1
Exhibit 10.13
AMENDMENT
Dated as of December 18, 1998
of
LEASE, SECURITY AGREEMENT AND FINANCING STATEMENT
Dated as of March 11, 1998
Among
WILMINGTON TRUST COMPANY
not in its individual capacity, but solely as Owner Trustee under the
FMS TRUST 1997-1
as Lessor
and
FRED MEYER, INC.
as Lessee
2
AMENDMENT, dated as of December 18, 1998 (this "Amendment"), of the
Lease, Security and Financing Statement, dated as of March 11, 1998 (as amended,
the "Lease"), among WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Owner Trustee under the FMS TRUST 1997-1, a Delaware business trust,
having its principal offices at Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware, 19890-0001, as lessor (the
"Lessor"), and FRED MEYER, INC., as a lessee (the "Lessee") and whose principal
offices are located at 3800 SE 22nd Avenue, P.O. Box 4214, Portland, Oregon,
97242.
W I T N E S S E T H :
WHEREAS, The Kroger Co. ("Kroger") has agreed, subject to certain
conditions, to acquire all of the outstanding common stock of the Lessee in
exchange for newly issued shares of common stock of Kroger pursuant to a merger
of a wholly owned subsidiary of Kroger into the Lessee (the "Acquisition"); and
WHEREAS, in connection with the Acquisition, Kroger and the Lessee
have requested and upon the effectiveness of this Amendment, the parties hereto
have agreed, that certain provisions of the Lease be amended upon the terms and
conditions set forth below to permit the consummation of the Acquisition;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Defined Terms. Terms defined in the Lease and used herein
shall have the meanings given to them in the Lease. Unless otherwise indicated,
all Section and subsection references are to the Lease.
SECTION 2. Amendments to Section 17. Section 17 of the Lease is hereby
amended as follows:
(a) by amending and restating paragraph (d) to read in its entirety as
follows:
"(d) Lessee shall fail to observe or perform any covenant,
condition or agreement contained in Sections 9.4(b), 9.4(e)(i) (with
respect to the maintenance of the Lessee's existence) or 9.4(e)(ii) or
in Section 9.5 of the Participation Agreement or Kroger shall fail to
observe or perform any covenant, condition or agreement contained in
Section 4.2 or 4.3 of the Kroger Guarantee; or";
(b) by amending and restating paragraphs (g) and (h) to read in their
respective entireties as follows:
"(g) Kroger or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against Kroger or any of its Subsidiaries seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization,
3
2
arrangement, adjustment, protection, relief, or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or Kroger or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this paragraph (g); or
(h) [Intentionally Omitted]";
(c) by amending and restating paragraph (l) to read in its entirety as
following:
(l) Kroger or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Indebtedness that is
outstanding in a principal or notional amount of at least $40,000,000
in the aggregate (but excluding Indebtedness outstanding hereunder) of
Kroger or such Subsidiary (as the case may be), when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Indebtedness; or any other event shall
occur or condition shall exist under any agreement or instrument
relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and payable, or
required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased,
or an offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case prior to the stated
maturity thereof; or";
(d) by amending and restating paragraphs (m) and (n) to read in their
entireties as follows:
"(m) (1) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code), shall have occurred with respect to
any Plan or Plans that reasonably could be expected to result in
liability of Kroger or any of its Subsidiaries to the PBGC or to a
Plan in an aggregate amount exceeding $40,000,000 and, within 30 days
after Kroger has provided written notice of any such Reportable Event
to the Lessor, the Lessor shall have notified Kroger in writing that
(i) the Lessor has determined that, on the basis of such Reportable
Event or Reportable Events or the failure to make a required payment,
there are reasonable grounds (A) for the
4
3
termination of such Plan or Plans by the PBGC, (B) for the appointment
by the appropriate United States District Court of a trustee to
administer such Plan or Plans or (C) for the imposition of a lien in
favor of a Plan and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the PBGC shall
institute proceedings (including giving notice of intent thereof) to
terminate any Plan or Plans; or (2) (A) (i) Kroger or any ERISA
Affiliate of Kroger shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) Kroger or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or is not
in fact contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of the Withdrawal Liability
specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date or dates of such
notification), either (x) exceeds $100,000,000 or requires payments
exceeding $40,000,000 in any year or (y) is less than $100,000,000 but
any Withdrawal Liability payment remains unpaid 30 days after such
payment is due (unless such Withdrawal Liability is being contested in
good faith by Kroger or any ERISA Affiliate of Kroger), or (B) Kroger
or any ERISA Affiliate of Kroger shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV
of ERISA, if solely as a result of such reorganization or termination
the aggregate contributions of Kroger and its ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or have been or
are being terminated have been or will be increased over the amounts
required to be contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding $40,000,000; or
(n) (1) any judgment or order for the payment of money in excess
of $40,000,000 shall be rendered against Kroger or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect; provided, however, that any such
judgment or order shall not be an Event of Default under this Section
6.1(j) if and for so long as (i) the amount of such judgment or order
is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof and (ii) such
insurer, which shall be rated at least "A" by A.M. Best Company, has
been notified of, and has not disputed the claim made for payment of,
the amount of such judgment or order; or (2) any non-monetary judgment
or order shall be rendered against Kroger or any of its Subsidiaries
that could be reasonably expected to have a Material Adverse Effect,
and there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or"
5
4
SECTION 3. Waiver of Events of Default. Any Default or Event of
Default arising out of any Change in Control resulting from the Acquisition is
hereby waived.
SECTION 4. Conditions to Effectiveness. This Amendment shall become
effective as of the date (the "Effective Date") of consummation of the
Acquisition and upon receipt by the Syndication Agent of each of the following:
(a) counterparts of this Amendment, duly executed and delivered by the
Lessor, the Lessee, the Owner Trustee and the Investors;
(b) counterparts of a Guarantee, substantially in the form of Exhibit
B to this Amendment (the "Kroger Guarantee"), duly executed and delivered by
Kroger and each other Kroger Guarantor;
(c) an opinion of counsel to the Lessee and the Borrower, as to the
due authorization and execution by the Lessee and the Borrower of this Amendment
and to such other matters, as is customary for similar transactions, as may be
reasonably requested by the Syndication Agent;
(d) an opinion of counsel to Kroger as to the due authorization and
execution by the Kroger Guarantors of the Kroger Guarantee and to such other
matters, as is customary for similar transactions, as may be reasonably
requested by the Syndication Agent;
(e) such documents and certificates as the Lead Arranger and Book
Manager and its counsel may reasonably request relating to this Amendment, all
in form and substance satisfactory to the Lead Arranger and Book Manager and its
counsel;
(f) satisfactory evidence that the Amendment and Restatement, dated as
of December 18, 1998, of the Loan Agreement, has been executed and delivered by
the requisite parties and all conditions precedent to the effectiveness thereof
have been satisfied.
(g) satisfactory evidence that the Participation Agreement Amendment
and the Credit Agreement Amendment have been duly executed and delivered by the
requisite parties and all conditions precedent to the effectiveness thereof have
been satisfied;
(h) satisfactory evidence that (i) the Current Synthetic Lease
Facility of the Borrower has been terminated and all Loans outstanding under the
Credit Agreement have been paid in full, (ii) the commitments under the Loan
Agreement have been reduced by $500,000,000 or (iii) a combination thereof
resulting in the reduction of commitments under the Loan Agreement and
Commitments under the Credit Agreement in an aggregate amount of $500,000,000;
(i) the surviving corporation following the Acquisition has confirmed
in writing its assumption of all of the obligations of FMI under the Operative
Agreements; and
(j) the payment of all fees and other amounts payable in connection
with this Amendment.
6
5
SECTION 5. Payment of Expenses. The Lessee agrees to pay or reimburse
the Lead Arranger and Book Manager for all of its reasonable out-of-pocket costs
and expenses incurred in connection with this Amendment, any other documents
prepared in connection herewith and the transactions contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel.
SECTION 6. Continuing Effect of Lease. Except as expressly amended
herein, the Lease shall continue to be, and shall remain, in full force and
effect in accordance with its terms.
SECTION 7. Governing Law; Counterparts. THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This
Amendment may be executed by the parties hereto in any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
7
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
FRED MEYER, INC., as Lessee
By: JAMES C. AALBERG
-------------------------------------
FMS TRUST 1997-1, as Lessor
By WILMINGTON TRUST COMPANY, not
individually but solely as Owner Trustee
By: /s/
-------------------------------------
Title: Assistant Vice President
WILMINGTON TRUST COMPANY, not
individually but solely as Owner Trustee
By: /s/
-------------------------------------
Title: Assistant Vice President
The foregoing Amendment is hereby
consented to and approved by each of the
undersigned:
SOCIETE GENERALE FINANCIAL CORPORATION,
as Investor
By: /s/
-------------------------------------
Title: Vice President