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EXHIBIT 4.10.2
April 26, 1995
Food 4 Less Supermarkets, Inc.
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mr. Ronald W. Burkle
Mr. Patrick Graham
Re: Acquisition of Ralphs Supermarkets, Inc.
Gentlemen:
You have advised us that Food 4 Less Supermarkets, Inc.
("F4L"), a wholly-owned subsidiary of Food 4 Less Holdings, Inc. ("F4L
Holdings"), proposes to acquire (the "Acquisition") all of the outstanding
capital stock of Ralphs Supermarkets, Inc. ("RSI"). RSI owns all of the issued
and outstanding capital stock of Ralphs Grocery Company ("RG"). Prior to the
Acquisition, Food 4 Less, Inc. ("FFL") will merge with F4L Holdings, its
wholly-owned subsidiary (the "FFL Merger"), with F4L Holdings being the
surviving corporation (such surviving corporation being referred to herein as
"Holdings"), and, immediately following the FFL Merger, Holdings will merge
with its newly-formed wholly-owned subsidiary incorporated in Delaware, with
such subsidiary being the surviving corporation (such surviving corporation
being referred to herein as "New Holdings"; the merger of Holdings with and
into New Holdings, together with the FFL Merger, being referred to herein as
the "Holdings Mergers"). The Acquisition will be consummated by merging RSI
with and into F4L with RSI being the surviving corporation (the "RSI Merger").
Upon consummation of the RSI Merger, RG will be merged with and into RSI with
RSI being the surviving corporation (the "RGC Merger"; the RSI Merger and the
RGC Merger are hereinafter collectively referred to as the "Mergers"). Upon
the consummation of the Holdings Mergers and the Mergers, all of F4L's current
subsidiaries will initially be direct or indirect wholly-owned subsidiaries of
RSI and RSI will be a wholly-owned subsidiary of New Holdings which will be
controlled, directly or indirectly, by an affiliate of The Yucaipa Companies
("Yucaipa").
We are pleased to confirm that Bankers Trust Company ("Bankers
Trust") is prepared to commit to provide all of the senior bank financing which
is required to consummate the
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Acquisition, the Mergers and related transactions on the terms and conditions
described in this letter up to a maximum aggregate amount of $1,075 million.
Bankers Trust welcomes the opportunity to continue its relationship with the
F4L companies. Bankers Trust's long-term experience with each of F4L and RG,
currently as a Co-Agent and the Agent on their existing bank credit agreements,
respectively, provides strong support for its willingness and ability to
provide the senior bank financing described herein.
The senior bank facilities will consist of a term loan
facility of up to $750 million (the "Term Loan Facility") and a six year
revolving credit facility of up to $325 million with a $150 million sublimit
for letters of credit (the "Revolving Credit Facility"; the Term Loan Facility
and the Revolving Credit Facility are hereinafter collectively referred to as
the "Bank Facilities"). Based on the assumptions described below, we propose
that the Term Loan Facility will consist of a six year Tranche A Loan of up to
$375 million, a seven year Tranche B Loan of up to $125 million, an eight year
Tranche C Loan of up to $125 million and a nine year Tranche D Loan of up to
$125 million. We reserve the right to propose changes in the actual amount,
maturity and amortization of each such tranche, however, in the event those
assumptions are not met, including the successful consummation of certain
consent solicitations and exchange and purchase offers with respect to the
existing F4L and RG debt securities described below, or if we determine that to
do so would enhance the successful syndication of the Bank Facilities.
With respect to the existing public debt securities of F4L,
Holdings and RG, you have advised us that F4L currently has outstanding $175
million in aggregate principal amount of 10.45% Senior Notes due April 15, 2000
(the "10.45% Senior Notes") and $145 million in aggregate principal amount of
13.75% Senior Subordinated Notes due June 15, 2001 (the "13.75% Subordinated
Notes"); that Holdings currently has outstanding $103.6 million in aggregate
face amount ($71.3 million in estimated accreted value at closing) of 15.25%
Senior Discount Notes, Series B due December 15, 2004 (the "15.25% Discount
Notes"; the 10.45% Senior Notes, the 13.75% Subordinated Notes and the 15.25%
Discount Notes are hereinafter collectively referred to as the "Existing F4L
Debt Securities"); and that RG currently has outstanding $150 million in
aggregate principal amount of 9% Senior Subordinated Notes due April 1, 2003
(the "9% Subordinated Notes") and $300 million in aggregate principal amount of
10-1/4% Senior Subordinated Notes due July 15, 2002 (the "10-1/4% Subordinated
Notes"; the 9% Subordinated Notes and the 10-1/4% Subordinated Notes are
hereinafter collectively referred to as the "Existing RG Debt Securities"). To
consummate the Acquisition, the Holdings Mergers and the Mergers as proposed,
you have advised us of the following:
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1. F4L and Holdings intend to undertake consent
solicitations with respect to the Existing F4L Debt Securities to
obtain the necessary amendments to the terms of the Existing F4L Debt
Securities, including such covenants in the indentures pursuant to
which the Existing F4L Debt Securities have been issued as may be
mutually agreed upon, to permit the Acquisition, the Holdings Mergers,
the Mergers and related transactions to occur as described herein.
With respect to the 15.25% Discount Notes, you have advised us that
you intend to offer to purchase for cash such securities at an
aggregate price which does not exceed $85.3 million, in part from the
proceeds of the issuance by New Holdings in a private placement of not
less than $100 million in initial accreted value of 13-5/8% Senior
Discount Debentures due 2005 (the "New Holdings Discount Debentures").
The New Holdings Discount Debentures will not mature or amortize prior
to the date which is 10 years and 1 month from the consummation of the
Acquisition (the "Closing Date") and will accrete at a rate of 13-5/8%
from the date of original issuance for not less than 5 years, such
that the aggregate principal amount of the New Holdings Discount
Debentures shall be $193,300,000 at maturity. From and after five
years following the date of original issuance, the New Holdings
Discount Debentures may bear cash interest at a rate of 13-5/8% per
annum. In addition, (i) F4L will issue (x) new Senior Notes due 2004
(the "New F4L Senior Notes"), and make a cash payment in an aggregate
amount to be mutually agreed upon, in exchange for an equivalent
principal amount of its 10.45% Senior Notes and (y) new senior
subordinated notes due 2005 (the "New F4L 13.75% Subordinated Notes"),
and make a cash payment in an aggregate amount to be mutually agreed
upon, in exchange for an equivalent principal amount of its 13.75%
Subordinated Notes. The amount of (i) the New F4L Senior Notes and
the 10.45% Senior Notes outstanding at any time will not exceed $470
million in aggregate principal amount and (ii) the New F4L 13.75%
Subordinated Notes and the 13.75% Subordinated Notes outstanding at
any time will not exceed $145 million in aggregate principal amount.
The offer to purchase, consent solicitations and exchange offers
described in this paragraph 1 are collectively referred to herein as
the "F4L Solicitations".
2. You intend (i) to offer to exchange the Existing RG
Debt Securities for an equivalent principal amount (but in no event
less than $225 million) of new Senior Subordinated Notes due 2005 (the
"F4L Senior Subordinated Notes") to be issued by F4L and a cash
payment in an aggregate amount to be mutually agreed upon, (ii) to
purchase for cash an amount of Existing RG Debt Securities equal to
the amount of Existing RG Debt Securities which are not exchanged for
F4L Senior Subordinated Notes as described in clause (i) above, but in
no event shall such amount
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exceed $225 million and (iii) to solicit certain consents with respect
to the Existing RG Debt Securities. The offers and solicitation
described in clauses (i), (ii) and (iii) are collectively referred to
herein as the "RG Solicitations"). Following the consummation of the
Mergers, it is anticipated that RSI will make an offer to purchase
(the "Change of Control Offer") any then outstanding Existing RG Debt
Securities in accordance with the provisions of the indentures
governing such securities at a purchase price of 101% of the principal
amount thereof plus accrued interest thereon, and RSI will utilize a
portion of the Tranche A Term Loan Facility to finance such
redemption. The aggregate principal amount of the Existing RG Debt
Securities and the F4L Senior Subordinated Notes outstanding at any
time will not exceed $650 million; provided that if more than $225
million principal amount of Existing RG Debt Securities is exchanged
for F4L Senior Subordinated Notes pursuant to the RG Solicitations,
the amount of proceeds of the Public Offering or the Term Loan
Facility shall be reduced on a dollar-for-dollar basis.
3. In order to provide a portion of the financing to
consummate the Acquisition and the other transactions contemplated
thereby, F4L is offering (i) up to $295 million principal amount of
additional New F4L Senior Notes and (ii) up to $200 million principal
amount of additional F4L Senior Subordinated Notes in a public
offering (the "Public Offering") registered under the Securities Act
of 1933, as amended.
The proceeds of (v) the Term Loan Facility, (w) approximately
$12.7 million of the Revolving Credit Facility, (x) the Public Offering, (y)
the New Holdings Discount Debentures, together with (z) not less than $10
million in cash contributions to New Holdings invested by the management of RG
(in the form of a cancellation of their rights to receive certain cash payments
at closing), and not less than $140 million in other cash contributions to New
Holdings (the "Equity Contributions"), will be used (i) to pay a $375.9 million
cash purchase price for the RSI common stock, (ii) to refinance certain
existing bank indebtedness of RG of approximately $255.1 million, (iii) to
refinance certain existing bank indebtedness of F4L of approximately $161.5
million, (iv) to repay in full the approximately $175 million in principal
amount of outstanding real estate mortagages of RG (the "Mortgage Debt") plus
accrued interest and premiums thereon, (v) to pay up to $22.8 million in equity
appreciation rights of RSI, (vi) to make cash payments to purchase Existing RG
Debt Securities in the RG Solicitations and the Change of Control Offer, (vii)
to repay in full the principal amount of the 15.25% Discount Notes plus accrued
interest and premiums thereon in an aggregate amount not to exceed $85.3
million and (viii) to pay approximately $157 million in fees, expenses,
premiums, accrued interest and other costs in
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connection with the Acquisition, the Holdings Mergers, the Mergers, the F4L
Solicitations, the RG Solicitations, the prepayment of the Mortgage Debt and
the related transactions. You have also advised us that in addition to the
$375.9 million in cash to be paid for the RSI common stock, the shareholders of
RSI will receive $131.5 million in initial principal amount of New Holdings
13-5/8% Senior Subordinated Pay-In-Kind Debentures Due 2007 (the "Seller
Debentures") and $18.5 million in initial accreted value of New Holdings
Discount Debentures, to the effect that, following the Closing Date, there will
be outstanding $131.5 million principal amount of Seller Debentures and $100
million initial accreted value of New Holdings Discount Debentures. The Seller
Debentures will not mature or amortize prior to the twelfth anniversary of the
Closing Date and will pay interest through the issuance of additional Seller
Debentures for not less than five years following the Closing Date. The RSI
common stock purchased with the proceeds of the Equity Contributions and in
consideration of the issuance of the Seller Debentures shall be contributed as
equity capital to F4L by New Holdings.
The Bank Facilities as described in this letter and on Annex A
attached hereto assume (i) that the F4L Solicitations and RG Solicitations are
obtained on terms that are satisfactory to you and to Bankers Trust, (ii) that
the New F4L Senior Notes and the F4L Senior Subordinated Notes issued in the
Public Offering are issued on terms that are satisfactory to you and to Bankers
Trust, (iii) that not less than 80% of the 10.45% Senior Notes and of the
13.75% Subordinated Notes are exchanged for the additional New F4L Senior Notes
and the New F4L 13.75% Subordinated Notes, respectively, (iv) that not less
than 50% of the 9% Subordinated Notes and the 10-1/4% Subordinated Notes are
exchanged for F4L Senior Subordinated Notes, (v) that the Mortgage Debt is
repaid in full and (vi) that the 15.25% Discount Notes are repaid in full. In
the event that such assumptions are not accurate, we reserve the right to
suggest alternative financing structures, including without limitation,
modifying the amounts, maturities and amortization of the Term Loan Facility.
Upon consummation of the Acquisition and the Mergers, total other indebtedness
for borrowed money of RSI and its subsidiaries expected to be outstanding will
not exceed $166.9 million in aggregate principal amount, including
approximately $145.1 million in capital lease obligations and approximately
$21.8 million in mortgage debt and all other indebtedness. Upon consummation
of such Acquisition and the Mergers, the remaining portion of the Revolving
Credit Facility will be available to be used by RSI (as the surviving
corporation in the Mergers) to provide for the working capital requirements and
other corporate purposes of RSI and its subsidiaries and the Letter of Credit
Facility will be available to be used for commercial letters of credit and
standby letters of credit for RSI and its subsidiaries.
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Bankers Trust intends to arrange for other banks, financial
institutions and other "accredited investors" (as defined in Securities and
Exchange Commission regulations; each such bank, financial institution and
accredited investor, including Bankers Trust, being a "Lender" and
collectively, the "Lenders") to provide a portion of the Bank Facilities and
Bankers Trust will act as agent for the Lenders (in such capacity, the
"Administrative Agent"). Certain of the terms of each of the Bank Facilities
are set forth in Annex A attached hereto (the "Term Sheet").
We have reviewed certain historical and pro forma financial
statements of RSI and F4L and their respective subsidiaries and met with
representatives of F4L and with members of management of F4L and we are pleased
to advise you that the results of our business and financial due diligence
investigation of RSI and F4L and their respective subsidiaries to date are
satisfactory. However, Bankers Trust's commitment to provide the financings
described in this letter is subject to our continuing satisfaction that there
has not occurred a material adverse change in the business, operations,
condition (financial and otherwise) and prospects of RSI and F4L and their
respective subsidiaries, our continuing satisfaction with the structure of the
Acquisition, including the tax, accounting and legal consequences thereof, and
the satisfaction of the conditions to be set forth in the definitive
documentation relating to the Bank Facilities including, without limitation,
those conditions set forth in the Term Sheet. It is understood that you (and
your advisors) will continue to fully cooperate with Bankers Trust with respect
to its ongoing due diligence analysis and review (including, but not limited
to, by providing adequate access to the records and management of RSI and F4L
and their respective subsidiaries). In the event that such ongoing due
diligence review discloses information relating to conditions or events not
previously disclosed to us or relating to new information or additional
developments concerning conditions or events previously disclosed to us which
we believe may have a material adverse effect on the condition (financial or
otherwise), assets, properties, business or prospects of RSI and F4L and their
respective subsidiaries, taken as a whole, or any such conditions set forth in
such definitive documentation are not satisfied, we may, in our sole
discretion, suggest alternative financing amounts or structures that ensure
adequate protection for the Lenders or decline to participate in the proposed
financing.
F4L hereby represents and covenants that based on its review
and analysis, to its knowledge (a) all information, other than Projections (as
defined below), which has been or is hereafter made available to Bankers Trust
or the Lenders by F4L or RSI or any of their representatives in connection with
the transactions contemplated hereby (the "Information") has been reviewed and
analyzed by F4L in connection with the performance of its own due diligence and
is, or in the case of Information
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made available after the date hereof will be, complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which such statements
were or are made, not materially misleading and (b) all financial projections
concerning RSI and F4L and their respective subsidiaries that have been or are
hereafter made available to Bankers Trust or the Lenders by RSI or F4L or any
of their representatives in connection with the transactions contemplated
hereby (the "Projections") have been or, in the case of Projections made
available after the date hereof, will be prepared in good faith based upon
reasonable assumptions (it being understood that the Projections are subject to
significant uncertainties and contingencies, many of which are beyond the
control of F4L and/or RSI, and that no assurance can be given that such
Projections will be realized). F4L agrees to supplement the Information and
the Projections from time to time until the Closing Date so that the
representation and warranty made in the preceding sentence is correct on the
Closing Date. In arranging and syndicating the Bank Facilities, Bankers Trust
will be using and relying on the Information and the Projections without
independent verification thereof. The representations and covenants contained
in this paragraph shall remain effective until a definitive financing agreement
is executed and thereafter the representations contained herein shall be
superseded by those contained in such definitive financing agreement.
The reasonable costs and expenses (including the reasonable
fees and expenses of counsel to Bankers Trust, reasonable professional fees of
consultants and other experts and reasonable out-of-pocket expenses of Bankers
Trust, including without limitation syndication expenses) arising in connection
with the preparation, execution and delivery of this letter and the definitive
financing agreements and the syndication of the Bank Facilities shall be for
the account of F4L. F4L further agrees to indemnify and hold harmless each of
the Lenders (including Bankers Trust) and each director, officer, employee and
affiliate thereof (each an "indemnified person") from and against any losses,
claims, damages, liabilities or other expenses to which a Lender or such
indemnified persons may become subject, insofar as such losses, claims,
damages, liabilities (or actions or other proceedings commenced or threatened
in respect thereof) or other expenses arise out of or in any way relate to the
Acquisition, the Holdings Mergers, the Mergers and related transactions, or any
of the statements contained in this letter or relating to the extension of the
financing contemplated by this letter, or any use or intended use of the
proceeds of any of the loans and other extensions of credit contemplated by
this letter, and to reimburse each of the Lenders and each indemnified person
for any reasonable legal or other expenses incurred in connection with
investigating, defending or participating in any such investigation, litigation
or other proceeding (whether or
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not such Lender or any such person is a party to any investigation, litigation
or proceeding out of which any such expenses arise); provided, however, that
the indemnity contained herein shall not apply to the extent that such losses,
claims, damages, liabilities or other expenses result from the gross negligence
or willful misconduct of such Lender or indemnified person. The obligations to
indemnify each Lender and such indemnified persons and pay such legal and other
expenses shall remain effective until a definitive financing agreement is
executed and thereafter the indemnification and expense reimbursement
obligations contained herein shall be superseded by those contained in such
definitive financing agreement. Neither Bankers Trust nor any other Lender
shall be responsible or liable to any other party or any other person for
consequential damages which may be alleged as a result of this letter.
In connection with the services to be provided hereunder by
Bankers Trust, Bankers Trust may employ the services of its affiliates,
including, without limitation, BT Securities Corporation. Bankers Trust may
share with such affiliates, and such affiliates may share with Bankers Trust,
any information concerning F4L and RSI; provided that Bankers Trust and such
affiliates agree to hold any non-public information confidential in accordance
with their respective customary policies relating to non-public information.
Any such affiliate so employed (and its directors, officers, employees and
affiliates) shall be entitled to all of the benefits afforded to Bankers Trust
hereunder.
This letter is confidential and shall not be disclosed by you
to any person other than your accountants, attorneys and, to the extent
approved by Bankers Trust, other advisors, and to RSI and its attorneys and, to
the extent approved by Bankers Trust, other advisors, and then only on a
confidential basis and in connection with the Acquisition, the Mergers and the
related transactions contemplated herein. Additionally, you may make such
disclosures of this letter as are required by law or judicial process or as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation. This letter supersedes any prior letters from
Bankers Trust with respect to the subject matter hereof including without
limitation our letters dated August 25, 1994, November 14, 1994 and January 6,
1995.
Our offer will terminate on April 28, 1995, unless on or
before that date you sign and return an enclosed counterpart of this letter
together with an executed copy of the accompanying letter concerning certain
fee arrangements. The Bank Facilities referred to herein shall in no event be
available unless the Acquisition and related transactions have been consummated
on or prior to the earlier of (x) the date on which the Agreement and Plan of
Merger dated as of September 14, 1994, as amended on January 12, 1995, February
24, 1995 and April 26, 1995 by and
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among FFL, F4L Holdings, F4L, RSI and the Selling Stockholders (as defined
therein) is terminated in accordance with Article XI thereof and (y) June 30,
1995.
This letter agreement shall be construed in accordance with
the internal laws of the State of New York. This letter agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
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ANNEX A
FOOD 4 LESS SUPERMARKETS, INC.
SUMMARY OF TERMS
BANK FACILITIES
The following summarizes certain terms for a senior bank term
loan facility and a senior bank revolving credit facility to be utilized in
connection with the proposed acquisition of Ralphs Supermarkets, Inc. by Food 4
Less Supermarkets, Inc. All terms defined in the financing letter to which
this Annex A is attached and not otherwise defined herein shall have the same
meanings when used herein.
I. THE BANK FACILITIES
Borrower: Food 4 Less Supermarkets, Inc. ("F4L") will be the
borrower under the Term Loan Facility and will borrow
approximately $12.7 million under the Revolving
Credit Facility; in connection with the consummation
of the Acquisition, F4L will be merged with and into
Ralphs Supermarkets, Inc. ("RSI") with RSI being the
surviving corporation (the "RSI Merger") and RSI will
assume all obligations of F4L in respect of the Bank
Facilities; upon consummation of the RSI Merger,
Ralphs Grocery Company ("RG") will be merged with and
into RSI, with RSI being the surviving corporation;
after such mergers, RSI will change its name to
"Ralphs Grocery Company" ("Company") and additional
extensions of credit under the Term Loan Facility and
the Revolving Credit Facility will be incurred by
Company.
The Lenders: Bankers Trust and a syndicate of banks, financial
institutions and other accredited investors (the
"Lenders").
Co-Agents for the Bankers Trust and such other Lenders as may be
Lenders: mutually agreed upon by Bankers Trust and F4L (the
"Co-Agents").
Co-Arrangers for Such Lenders as may be mutually agreed upon by
the Lenders: Bankers Trust and F4L (the "Co-Arrangers").
Administrative Bankers Trust (in such capacity, the "Administrative
Agent for the Agent").
Lenders:
Type and Amount: The Bank Facilities shall consist of the Term
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Loan Facility and the Revolving Credit Facility.
Term Loan Facility. The Term Loan Facility will
consist of Tranche A Loans, Tranche B Loans, Tranche
C Loans and Tranche D Loans. The Lenders'
commitments to lend the Tranche A Loans, the Tranche
B Loans, the Tranche C Loans and the Tranche D Loans
will terminate immediately upon the consummation of
the Acquisition; provided that a portion of the
Tranche A Term Loan Facility may be available for up
to 91 days after the Closing Date to purchase the
Existing RG Debt Securities in the event that any
Change of Control Offer is required to be made for
such securities.
Tranche A Loans. The Tranche A Loans will mature on
the date six years from the Closing Date and be in an
original principal amount of up to $375 million. If
the amount of the Existing RG Debt Securities
exchanged in the RG Solicitations exceeds $225
million, then the amount available for borrowing
under the Term Loan Facility shall be reduced, on a
dollar-for-dollar basis, to the extent that the
amount of proceeds from the Public Offering is not
reduced from $495 million. The Tranche A Loans will
be required to be amortized, commencing in the
fifteenth month after the Closing Date, in quarterly
installments in aggregate annual amounts of $45
million in the second year; $75 million in the third
year; $80 million in the fourth year; $85 million in
the fifth year; and $90 million in the sixth year;
provided that in the event that less than $375
million of the Tranche A Loans are utilized, the
annual amounts of amortization payments set forth
above shall be reduced on a pro rata basis.
Tranche B Loans. The Tranche B Loans will mature on
the date seven years from the Closing Date and be in
an original principal amount of up to $125 million.
The Tranche B Loans will be required to be amortized
in equal quarterly installments in aggregate annual
amounts of $1.25 million for the first six years and
$117.5 million in the seventh year.
Tranche C Loans. The Tranche C Loans will mature on
the date eight years from the
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Closing Date and be in an original principal amount
of up to $125 million. The Tranche C Loans will be
required to be amortized in equal quarterly
installments in aggregate annual amounts of $1.25
million for the first seven years and $116.25 million
in the eighth year.
Tranche D Loans. The Tranche D Loans will mature on
the date nine years from the Closing Date and be in
an original principal amount of up to $125 million.
The Tranche D Loans will be required to be amortized
in equal quarterly installments in aggregate annual
amounts of $1.25 million for the first eight years
and $115 million in the ninth year.
The amounts, amortization payments and maturities of
the Term Loan Facility are subject to modification in
the event that various financing transactions are not
consummated on mutually agreeable terms as described
in "Certain Conditions Precedent to Initial
Funding--Seller Debentures and New Holdings Discount
Debentures;--Issuance of F4L Senior Subordinated
Notes;--Public Offering;--F4L Solicitations" below,
or Bankers Trust believes that such modification
would enhance the successful syndication of the Bank
Facilities.
Revolving Credit Facility. The Revolving Credit
Facility will mature on the same date as the Tranche
A Loan and be in an amount of up to $325 million
under which working capital loans may be made and
commercial or standby letters of credit in the
maximum aggregate amount of up to $150 million may be
issued. Up to $30 million of the Revolving Credit
Facility will be available as a swingline facility.
Use of Proceeds: The proceeds of (without duplication) (u) the Term
Loan Facility, (v) approximately $12.7 million of the
Revolving Credit Facility, (w) up to $495 million
from the Public Offering, (x) the issuance of up to
$450 million of F4L Senior Subordinated Notes, (y)
the issuance of not less than $100 million initial
accreted value of New Holdings Discount Debentures,
together with (z) not less than $10 million in cash
contributions invested by the RG management (in the
form of a cancellation of
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their rights to receive certain cash payments at
closing), and not less than $140 million in proceeds
from the issuance of preferred stock, a portion of
which shall be contributed by New Holdings to F4L as
common equity shall be used as follows:
1. to pay the cash component of the purchase
price for the stock of RSI of approximately
$375.9 million; the remaining purchase price
will be paid through the issuance of $131.5
million in initial principal amount of the
Seller Debentures by New Holdings and $18.5
million initial accreted value of New
Holdings Discount Debentures;
2. to refinance approximately $255.1 million of
existing bank indebtedness of RG and
approximately $161.5 million of existing bank
indebtedness of F4L;
3. to exchange up to $450 million (but in no
event less than $225 million) principal
amount of Existing RG Debt Securities for F4L
Senior Subordinated Notes plus a cash
payment, and to purchase Existing RG Debt
Securities in the RG Solicitations or in any
Change of Control Offer (provided that the
aggregate outstanding principal amount of F4L
Senior Subordinated Notes and Existing RG
Debt Securities shall not exceed $650 million
at any time); provided further that if more
than $225 million pricipal amount of Existing
RG Debt Securities is exchanged for F4L
Senior Subordinated Notes pursuant to the RG
Solicitations, the amount of proceeds of the
Public Offering or the Term Loan Facility
shall be reduced on a dollar-for-dollar
basis;
4. to repay in full the approximately $175
million in principal amount of the Mortgage
Debt;
5. to pay up to $22.8 million in RSI equity
appreciation rights;
6. to repay in full the principal amount of the
15.25% Discount Notes plus accrued interest
and premiums thereon in an
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aggregate amount not to exceed $85.3 million;
and
7. to pay up to $157 million of fees, expenses,
premiums, accrued interest and other costs
associated with the Acquisition and the
Mergers, the Bank Facilities, the F4L
Solicitations, the RG Solicitations, the
Public Offering, the Change of Control Offer,
if any, the prepayment of the Mortgage Debt
and the related transactions described
herein.
A portion of the Tranche A Term Loan Facility, equal
to the principal amount of Existing RG Debt
Securities not exchanged or purchased in the RG
Solicitations, but in no event to exceed $225
million, may be available in a single draw as soon as
practicable (but not later than 91 days) after the
Closing Date to purchase any such Existing RG Debt
Securities tendered in any Change of Control Offer.
The Revolving Credit Facility will be available to
provide for the working capital requirements and
general corporate purposes of Company and its
subsidiaries and to issue commercial letters of
credit and standby letters of credit to support
workers' compensation contingencies and for other
corporate purposes to be agreed upon.
Security: All extensions of credit to Company and guaranties of
subsidiaries of Company will be secured by all
personal property of Company and its subsidiaries,
including a pledge of the stock of all subsidiaries
of Company (other than the stock of Bell Markets,
Inc.). The guaranty of New Holdings will be secured
by a pledge of the stock of F4L and, upon
consummation of the merger of F4L into RSI, RSI.
In an abundance of caution, the Bank Facilities shall
also be secured by first priority liens on all
unencumbered real property fee interests of Company
and its subsidiaries and Company and its subsidiaries
shall use their reasonable economic efforts to
provide the Lenders with a first priority lien on all
unencumbered leasehold interests of Company and its
subsidiaries.
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To effect liens securing the Bank Facilities, F4L and
its subsidiaries (and, upon consummation of the
Mergers, Company and its subsidiaries) shall execute
and deliver to Administrative Agent all security
agreements, financing statements, deeds of trust,
mortgages and other documents and instruments as are
necessary to grant a first priority perfected
security interest in and lien upon all their
respective properties, subject to customary permitted
liens to be agreed upon.
Negative pledge on all assets of Company and its
subsidiaries, subject to exceptions to be agreed
upon.
Guarantors: New Holdings and all active subsidiaries of F4L (and,
upon consummation of the Mergers, all active
subsidiaries of Company). The aggregate assets and
revenues of inactive subsidiaries that are not
guarantors shall be de minimis in amount.
Interest Rates: All amounts outstanding under the Bank Facilities
shall bear interest, at Company's option, as follows:
A. With respect to the Tranche A Loans and loans
made under the Revolving Credit Facility:
(i) at the Base Rate plus 1.50% per
annum; or
(ii) at the reserve adjusted Euro-Dollar
Rate plus 2.75% per annum.
B. With respect to the Tranche B Loans:
(i) at the Base Rate plus 2.00% per
annum; or
(ii) at the reserve adjusted Euro-Dollar
Rate plus 3.25% per annum.
C. With respect to the Tranche C Loans:
(i) at the Base Rate plus 2.50% per
annum; or
(ii) at the reserve adjusted Euro-Dollar
Rate plus 3.75% per annum.
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D. With respect to the Tranche D Loans:
(i) at the Base Rate plus 2.75% per
annum; or
(ii) at the reserve adjusted Euro-Dollar
Rate plus 4.00% per annum.
The foregoing interest rates on the Tranche A Loans
and the Revolving Credit Facility and the fees
payable under the Revolving Credit Facility on
letters of credit, will be reduced in increments of
0.25% per annum (but not more than .50% per annum for
all such reductions in the aggregate) after the Term
Loan Facility has been reduced by such amounts, and
during such times as the ratio of EBITDA (to be
defined) to cash interest expense for the four most
recently concluded fiscal quarters exceeds such
ratios, as are mutually agreed upon.
Loans outstanding under the swingline facility shall
bear interest at the Base Rate plus 1.00% per annum
(subject to adjustment as described in the preceding
paragraph) and, solely for the purposes of
calculating the commitment fee, such outstanding
loans shall not constitute usage of the Revolving
Credit Facility.
As used herein, the terms "Base Rate" and "reserve
adjusted Euro-Dollar Rate" shall have meanings
customary and appropriate for financings of this
type, and the basis for calculating accrued interest
and the interest periods for loans bearing interest
at the reserve adjusted Euro-Dollar Rate shall be
customary and appropriate for financings of this
type. After the occurrence of a default, interest
shall accrue at a rate equal to the rate on loans
bearing interest at the rate determined by reference
to the Base Rate plus an additional two percentage
points (2.00%) per annum and shall be payable on
demand.
Interest Quarterly for Base Rate Loans; on the last day of
Payments: selected interest periods (which shall be 1, 2, 3
and 6 months) for Euro-Dollar Loans (and at the end
of every three months, in the case of interest
periods of longer than three months); and upon
prepayment, in each case
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payable in arrears and computed on the basis of a
360-day year.
Interest Rate Within 120 days of the Closing Date, Company will
Protection: obtain interest rate protection by interest rate
swaps, caps or other agreements satisfactory to
Administrative Agent against increases in interest
rates with respect to a notional amount equal to
not less than one-third of the Term Loans
outstanding on the Closing Date for a period of not
less than two years.
Letter of Credit The fees payable on the standby letters of credit
Fees: shall be equal to the sum of (i) an amount, to be
shared by all Lenders pro rata, equal to the
applicable margin over the reserve adjusted
Euro-Dollar Rate under the Revolving Credit Facility
(as the same may be adjusted) plus (ii) an
additional .25% per annum to be retained by the
Lender issuing the standby letter of credit. The
fees payable on the commercial letters of credit
shall be equal to the sum of (i) an amount, to be
shared by all Lenders pro rata, equal to the
applicable margin over the reserve adjusted
Euro-Dollar Rate under the Revolving Credit Facility
(as the same may be adjusted) minus 1.00% per annum
plus (ii) an additional .25% per annum to be
retained by the Lender issuing the commercial
letter of credit. Fees on all letters of credit
shall be based upon the amount available for drawing
under such outstanding letters of credit.
Commitment Fees: Commitment fees equal to .50% per annum times the
undrawn portion of the Tranche A Term Loan Facility
shall accrue from the Closing Date to the date of
drawing thereof or the date of termination of such
undrawn commitment (which shall be no later than 91
days after the Closing Date) and shall be payable
upon such drawing or termination. Commitment fees
equal to .50% per annum times the daily average
unused portion of the Revolving Credit Facility shall
accrue from the Closing Date and shall be payable
quarterly in arrears and at maturity.
Voluntary The Bank Facilities may be prepaid in whole or in
Prepayments: part without premium or penalty (Euro-Dollar Rate
Loans prepayable only on the last days of related
interest periods) and the
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Lenders' commitments relative thereto reduced or
terminated upon such notice and in such amounts as
may be agreed upon. Voluntary prepayments of the
Term Loan Facility shall be applied ratably among
Tranche A Loans, Tranche B Loans, Tranche C Loans and
Tranche D Loans and shall be applied to scheduled
amortization payments pro rata.
Mandatory Company shall make the following mandatory
Prepayments: prepayments (subject to certain basket amounts to be
negotiated in the definitive financing agreements):
1. prepayments in the amount of all of the net
after-tax cash proceeds of the sale or other
disposition of any property or assets of
Company or its subsidiaries, other than net
cash proceeds of sales or other dispositions
of inventory or obsolete equipment in the
ordinary course of business, reinvestment of
the proceeds from the sale of any store in
like assets within 9 months of such sale and
the sale/leaseback of any store within 6
months of the completion of such store and
other exceptions to be negotiated, payable no
later than the third Business Day following
the date of receipt or other date such
payment becomes due;
2. prepayments in the amount of the net cash
proceeds received from the issuance of
certain debt securities of New Holdings or
its subsidiaries with exceptions to be agreed
upon, payable no later than the first
Business Day following the date of receipt;
3. prepayments in an amount equal to 50% (the
"Equity Repayment Amount"), of the net cash
proceeds received from the issuance of equity
securities of New Holdings, payable no later
than the first Business Day following the
date of receipt; provided that a portion of
the Equity Repayment Amount may be used to
redeem, retire or repurchase other
indebtedness of New Holdings or Company in an
amount to be mutually agreed upon;
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4. prepayments in the amount of all proceeds
received from any pension plan reversion,
payable upon receipt; and
5. prepayments in an amount equal to 75% (the
"Cash Flow Repayment Amount") of excess cash
flow (to be defined), payable within 100 days
of fiscal year-end; provided that a portion
of the Cash Flow Repayment Amount may be used
to redeem, retire or repurchase other
indebtedness of New Holdings or Company in an
amount to be mutually agreed upon.
All mandatory prepayments shall be applied ratably
between Tranche A Loans, Tranche B Loans, Tranche C
Loans and Tranche D Loans and to scheduled
amortization payments of the Tranche A Loans, Tranche
B Loans, Tranche C Loans and Tranche D Loans pro
rata. Mandatory prepayments allocated to the Tranche
B Loans, Tranche C Loans and Tranche D Loans will be
used to make an offer for such Loans and, to the
extent not accepted by the holders of such Loans, 50%
may be retained by Company and the remaining 50% will
be applied to the prepayment of the Tranche A Loans.
Clean-Down: Loans outstanding under the Revolving Credit Facility
shall be reduced to $75 million for not less than 30
consecutive days during each consecutive twelve-month
period.
Representations Customary and appropriate, including without
Warranties: limitation due organization and authorization,
financial and condition, no material adverse changes,
title to properties, liens, litigation, payment of
taxes, no material adverse agreements, employee
benefit plans, environmental liabilities and full
disclosure.
Covenants: Customary and appropriate affirmative and negative
covenants, including but not limited to financial
covenants related to minimum fixed charge coverage,
minimum EBITDA, maximum leverage (to be defined as
the ratio of total debt to EBITDA) and minimum net
worth. Other covenants will include financial
reporting, compliance with laws, limitations on other
indebtedness, liens, investments, guarantees,
restricted junior payments (dividends, redemptions
and payments on subordinated debt), prepayment or
repurchase of other
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indebtedness (other than from the proceeds of Equity
Repayment Amounts and Cash Flow Repayment Amounts or
from the proceeds of certain refinancing indebtedness
as mutually agreed upon), mergers and acquisitions,
sales of assets, cash capital expenditures, leases,
transactions with affiliates and other provisions
customary and appropriate for financings of this
type, including exceptions and baskets to be mutually
agreed upon.
Events of Customary and appropriate, including without
Default: limitation failure to make payments when due,
defaults under other agreements or instruments of
indebtedness, noncompliance with covenants, breaches
of representations and warranties, bankruptcy,
judgments in excess of specified amounts, impairment
of security interests in collateral, invalidity of
guarantees, and "changes of control" (to be defined
in a mutually agreed upon manner).
II. CONDITIONS TO LOANS
Certain Conditions precedent to the initial funding of the
Conditions Bank Facilities will include, without limitation, the
Precedent to following:
Initial Funding:
1. Satisfactory Bank Documentation. The
definitive documentation evidencing the Bank
Facilities (the "Definitive Financing
Documents") shall be prepared by counsel to
Bankers Trust and shall be in form and
substance satisfactory to Bankers Trust and
Lenders.
2. Structure and Other Related Documentation.
The tax, accounting and legal aspects of the
structure utilized to consummate the
Acquisition, the Holdings Mergers, the
Mergers and the financings and other
transactions related thereto and the
definitive documentation evidencing such
transactions shall be in form and substance
satisfactory to Bankers Trust and Lenders.
3. New Equity. Prior to or concurrently with
the Closing Date, New Holdings shall have
received cash contributions of not less than
$10 million contributed by the RG management
(in the form of a cancellation of their
rights to receive
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certain cash payments), plus not less than
$140 million in proceeds from the issuance of
preferred stock to new equity investors, a
portion of the proceeds of which shall be
used to purchase RSI common stock in
connection with the Acquisition, which common
stock shall be contributed to the equity
capital of F4L. The terms and conditions of
the preferred stock issued by New Holdings,
including the type and amount of dividend
payments and any redemption provisions, shall
be satisfactory to Bankers Trust; provided
that such preferred stock shall not be
subject to any mandatory redemption and no
payments of cash dividends shall be required
thereon.
4. Seller Debentures and New Holdings Discount
Debentures. Prior to or concurrently with
the Closing Date, New Holdings shall have
issued (i) the Seller Debentures in the
aggregate initial principal amount of $131.5
million and (ii) the New Holdings Discount
Debentures in the initial accreted value of
$100 million. The Seller Debentures may not
mature, and amortization payments may not be
made on the Seller Debentures, prior to the
twelfth anniversary of the Closing Date. The
New Holdings Discount Debentures, may not
mature, and amortization payments may not be
made on the New Holdings Discount Debentures,
prior to the date which is 10 years and 1
month from the Closing Date. Interest shall
be payable on the Seller Debentures through
the issuance of additional Seller Debentures
until the fifth anniversary of the Closing
Date and thereafter may be paid in cash. The
New Holdings Discount Debentures will accrete
at a rate of 13-5/8% from the date of
original issuance for not less than 5 years
and thereafter interest may be paid on the
New Holdings Discount Debentures in cash.
The Seller Debentures and the New Holdings
Discount Debentures shall be structurally
subordinate to the Bank Facilities and may
not be secured or guaranteed. The interest
rate, covenants, defaults, subordination
terms, remedies and all other terms of the
Seller Debentures and
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the New Holdings Discount Debentures shall be
satisfactory to Bankers Trust and Lenders and
shall be consistent with the terms of the F4L
Senior Subordinated Notes. In addition,
without limitation of the foregoing, Bankers
Trust and Lenders shall be satisfied with the
appropriateness of the definition of a
"Change of Control" contained in the Seller
Debentures and the New Holdings Discount
Debentures in light of all of the relevant
circumstances on the Closing Date, including
the equity ownership of Yucaipa and its
affiliates and the other major shareholders
and the terms of all shareholder agreements.
Bankers Trust has reviewed a draft dated
September 1, 1994 of the Indenture pursuant
to which the Seller Debentures are to be
issued and except for provisions of the
Indenture which are not yet completed and
subject to our satisfaction with such
consistency and such matters related to a
Change of Control, the terms of such
Indenture are satisfactory to Bankers Trust.
The RSI common stock purchased for cash and
in consideration of the issuance of the
Seller Debentures and the New Holdings
Discount Debentures shall be contributed to
the equity capital of F4L by New Holdings.
5. Issuance of F4L Senior Subordinated Notes.
Not less than 50% of the 9% Subordinated
Notes and of the 10-1/4% Subordinated Notes
shall have been tendered for exchange as a
result of the RG Solicitations and F4L shall
have obtained all such consents and
amendments as may be required to permit the
Acquisition, the Holdings Mergers, the
Mergers, the borrowings under the Bank
Facilities and the related transactions to
occur as described herein, the terms and
conditions of such consents to be in form and
substance satisfactory to Bankers Trust and
Lenders. Prior to or concurrently with the
Closing Date, F4L shall have issued not less
than $225 million of F4L Senior Subordinated
Notes in exchange for a like principal amount
of Existing RG Debt Securities and an
aggregate cash payment in an amount to be
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mutually agreed upon. The F4L Senior
Subordinated Notes shall be unsecured and
shall have no scheduled principal payments
payable prior to the tenth anniversary of the
Closing Date. The interest rate, covenants,
defaults, subordination provisions, remedies
and all other terms of the F4L Senior
Subordinated Notes shall be satisfactory to
Bankers Trust and Lenders. All such negative
covenants and defaults shall be less
restrictive than those contained in the
Definitive Financing Documents. The
aggregate principal amount of the F4L Senior
Subordinated Notes and the Existing RG Debt
Securities shall not exceed $650 million
outstanding at any time; provided that if
more than $225 million principal amount of
Existing RG Debt Securities is exchanged for
F4L Senior Subordinated Notes pursuant to the
RG Solicitations, the amount of proceeds of
the Public Offering or the Term Loan Facility
shall be reduced on a dollar-for-dollar
basis.
6. Public Offering. Prior to or concurrently
with the Closing Date, F4L shall have
received cash proceeds of (i) not less than
$200 million from the Public Offering of F4L
Senior Subordinated Notes and (ii) not less
than $295 million from the Public Offering of
New F4L Senior Notes, in each case, the
proceeds of which shall be applied to the
purposes specified under "Use of Proceeds"
above; provided that either or both of such
amounts may be reduced if the amount of
Existing RG Debt Securities exchanged in the
RG Solicitations exceeds $225 million. The
terms and conditions of the F4L Senior
Subordinated Notes issued on the Public
Offering shall be as described under
"Issuance of F4L Senior Subordinated Notes"
above. The terms and conditions of the New
F4L Senior Notes issued in the Public
Offering shall be as described under "F4L
Solicitations" below.
7. Payment of Purchase Price. Concurrently with
the Closing Date, New Holdings shall have
acquired 100% of the capital stock
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of RSI at a purchase price not to exceed a
payment of $525.9 million, comprised of a
$375.9 million cash payment and the issuance
of $131.5 million of Seller Debentures and
$18.5 million initial accreted value of New
Holdings Discount Debentures by New Holdings,
not including any refinancing or assumption
of existing indebtedness as described below.
Upon consummation of the Acquisition, the
Holdings Mergers and the Mergers, all shares
of the capital stock of Company shall be
owned by New Holdings and Yucaipa shall,
directly or indirectly, control New Holdings.
8. Discharge of Bank Indebtedness. Concurrently
with the Acquisition, all existing bank
indebtedness of RG in the approximate
aggregate principal amount of $255.1 million
and of F4L and its subsidiaries in the
approximate aggregate principal amount of
$161.5 million shall be repaid in full and
all commitments thereunder shall have been
terminated.
9. F4L Solicitations. Prior to or concurrently
with the Closing Date, F4L shall have issued
additional New F4L Senior Notes and the New
F4L 13.75% Subordinated Notes in exchange for
not less than 80% of the 10.45% Senior Notes
and the 13.75% Subordinated Notes and an
aggregate cash payment to be mutually agreed
upon, and Holdings and F4L shall have
obtained all such consents and amendments as
may be required to permit the Acquisition,
the Holdings Mergers, the Mergers, the
borrowings under the Bank Facilities and the
related transactions to occur as described
herein, the terms and conditions of such
consents to be in form and substance
satisfactory to Bankers Trust and Lenders.
The New F4L Senior Notes and the New F4L
13.75% Subordinated Notes shall be unsecured
and shall have no scheduled principal
payments prior to 2004 and 2005,
respectively. The interest rate, covenants,
defaults, remedies, subordination provisions
(in the case of the New F4L 13.75%
Subordinated Notes) and all other terms
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of the New F4L Senior Notes and New F4L
13.75% Subordinated Notes shall be
satisfactory to Bankers Trust and Lenders.
All such negative covenants and defaults
shall be less restrictive than those
contained in the Definitive Financing
Documents. The aggregate principal amount of
the 10.45% Senior Notes and the New F4L
Senior Notes shall not exceed $470 million at
any time outstanding, and the aggregate
principal amount of the 13.75% Subordinated
Notes and the New F4L 13.75% Subordinated
Notes shall not exceed $145 million at any
time outstanding. F4L shall otherwise be in
compliance with its obligations under the
indentures pursuant to which the 10.45%
Senior Notes and the 13.75% Subordinated
Notes have been issued.
10. Mortgage Debt and Other Obligations. Prior
to or concurrently with the Closing Date, RG
shall have repaid in full the Mortgage Debt.
Company and its subsidiaries may remain
liable with respect to obligations relating
to existing indebtedness in the approximate
aggregate principal amount of $166.9 million,
including approximately $145.1 million in
existing capital lease obligations and
approximately $21.8 million in mortgage debt
and all other indebtedness, all such matters
to be on terms and conditions and in form and
substance satisfactory to Bankers Trust and
Lenders. RSI and its subsidiaries shall have
obtained all such consents, waivers,
amendments, approvals and the like as may be
required under the existing contracts and
agreements of such persons to permit the
borrowing under the Bank Facilities, the
Acquisition, the Holdings Mergers, the
Mergers and all related transactions and
shall otherwise be in compliance in all
material respects with their respective
obligations under such agreements.
11. Security. The Administrative Agent, for the
benefit of Lenders, shall have been granted a
perfected security interest in all assets to
the extent described above under the heading
"Security".
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12. Title Insurance. The Administrative Agent
shall have received satisfactory assurances
that an ALTA title insurance policy insuring
the interest of the Administrative Agent for
the benefit of Lenders in certain of the real
property securing the Bank Facilities will be
available in form and substance satisfactory
to Bankers Trust.
13. Appraisals. Upon request of Bankers Trust or
Lenders, the Administrative Agent shall have
received appraisals in form, scope and
substance reasonably satisfactory to Bankers
Trust and satisfying the requirements of any
applicable laws and regulations concerning
the real property security.
14. Environmental Matters. Bankers Trust and
Lenders shall have received reports and other
information in form, scope and substance
satisfactory to Bankers Trust and Lenders
concerning environmental liabilities of F4L,
RG and their respective subsidiaries.
15. No Material Adverse Change. Other than with
respect to such information as is disclosed
in the filing on Form 10Q made on July 17,
1994 with respect to RSI and its
subsidiaries, there shall have occurred no
material adverse change in the condition
(financial or otherwise), business, assets,
liabilities, properties, results of
operations or prospects of F4L, RG and their
respective subsidiaries, individually and
taken as a whole, since June 25, 1994, in the
case of Holdings and its subsidiaries, and
January 30, 1994, in the case of RSI and its
subsidiaries.
16. No Disruption of Financial and Capital
Markets. There shall have been no material
adverse change after the date hereof to the
syndication markets for credit facilities
similar in nature to the Bank Facilities and
there shall not have occurred and be
continuing a material disruption of or
material adverse change in financial, banking
or capital markets that would have an
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adverse effect on such syndication market, in
each case as determined by Bankers Trust in
its sole discretion.
17. Financial Statements. Bankers Trust and
Lenders shall have received the unaudited
financial statements for F4L, RG and their
respective subsidiaries for most recently
ended fiscal periods. If unaudited, Bankers
Trust and Lenders may review such unaudited
financial statements with the independent
certified public accountants for F4L and the
cost of such review shall be for the account
of F4L.
18. Due Diligence. The results of Bankers
Trust's business and financial due diligence
investigations, and any supplemental business
or financial due diligence that Bankers Trust
reasonably determines has become necessary,
shall be satisfactory in all respects to
Bankers Trust. Bankers Trust and Lenders
shall also have received any information
reasonably necessary to conduct such due
diligence. Bankers Trust completed such due
diligence by October 14, 1994.
19. Solvency. Bankers Trust and Lenders shall
have received a solvency opinion from a
nationally recognized valuation firm
satisfactory to Bankers Trust and a
certificate from the chief financial officer
of F4L in form and substance satisfactory to
Bankers Trust and Lenders, supporting the
conclusions that, after giving effect to the
Acquisition, the Mergers and related
transactions, Company will not be insolvent
or will not be rendered insolvent by the
indebtedness incurred in connection
therewith, or be left with unreasonably small
capital with which to engage in its
businesses or have incurred debts beyond its
ability to pay such debts as they mature.
20. Customary Closing Documents. All documents
required to be delivered under the Definitive
Financing Documents, including customary
legal opinions, corporate records and
documents from
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public officials and officers' certificates,
shall have been delivered.
Conditions to All The conditions to all borrowings will include
Borrowings: requirements relating to prior written notice of
borrowing, the accuracy of representations and
warranties, and the absence of any default or
potential event of default, and will otherwise be
customary and appropriate for financings of this
type.
III. MISCELLANEOUS
Syndication: A syndicate of financial institutions will be
arranged by Bankers Trust. RG and F4L shall
cooperate with Bankers Trust in the syndication of
the Bank Facilities (including, but not limited to,
participation in meetings with Lenders and assisting
in the preparation of a Confidential Information
Memorandum and other materials to be used in
connection with such syndication) and shall provide
and cause its advisors to provide all information
reasonably deemed necessary by Bankers Trust to
complete a successful syndication. RG and F4L also
agree to assist in coordinating Bankers Trust's
primary syndication efforts with those of other
financings contemplated by RG and F4L in this
transaction.
The Lenders may assign all or, in an amount of not
less than $5 million, any part of their share of the
Bank Facilities to affiliates or one or more banks or
other entities that are eligible assignees (to be
described in the loan documentation) which, in the
case of assignments made by Lenders other than
Bankers Trust, are acceptable to Administrative Agent
and Company, such consent not to be unreasonably
withheld, and upon such assignment, such affiliate,
bank or entity shall become a Lender for all purposes
of the loan documentation; provided that assignments
made to affiliates and other Lenders shall not be
subject to the $5 million minimum assignment
requirement. Lenders will have the right to sell
participations, subject to customary limitations on
voting rights, in their share of the Bank Facilities.
Requisite Requisite Lenders shall mean Lenders holding in the
Lenders: aggregate 51% of the commitments under the Bank
Facilities.
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Taxes, Reserve All payments are to be made free and clear of any
Requirements & taxes (other than franchise taxes and taxes on
Indemnities: overall net income), imposts, assessments,
withholdings, or other deductions whatsoever.
Foreign lenders shall furnish to Administrative
Agent (for delivery to Company) appropriate
certificates or other evidence of exemption from
U.S. federal tax withholding.
Company is to indemnify the Lenders against all
increased costs of capital resulting from reserve
requirements or otherwise imposed, in each case
subject to customary increased costs, capital
adequacy and similar provisions to the extent not
taken into account in the calculation of the Base
Rate or the Euro-Dollar Rate.
Governing Law and Company will submit to the non-exclusive jurisdiction
Jurisdiction: and venue of the federal and state courts of the
State of New York and will waive any right to trial
by jury. New York law shall govern loan
documentation.
Bankers Trust's O'Melveny & Myers.
Counsel:
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We appreciate having been given the opportunity by you to be
involved in this transaction and we look forward to continuing our relationship
with the F4L companies in the future.
Very truly yours,
BANKERS TRUST COMPANY
By: __________________________
Title: _______________________
AGREED AND ACCEPTED THIS
___ day of April, 1995
FOOD 4 LESS SUPERMARKETS, INC.
By:_____________________
Title:__________________
S-1