that complies with Section 10.7 of the ESOP and
Section 409(h) of the Code.
We shall have the right, in our sole discretion, to designate
another person or entity to purchase any F4L shares in accordance with the
terms of this letter, or otherwise to assign or to delegate
2
to another person or entity our rights and obligations hereunder. No such
designation, assignment or delegation shall in anyway diminish or release us
from our obligations hereunder.
This letter is intended to amend the aforementioned provisions
of the Stock Purchase Agreement dated May 22, 1988, with such amendment to have
retroactive effect to the original date of the Stock Purchase Agreement.
Please indicate your confirmation of the foregoing agreement
by signing this letter, or a counterpart thereof, in the space provided
therefor below.
FFL PARTNERS
By: /s/ Mark A. Resnik
----------------------------
Name: Mark A. Resnik
Title: General Partner
Accepted and agreed to this
14 day of September, 1994:
FOOD 4 LESS, INC.
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Vice President
FOOD 4 LESS HOLDINGS, INC.
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Vice President
FOOD 4 LESS SUPERMARKETS, INC.
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Vice President
FALLEY'S, INC.
By: /s/ Mark A. Resnik
------------------------------
Name: Mark A. Resnik
Title: Assistant Secretary