1
EXHIBIT 4.3(c)
================================================================================
THE KROGER CO.
TO
STAR BANK, NATIONAL ASSOCIATION
Trustee
----------
THIRD SUPPLEMENTAL INDENTURE
Dated as of December 11, 1998
TO
INDENTURE
Dated as of May 1, 1998
----------
6.80% SENIOR NOTES DUE 2018
================================================================================
2
THIRD SUPPLEMENTAL INDENTURE, dated as of December 11, 1998,
between The Kroger Co., a corporation duly organized and existing under the laws
of the State of Ohio (herein called the "Company"), having its principal office
at 1014 Vine Street, Cincinnati, Ohio 45202, and Star Bank, National
Association, a banking corporation duly organized and existing under the laws of
the State of Ohio, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has heretofore executed and delivered to the
Trustee an Indenture dated as of May 1, 1998 (the "Indenture"), providing for
the issuance from time to time of the Company's unsecured debentures, notes or
other evidences of indebtedness (herein and therein called the "Securities"), to
be issued in one or more series as in the Indenture provided.
Section 201 of the Indenture permits the form of the
Securities of any series to be established pursuant to an indenture supplemental
to the Indenture.
Section 301 of the Indenture permits the terms of the
Securities of any series to be established in an indenture supplemental to the
Indenture.
Section 901(7) of the Indenture provides that, without the
consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental to the Indenture for the purpose of establishing the
form or terms of Securities of any series as permitted by Sections 201 and 301
of the Indenture.
The Company, pursuant to the foregoing authority, proposes in
and by this Third Supplemental Indenture to establish the terms and form of the
Securities of a new series and to amend and supplement the Indenture in certain
respects with respect to the Securities of such series.
All things necessary to make this Third Supplemental Indenture
a valid agreement of the Company, and a valid amendment of and supplement to the
Indenture, have been done.
NOW, THEREFORE, THIS THIRD Supplemental Indenture WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities of the series to be
created hereby, as follows:
3
ARTICLE ONE
DEFINITIONS
Section 101. Definitions.
(a) For all purposes of this Third Supplemental Indenture:
(1) Capitalized terms used herein without definition
shall have the meanings specified in the Indenture;
(2) All references herein to Articles and Sections,
unless otherwise specified, refer to the corresponding
Articles and Sections of this Third Supplemental Indenture
and, where so specified, to the Articles and Sections of the
Indenture as supplemented by this Third Supplemental
Indenture; and
(3) The terms "hereof", "herein", "hereby", "hereto",
"hereunder" and "herewith" refer to this Third Supplemental
Indenture.
(b) For all purposes of the Indenture and this Third
Supplemental Indenture, with respect to the Securities of the series created
hereby, except as otherwise expressly provided or unless the context otherwise
requires:
"Adjusted Treasury Rate" means, with respect to any
Redemption Date, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.
"Attributable Debt" means, in connection with a Sale and
Lease-Back Transaction, as of any particular time, the
aggregate of present values (discounted at a rate per annum
equal to the interest rate borne by the Securities of the
series created by this Third Supplemental Indenture) of the
obligations of the Company or any Restricted Subsidiary for
net rental payments during the remaining primary term of the
applicable lease, calculated in accordance with generally
accepted accounting principles. The term "net rental payments"
under any lease for any period shall mean the sum of the
rental and other payments required to be paid in such period
by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee (whether or not designated
as rental or additional rental) on account of maintenance and
repairs, reconstruction, insurance, taxes, assessments, water
rates, operating and labor costs or similar charges required
to be paid by such lessee thereunder or any amounts required
to be paid by such lessee thereunder
-2-
4
contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or
similar charges.
"Business Day" means any day other than a Saturday or
Sunday or a day on which banking institutions in New York City
or Cincinnati, Ohio are authorized or obligated by law or
executive order to close.
"Capital Lease" means any lease of property which, in
accordance with generally accepted accounting principles,
should be capitalized on the lessee's balance sheet or for
which the amount of the asset and liability thereunder as if
so capitalized should be disclosed in a note to such balance
sheet; and "Capitalized Lease Obligation" means the amount of
the liability which should be so capitalized or disclosed.
"Comparable Treasury Issue" means the United States
Treasury security selected by a Quotation Agent as having a
maturity comparable to the remaining term of the Securities to
be redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to
any Redemption Date, (i) the average of the Reference Treasury
Dealer Quotations, after excluding the highest and lowest such
Reference Treasury Dealer Quotations for such Redemption Date,
or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such
Quotations.
"Consolidated Net Tangible Assets" means, for the
Company and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting
principles, the aggregate amounts of assets (less depreciation
and valuation reserves and other reserves and items deductible
from gross book value of specific asset accounts under
generally accepted accounting principles) which under
generally accepted accounting principles would be included on
a balance sheet after deducting therefrom (a) all liability
items except deferred income taxes, commercial paper,
short-term bank Indebtedness, Funded Indebtedness, other
long-term liabilities and shareholders' equity and (b) all
goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each
case would be so included on such balance sheet.
"Funded Indebtedness" means any Indebtedness maturing
by its terms more than one year from the date of the
determination thereof, including (i) any Indebtedness having a
maturity of 12
-3-
5
months or less but by its terms renewable or extendible at the
option of the obligor to a date later than 12 months from the
date of the determination thereof and (ii) rental obligations
payable more than 12 months from the date of determination
thereof under Capital Leases (such rental obligations to be
included as Funded Indebtedness at the amount so capitalized
at the date of such computation and to be included for the
purposes of the definition of Consolidated Net Tangible Assets
both as an asset and as Funded Indebtedness at the amount so
capitalized).
"Non-Restricted Subsidiary" means any Subsidiary that
the Company's Board of Directors has in good faith declared
pursuant to a written resolution not to be of material
importance, either singly or together with all other
Non-Restricted Subsidiaries, to the business of the Company
and its consolidated Subsidiaries taken as a whole.
"Operating Assets" means all merchandise inventories,
furniture, fixtures and equipment (including all
transportation and warehousing equipment but excluding office
equipment and data processing equipment) owned or leased
pursuant to Capital Leases by the Company or a Restricted
Subsidiary.
"Operating Property" means all real property and
improvements thereon owned or leased pursuant to Capital
Leases by the Company or a Restricted Subsidiary and
constituting, without limitation, any store, warehouse,
service center or distribution center wherever located,
provided that such term shall not include any store,
warehouse, service center or distribution center which the
Company's Board of Directors declares by written resolution
not to be of material importance to the business of the
Company and its Restricted Subsidiaries.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Reference Treasury Dealer" means (i) Goldman, Sachs
& Co. and its successors; provided, however, that if the
foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer, and (ii) any other Primary Treasury
Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any Redemption
Date, the average, as determined by the Company, of the bid
and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted
in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m. on the third Business Day preceding such Redemption
Date.
-4-
6
"Restricted Subsidiaries" means all Subsidiaries other
than Non-Restricted Subsidiaries.
"Sale and Lease-Back Transaction" has the meaning
specified in Section 1010.
"Subsidiary" means (i) any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by the Company and/or
one or more Subsidiaries or (ii) any partnership of which more
than 50% of the partnership interest is owned by the Company
or any Subsidiary.
ARTICLE TWO
SECURITY FORMS
Section 201. Form of Securities of this Series.
The Securities of this series shall be in the form set forth
in this Article.
Section 202. Form of Face of Security.
THE KROGER CO.
6.80% Senior Notes due 2018
No. _________ $ ________
The Kroger Co., a corporation duly organized and existing
under the laws of the State of Ohio (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of _____________________________________
Dollars on December 15, 2018, and to pay interest thereon from December 11, 1998
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on June 15 and December 15 in each year,
commencing June 15, 1999, at the rate of interest of 6.80% per annum until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the June 1 or
December 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder
-5-
7
on such Regular Record Date and may either be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the Company maintained
for that purpose in Cincinnati, Ohio, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register.
In the case where any Interest Payment Date or the maturity
date of this Security does not fall on a Business Day, payment of interest or
principal otherwise payable on such day need not be made on such day, but may be
made on the next succeeding Business Day with the same form and effect as if
made on such Interest Payment Date or the maturity date of this Security.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
-6-
8
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated:
THE KROGER CO.
By
---------------------------------
Attest:
- --------------------------
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities
of the Company (herein called the "Securities") issued and to be issued under an
Indenture dated as of May 1, 1998, as supplemented by the First Supplemental
Indenture dated as of May 11, 1998, the Second Supplemental Indenture, dated as
of June 26, 1998 and the Third Supplemental Indenture dated as of December 11,
1998 (as so supplemented, herein called the "Indenture"), each between the
Company and Star Bank, National Association, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $300,000,000.
The Securities of this series will be redeemable, in whole or
in part, at the option of the Company at any time at a redemption price equal to
the greater of (i) 100% of the principal amount of such Securities or (ii) as
determined by a Quotation Agent, the sum of the present values of the remaining
scheduled payments of principal and interest thereon (not including any portion
of such payments of interest accrued as of the date of redemption) discounted to
the date of redemption on a semi-annual basis (assuming a
-7-
9
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate
plus 12.5 basis points, plus, in each case, accrued interest thereon to the date
of redemption.
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each holder of the
Securities to be redeemed. Unless the Company defaults in payment of the
redemption price, on and after the Redemption Date, interest will cease to
accrue on the Securities or portions thereof called for redemption.
The Indenture contains provisions for defeasance at any time
of (i) the entire indebtedness of this Security or (ii) certain restrictive
covenants and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
If an Event of Default shall occur and be continuing, the
principal of all Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of 50% in aggregate principal amount
of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all the Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange therefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As set forth in, and subject to, the provisions of the
Indenture, no Holder of any Security will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default, the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in principal amount of the Outstanding Securities a direction inconsistent with
such request and shall have failed to institute such proceeding within 60 days;
provided, however, that such limitations do
-8-
10
not apply to a suit instituted by the Holder hereof for the enforcement of
payment of the principal of (and premium, if any) or any interest on this
Security on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like aggregate principal amount of Securities
of like tenor, of a different authorized denomination, as requested by the
Holder surrendering the same.
Except where otherwise specifically provided in the Indenture,
no service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
-9-
11
ARTICLE THREE
THE SERIES OF SECURITIES
Section 301. Title and Terms.
There shall be a series of Securities designated as the "6.80%
Senior Notes due 2018" of the Company. Their Stated Maturity shall be December
15, 2018, and they shall bear interest at the rate of 6.80% per annum.
Interest on the Securities of this series will be payable
semi-annually on June 15 and December 15 of each year, commencing June 15, 1999,
until the principal thereof is made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will be paid to the Person in whose name the Securities of this series (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the June 1 or December 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.
In the case where any Interest Payment Date or the maturity
date of the Securities of this series does not fall on a Business Day, payment
of interest or principal otherwise payable on such date need not be made on such
day, but may be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date or the maturity date of the
Securities of this series.
The aggregate principal amount of Securities of this series
which may be authenticated and delivered under this Third Supplemental Indenture
is limited to $300,000,000, except for Securities authenticated and delivered
upon registration or transfer of, or in exchange for, or in lieu of, other
Securities of this series pursuant to Section 304, 305 and 306 of the Indenture
and except for any Securities of this series which, pursuant to Section 303 of
the Indenture, are deemed never to have been authenticated and delivered under
the Indenture.
The Securities of this series will be represented by two or
more Global Securities representing the entire $300,000,000 aggregate principal
amount of the Securities of this series, and the Depositary with respect to such
Global Security or Global Securities will be The Depository Trust Company.
The Place of Payment for the principal of (and premium, if
any) and interest on the Securities of this series shall be the office or agency
of the Company in the City of Cincinnati, State of Ohio, maintained for such
purpose, which shall be the Corporate Trust Office of the Trustee and at any
other office or agency maintained by the Company for such purpose; provided,
however, that at the option of the Company payment of
-10-
12
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
The Securities of this series are redeemable prior to maturity
at the option of the Company as provided in this Third Supplemental Indenture.
The Securities of this series are not subject to a sinking
fund and the provisions of Section 501(3) and Article Twelve of the Indenture
shall not be applicable to the Securities of this series.
The Securities of this series are subject to defeasance at the
option of the Company as provided in this Third Supplemental Indenture.
ARTICLE FOUR
MODIFICATIONS AND ADDITIONS TO THE INDENTURE
Section 401. Modifications to the Consolidation, Merger,
Conveyance, Transfer or Lease Provisions.
With respect to the Securities of this series, Section 801 of
the Indenture shall be deleted in its entirety and the following shall be
substituted therefor:
"Section 801. Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain Conditions.
The Company covenants that it will not merge with or into or
consolidate with any corporation, partnership, or other entity
or sell, lease or convey all or substantially all of its
assets to any other Person, unless (i) either the Company
shall be the continuing corporation, or the successor entity
or the Person which acquires by sale, lease or conveyance all
or substantially all the assets of the Company (if other than
the Company) shall be a corporation or partnership organized
under the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly assume
all obligations of the Company under this Indenture and the
Securities of the series created by the Third Supplemental
Indenture, including the due and punctual payment of the
principal of and interest on all the Securities of the series
created by the Third Supplemental Indenture according to their
tenor, and the due and punctual performance and observance of
all of the covenants and conditions of the Indenture to be
performed or observed by the
-11-
13
Company, by supplemental indenture in form satisfactory to the
Trustee, executed and delivered to the Trustee by such entity,
and (ii) the Company, such person or such successor entity, as
the case may be, shall not, immediately after such merger or
consolidation, or such sale, lease or conveyance, be in
default in the performance of any such covenant or condition
and, immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have
happened and be continuing.
Section 802. Successor Substituted
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any sale, lease or
conveyance of all or substantially all of the assets of the
Company in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is
merged or to which such sale, lease or conveyance is made
shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the
case of a lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the
Securities."
Section 402. Other Modifications.
With respect to the Securities of this series, the Indenture
shall be modified as follows:
(a) The eighth paragraph of Section 305 of the Indenture shall
be modified by inserting ", and a successor Depositary is not appointed by the
Company within 90 days" at the end of clause (i) in such paragraph; and
(b) Section 401 of the Indenture shall be modified by adding
to the end of such Section the following paragraph:
"For the purpose of this Section 401, trust funds may consist
of (A) money in an amount, or (B) U.S. Government Obligations
(as defined in Section 1304) which through the scheduled
payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or
(C) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, the principal of, premium, if
any, and each installment of interest on the Securities of
this
-12-
14
series on the Stated Maturity of such principal or installment
of interest on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of
such Securities of this series."
Section 403. Additional Covenants; Defeasance and Covenant Defeasance.
(a) With respect to the Securities of this series, the following provisions
shall be added as Sections 1009 and 1010 and as Article Thirteen (Section
references contained in these additional provisions are to the Indenture
as supplemented by this Third Supplemental Indenture):
"Section 1009. Limitations on Liens.
After the date hereof and so long as any Securities of the
series created by the Third Supplemental Indenture are
Outstanding, the Company will not issue, assume or guarantee,
and will not permit any Restricted Subsidiary to issue, assume
or guarantee, any Indebtedness which is secured by a mortgage,
pledge, security interest, lien or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement
to give any of the foregoing) (each being hereinafter referred
to as a "lien" or "liens") of or upon any Operating Property
or Operating Asset, whether now owned or hereafter acquired,
of the Company or any Restricted Subsidiary without
effectively providing that the Securities of the series
created by the Third Supplemental Indenture (together with, if
the Company shall so determine, any other Indebtedness of the
Company ranking equally with the Securities) shall be equally
and ratably secured by a lien on such assets ranking ratably
with and equal to (or at the Company's option prior to) such
secured Indebtedness; provided that the foregoing restriction
shall not apply to:
(a) liens on any property or assets of any corporation
existing at the time such corporation becomes a Restricted
Subsidiary provided that such lien does not extend to any
other property of the Company or any of its Restricted
Subsidiaries;
(b) liens on any property or assets (including stock) existing at the time of
acquisition of such property or assets by the Company or a Restricted
Subsidiary, or liens to secure the payment of all or any part of the
purchase price of such property or assets (including stock) upon the
acquisition of such property or assets by the Company or a Restricted
Subsidiary or to secure any indebtedness incurred, assumed or guaranteed
by the Company or a Restricted Subsidiary for the purpose of financing all
or any part of the purchase price of such property or, in the case of real
property, construction or improvements thereon or attaching to property
substituted by the Company to obtain the release of a lien on other
property of the Company on which a lien then exists, which indebtedness is
incurred, assumed or guaranteed prior to, at the time of, or within 18
months after such acquisition (or in the case of real property, the
completion of construction (including any improvements on an existing
asset) or commencement of full operation at such property, whichever is
later (which in the case of a retail
-13-
15
store is the opening of the store for business to the public)); provided
that in the case of any such acquisition, construction or improvement, the
lien shall not apply to any other property or assets theretofore owned by
the Company or a Restricted Subsidiary;
(c) liens on any property or assets to secure Indebtedness of a Restricted
Subsidiary to the Company or to another Restricted Subsidiary;
(d) liens on any property or assets of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a
Restricted Subsidiary or at the time of a purchase, lease or other
acquisition of the assets of a corporation or firm as an entirety or
substantially as an entirety by the Company or a Restricted Subsidiary
provided that such lien does not extend to any other property of the
Company or any of its Restricted Subsidiaries;
(e) liens on any property or assets of the Company or a Restricted Subsidiary
in favor of the United States of America or any State thereof, or any
department, agency or instrumentality or political subdivision of the
United States of America or any State thereof, or in favor of any other
country, or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute or
to secure any Indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real
property, the cost of construction) of the property or assets subject to
such liens (including, but not limited to, liens incurred in connection
with pollution control, industrial revenue or similar financings);
(f) liens existing on properties or assets of the Company or any Restricted
Subsidiary existing on the date hereof; provided that such liens secure
only those obligations which they secure on the date hereof or any
extension, renewal or replacement thereof;
(g) any extension, renewal or replacement (or successive extensions, renewals
or replacements) in whole or in part, of any lien referred to in the
foregoing clauses (a) through (f), inclusive; provided that such
extension, renewal or replacement shall be limited to all or a part of the
property or assets which secured the lien so extended, renewed or replaced
(plus improvements and construction on real property);
(h) liens imposed by law, such as mechanics', workmen's, repairmen's,
materialmen's, carriers', warehouseman's, vendors', or other similar liens
arising in the ordinary course of business of the Company or a Restricted
Subsidiary, or governmental (federal, state or municipal) liens arising
out of contracts for the sale of products or services by the Company or
any Restricted Subsidiary, or deposits or pledges to obtain the release of
any of the foregoing liens;
(i) pledges, liens or deposits under worker's compensation laws or similar
legislation and liens or judgments thereunder which are not currently
dischargeable, or in connection with bids, tenders, contracts (other than
for the payment of money) or leases to which the Company or any Restricted
Subsidiary is a party, or to secure the public or statutory obligations of
the Company or any Restricted Subsidiary, or in connection with obtaining
or
-14-
16
maintaining self-insurance or to obtain the benefits of any law,
regulation or arrangement pertaining to unemployment insurance, old age
pensions, social security or similar matters, or to secure surety, appeal
or customs bonds to which the Company or any Restricted Subsidiary is a
party, or in litigation or other proceedings such as, but not limited to,
interpleader proceedings, and other similar pledges, liens or deposits
made or incurred in the ordinary course of business;
(j) liens created by or resulting from any litigation or other proceeding
which is being contested in good faith by appropriate proceedings,
including liens arising out of judgments or awards against the Company or
any Restricted Subsidiary with respect to which the Company or such
Restricted Subsidiary is in good faith prosecuting an appeal or
proceedings for review or for which the time to make an appeal has not yet
expired; or final unappealable judgment liens which are satisfied within
30 days of the date of judgment; or liens incurred by the Company or any
Restricted Subsidiary for the purpose of obtaining a stay or discharge in
the course of any litigation or other proceeding to which the Company or
such Restricted Subsidiary is a party;
(k) liens for taxes or assessments or governmental charges or levies not yet
due or delinquent, or which can thereafter be paid without penalty, or
which are being contested in good faith by appropriate proceedings;
landlord's liens on property held under lease; and any other liens or
charges incidental to the conduct of the business of the Company or any
Restricted Subsidiary or the ownership of the property or assets of any of
them which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit and which do not, in the opinion of
the Company, materially impair the use of such property or assets in the
operation of the business of the Company or such Restricted Subsidiary or
the value of such property or assets for the purposes of such business; or
(l) liens not permitted by clauses (a) through (k) above if at the time of,
and after giving effect to, the creation or assumption of any such lien,
the aggregate amount of all Indebtedness of the Company and its Restricted
Subsidiaries secured by all such liens not so permitted by clauses (a)
through (k) above together with the Attributable Debt in respect of Sale
and Lease-Back Transactions permitted by paragraph (a) of Section 1010
does not exceed 10% of Consolidated Net Tangible Assets.
Section 1010. Limitations on Sale and Lease-Back Transactions.
After the date hereof and so long as any Securities of the series created
by the Third Supplemental Indenture are Outstanding, the Company agrees
that it will not, and will not permit any Restricted Subsidiary to, enter
into any arrangement with any Person providing for the leasing by the
Company or a Restricted Subsidiary of any Operating Property or Operating
Asset (other than any such arrangement involving a lease for a term,
including renewal rights, for not more than 3 years and leases between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries),
whereby such Operating Property or Operating Asset has been or is to be
sold or transferred by the Company or any Restricted Subsidiary to such
Person (herein referred to as a "Sale and Lease-Back Transaction"),
unless:
-15-
17
(a) the Company or such Restricted Subsidiary would, at the time of entering
into a Sale and Lease-Back transaction, be entitled to incur Indebtedness
secured by a lien on the Operating Property or Operating Asset to be
leased in an amount at least equal to the Attributable Debt in respect of
such Sale and Lease-Back Transaction without equally and ratably securing
the Securities of the series created by the Third Supplemental Indenture
pursuant to Section 1009; or
(b) the proceeds of the sale of the Operating Property or Operating Asset to
be leased are at least equal to the fair market value of such Operating
Property or Operating Asset (as determined by the chief financial officer
or chief accounting officer of the Company) and an amount in cash equal to
the net proceeds from the sale of the Operating Property or Operating
Asset so leased is applied, within 180 days of the effective date of any
such Sale and Lease-Back Transaction, to the purchase or acquisition (or,
in the case of Operating Property, the construction) of Operating Property
or Operating Assets or to the retirement, repurchase, redemption or
repayment (other than at maturity or pursuant to a mandatory sinking fund
or redemption provision and other than Indebtedness owned by the Company
or any Restricted Subsidiary) of Securities of the series created by the
Third Supplemental Indenture or of Funded Indebtedness of the Company
ranking on a parity with or senior to the Securities of the series created
by the Third Supplemental Indenture, or in the case of a Sale and
Lease-Back Transaction by a Restricted Subsidiary, of Funded Indebtedness
of such Restricted Subsidiary; provided that in connection with any such
retirement, any related loan commitment or the like shall be reduced in an
amount equal to the principal amount so retired.
The foregoing restriction shall not apply to, in the case of any Operating
Property or Operating Asset acquired or constructed subsequent to the date
eighteen months prior to the date of this Indenture, any Sale and Lease-Back
Transaction with respect to such Operating Asset or Operating Property
(including presently owned real property upon which such Operating Property is
to be constructed) if a binding commitment is entered into with respect to such
Sale and Lease-Back Transaction within 18 months after the later of the
acquisition of the Operating Property or Operating Asset or the completion of
improvements or construction thereon or commencement of full operations at such
Operating Property (which in the case of a retail store is the opening of the
store for business to the public).
-16-
18
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Defeasance or
Covenant Defeasance.
The Company may at its option by Board Resolution, at any
time, elect to have either Section 1302 or Section 1303 applied to the
Outstanding Securities of this series upon compliance with the
conditions set forth below in this Article Thirteen.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section
1301 applicable to this Section, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Securities of
the series created by the Third Supplemental Indenture on the date the
conditions set forth below are satisfied (hereinafter, "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities of
this series and to have satisfied all its other obligations under such
Securities of this series and this Indenture insofar as such Securities of this
series are concerned (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (A) the
rights of Holders of Outstanding Securities of this series to receive, solely
from the trust fund described in Section 1304 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any) and
interest on such securities when such payments are due, (B) the Company's
obligations with respect to such Securities of this series under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and (D) this Article Thirteen. Subject to compliance
with this Article Thirteen, the Company may exercise its option under this
Section 1302 notwithstanding the prior exercise of its option under Section
1303.
Section 1303. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section
1301 applicable to this Section, the Company shall be released from its
obligations under Section 501(4) (in respect of the covenants in Sections 1008
through 1010), Section 801 and Sections 1008 through 1010, the Securities of
this series and the Holders of Securities of this series, on and after the date
the conditions set forth below are satisfied (hereinafter, "covenant
Defeasance"). For this purpose, such covenant Defeasance means that the Company
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such
-17-
19
Section, whether directly or indirectly, by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document, but the remainder of this
Indenture and such Securities of this series shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1302 or Section 1303 to the Outstanding Securities of this series:
(1) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 609 who shall agree to
comply with the provisions of this Article Thirteen applicable
to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such
Securities of this series, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with
their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and
discharge, the principal of, premium, if any, and each
installment of interest on the Securities of this series on
the Stated Maturity of such principal or installment of
interest on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such
Securities of this series. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations
of the United States of America for the payment of which its
full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the
Company thereof, and shall also include a depository receipt
issued by a bank
-18-
20
(as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from
any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of
or interest on the U.S. Government Obligation evidenced by
such depositary receipt.
(2) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default shall
have occurred and be continuing on the date of such deposit
or, insofar as subsections 501(6) and (7) are concerned, at
any time during the period ending on the 121st day after the
date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such
period).
(3) Such Defeasance or covenant Defeasance shall not
cause the Trustee to have a conflicting interest as defined in
Section 608 and for purposes of the Trust Indenture Act with
respect to any securities of the Company.
(4) Such Defeasance or covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound.
(5) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to
either the Defeasance under Section 1302 or the covenant
Defeasance under Section 1303 (as the case may be) have been
complied with.
(6) In the case of an election under Section 1302,
the Company shall have delivered to the Trustee an Opinion of
Counsel stating that (x) the Company has received from, or
there has been published by, the Internal Revenue Service a
-19-
21
ruling, or (y) since the date of this Third Supplemental
Indenture there has been a change in the applicable Federal
income tax law, in either case to the effect that and based
thereon such opinion shall confirm that, the Holders of the
Outstanding Securities of this series will not recognize
income, gain or loss for Federal income tax purposes as a
result of such Defeasance or covenant Defeasance and will be
subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if
such Defeasance or covenant Defeasance had not occurred."
Section 1305. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section
1003, all money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying
trusteecollectively, for purposes of this Section 1305, the "Trustee")
pursuant to Section 1304 in respect of the Securities of this series
shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities of this series and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine,
to the Holders of such Securities of this series, of all sums due and
to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 1304 or the
principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders
of the Outstanding Securities of this series.
Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from
time to time upon Company Request any money or U.S. Government
Obligations held by it as provided in Section 1304 which, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Defeasance or covenant
Defeasance.
Section 1306. Reinstatement.
-20-
22
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1302 or 1303 by reason of any order or
judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities of this series
shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with
Section 1302 or 1303; provided, however, that if the Company makes any
payment of principal of (and premium, if any) or interest on any
Security of this series following the reinstatement of its obligations,
the Company shall be subjugated to the rights of the Holders of such
Securities of this series to receive such payment from the money held
by the Trustee or the Paying Agent.
Section 404. Redemption of Securities.
With respect to Securities of this series, Section 1101 of the
Indenture shall be deleted in its entirety and the following shall be
substituted therefor:
"Section 1101. Optional Redemption.
The Securities will be redeemable, in whole or in part, at the
option of the Company at any time at a redemption price equal
to the greater of (i) 100% of the principal amount of such
Securities or (ii) as determined by a Quotation Agent, the sum
of the present values of the remaining scheduled payments of
principal and interest thereon (not including any portion of
such payments of interest accrued as of the date of
redemption) discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate plus 12.5
basis points plus, in each case, accrued interest thereon to
the date of redemption."
ARTICLE FIVE
MISCELLANEOUS
Section 501. Miscellaneous.
(a) The Trustee accepts the trusts created by the Indenture,
as supplemented by this Third Supplemental Indenture, and agrees to perform the
same upon the terms and conditions of the Indenture, as supplemented by this
Third Supplemental Indenture.
-21-
23
(b) The recitals contained herein shall be taken as statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Third Supplemental Indenture.
(c) All capitalized terms used and not defined herein shall
have the respective meanings assigned to them in the Indenture.
(d) Each of the Company and the Trustee makes and reaffirms as
of the date of execution of this Third Supplemental Indenture all of its
respective representations, covenants and agreements set forth in the Indenture.
(e) All covenants and agreements in this Third Supplemental
Indenture by the Company or the Trustee shall bind its respective successors and
assigns, whether so expressed or not.
(f) In case any provisions in this Third Supplemental
Indenture 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.
(g) Nothing in this Third Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and their
successors under the Indenture and the Holders of the series of Securities
created hereby, any benefit or any legal or equitable right, remedy or claim
under the Indenture.
(h) If any provision hereof limits, qualifies or conflicts
with a provision of the Trust Indenture Act of 1939, as may be amended from time
to time, that is required under such Act to be a part of and govern this Third
Supplemental Indenture, the latter provision shall control. If any provision
hereof modifies or excludes any provision of such Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Third
Supplemental Indenture as so modified or excluded, as the case may be.
(i) This Third Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York.
(j) All amendments to the Indenture made hereby shall have
effect only with respect to the series of Securities created hereby.
(k) All provisions of this Third Supplemental Indenture shall
be deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented by this Third Supplemental Indenture, shall be read,
taken and construed as one and the same instrument.
-22-
24
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-23-
25
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
THE KROGER CO.
By
--------------------------------
Name:
Title:
Attest:
- -------------------
Assistant Secretary
STAR BANK, NATIONAL ASSOCIATION,
as Trustee
By
--------------------------------
Name:
Title:
Attest:
- -------------------
Assistant Secretary
-24-
26
STATE OF _________ )
) ss.:
COUNTY OF _______ )
On the th day of December, 1998, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is _____________ of The Kroger Co., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
----------------------------------------
STATE OF __________ )
) ss.:
COUNTY OF ________ )
On the th day of December, 1998, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he is a _____________ of Star Bank, National Association, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
----------------------------------------
-25-