GUARANTY
As of September 10, 1998
Brazos Markets Development, L.P. (the "LESSOR")
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Mr. Gregory C. Greene
Re: Agreement for Ground Lease, Ground Lease Agreement ("GROUND LEASE"),
Agreement for Facilities Lease and Facilities Lease Agreement
("FACILITIES LEASE") (collectively, the "LEASE DOCUMENTS") each
between Brazos Markets Development, L.P., a Delaware corporation, and
RANDALL'S FOOD & DRUGS, INC., a Delaware corporation and RANDALL'S
FOOD MARKETS, INC., a Texas corporation (collectively, the "LESSEE"),
and each effective as of September 10, 1998 (the "CLOSING DATE")
Gentlemen:
1. GUARANTY. For value received, and in consideration of your entering
into the Lease Documents with the Lessee, the undersigned (the "GUARANTOR") does
hereby unconditionally, irrevocably, and absolutely guarantee (a) the full
payment when due, whether at the stated due date, by acceleration or otherwise,
of any and all rent, indebtedness and other amounts of every kind howsoever
created, arising, or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to you by the Lessee pursuant to
the Lease Documents and that certain Consent and Agreement dated as of September
10, 1998 among the Lessee, the Borrower, and the Agent, as it may be amended or
supplemented from time to time (the "LESSEE CONSENT"), and (b) the performance
by the Lessee of its obligations under the (i) Lease Documents pursuant to the
terms of the Lease Documents and (ii) the Lessee Consent pursuant to the terms
of the Lessee Consent (all such obligations being hereinafter collectively
called the "LIABILITIES"). The Guarantor hereby agrees that upon any default by
the Lessee in the payment of any of the Liabilities when and as due or in the
performance of its other obligations thereunder, it will, upon written demand by
the Lessor, forthwith pay the same immediately or perform or cause Lessee to
perform such obligations.
2. GUARANTY CONTINUING, ABSOLUTE, UNLIMITED. This Guaranty is a
continuing, irrevocable, absolute guaranty of performance and payment as a
primary obligor and not as a surety. This Guaranty shall apply to all
Liabilities. The Liabilities shall be conclusively presumed to have been
created in reliance on this Guaranty. You shall not be required to proceed
first against the Lessee or any other person, firm or corporation or against any
property securing any of the Liabilities before resorting to the Guarantor for
payment. To the extent permitted by applicable law, this Guaranty shall be
construed as a guarantee of payment without regard to the enforceability of any
of the Liabilities, the rejection of the Lease Documents in bankruptcy, or any
limitation of claims against the Lessee, and notwithstanding any claim, defense
(other than payment or performance by the Guarantor) or right of set-off which
the Lessee or the Guarantor may have against you, including any such claim,
defense or right of set-off based on any present or future law or order of any
government (DE JURE or DE FACTO), or of any agency thereof or court of law
purporting to reduce, amend or otherwise affect any obligations of the Lessee,
or any other obligor, or to vary any terms of payment, and without regard to any
other circumstances which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. The Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time payment to you of the Liabilities or any part thereof is rescinded or must
otherwise be returned by you to the Guarantor upon the insolvency, bankruptcy or
reorganization of the Lessee, or otherwise, as though such payment to you had
not been made. To the extent permitted by applicable law, the Guarantor's
obligation to fully pay or perform the Liabilities and any remedy for the
enforcement thereof shall not be impaired, modified, released, or limited in any
way by any impairment, modification, release, or limitation of the liability of
Lessee or its bankruptcy estate, resulting from the operation of any present or
future provision of the Bankruptcy Code or any Debtor Relief Law or from the
decision of any court interpreting the same.
FORM OF GUARANTY - Page 1
3. GUARANTY NOT AFFECTED BY CHANGE IN SECURITY OR OTHER ACTIONS. You
may, from time to time, without the consent of or notice to the Guarantor, take
any or all of the following actions without impairing or affecting the
Guarantor's obligations under this Guaranty or releasing or exonerating the
Guarantor from any of its liabilities hereunder:
(a) retain or obtain a security interest in any property to secure
any of the Liabilities or any obligation hereunder;
(b) retain or obtain the primary or secondary liability of any party
or parties, in addition to the Guarantor, with respect to any of the
Liabilities;
(c) extend the time or change the manner, place or terms of payment
of, or renew or amend any note or other instrument evidencing the Liabilities or
any part thereof, or amend in any manner any agreement relating thereto;
(d) release or compromise, in whole or in part, or accept full or
partial payment for, any of the Liabilities hereby guaranteed, or any liability
of any nature of any other party or parties with respect to the Liabilities or
any security therefor;
(e) subordinate the payment of all or any part of the Liabilities to
the payment of any liability of the Lessee to creditors of the Lessee other than
you or the Guarantor;
(f) enforce your security interest, if any, in all or any properties
securing any of the Liabilities or any obligations hereunder in order to obtain
full or partial payment of the Liabilities then outstanding; or
(g) release or fail to perfect, protect, or enforce your security
interest, if any, in all or any properties securing any of the Liabilities or
any obligation hereunder, or permit any substitution or exchange for any such
property.
4. WAIVERS. The Guarantor hereby expressly waives to the extent
permitted by law:
(a) notice of acceptance of this Guaranty;
(b) notice of the existence or incurrence of any or all of the
Liabilities;
(c) presentment, demand, notice of dishonor, protest, and all other
notices whatsoever (except the written demand referred to in SECTION 1
hereinabove);
(d) any requirement that proceedings first be instituted by you
against the Lessee;
(e) all diligence in collection or protection of or realization upon
the Liabilities or any part thereof, or any obligation hereunder, or any
collateral for any of the foregoing;
(f) any rights or defenses based on the Lessor's election of
remedies, including any defense to the Lessor's action to recover any deficiency
after a non-judicial sale; and
(g) the occurrence of every other condition precedent to which the
Guarantor might otherwise be entitled.
5. DEFINITIONS. As used in this Guaranty, the following terms will have
the following meanings, unless the context otherwise requires:
FORM OF GUARANTY - Page 2
"ACQUIRED EBITDA" shall mean, with respect to any Acquired Entity or
Business, any Controverted Restricted Subsidiary, any Sold Entity or Business or
any Converted Unrestricted Subsidiary (any of the foregoing, a "PRO FORMA
ENTITY") for any period, the sum of the amounts for such period of (a) income
from continuing operations before income taxes and extraordinary items, (b)
interest expense, (c) depreciation expense, (d) amortization expense, including
amortization of deferred financing fees, (e) non-recurring charges, (f) non-cash
charges, (g) losses on asset sales and (h) restructuring charges or reserves
LESS the sum of the amounts for such period of (i) non-recurring gains, (j)
non-cash gains and (k) gains on asset sales, all as determined on a
consolidated basis for such Pro Forma Equity in accordance with GAAP.
"ACQUIRED ENTITY OR BUSINESS" shall have the meaning provided in the
definition of the term "Consolidated EBITDA."
"ACQUISITION SUBSIDIARY" shall mean (a) any Subsidiary of the Guarantor
that is formed or acquired after June 27, 1997 in connection with Permitted
Acquisitions, PROVIDED that at such time (or promptly thereafter) the Guarantor
designates such Subsidiary an Acquisition Subsidiary in a written notice to the
Lessor, (b) any Restricted Subsidiary on June 27, 1997 subsequently
re-designated as an Acquisition Subsidiary by the Guarantor in a written
notice to the Lessor, PROVIDED that such re-designation shall be deemed to be
an investment on the date of such re-designation in an Acquisition Subsidiary
in an amount equal to the sum of (i) the net worth of such re-designated
Restricted Subsidiary immediately prior to such re-designation (such net
worth to be calculated without regard to any Subsidiary Guaranty or
Subsidiary Residual Guaranty provided by such re-designated Restricted
Subsidiary) and (ii) the aggregate principal amount of any Indebtedness owed
by such re-designated Restricted Subsidiary to the Guarantor or any other
Restricted Subsidiary immediately prior to such re-designation, all
calculated, except as set forth in the parenthetical to clause (i), on a
consolidated basis in accordance with GAAP, and (c) each Subsidiary of an
Acquisition Subsidiary; PROVIDED, HOWEVER, that (i) at the time of any
written re-designation by the Guarantor to the Lessor of any Acquisition
Subsidiary as a Restricted Subsidiary, the Acquisition Subsidiary so
re-designated shall no longer constitute an Acquisition Subsidiary, (ii) no
Acquisition Subsidiary may be re-designated as a Restricted Subsidiary if a
Default or Event of Default would result from such re-designation and (iii)
no Restricted Subsidiary may be re-designated as an Acquisition Subsidiary if
a Default or Event of Default would result from such re-designation. On or
promptly after the date of its formation, acquisition or re-designation, as
applicable, each Acquisition Subsidiary (other than an Acquisition Subsidiary
that is a Foreign Subsidiary) shall have entered into a tax sharing agreement
containing terms that, in the reasonable judgment of the Lessor, provide for
an appropriate allocation of tax liabilities and benefits.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (a) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (b) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"AGENT" means Chase Bank of Texas, National Association, a national banking
association, in its capacity as agent pursuant to ARTICLE 8 of the Credit
Agreement and any successor agent pursuant to SECTION 8.6 of the Credit
Agreement.
"ATTORNEY COSTS" means and includes all reasonable fees and disbursements
of any law firm or other external counsel, the reasonable allocated cost of
internal legal services and all reasonable disbursements of internal counsel.
"AVAILABLE AMOUNT" shall have the meaning ascribed to such term in the 1997
Credit Agreement.
"AVAILABLE FOREIGN INVESTMENT AMOUNT" shall mean, on any date (the
"INVESTMENT DATE"), an amount equal to (a) the sum of (i) $20,000,000, (ii) the
aggregate amount of all cash dividends and other cash distributions received by
the Guarantor or any Subsidiary Guarantor from any Restricted Foreign
Subsidiaries on or prior to the Investment Date (other than the portion of any
such dividends and other distributions that is used by the Guarantor or any
Subsidiary
FORM OF GUARANTY - Page 3
Guarantor to pay taxes), (iii) the aggregate amount of all cash repayments of
principal received by the Guarantor or any Subsidiary Guarantor from any
Restricted Foreign Subsidiaries on or prior to the Investment Date in respect
of loans made by the Guarantor or any Subsidiary Guarantor to such Restricted
Foreign Subsidiaries and (iv) the aggregate amount of all net cash proceeds
received by the Guarantor or any Subsidiary Guarantor in connection with the
sale, transfer or other disposition of its ownership interest in any
Restricted Foreign Subsidiary on or prior to the Investment Date MINUS (b)
the aggregate amount of any investments (including loans) made by the
Guarantor or any Restricted Subsidiary (other than any Restricted Foreign
Subsidiary) in or to Restricted Foreign Subsidiaries pursuant to SECTION
8(e)(x) or (xi) on or prior to the Investment Date.
"BANKRUPTCY CODE" shall have the meaning provided in SECTION 9(a)(v).
"BANKS" means the lenders listed on the signature pages of the Credit
Agreement and each Eligible Assignee (as defined in the Credit Agreement) that
shall become a party to the Credit Agreement pursuant to SECTION 9.6 thereof.
"BUSINESS DAY" means any day of the year other than a Saturday or Sunday or
any other day on which banks are not required or authorized to close in Houston,
Texas.
"CAPITAL EXPENDITURES" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including in
all events all amounts expended or capitalized under Capital Leases, but
excluding any amount representing capitalized interest) by the Guarantor and the
Restricted Subsidiaries during such period that, in conformity with GAAP, are or
are required to be included as additions during such period to property, plant
or equipment reflected in the consolidated balance sheet of the Guarantor and
its Subsidiaries, PROVIDED that the term "Capital Expenditures" shall not
include (a) expenditures made in connection with the replacement, substitution
or restoration of assets (i) to the extent financed from insurance proceeds paid
on account of the loss of or damage to the assets being replaced or restored or
(ii) with awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced, (b) the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment to the
extent that the gross amount of such purchase price is reduced by the credit
granted by the seller of such equipment for the equipment being traded in at
such time, (c) the purchase of plant, property or equipment made within one year
of the sale of any asset to the extent purchased with the proceeds of such sale
or (d) expenditures that constitute any part of Consolidated Lease Expense.
"CAPITALIZED LEASE OBLIGATIONS" shall mean, as applied to any Person, all
obligations under Capital Leases of such Person or any of its Subsidiaries, in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
"CAPITAL LEASE", as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is, or is required to be, accounted for as a capital lease
on the balance sheet of that Person.
"CHANGE OF CONTROL" shall mean and be deemed to have occurred if (a) (i)
KKR, its Affiliates and the Management Group shall at any time not own, in the
aggregate, directly or indirectly, beneficially and of record, at least 35% of
the outstanding Voting Stock of the Guarantor (other than as the result of one
or more widely distributed offerings of Guarantor Common Stock, in each case
whether by the Guarantor or by KKR, its Affiliates or the Management Group)
and/or (ii) any person, entity or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) shall at any time
have acquired direct or indirect beneficial ownership of a percentage of the
outstanding Voting Stock of the Guarantor that exceeds the percentage of such
Voting Stock then beneficiary owned, in the aggregate, by KKR, its Affiliates
and the Management Group, unless, in the case of either clause (i) or (ii)
above, KKR, its Affiliates and the Management Group have, at such time, the
right or the ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Guarantor;
(b) at any time Continuing Directors shall not constitute a majority of the
Board of Directors of the Guarantor; and/or (c) a Change of Control (as defined
in the Subordinated Note Indenture) shall occur.
FORM OF GUARANTY - Page 4
"CHASE" means Chase Bank of Texas, National Association, or its successors
or assigns.
"CLOSING DATE" has the meaning given such term in the introductory
paragraph.
"CLOSING DATE STORE" shall mean any Store that (a) is owned, leased or
operated by the Guarantor or any of the Restricted Subsidiaries and (b) was
opened for business by the Guarantor or a Restricted Subsidiary on or prior to
June 27, 1997.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Guaranty, and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"CONSOLIDATED EARNINGS" shall mean, for any period, "income from continuing
operations before income taxes and extraordinary items" of the Guarantor and the
Restricted Subsidiaries for such period, determined in a manner consistent with
the manner in which such amount was determined in accordance with the audited
financial statements referred to in SECTION 7(a)(i).
"CONSOLIDATED EBITDA" shall mean, for any period, the sum, without
duplication, of the amounts for such period of (a) Consolidated Earnings, (b)
Consolidated Interest Expense, (c) depreciation expense, (d) amortization
expense, including amortization of deferred financing fees, (e) non-recurring
charges, (f) non-cash charges, (g) losses on asset sales, (h) restructuring
charges or reserves (including charges incurred in connection with the closing,
exchange or replacement of Stores), (i) in the case of any period ending during
the fiscal year ending June 27, 1998, Transaction Expenses, (j) any expenses or
charges incurred in connection with any issuance of debt or equity securities,
(k) any fees and expenses related to Permitted Acquisitions and (l) any
deduction for minority interest expense LESS the sum of the amounts for such
period of (m) non-recurring gains, (n) non-cash gains and (o) gains on asset
sales, all as determined on a consolidated basis for the Guarantor and the
Restricted Subsidiaries in accordance with GAAP, PROVIDED that (i) except as
provided in clause (ii) below, there shall be excluded from Consolidated
Earnings for any period the income from continuing operations before income
taxes and extraordinary items of all Unrestricted Subsidiaries for such period
to the extent otherwise included in Consolidated Earnings, except to the extent
actually received in cash by the Guarantor or its Restricted Subsidiaries during
such period through dividends or other distributions, and (ii) for purposes of
the definition of the term "Permitted Acquisition" and SECTIONS 8(c), (j) and
(k), (x) there shall be included in determining Consolidated EBITDA for any
period (A) the Acquired EBITDA of any Person, property, business or asset (other
than an Unrestricted Subsidiary) acquired to the extent not subsequently sold,
transferred or otherwise disposed of (but not including the Acquired EBITDA of
any related Person, property, business or assets to the extent not so acquired)
by the Guarantor or any Restricted Subsidiary during such period (each such
Person, property, business or asset acquired and not subsequently so disposed
of, an "ACQUIRED ENTITY OR BUSINESS"), and the Acquired EBITDA of any
Unrestricted Subsidiary that is converted into a Restricted Subsidiary during
such period (each, a "CONVERTED RESTRICTED SUBSIDIARY"), in each case based on
the actual Acquired EBITDA of such Acquired Entity or Business or Converted
Restricted Subsidiary for such period (including the portion thereof occurring
prior to such acquisition or conversion) and (B) an adjustment in respect of
each Acquired Entity or Business equal to the amount of the Pro Forma Adjustment
with respect to such Acquired Entity or Business for such period (including the
portion thereof occurring prior to such acquisition or conversion) as specified
in the Pro Forma Adjustment Certificate delivered to the Lessor and (y) for
purposes of determining the Consolidated Total Debt to Consolidated EBITDA Ratio
only, there shall be excluded in determining Consolidated EBITDA for any period
the Acquired EBITDA of any Person, property, business or asset (other than an
Unrestricted Subsidiary) sold, transferred or otherwise disposed of by the
Guarantor or any Restricted Subsidiary during such period (each such Person,
property, business or asset so sold or disposed of, a "SOLD ENTITY OR
BUSINESS"), and the Acquired EBITDA of any Restricted Subsidiary that is
converted into an Unrestricted Subsidiary during such period (each, a "CONVERTED
UNRESTRICTED SUBSIDIARY"), in each case based on the actual Acquired EBITDA of
such Sold Entity or Business or Converted Unrestricted Subsidiary for such
period (including the portion thereof occurring prior to such sale, transfer,
disposition or conversion).
FORM OF GUARANTY - Page 5
"CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE RATIO" shall mean, as
of any date of determination, the ratio of (a) Consolidated EBITDA for the
relevant Test Period to (b) Consolidated Interest Expense for such Test Period.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, cash interest
expense (including that attributable to Capital Leases in accordance with GAAP),
net of cash interest income, of the Guarantor and the Restricted Subsidiaries on
a consolidated basis with respect to all outstanding Indebtedness of the
Guarantor and the Restricted Subsidiaries, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Hedge Agreements
(other than currency swap agreements, currency future or option contracts and
other similar agreements), but excluding, however, amortization of deferred
financing costs and any other amounts of non-cash interest, all as calculated on
a consolidated basis in accordance with GAAP, PROVIDED that (a) except as
provided in clause (b) below, there shall be excluded from Consolidated Interest
Expense for any period the cash interest expense (or income) of all Unrestricted
Subsidiaries for such period to the extent otherwise included in Consolidated
Interest Expense and (b) for purposes of the definition of the term "Permitted
Acquisition" and SECTIONS 8(c), (j) and (k), there shall be included in
determining Consolidated Interest Expense for any period the cash interest
expense (or income) of any Acquired Entity or Business acquired during such
period and of any Converted Restricted Subsidiary converted during such period,
in each case based on the cash interest expense (or income) of such Acquired
Entity or Business or Converted Restricted Subsidiary for such period (including
the portion thereof occurring prior to such acquisition or conversion) assuming
any Indebtedness incurred or repaid in connection with any such acquisition or
conversion had been incurred or prepaid on the first day of such period.
"CONSOLIDATED LEASE EXPENSE" shall mean, for any period, all rental
expenses of the Guarantor and the Restricted Subsidiaries during such period
under operating leases for real or personal property (including in connection
with Permitted Sale Leasebacks), excluding real estate taxes, insurance costs
and common area maintenance charges and net of sublease income, other than (a)
obligations under vehicle leases entered into in the ordinary course of
business, (b) all such rental expenses associated with Stores acquired after
June 27, 1997 to the extent that such rental expenses relate to operating leases
in effect at the time of (and immediately prior to) such acquisition and (c)
Capitalized Lease Obligations, all as determined on a consolidated basis in
accordance with GAAP, PROVIDED that there shall be excluded from Consolidated
Lease Expense for any period the rental expenses of all Unrestricted
Subsidiaries for such period to the extent otherwise included in Consolidated
Lease Expense.
"CONSOLIDATED NET INCOME" shall mean, for any period, the sum of (a) the
consolidated net income (or loss) of the Guarantor and the Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, and
(b) the Distribution System Amount for such period to the extent otherwise
deducted in arriving at such Consolidated Net Income.
"CONSOLIDATED TOTAL DEBT" shall mean, as of any date of determination, (a)
the sum of (i) all Indebtedness of the Guarantor and the Restricted Subsidiaries
for borrowed money outstanding on such date and (ii) all Capitalized Lease
Obligations of the Guarantor and the Restricted Subsidiaries outstanding on such
date, all calculated on a consolidated basis in accordance with GAAP MINUS (b)
aggregate amount of cash included in the cash accounts listed on the
consolidated balance sheet of the Guarantor and the Restricted Subsidiaries as
at such date to the extent the use thereof for application to payment of
Indebtedness is not prohibited by law or any contract to which the Guarantor or
any of the Restricted Subsidiaries is a party.
"CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA RATIO" shall mean, as of
any date of determination, the ratio of (a) Consolidated Total Debt as of the
last day of the relevant Test Period to (b) Consolidated EBITDA for such Test
Period.
"CONTINUING DIRECTOR" shall mean, at any date, an individual (a) who is a
member of the Board of Directors of the Guarantor on the date hereof, (b) who,
as at such date, has been a member of such Board of Directors for at least the
12 preceding months, (c) who has been nominated to be a member of such Board of
Directors, directly or indirectly,
FORM OF GUARANTY - Page 6
by KKR or Persons nominated by KKR or (d) who has been nominated to be a
member of such Board of Directors by a majority of the other Continuing
Directors then in office.
"CONVERTED RESTRICTED SUBSIDIARY" shall have the meaning provided in the
definition of the term "Consolidated EBITDA."
"CONVERTED UNRESTRICTED SUBSIDIARY" shall have the meaning provided in the
definition of the term "Consolidated EBITDA."
"CORRESPONDING PROVISION" has the meaning set forth in SECTION 28.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as of
September 10, 1998, by and among Lessor , as Borrower, Chase Bank of Texas,
National Association, as Agent, and the Banks named therein, as it may be
amended, amended and restated, modified or supplemented from time to time.
"CUMULATIVE CONSOLIDATED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS"
means, as of any date of determination, Consolidated Net Income less cash
dividends paid with respect to preferred stock for the period (taken as one
accounting period) commencing on the Closing Date and ending on the last day of
the most recent fiscal quarter for which Section 7(a) Financials have been
delivered to the Lessor under SECTION 7(a).
"DEBTOR RELIEF LAW" means the Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar laws
from time to time in effect affecting the rights of creditors generally.
"DEFAULT" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"DISTRIBUTION CAPITAL EXPENDITURES" shall mean Capital Expenditures by the
Guarantor and the Restricted Subsidiaries in connection with the expansion of
the Guarantor's self-distribution capabilities.
"DISTRIBUTION SYSTEM AMOUNT" shall mean, for any period, non-recurring
expenses for such period that are not capitalized and that are incurred in
connection with the expansion of the Guarantor's self-distribution capabilities.
"DIVIDENDS" shall have the meaning provided in SECTION 8(f).
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary of the Guarantor that is
organized under the laws of the United States, any state or territory thereof,
or the District of Columbia.
"ENVIRONMENTAL CLAIMS" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Guarantor or any of its Subsidiaries (a) in the ordinary course of such
Person's business or (b) as required in connection with a financing transaction
or an acquisition or disposition of real estate) or proceedings relating in any
way to any Environmental Law or any permit issued, or any approval given, under
any such Environmental Law (hereinafter, "CLAIMS"), including, without
limitation, (i) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (ii) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" shall mean any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code and rule of common law now
or hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree
FORM OF GUARANTY - Page 7
or judgment, relating to the environmental, human health or safety or
Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in
effect at the date of this Guaranty and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean each person (as defined in Section 3(9) of
ERISA) that together with the Guarantor or a Subsidiary would be deemed to be a
"single employer" within the meaning of Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as single employer under Section 414 of the Code.
"EVENT OF DEFAULT" shall have the meaning specified in SECTION 9.
"FACILITIES LEASE" has the meaning given such term in the introductory
paragraph.
"FACILITY" has the meaning set forth in the Facilities Lease.
"FOREIGN SUBSIDIARY" shall mean each Subsidiary of the Guarantor that is
not a Domestic Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time; PROVIDED, HOWEVER, that if
there occurs after the date hereof any change in GAAP that affects in any
respect the calculation of any covenant contained in SECTION 8, the Lessor and
the Guarantor shall negotiate in good faith amendments to the provisions of this
Guaranty that relate to the calculation of such covenant with the intent of
having the respective positions of the Lessor and the Guarantor after such
change in GAAP conform as nearly as possible to their respective positions as of
the date of this Guaranty and, until any such amendments have been agreed upon,
the covenants in SECTION 8 shall be calculated as if no such change in GAAP has
occurred.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GROUND" means the Property (as defined in the Ground Lease).
"GROUND LEASE" has the meaning given such term in the introductory
paragraph.
"GUARANTEE OBLIGATIONS" shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness of any other
Person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such Indebtedness or any property constituting
direct or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such Indebtedness or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
Indebtedness of the ability of the primary obligor to make payment of such
Indebtedness or (d) otherwise to assure or hold harmless the owner of such
Indebtedness against loss in respect thereof; PROVIDED, HOWEVER, that the term
"Guarantee Obligations" shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the Indebtedness in respect of which such Guarantee
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"GUARANTOR COMMON STOCK" shall mean any class of outstanding common stock
of the Guarantor as of the Closing Date.
FORM OF GUARANTY - Page 8
"GUARANTOR" has the meaning given such term in SECTION 1 hereof.
"HAZARDOUS MATERIALS" shall mean (a) any petroleum or petroleum products,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contains dielectric fluid containing
regulated levels of polychlorinated biphenyls, and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," "toxic substances," "toxic pollutants,"
"contaminants," or "pollutants," or words of similar import, under any
applicable Environmental Law; and (c) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority.
"HEDGE AGREEMENTS" shall mean interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements entered into by the
Guarantor in order to protect the Guarantor or any of the Restricted
Subsidiaries against fluctuations in interest rates or currency exchange rates.
"INDEMNIFIED PERSON" has the meaning given such term in SECTION 26(a) of
this Guaranty.
"INDEBTEDNESS" of any Person shall mean (a) all indebtedness of such Person
for borrowed money, (b) the deferred purchase price of assets or services that
in accordance with GAAP would be shown on the liability side of the balance
sheet of such Person, (c) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (d) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed, (e) all Capitalized Lease Obligations of such Person, (f) all
obligations of such Person under interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements and (g) without
duplication, all Guarantee Obligations of such Person, PROVIDED that
Indebtedness shall not include trade payables and accrued expenses, in each case
arising in the ordinary course of business.
"KKR" shall mean each of Kohlberg Kravis Roberts & Co., L.P. and KKR
Associates, L.P.
"LEASE DOCUMENTS" has the meaning given such term in the introductory
paragraph.
"LESSEE" has the meaning given such term in the introductory paragraph.
"LIABILITIES" has the meaning given such term in SECTION 1 of this
Guaranty.
"LEVEL I STATUS" shall mean, on any date, the Consolidated Total Debt to
Consolidated EBITDA Ratio is greater than or equal to 6.00:1.00 as of such date.
"LEVEL II STATUS" shall mean, on any date, the circumstance that Level I
Status does not exist and the Consolidated Total Debt to Consolidated EBITDA
Ratio is greater than or equal to 5.50:1.00 as of such date.
"LEVEL III STATUS" shall mean, on any date, the circumstance that neither
Level I Status nor Level II Status exists and the Consolidated Total Debt to
Consolidated EBITDA Ratio is greater than or equal to 5.00:1.00 as of such date.
"LEVEL IV STATUS" shall mean, on any date, the circumstance that none of
Level I Status, Level II Status or Level III Status exists and the Consolidated
Total Debt to Consolidated EBITDA Ratio is greater than or equal to 4.50:1.00 as
of such date.
"LEVEL V STATUS" shall mean, on any date, the circumstance that none of
Level I Status, Level II Status, Level III Status or Level IV Status exists and
the Consolidated Total Debt to Consolidated EBITDA Ratio is greater than or
FORM OF GUARANTY - Page 9
equal to 4.00:1.00 as of such date.
"LEVEL VI STATUS" shall mean, on any date, the circumstance that none of
Level I Status, Level II Status, Level III Status, Level IV Status or Level V
Status exists and the Consolidated Total Debt to Consolidated EBITDA Ratio is
greater than or equal to 3.50:1.00 as of such date.
"LEVEL VII STATUS" shall mean, on any date, the circumstance that none of
Level I Status, Level II Status, Level III Status, Level IV Status, Level V
Status or Level VI Status exists and the Consolidated Total Debt to Consolidated
EBITDA Ratio is greater than or equal to 3.00:1.00 as of such date.
"LEVEL VIII STATUS" shall mean, on any date, the circumstance that the
Consolidated Total Debt to Consolidated EBITDA Ratio is less than 3.00:1.00 as
of such date.
"LIEN" shall mean any mortgage, pledge, security interest, hypothecation,
assignment, lien (statutory or other) or similar encumbrance (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"MANAGEMENT GROUP" shall mean, at any time, the Chairman of the Board, the
President, the Executive Vice President or Vice President, the Treasurer and the
Secretary of the Guarantor at such time.
"MATERIAL" means a circumstance, standard or event that is deemed
"material" by Guarantor in its sole, but reasonable, determination.
"MATERIAL ADVERSE EFFECT" shall mean a circumstance or condition affecting
the business, assets, operations, properties or financial condition of the
Guarantor and its Subsidiaries taken as a whole that would materially adversely
affect (a) the ability of the Guarantor to perform its obligations under this
Guaranty or the Lessee to perform its obligations under any Lease Document or
(b) the rights and remedies of the Lessor under this Guaranty or under any Lease
Document, in each case if, but only if, such circumstance or condition has an
economic effect (on an after tax basis) which exceeds an amount equal to the
greater of (i) fifteen percent (15%) of the consolidated stockholders' equity
(determined in accordance with GAAP) of the Guarantor at the time of
determination and (ii) $40,000,000.
"MATERIAL SUBSIDIARY" shall mean, at any date of determination, any
Restricted Subsidiary of the Guarantor (a) whose total assets at the last day of
the Test Period ending on the last day of the most recent fiscal period for
which Section 7(a) Financials have been delivered were equal to or greater than
5% of the consolidated total assets of the Guarantor and the Restricted
Subsidiaries at such date or (b) whose gross revenues for such Test Period were
equal to or greater than 5% of the consolidated gross revenues of the Guarantor
and the Restricted Subsidiaries for such period, in each case determined in
accordance with GAAP.
"MINORITY INVESTMENT" shall mean any Person (other than a Subsidiary) in
which the Guarantor or any Restricted Subsidiary owns capital stock or other
equity interests.
"MOODY'S" shall mean Moody's Investors Service, Inc. or any successor by
merger or consolidation to its business.
"MORTGAGE" means each Deed of Trust, Security Agreement, Assignment of
Rents, and Fixture Filing executed by the Lessor to the trustee named therein,
for the benefit of the Agent on behalf of the Banks, substantially in the form
of Exhibit "C" attached to the Credit Agreement.
"MORTGAGED PREMISES" means the property made subject to the Mortgage, which
property is subject to the Ground Lease and the Facilities Lease.
"1997 CREDIT AGREEMENT" means that certain Credit Agreement dated as of
June 27, 1997 among Guarantor,
FORM OF GUARANTY - Page 10
The Chase Manhattan Bank, as Administrative Agent, National Westminster Bank
PLC, as Syndication Agent, Citicorp USA, Inc., as Documentation Agent, and
the other financial institutions from time to time party thereto, as the same
may be amended, amended and restated, renewed, extended or otherwise modified
or supplemented from time to time and together with any one or more credit
agreements or similar instruments, agreements or documents executed from time
to time in respect of any financing arrangements to replace, or which are in
substitution for, the financing arrangement evidenced thereby.
"OPERATING LEASE" means an operating lease determined in accordance with
GAAP.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PERMITTED ACQUISITION" shall mean the acquisition, by merger or otherwise,
by the Guarantor or any of the Restricted Subsidiaries of assets or capital
stock or other equity interests, so long as (a) such acquisition and all
transactions related thereto shall be consummated in accordance with applicable
law; (b) such acquisition shall, in the case of the acquisition of capital stock
or other equity interests by the Guarantor or any Restricted Domestic
Subsidiary, result in the issuer of such capital stock or other equity interests
becoming a Restricted Domestic Subsidiary and a direct Restricted Domestic
Subsidiary in the case of such an acquisition by the Guarantor; (c) after giving
effect to such acquisition, no Default or Event of Default shall have occurred
and be continuing; and (d) the Guarantor shall be in compliance, on a pro forma
basis after giving effect to such acquisition (including any Indebtedness
assumed or permitted to exist or incurred pursuant to SECTIONS 8(a)(x) and (xi),
respectively, and any related Pro Forma Adjustment), with the covenants set
forth in SECTIONS 8(i), (j) and (k), as such covenants are recomputed as at the
last day of the most recently ended Test Period under such Sections as if such
acquisition had occurred on the first day of such Test Period.
"PERMITTED INVESTMENTS" shall mean (a) securities issued or unconditionally
guaranteed by the United States government or any agency or instrumentality
thereof, in each case having maturities of not more than 24 months from the date
of acquisition thereof; (b) securities issued by any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof or any political subdivision of any such state or any
public instrumentality thereof having maturities of not more than 24 months from
the date of acquisition thereof and, at the time of acquisition, having an
investment grade rating generally obtainable from either S&P or Moody's (or, if
at any time neither S&P nor Moody's shall be rating such obligations, then from
another nationally recognized rating service); (c) commercial paper issued by
any Bank or any bank holding company owning any Bank; (d) commercial paper
maturing no more than 12 months after the date of creation thereof and, at the
time of acquisition, having a rating of at least A-2 or P-2 from either S&P or
Moody's (or, if at any time neither S&P nor Moody's shall be rating such
obligations, an equivalent rating from another nationally recognized rating
service); (e) domestic and Eurodollar certificates of deposit or bankers'
acceptances maturing no more than two years after the date of acquisition
thereof issued by any Bank or any other bank having combined capital and surplus
of not less than $250,000,000 in the case of domestic banks and $100,000,000 (or
the dollar equivalent thereof) in the case of foreign banks; (f) repurchase
agreements with a term of not more than 30 days for underlying securities of the
type described in clauses (a), (b) and (e) above entered into with any bank
meeting the qualifications specified in clause (e) above or securities dealers
or recognized national standing; (g) shares of investment companies that are
registered under the Investment Company Act of 1940 and invest solely in one or
more of the types of securities described in clauses (a) through (f) above; and
(h) in the case of investments by any Restricted Foreign Subsidiary, other
customarily utilized high-quality investments in the country where such
Restricted Foreign Subsidiary is located.
"PERMITTED LIENS" shall mean (a) Liens for taxes, assessments or
governmental charges or claims not yet due or which are being contested in good
faith and by appropriate proceedings for which appropriate reserves have been
established in accordance with GAAP; (b) Liens in respect of property or assets
of the Guarantor or any of its Subsidiaries imposed by law, such as carriers',
warehousemen's and mechanic's Liens and other similar Liens arising in the
ordinary course of business, in each case so long as such Liens arise in the
ordinary course of business and do not individually or in the aggregate have a
Material Adverse Effect; (c) Liens arising from judgments or decrees in
FORM OF GUARANTY - Page 11
circumstances not constituting an Event of Default under SECTION 9(a); (d) Liens
incurred or deposits made in connection with worker's compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business; (e) ground leases in
respect of real property on which facilities owned or leased by the Guarantor or
any of its Subsidiaries are located; (f) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any Material respect with the business of the
Guarantor and its Subsidiaries taken as a whole; (g) any interest or title of a
lessor or secured by a lessor's interest under any lease permitted by this
Guaranty; (h) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (i) Liens on goods the purchase price of which is financed
by a documentary letter of credit issued for the account of the Guarantor or any
of its Subsidiaries, PROVIDED that such Liens secures only the obligations of
the Guarantor or such Subsidiaries in respect of such letter of credit to the
extent permitted under SECTION 8(a); and (j) leases or subleases granted to
others not interfering in any Material respect with the business of the
Guarantor and its Subsidiaries, taken as a whole.
"PERMITTED SALE LEASEBACK" shall mean any Sale Leaseback consummated by the
Guarantor or any of the Restricted Subsidiaries after June 27, 1997 with respect
to one or more Stores, PROVIDED that such Sale Leaseback is consummated for fair
value as determined at the time of consummation in good faith by the Guarantor
and, in the case of any Permitted Sale Leaseback (or series of related Permitted
Sales Leasebacks) the aggregate proceeds of which exceed $20,000,000, the Board
of Directors of the Guarantor (which such determination may take into account
any retained interest or other investment of the Guarantor or such Restricted
Subsidiary in connection with, and any other Material economic terms of, such
Sale Leaseback).
"PERSON" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.
"PLAN" shall mean any multiemployer or single-employer plan, as defined in
Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within
any of the preceding five plan years maintained or contributed to by (or to
which there is or was an obligation to contribute or to make payments of) the
Guarantor, a Subsidiary or an ERISA Affiliate.
"PRO-FORMA ADJUSTMENT" shall mean, for any test period that includes any of
the six fiscal quarters first following any Permitted Acquisition, with respect
to the Acquired EBITDA of the applicable Acquired Entity or Business, the pro
forma increase or decrease in such Acquired EBITDA projected by the Guarantor in
good faith as a result of reasonably identifiable and supportable net cost
savings or additional net costs, as the case may be, realizable during such
period by combining the operations of such Acquired Entity or Business with the
operations of the Guarantor and its Subsidiaries, PROVIDED that so long as such
net cost savings or additional net costs will be realizable at any time during
such period, it may be assumed, for purposes of projecting such pro forma
increase or decrease to such Acquired EBITDA, that such net cost savings or
additional net costs will be realizable during the entire such period, PROVIDED
FURTHER that any such pro forma increase or decrease to such Acquired EBITDA
shall be without duplication for net cost savings or additional net costs
actually realized during such period and already included in such Acquired
EBITDA.
"PRO FORMA ADJUSTMENT CERTIFICATE" shall mean any certificate of an
Authorized Officer of the Guarantor delivered pursuant to SECTION 7(a)(viii) or
setting forth the information described in CLAUSE (4) to SECTION 7(a)(iv).
"PUTABLE SHARES" has the meaning set forth in the 1997 Credit Agreement.
"PUTABLE SHARE RESERVE FUND" shall mean the amount required for the
Guarantor to repurchase the Putable Shares following the Closing Date.
"REPLACEMENT CREDIT AGREEMENT" means, a credit agreement or financing
arrangement that amends, amends and restates, modifies, supplements, or
replaces, or which is in substitution for, the financing arrangement evidenced
FORM OF GUARANTY - Page 12
by the 1997 Credit Agreement.
"REPORTABLE EVENT" shall mean an event described in Section 4043 of ERISA
and the regulations thereof.
"REQUIREMENT OF LAW" shall mean, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or assets or to which such
Person or any of its property or assets is subject.
"RESTRICTED DOMESTIC SUBSIDIARY" shall mean each Restricted Subsidiary that
is also a Domestic Subsidiary.
"RESTRICTED FOREIGN SUBSIDIARY" shall mean any Foreign Subsidiary that is
also a Restricted Subsidiary.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Guarantor other
than an Unrestricted Subsidiary.
"SALE LEASEBACK" shall mean any transaction or series of related
transactions pursuant to which the Guarantor or any of the Restricted
Subsidiaries sells, transfers or otherwise disposes of any property, real or
personal, whether now owned or hereafter acquired, and thereafter rents or
leases such property or other property that it intends to use for substantially
the same purpose or purposes as the property being sold, transferred or
disposed.
"S&P" shall mean Standard & Poor's Ratings Service or any successor by
merger or consolidation to its business.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereof.
"SECTION 7(a) FINANCIALS" shall mean the financial statements delivered, or
required to be delivered, pursuant to SECTION 7(a)(i) or (ii) together with the
accompanying officer's certificate delivered, or required to be delivered,
pursuant to SECTION 7(a)(v).
"SOLD ENTITY OR BUSINESS" shall have the meaning provided in the definition
of the term "Consolidated EBITDA."
"SPECIFIED SUBSIDIARY" shall mean, at any date of determination, (a) any
Material Subsidiary or (b) any Unrestricted Subsidiary (i) whose total assets at
the last day of the Test Period ending on the last day of the most recent fiscal
period for which Section 7(a) Financials have been delivered were equal to or
greater than 15% of the consolidated total assets of the Guarantor and its
Subsidiaries at such date or (ii) whose gross revenues for such Test Period were
equal to or greater than 15% of the consolidated gross revenues of the Guarantor
and its Subsidiaries for such period, in each case determined in accordance with
GAAP.
"STATUS" shall mean, as to the Guarantor as of any date, the existence of
Level I Status, Level II Status, Level III Status, Level IV Status, Level V
Status, Level VI Status, Level VII Status or Level VIII Status, as the case may
be, on such date. Changes in Status resulting from changes in the Consolidated
Total Debt to Consolidated EBITDA Ratio shall become effective (the date of such
effectiveness, the "EFFECTIVE DATE") as of the first day following the last day
of the most recent fiscal year or period for which (a) Section 7(a) Financials
are delivered to the Lessor under SECTION 7(a) and (b) an officer's certificate
is delivered by the Guarantor to the Lessor setting forth, with respect to such
Section 7(a) Financials, the then-applicable Status, and shall remain in effect
until the next change to be effective pursuant to this definition, PROVIDED that
(i) if the Guarantor shall have made any payments in respect of interest or
commitment fees during the period (the "INTERIM PERIOD") from and including the
Effective Date to but excluding the date any change in Status is determined as
provided above, then the amount of the next such payment due on or after such
day shall be increased or decreased by an amount equal to any underpayment or
overpayment so made by the Guarantor during such Interim Period and (ii) each
determination of the Consolidated Total Debt to Consolidated EBITDA Ratio
pursuant to this definition shall be made with respect to the Test Period ending
at the end of the fiscal period covered
FORM OF GUARANTY - Page 13
by the relevant financial statements.
"STORES" shall mean any facility operated by the Guarantor or any of its
Subsidiaries as a grocery store or drug store, or part of such facility
(including, without limitation, related office buildings, parking lots or other
related real property), now or hereafter owned by the Guarantor or any of its
Subsidiaries, in each case including, without limitation, the land on which such
facility is located, all buildings and other improvements thereon, all fixtures,
furniture, equipment and other tangible personal property located in or used in
connection with such facility (other than motor vehicles) related to the
ownership, lease or operation of such facility, all whether now existing or
hereafter acquired.
"SUBORDINATED NOTE INDENTURE" shall mean the Indenture dated as of June 27,
1997, as the same may be amended, supplemented or otherwise modified from time
to time, between the Guarantor and Marine Midland Bank, as trustee, pursuant to
which the Subordinated Notes were issued.
"SUBORDINATED NOTES" shall mean the $150,000,000 aggregate principal amount
of Senior Subordinated Notes due 2007 of the Guarantor issued on or about June
27, 1997 pursuant to the Subordinated Note Indenture.
"SUBSIDIARY" of any Person shall mean and include (a) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Guarantor.
"SUBSIDIARY GUARANTY" shall mean each guaranty made by each Subsidiary
Guarantor substantially in the form of the Subsidiary Guaranty dated
concurrently herewith executed by Randall's Properties, Inc., a Delaware
corporation, in favor of the Lessor, as the same may be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY RESIDUAL GUARANTY" shall mean each guaranty made by each
Subsidiary Guarantor substantially in the form of the Subsidiary Residual
Guaranty dated concurrently herewith executed by Randall's Properties, Inc., a
Delaware corporation, in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY GUARANTOR" shall mean each Domestic Subsidiary of the Guarantor
that is a Restricted Subsidiary or is or becomes a party to a Subsidiary
Guaranty or Subsidiary Residual Guaranty.
"TEST PERIOD" shall mean, for any determination under this Guaranty, the
four consecutive fiscal quarters of the Guarantor then last ended.
"TRANSACTION EXPENSES" shall mean any fees or expenses incurred or paid by
the Guarantor or any of its Subsidiaries in connection with the Recapitalization
(as defined in the 1997 Credit Agreement), the financing therefor and the other
transactions contemplated hereby and thereby (including the Make-Whole Premium
(as defined in the 1997 Credit Agreement)).
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if any, by
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year, determined in accordance with Statement of
Financial Accounting Standards No. 87 as in effect on the date hereof, based
upon the actuarial assumptions that would be used by the Plan's actuary in a
termination of the Plan, exceeds the fair market value of the assets allocable
thereto.
"UNRESTRICTED SUBSIDIARY" shall mean (a) any Subsidiary of the Guarantor
that is formed or acquired after June 27, 1997, PROVIDED that at such time (or
promptly thereafter) the Guarantor designates such Subsidiary an
FORM OF GUARANTY - Page 14
Unrestricted Subsidiary in a written notice to the Lessor, (b) any Restricted
Subsidiary on June 27, 1997 subsequently re-designated as an Unrestricted
Subsidiary by the Guarantor in a written notice to the Lessor, PROVIDED that
such re-designation shall be deemed to be an investment on the date of such
re-designation in an Unrestricted Subsidiary in an amount equal to the sum of
(i) the net worth of such re-designated Restricted Subsidiary immediately
prior to such re-designation (such net worth to be calculated without regard
to any Subsidiary Guaranty or Subsidiary Residual Guaranty provided by such
re-designated Restricted Subsidiary) and (ii) the aggregate principal amount
of any Indebtedness owed by such re-designated Restricted Subsidiary to the
Guarantor or any other Restricted Subsidiary immediately prior to such
re-designation, all calculated, except as set forth in the parenthetical to
clause (i), on a consolidated basis in accordance with GAAP, and (c) each
Subsidiary of an Unrestricted Subsidiary; PROVIDED, HOWEVER, that (i) at the
time of any written re-designation by the Guarantor to the Lessor of any
Unrestricted Subsidiary as a Restricted Subsidiary, the Unrestricted
Subsidiary so re-designated shall no longer constitute an Unrestricted
Subsidiary, (ii) no Unrestricted Subsidiary may be re-designated as a
Restricted Subsidiary if a Default or Event of Default would result from such
re-designation and (iii) no Restricted Subsidiary may be re-designated as an
Unrestricted Subsidiary if a Default or Event of Default would result from
such re-designation. On or promptly after the date of its formation,
acquisition or re-designation, as applicable, each Unrestricted Subsidiary
(other than an Unrestricted Subsidiary that is a Foreign Subsidiary) shall
have entered into a tax sharing agreement containing terms that, in the
reasonable judgment of the Lessor, provide for an appropriate allocation of
tax liabilities and benefits.
"VOTING STOCK" shall mean, with respect to any Person, shares of such
Person's capital stock having the right to vote for the election of directors of
such Person under ordinary circumstances.
6 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF GUARANTOR. The
Guarantor represents and warrants to you that:
(a) CORPORATE STATUS. The Guarantor and each Material Subsidiary (a)
is a duly organized and validly existing corporation or other entity in good
standing under the laws of the jurisdiction of its organization and has the
corporate or other organizational power and authority to own its property and
assets and to transact the business in which it is engaged and (b) has duly
qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified could not reasonably be expected to result in a Material
Adverse Effect.
(b) CORPORATE POWER AND AUTHORITY. The Guarantor has the corporate
power and authority to execute, deliver and carry out the terms and provisions
of this Guaranty and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Guaranty. The Guarantor has duly
executed and delivered this Guaranty and this Guaranty constitutes the legal,
valid and binding obligation of the Guarantor enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and subject to
general principles of equity.
(c) NO VIOLATION. Neither the execution, delivery and performance by
the Guarantor of this Guaranty nor compliance with the terms and provisions
hereof nor the consummation of the transactions contemplated herein will (a)
contravene any applicable provision of any Material law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality, (b) result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Guarantor or any of the Restricted
Subsidiaries pursuant to, the terms of any Material indenture (including the
Senior Note Indenture), loan agreement, lease agreement, mortgage, deed of
trust, agreement or other Material instrument to which the Guarantor or any of
the Restricted Subsidiaries is a party or by which it or any of its property or
assets is bound or (c) violate any provision of the certificate of incorporation
or By-Laws of the Guarantor or any of the Restricted Subsidiaries.
(d) LITIGATION. Except as set forth in the Guarantor's audited
financial statements for the fiscal year ended June 28, 1997, there are no
actions, suits or proceedings (including, without limitation, Environmental
Claims) pending or, to the knowledge of the Guarantor, threatened with respect
to the Guarantor or any of its
FORM OF GUARANTY - Page 15
Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect.
(e) GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any Governmental Authority is required to authorize or is required
in connection with (a) the execution, delivery and performance of any Credit
Document or (b) the legality, validity, binding effect or enforceability of this
Guaranty, except any of the foregoing the failure to obtain or make could not
reasonably be expected to have a Material Adverse Effect.
(f) INVESTMENT COMPANY ACT. The Guarantor is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(g) TRUE AND COMPLETE DISCLOSURE.
(i) All factual information and data (taken as a whole)
heretofore or contemporaneously furnished by the Guarantor, any of its
Subsidiaries or any of their respective authorized representatives in
writing to the Lessor on or before the Closing Date for purposes of or in
connection with this Guaranty or any transaction contemplated herein was
true and complete in all Material respects on the date as of which such
information or data is dated or certified and was not incomplete by
omitting to state any Material fact necessary to make such information and
data (taken as a whole) not misleading at such time in light of the
circumstances under which such information or data was furnished, it being
understood and agreed that for purposes of this Section, such factual
information and data shall not include projections and pro forma financial
information.
(ii) The projections and pro formal financial information
contained in the information and data referred to in paragraph (i) above
were based on good faith estimates and assumptions believed by such Persons
to be reasonable at the time made, it being recognized by the Lessor that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections
may differ from the projected results.
(h) FINANCIAL CONDITION; FINANCIAL STATEMENTS. (i) The consolidated
balance sheet of the Guarantor and its Subsidiaries at June 28, 1997, and the
related consolidated statements of operations, redeemable stock and
stockholders' equity and cash flows for the fiscal year ended as of such date,
which statements have been audited by Deloitte & Touche LLP, independent
certified public accountants, who delivered an unqualified opinion with respect
thereto, and (ii) the unaudited consolidated balance sheet of the Guarantor and
its Subsidiaries at April 5, 1998, and the related consolidated statements of
operations, redeemable stock and stockholders' equity and cash flows for the
respective fiscal quarters and portions of the fiscal year ended as of such
dates, in each case present fairly in all Material respects the consolidated
financial position of the Guarantor and its Subsidiaries at the respective dates
of said statements and the results of operations for the respective periods
covered thereby. All such financial statements have been prepared in accordance
with GAAP consistently applied except to the extent provided in the notes to
said financial statements and, in the case of said financial statements referred
to in clause (ii), subject to normal year-end audit adjustments. No event has
occurred since June 28, 1997 which has resulted in a Material Adverse Effect.
(i) TAX RETURNS AND PAYMENTS. Each of the Guarantor and its
Subsidiaries has filed all federal income tax returns and all other Material tax
returns, domestic and foreign, required to be filed by it and has paid all
Material taxes and assessments payable by it that have become due, other than
those not yet delinquent or contested in good faith. The Guarantor and each of
its Subsidiaries have paid, or have provided adequate reserves (in the good
faith judgment of the management of the Guarantor) in accordance with GAAP for
the payment of, all Material federal, state and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to the Closing Date.
(j) COMPLIANCE WITH ERISA. Each Plan is in compliance with ERISA,
the Code and any applicable Requirement of Law; no Reportable Event has occurred
(or is reasonably likely to occur) with respect to any Plan; no Plan is
insolvent or in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no
FORM OF GUARANTY - Page 16
written notice of any such insolvency or reorganization has been given to the
Guarantor, any Subsidiary or any ERISA Affiliate; no Plan (other than a
multiemployer plan) has an accumulated or waived funding deficiency (or is
reasonably likely to have such a deficiency); neither the Guarantor nor any
Subsidiary nor any ERISA Affiliate has incurred (or is reasonably likely
expected to incur) any liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 of the Code or has been notified in writing
that it will incur any liability under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted (or are reasonably
likely to be instituted) to terminate or to reorganize any Plan or to appoint
a trustee to administer any Plan, and no written notice of any such
proceedings has been given to the Guarantor, any Subsidiary or any ERISA
Affiliate; and no lien imposed under the Code or ERISA on the assets of the
Guarantor or any Subsidiary or any ERISA Affiliate exists (or is reasonably
likely to exist) nor has the Guarantor, any Subsidiary or any ERISA Affiliate
been notified in writing that such a lien will be imposed on the assets of
the Guarantor, any Subsidiary or any ERISA Affiliate on account of any Plan,
EXCEPT to the extent that a breach of any of the foregoing representations,
warranties or agreements in this Section would not result, individually or in
the aggregate, in an amount of liability that would be reasonably likely to
have a Material Adverse Effect or relates to any matter disclosed in the
financial statements of the Guarantor contained in the Confidential
Information Memorandum. No Plan (other than a multiemployer plan) has an
Unfunded Current Liability that would, individually or when taken together
with any other liabilities referenced in this Section, be reasonably likely
to have a Material Adverse Effect. With respect to Plans that are
multiemployer plans (as defined in Section 3(37) of ERISA), the
representations and warranties in this Section, other than any made with
respect to (a) liability under Section 4201 or 4204 of ERISA or (b) liability
for termination or reorganization of such Plans under ERISA, are made to the
best knowledge of the Guarantor.
(k) SUBSIDIARIES. SCHEDULE 6(k) lists each Subsidiary of the
Guarantor (and the direct and indirect ownership interest of the Guarantor
therein), in each case existing on the Closing Date. To the knowledge of the
Guarantor, each Material Subsidiary as of the Closing Date has been so
designated on SCHEDULE 6(k).
(l) PATENTS, ETC. The Guarantor and each of the Restricted
Subsidiaries have obtained all patents, trademarks, servicemarks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their respective businesses as currently
conducted and as proposed to be conducted, except where the failure to obtain
any such rights could not reasonably be expected to have a Material Adverse
Effect.
(m) ENVIRONMENTAL LAWS.
(i) Other than instances of noncompliance that could not
reasonably be expected to have a Material Adverse Effect: (1) the
Guarantor and each of its Subsidiaries are in compliance with all
Environmental Laws in all jurisdictions in which the Guarantor and each of
its Subsidiaries are currently doing business (including, without
limitation, having obtained all Material permits required under
Environmental Laws) and (2) the Guarantor will comply and cause each of its
Subsidiaries to comply with all of such Environmental Laws (including,
without limitation, all permits required under Environmental Laws).
(ii) Neither the Guarantor nor any of its Subsidiaries has
treated, stored, transported or disposed of Hazardous Materials at or from
any currently or formerly owned Real Estate (as defined in SECTION
7(a)(vi)) or facility relating to its business in a manner that could
reasonably be expected to have a Material Adverse Effect.
(iii) PROPERTIES. The Guarantor and each of the Restricted
Subsidiaries have good title to or leasehold interest in all properties
that are necessary for the operation of their respective businesses as
currently conducted and as proposed to be conducted, free and clear of all
Liens (other than any Liens permitted by this Guaranty) and except where
the failure to have such good title could not reasonably be expected to
have a Material Adverse Effect.
70 AFFIRMATIVE COVENANTS. So long as any Lease Document remains in
effect:
FORM OF GUARANTY - Page 17
(a) INFORMATION COVENANTS. The Guarantor will furnish to the Lessor:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event on or before the date on which such financial statements are
required to be filed with the SEC, the consolidated balance sheet or (1)
the Guarantor and the Restricted Subsidiaries and (2) the Guarantor and its
Subsidiaries, in each case as at the end of such fiscal year and the
related consolidated statement of operations, redeemable stock and
stockholders' equity cash flows for such fiscal year, setting forth
comparative consolidated figures for the preceding fiscal year, and
certified by independent certified public accountants of recognized
national standing whose opinion shall not be qualified as to the scope of
audit or as to the status of the Guarantor or any of the Material
Subsidiaries as a going concern, together in any event with a certificate
of such accounting firm stating that in the course of its regular audit of
the business of the Guarantor and the Material Subsidiaries, which audit
was conducted in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge of any Default or Event of
Default relating to SECTIONS 8(i), (j) and (k) that has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or
Event of Default has occurred and is continuing, a statement as to the
nature thereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event on or before the date on which such financial statements are
required to be filed with the SEC with respect to each of the first three
quarterly accounting periods in each fiscal year of the Guarantor, the
consolidated balance sheet or (1) the Guarantor and the Restricted
Subsidiaries and (2) the Guarantor and its Subsidiaries, in each case as at
the end of such quarterly period and the related consolidated statement of
operations, redeemable stock and stockholders' equity income for such
quarterly accounting period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and the related
consolidated statement of cash flows for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, and setting forth
comparative consolidated figures for the related periods in the prior
fiscal year or, in the case of such consolidated balance sheet, for the
last day of the prior fiscal year, all of which shall be certified by an
Authorized Officer of the Guarantor, subject to changes resulting from
audit and normal year-end audit adjustments.
(iii) BUDGETS. Within 60 days after the commencement of each
fiscal year of the Guarantor, budgets of the Guarantor in reasonable detail
for the fiscal year as customarily prepared by management of the Guarantor
for its internal use, setting forth the principal assumptions upon which
such budgets are based.
(iv) OFFICER'S CERTIFICATES. At the time of the delivery of
the financial statements provided for in SECTIONS 7(i) and (ii), a
certificate of an Authorized Officer of the Guarantor to the effect that no
Default or Event of Default exists or, if any Default or Event of Default
does exist, specifying the nature and extent thereof, which certificate
shall set forth (1) the calculations required to establish whether the
Guarantor and its Subsidiaries were in compliance with the provisions of
SECTIONS 8(i), (j) and (k) as at the end of such fiscal year or period, as
the case may be, (2) a specification of any change in the identity of the
Restricted Subsidiaries, Unrestricted Subsidiaries, Acquisition
Subsidiaries and Foreign Subsidiaries as at the end of such fiscal year or
period, as the case may be, from the Restricted Subsidiaries, Unrestricted
Subsidiaries, Acquisition Subsidiaries, and Foreign Subsidiaries,
respectively, provided to the Lessor on the Closing Date or the most recent
fiscal year or period, as the case may be, (3) the then applicable Status
and (4) the amount of any Pro Forma Adjustment not previously set forth in
a Pro Formal Adjustment Certificate or any change in the amount of a Pro
Forma Adjustment set forth in any Pro Forma Adjustment Certificate
previously provided and, in either case, in reasonable detail, the
calculations and basis therefor; and at the time of the delivery of the
financial statements provided for in SECTION 7(a)(i), a certificate of an
Authorized Officer of the Guarantor setting forth in reasonable detail the
Available Amount as at the end of the fiscal year to which such financial
statements relate.
(v) NOTICE OF DEFAULT OR LITIGATION. Promptly after an
Authorized Officer of the Guarantor or any of its Subsidiaries obtains
knowledge thereof, notice of (1) the occurrence of any event that
FORM OF GUARANTY - Page 18
constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the
Guarantor proposes to take with respect thereto, and (2) any litigation or
governmental proceeding pending against the Guarantor or any of its
Subsidiaries that could reasonably be expected to result in a Material
Adverse Effect.
(vi) ENVIRONMENTAL MATTERS. The Guarantor will promptly advise
the Lessor in writing after obtaining knowledge of any one or more of the
following environmental matters, unless such environmental matters would
not, individually or when aggregated with all other such matters, be
reasonably expected to result in a Material Adverse Effect:
(1) Any pending or threatened Environmental Claim
against the Guarantor or any of its Subsidiaries or any Real Estate
(as defined below);
(2) Any condition or occurrence on any Real Estate
that (x) results in noncompliance by the Guarantor or any of its
Subsidiaries with any applicable Environmental Law or (y) could
reasonably be anticipated to form the basis of an Environmental Claim
against the Guarantor or any of its Subsidiaries or any Real Estate;
(3) Any condition or occurrence on any Real Estate
that could reasonably be anticipated to cause such Real Estate to be
subject to any restrictions on the ownership, occupancy, use or
transferability or such Real Estate under any Environmental Law; and
(4) The taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous Material
on any Real Estate.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the Guarantor's response thereto. The term "REAL ESTATE" shall mean
land, buildings and improvements owned or leased by the Guarantor or any of
its Subsidiaries, but excluding all operating fixtures and equipment,
whether or not incorporated into improvements.
(vii) OTHER INFORMATION. Promptly upon filing thereof, copies
of any filings on Form 10-K, 10-Q or 8-K or registration statements with,
and reports to, the SEC by the Guarantor or any of its Subsidiaries (other
than amendments to any registration statement (to the extent such
registration statement, in the form it becomes effective, is delivered to
the Lessor), exhibits to any registration statement and any registration
statements on Form S-8) and copies of all financial statements, proxy
statements, notices and reports that the Guarantor or any of its
Subsidiaries shall send to the holders of any publicly issued debt of the
Guarantor and/or any of its Subsidiaries (including the Subordinated Notes)
in their capacity as such holders (in each case to the extent not
theretofore delivered to the Lessor pursuant to this Guaranty) and, with
reasonable promptness, such other information (financial or otherwise) as
the Lessor may reasonably request in writing from time to time.
(viii) PRO FORMA ADJUSTMENT CERTIFICATE. Not later than the
consummation of the acquisition of any Acquired Entity or Business by the
Guarantor or any Restricted Subsidiary for which there shall be a Pro Forma
Adjustment, a certificate of an Authorized Officer of the Guarantor setting
forth the amount of such Pro Forma Adjustment and, in reasonable detail,
the calculations and basis therefor.
(b) BOOKS, RECORDS AND INSPECTIONS. The Guarantor will, and will
cause each of the Specified Subsidiaries to, permit officers and designated
representatives of the Lessor to visit and inspect any of the properties or
assets of the Guarantor and any such Specified Subsidiary in whomsoever's
possession to the extent that it is within the Guarantor's or such Specified
Subsidiary's control to permit such inspection, and to examine the books of
account of the Guarantor and any such Specified Subsidiary and discuss the
affairs, finances and accounts of the Guarantor and of any such Specified
Subsidiary with, and be advised as to the same by, its and their officers and
independent
FORM OF GUARANTY - Page 19
accountants, all at such reasonable times and intervals and to such
reasonable extent as the Lessor may desire.
(c) MAINTENANCE OF INSURANCE. The Guarantor will, and will cause
each of the Material Subsidiaries to, at all times maintain in full force and
effect, with insurance companies that the Guarantor believes (in the good
faith judgment of the management of the Guarantor) are financially sound and
responsible at the time the relevant coverage is placed or renewed, insurance
in at least such amounts and against at least such risks (and with such risk
retentions) as are usually insured against in the same general area by
companies engaged in the same or a similar business; and will furnish to the
Lessor, upon written request from the Lessor, information presented in
reasonable detail as to the insurance so carried.
(d) PAYMENT OF TAXES. The Guarantor will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all Material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date
on which Material penalties attach thereto, and all lawful Material claims
that, if unpaid, could reasonably be expected to become a Material Lien upon
any properties of the Guarantor or any of the Restricted Subsidiaries,
PROVIDED that neither the Guarantor nor any of its Subsidiaries shall be
required to pay any such tax, assessments, charge, levy or claim that is
being contested in good faith and by proper proceedings if it has maintained
adequate reserves (in the good faith judgment of the management of the
Guarantor) with respect thereto in accordance with GAAP.
(e) CONSOLIDATED CORPORATE FRANCHISES. The Guarantor will do, and
will cause each Material Subsidiary to do, or cause to be done, all things
necessary to preserve and keep in full force and effect its existence,
corporate rights and authority, except to the extent that the failure to do
so could not reasonably be expected to have a Material Adverse Effect;
PROVIDED, HOWEVER, that the Guarantor and its Subsidiaries may consummate any
transaction permitted under SECTIONS 8(c) or (d).
(f) COMPLIANCE WITH STATUTES, OBLIGATIONS, ETC. The Guarantor
will, and will cause each Subsidiary to, comply with all applicable laws,
rules, regulations and orders, except to the extent the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
(g) ERISA. Promptly after the Guarantor or any Subsidiary or any
ERISA Affiliate knows or has reason to know of the occurrence of any of the
following events that, individually or in the aggregate (including in the
aggregate such events previously disclosed or exempt from disclosure
hereunder, to the extent the liability therefor remains outstanding), would
be reasonably likely to have a Material Adverse Effect, the Guarantor will
deliver to the Lessor a certificate of an Authorized Officer or any other
senior officer of the Guarantor setting forth details as to such occurrence
and the action, if any, that the Guarantor, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices
(required, proposed or otherwise) given to or filed with or by the Guarantor,
such Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant (other
than notices relating to an individual participant's benefits) or the Plan
administrator with respect thereto: that a Reportable Event has occurred;
that an accumulated funding deficiency has been incurred or an application is
to be made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code with
respect to a Plan; that a Plan having an Unfunded Current Liability has been
or is to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA (including the giving of written notice thereof); that a
Plan has an Unfunded Current Liability that has or will result in a lien
under ERISA or the Code; that proceedings will be or have been instituted to
terminate a Plan having an Unfunded Current Liability (including the giving
of written notice thereof); that a proceeding has been instituted against the
Guarantor, a Subsidiary or an ERISA Affiliate pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; that the PBGC has
notified the Guarantor, any Subsidiary or any ERISA Affiliate of its
intention to appoint a trustee to administer any Plan; that the Guarantor,
any Subsidiary or any ERISA Affiliate has failed to make a required
installment or other payment pursuant to Section 412 of the Code with respect
to a Plan; or that the Guarantor, any Subsidiary or any ERISA Affiliate has
incurred or will incur (or has been notified in writing that it will incur)
any liability (including any contingent or secondary liability) to or on
account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code.
FORM OF GUARANTY - Page 20
(h) GOOD REPAIR. The Guarantor will, and will cause each of the
Restricted Subsidiaries to, ensure that its properties and equipment used or
useful in its business in whomsoever's possession they may be to the extent
that it is within the Guarantor's or such Restricted Subsidiary's control to
cause same, are kept in good repair, working order and condition, normal wear
and tear excepted, and that from time to time there are made in such
properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner customary for companies in similar businesses
and consistent with third party leases, except in each case to the extent the
failure to do so could not be reasonably expected to have a Material Adverse
Effect.
(i) TRANSACTIONS WITH AFFILIATES. The Guarantor will conduct, and
cause each of the Restricted Subsidiaries to conduct, all transactions with
any of its Affiliates on terms that are substantially as favorable to the
Guarantor or such Restricted Subsidiary as it would obtain in a comparable
arm's-length transaction with a Person that is not an Affiliate, PROVIDED
that the foregoing restrictions shall not apply to (i) the payment of
customary annual fees to KKR and its Affiliates for management, consulting
and financial services rendered to the Guarantor and its Subsidiaries, and
investment banking fees paid to KKR and its Affiliates for services rendered
to the Guarantor and its Subsidiaries in connection with divestitures,
acquisitions, financings and other transactions, (ii) customary fees paid to
members of the Board of Directors of the Guarantor and its Subsidiaries and
(iii) transactions permitted by SECTION 8(f).
(j) END OF FISCAL YEARS; FISCAL QUARTERS. The Guarantor will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on the last Saturday in June of each year
and (i) each of its, and each of its Subsidiaries', fiscal quarters to end on
dates consistent with such fiscal year-end and the Guarantor's past practice;
PROVIDED, HOWEVER, that the Guarantor may, upon written notice to the Lessor,
change the financial reporting convention specified above to any other
financial reporting convention reasonably acceptable to the Lessor, in which
case the Guarantor and the Lessor will make any adjustments to this Guaranty
that are necessary in order to reflect such change in financial reporting.
(k) ADDITIONAL GUARANTOR SUBSIDIARIES. The Guarantor will cause
(i) any direct or indirect Domestic Subsidiary (other than any Unrestricted
Subsidiary or Acquisition Subsidiary) formed or otherwise purchased or
acquired after the date hereof and (b) any Subsidiary (other than any
Unrestricted Subsidiary or Acquisition Subsidiary) that is not a Domestic
Subsidiary on the date hereof but subsequently becomes a Domestic Subsidiary
(other than any Unrestricted Subsidiary or Acquisition Subsidiary), in each
case to become a Subsidiary Guarantor and to execute and deliver to the Agent
a Subsidiary Guaranty and a Subsidiary Residual Guaranty.
(l) CHANGES IN BUSINESS. The Guarantor and its Subsidiaries taken
as a whole will not fundamentally and substantively alter the character of
their business taken as a whole from the business conducted by the Guarantor
and its Subsidiaries taken as a whole on the date hereof and other business
activities incidental or related to any of the foregoing.
80 NEGATIVE COVENANTS. So long as any Lease Document remains in
effect:
(a) LIMITATION ON INDEBTEDNESS. The Guarantor will not, and will
not permit any of the Restricted Subsidiaries to, create, incur, assume or
suffer to exist any Indebtedness, except:
(i) Indebtedness arising under the Credit Documents (as
defined in the 1997 Credit Agreement), as presently in effect or as may be
hereafter required under the present terms of the 1997 Credit Agreement;
(ii) Indebtedness of (1) the Guarantor to any Subsidiary of the
Guarantor and (2) Indebtedness of any Restricted Subsidiary to the
Guarantor or any other Subsidiary of the Guarantor;
(iii) Indebtedness in respect of any bankers' acceptance, letter
of credit, warehouse
FORM OF GUARANTY - Page 21
receipt or similar facilities entered into in the ordinary course of
business;
(iv) except as provided in CLAUSES (x) and (xi) below,
Guarantee Obligations incurred by (1) Restricted Subsidiaries in respect of
Indebtedness of the Guarantor or other Restricted Subsidiaries that is
permitted to be incurred under this Guaranty and (2) the Guarantor in
respect of Indebtedness of the Restricted Subsidiaries that is permitted to
be incurred under this Guaranty;
(v) Guarantee Obligations incurred in the ordinary course of
business in respect of obligations of suppliers, customers, franchisees,
lessors and licensees;
(vi) (1) Indebtedness (including Indebtedness arising under
Capital Leases) incurred within 270 days of the acquisition, construction
or improvement of fixed or capital assets to finance the acquisition,
construction or improvement of such fixed or capital assets or otherwise
incurred in respect of Capital Expenditures permitted by SECTION 8(l), (2)
Indebtedness arising under Capital Leases entered into in connection with
Permitted Sale Leasebacks and (3) Indebtedness arising under Capital
Leases, other than Capital Leases in effect on the date hereof and Capital
Leases entered into pursuant to SUBCLAUSES (1) and (2) above, PROVIDED that
the aggregate amount of Indebtedness incurred pursuant to this SUBCLAUSE
(3) shall not exceed $100,000,000 at any time outstanding, and (4) any
refinancing, refunding, renewal or extension of any Indebtedness specified
in SUBCLAUSES (1), (2) or (3) above, PROVIDED that the principal amount
thereof is not increased above the principal amount thereof outstanding
immediately prior to such refinancing, refunding, renewal or extension;
(vii) Indebtedness outstanding on the date hereof and listed on
SCHEDULE 8(a) and any refinancing, refunding, renewal or extension thereof,
PROVIDED that (1) the principal amount thereof is not increased above the
principal amount thereof outstanding immediately prior to such refinancing,
refunding, renewal or extension, except to the extent otherwise permitted
hereunder, and (2) the direct and contingent obligors with respect to such
Indebtedness are not changed;
(viii) Indebtedness in respect of Hedge Agreements;
(ix) Indebtedness in respect of the Subordinated Notes;
(x) (1) Indebtedness of a Person or Indebtedness attaching to
assets of a Person that, in either case, becomes a Restricted Subsidiary
(including a Restricted Subsidiary that is also an Acquisition Subsidiary)
or Indebtedness attaching to assets that are acquired by the Guarantor or
any Restricted Subsidiary (including any Acquisition Subsidiary), in each
case after June 27, 1997 as the result of a Permitted Acquisition, PROVIDED
that (w) such Indebtedness existed at the time such Person became a
Restricted Subsidiary or at the time such assets were acquired and, in each
case, was not created in anticipation thereof, (x) such Indebtedness is not
guaranteed in any respect by the Guarantor or any Restricted Subsidiary
(other than any such person that so becomes a Restricted Subsidiary), (y)
(A) such Person executes a Subsidiary Guaranty and a Subsidiary Residual
Guaranty to the extent required under SECTION 7(k) and (B) if any such
Indebtedness is secured, the Liabilities are equally and ratably secured in
a manner reasonably acceptable to the Agent, PROVIDED that the requirements
of this SUBCLAUSE (y) shall not apply to an aggregate amount at any time
outstanding of up to (and including) $75,000,000 of the aggregate of (1)
such Indebtedness and (2) all Indebtedness as to which the proviso to
CLAUSE (xi)(1)(y) below then applies and (z) the aggregate amount of such
Indebtedness and all Indebtedness incurred under CLAUSE (xi) below, when
taken together, does not exceed $200,000,000 in the aggregate at any time
outstanding, PROVIDED that, when calculating the outstanding amount of
Indebtedness for purposes of this SUBCLAUSE (z), Indebtedness of any
Acquisition Subsidiary, Indebtedness attaching to assets of any Acquisition
Subsidiary and Indebtedness attaching to assets acquired by any Acquisition
Subsidiary shall be excluded, and (2) any refinancing, refunding, renewal
or extension of any Indebtedness specified in SUBCLAUSE (1) above, PROVIDED
that, except to the extent otherwise permitted hereunder, (x) the principal
amount of any such Indebtedness is not increased above the principal amount
FORM OF GUARANTY - Page 22
thereof outstanding immediately prior to such refinancing, refunding,
renewal or extension and (y) the direct and contingent obligors with
respect to such Indebtedness are not changed;
(xi) (1) Indebtedness of the Guarantor or any Restricted
Subsidiary (including any Acquisition Subsidiary) incurred to finance a
Permitted Acquisition, PROVIDED that (x) such Indebtedness is not
guaranteed in any respect by any Restricted Subsidiary (other than any
Person acquired (the "ACQUIRED PERSON") as a result of such Permitted
Acquisition or the Restricted Subsidiary so incurring such Indebtedness)
or, in the case of Indebtedness of any Restricted Subsidiary, by the
Guarantor, (y) (A) such Person executes a Subsidiary Guaranty and a
Subsidiary Residual Guaranty to the extent required under SECTION 7(k) and
(B) if a guarantee by such acquired Person of any such Indebtedness is
secured by assets of such acquired Person, the Liabilities are equally and
ratably secured in a manner reasonably acceptable to the Agent, PROVIDED
that the requirements of this SUBCLAUSE (y) shall not apply to an aggregate
amount at any time outstanding of up to (and including) $75,000,000 of the
aggregate of (1) such Indebtedness and (2) all Indebtedness as to which the
proviso to CLAUSE (x)(1)(y) above then applies and (z) the aggregate amount
of such Indebtedness and all Indebtedness assumed or permitted to exist
under CLAUSE (x) above, when taken together, does not exceed $200,000,000
in the aggregate at any time outstanding, PROVIDED that, when calculating
the outstanding amount of Indebtedness for purposes of this SUBCLAUSE (z),
Indebtedness of any Acquisition Subsidiary shall be excluded, and (2) any
refinancing, refunding, renewal or extension of any Indebtedness specified
in SUBCLAUSE (1) above, PROVIDED that (x) the principal amount of any such
Indebtedness is not increased above the principal amount thereof
outstanding immediately prior to such refinancing, refunding, renewal or
extension and (y) the direct and contingent obligors with respect to such
Indebtedness are not changed, except to the extent otherwise permitted
hereunder;
(xii) Indebtedness of Restricted Foreign Subsidiaries in an
aggregate amount at any time outstanding not to exceed (i) $20,000,000
MINUS (ii) the amount equal to (x) the aggregate amount of Indebtedness
incurred and outstanding at such time pursuant to CLAUSE (xiv) below MINUS
(y) $200,000,000;
(xiii) (1) Indebtedness incurred in connection with any Permitted
Sale Leaseback and (2) any refinancing, refunding, renewal or extension of
any Indebtedness specified in SUBCLAUSE (1) above, PROVIDED that, except to
the extent otherwise permitted hereunder, (x) the principal amount of any
such Indebtedness is not increased above the principal amount thereof
outstanding immediately prior to such refinancing, refunding, renewal or
extension and (y) the direct and contingent obligors with respect to such
Indebtedness are not changed; and
(xiv) (1) additional Indebtedness, PROVIDED that the aggregate
amount of Indebtedness incurred and remaining outstanding pursuant to this
CLAUSE (xiv) shall not at any time exceed the sum of (x) $200,000,000 and
(y) the amount equal to (A) $20,000,000 MINUS (B) the aggregate amount of
Indebtedness then outstanding under CLAUSE (xii) above, and (2) any
refinancing, refunding, renewal or extension of any Indebtedness specified
in SUBCLAUSE (1) above.
(b) LIMITATION ON LIENS. The Guarantor will not, and will not
permit any of the Restricted Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon any property or assets of any kind (real or personal,
tangible or intangible) of the Guarantor or any Restricted Subsidiary,
whether now owned or hereafter acquired, except:
(i) Liens arising under the Credit Documents (as defined in
the 1997 Credit Agreement), as presently in effect or as may be hereafter
required under the present terms of the 1997 Credit Agreement;
(ii) Permitted Liens;
(iii) Liens securing Indebtedness permitted pursuant to SECTION
8(a)(vi), PROVIDED that
FORM OF GUARANTY - Page 23
such Liens attach at all times only to the assets so financed;
(iv) Liens existing on the date hereof;
(v) Liens existing on the assets of any Person that becomes a
Restricted Subsidiary, or existing on assets acquired, pursuant to a
Permitted Acquisition to the extent the Liens on such assets secure
Indebtedness permitted by Section 8(a)(x), PROVIDED that such Liens attach
at all times only to the same assets that such Liens attached to, and
secure only the same Indebtedness that such Liens secured, immediately
prior to such Permitted Acquisition;
(vi) (1) Liens placed upon the capital stock of any Restricted
Subsidiary acquired pursuant to a Permitted Acquisition to secure
Indebtedness of the Guarantor or any other Restricted Subsidiary incurred
pursuant to SECTION 8(a)(xi) in connection with such Permitted Acquisition,
(2) Liens placed upon the assets of such Restricted Subsidiary to secure a
guarantee by such Restricted Subsidiary of any such Indebtedness of the
Guarantor or any other Restricted Subsidiary and (3) Liens placed upon the
capital stock or assets of any Acquisition Subsidiary to secure
Indebtedness of such Acquisition Subsidiary incurred pursuant to SECTION
8(a)(xi) in connection with any Permitted Acquisition;
(vii) the replacement, extension or renewal of any Lien
permitted by clauses (i) through (vi) above upon or in the same assets
theretofore subject to such Lien or the replacement, extension or renewal
(without increase in the amount or change in any direct or contingent
obligor) of the Indebtedness secured thereby;
(viii) additional Liens so long as the aggregate principal amount
of the obligations so secured does not exceed $25,000,000 at any time
outstanding; and
(ix) Liens provided for in the Lease Documents to the extent
the transaction to which the Lease Documents relate is deemed to be a
mortgage.
(c) LIMITATION ON FUNDAMENTAL CHANGES. Except as expressly
permitted by SECTIONS 8(d) or (e), the Guarantor will not, and will not
permit any of the Restricted Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all its business
units, assets or other properties, except that:
(i) any Subsidiary of the Guarantor or any other Person may be
merged or consolidated with or into the Guarantor, PROVIDED that (1) the
Guarantor shall be the continuing or surviving corporation or the Person
formed by or surviving any such merger or consolidation (if other that the
Guarantor) shall be a corporation organized or existing under the laws of
the United States, any state thereof, the District of Columbia or any
territory thereof (the Guarantor or such Person, as the case may be, being
herein referred to as the "SUCCESSOR GUARANTOR"), (2) the Successor
Guarantor (if other than the Guarantor) shall expressly assume all the
obligations of the Guarantor under this Guaranty pursuant to a supplement
hereto in form reasonably satisfactory to the Lessor, (3) no Default or
Event of Default would result from the consummation of such merger or
consolidation, (4) the Successor Guarantor shall be in compliance, on a pro
forma basis after giving effect to such merger or consolidation, with the
covenants set forth in SECTIONS 8(i), (j) and (k), as such covenants are
recomputed as at the last day of the most recently ended Test Period under
such Sections as if such merger or consolidation had occurred on the first
day of such Test Period, (5) each Subsidiary Guarantor, unless it is the
other party to such merger or consolidation, shall have confirmed, in a
manner reasonably acceptable to the Agent, that its Subsidiary Guaranty and
Subsidiary Residual Guaranty shall continue to apply to the Liabilities and
(6) the Guarantor shall have delivered to the Lessor an officer's
certificate and an opinion of counsel, each stating that such merger or
consolidation and such supplement to this Guaranty, PROVIDED FURTHER that
if the foregoing are satisfied, the Successor Guarantor (if other than the
Guarantor) will succeed to, and be substituted for, the Guarantor under
this Guaranty;
FORM OF GUARANTY - Page 24
(ii) any Subsidiary of the Guarantor or any other Person may be
merged or consolidated with or into any one or more Subsidiaries of the
Guarantor, PROVIDED that (1) in the case of any merger or consolidation
involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary
shall be the continuing or surviving corporation or (B) the Guarantor shall
take all steps necessary to cause the Person formed by or surviving any
such merger or consolidation (if other than a Restricted Subsidiary) to
become a Restricted Subsidiary, (2) in the case of any merger or
consolidation involving one or more Guarantor Subsidiaries, a Subsidiary
Guarantor shall be the continuing or surviving corporation or the Person
formed by or surviving any such merger or consolidation (if other than a
Subsidiary Guarantor) shall become a Subsidiary Guarantor and to execute
and deliver to the Agent a Subsidiary Guaranty and a Subsidiary Residual
Guaranty, (3) no Default or Event of Default would result from the
consummation of such merger or consolidation, (4) the Guarantor shall be in
compliance, on a pro forma basis after giving effect to such merger or
consolidation, with the covenants set forth in SECTIONS 8(i), (j) and (k),
as such covenants are recomputed as at the last day of the most recently
ended Test Period under such Sections as if such merger or consolidation
had occurred on the first day of such Test Period, and (5) the Guarantor
shall have delivered to the Lessor an Officers' Certificate stating that
such merger or consolidation complies with this Guaranty;
(iii) any Restricted Subsidiary that is not a Subsidiary
Guarantor may sell, lease, transfer or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Guarantor, a
Subsidiary Guarantor or any other Restricted Subsidiary of the Guarantor;
and
(iv) any Subsidiary Guarantor may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Guarantor or any other Subsidiary Guarantor.
(d) LIMITATION ON SALE OF ASSETS. The Guarantor will not, and
will not permit any of the Restricted Subsidiaries to, (1) convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business
or assets (including, without limitation, receivables and leasehold
interests), whether now owned or hereafter acquired (other than any such
sale, transfer, assignment or other disposition resulting from any casualty
or condemnation, of any assets of the Guarantor or the Restricted
Subsidiaries or (2) sell any shares owned by it of any Restricted
Subsidiary's capital stock to any Person other than the Guarantor, a
Subsidiary Guarantor or a Restricted Foreign Subsidiary, except that:
(i) the Guarantor and the Restricted Subsidiaries may sell,
transfer or otherwise dispose of used or surplus equipment, vehicles,
inventory and other assets in the ordinary course of business;
(ii) the Guarantor and the Restricted Subsidiaries may sell,
transfer or otherwise dispose of other assets for fair value, PROVIDED that
(1) the aggregate amount of such sales, transfers and disposals by the
Guarantor and the Restricted Subsidiaries taken as a whole pursuant to this
CLAUSE (ii) shall not exceed in the aggregate $175,000,000 from and after
June 27, 1997, (2) any consideration in excess of $5,000,000 received by
the Guarantor or any Subsidiary Guarantor in connection with such sales,
transfers and other dispositions of assets pursuant to this CLAUSE (ii)
that is in the form of Indebtedness shall be pledged to the Agent as
security for the Liabilities in a manner reasonably acceptable to the
Agent, (3) with respect to any such sale, transfer or disposition (or
series of related sales, transfers or dispositions) in an aggregate amount
in excess of $10,000,000, the Guarantor shall be in compliance, on a pro
forma basis after giving effect to such sale, transfer or disposition, with
the covenants set forth in SECTIONS 8(i), (j) AND (k), as such covenants
are recomputed as at the last day of the most recently ended Test Period
under such Sections as if such sale, transfer or disposition had occurred
on the first day of such Test Period, and (4) after giving effect to any
such sale, transfer or disposition, no Default or Event of Default shall
have occurred and be continuing;
(iii) The Guarantor and the Restricted Subsidiaries may make
sales of assets to the Guarantor or to any Restricted Subsidiary, PROVIDED
that any such sales to Restricted Foreign Subsidiaries must be for fair
value;
FORM OF GUARANTY - Page 25
(iv) any Restricted Subsidiary may effect any transaction
permitted by SECTION 8(c);
(v) in addition to selling or transferring accounts receivable
pursuant to the other provisions hereof, the Guarantor and the Restricted
Subsidiaries may sell or discount without recourse accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(vi) the Guarantor and the Restricted Subsidiaries may sell,
transfer or otherwise dispose of Stores in connection with Permitted Sale
Leasebacks.
(e LIMITATION ON INVESTMENTS. The Guarantor will not, and will not
permit any of the Restricted Subsidiaries to, make any advance, loan,
extensions of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets of, or make any other
investment in, any Person, except:
(i) extensions of trade credit and asset purchases in the
ordinary course of business;
(ii) Permitted Investments;
(iii) loans and advances to officers, directors and employees of
the Guarantor or any of its Subsidiaries (1) to finance the purchase of
capital stock of the Guarantor and (2) for additional purposes not
contemplated by SUBCLAUSE (1) above in an aggregate principal amount at any
time outstanding with respect to this CLAUSE (2) not exceeding $10,000,000;
(iv) investments existing on the date hereof and any
extensions, renewals or reinvestments thereof, so long as the aggregate
amount of all investments pursuant to this CLAUSE (iv) is not increased at
any time above the amount of such investments existing on the date hereof;
(v) investments in Hedge Agreements permitted by SECTION
8(a)(viii);
(vi) investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, customers arising in the ordinary
course of business;
(vii) investments to the extent that payment for such
investments is made solely with capital stock of the Guarantor;
(viii) investments constituting non-cash proceeds of sales,
transfers and other dispositions of assets to the extent permitted by
SECTION 8(d);
(ix) investments in any Subsidiary Guarantor;
(x) investments constituting Permitted Acquisitions, PROVIDED
that the aggregate amount of any such investment made by the Guarantor or
any Restricted Subsidiary (other than any Acquisition Subsidiary) in any
Acquisition Subsidiary shall not exceed the Available Amount at the time of
such investment, PROVIDED FURTHER that the aggregate amount of any such
investment made by the Guarantor or any Restricted Subsidiary (other than
any Restricted Foreign Subsidiary) in any Restricted Foreign Subsidiary
shall not exceed (1) the Available Foreign Investment Amount at the time of
such investment MINUS (2) the portion of the Available Foreign Investment
Amount being used at such time for investments made pursuant to CLAUSE
(xiv) below;
(xi) investments in any Restricted Foreign Subsidiary, PROVIDED
that the aggregate
FORM OF GUARANTY - Page 26
amount of any such investment made by the Guarantor or any Restricted
Subsidiary (other than any Restricted Foreign Subsidiary) shall not exceed
(1) the Available Foreign Investment Amount at the time of such investment
MINUS (2) the portion of the Available Foreign Investment Amount being
used at such time for investments made pursuant to CLAUSE (xiv) below;
(xii) investments made to pay for the repurchase, retirement or
other acquisition of the Remaining Equity in an aggregate amount at the
time of such investment not in excess of the lesser of (1) the Available
Amount at such time and (2) the aggregate amount of such investments then
permitted to be made under the Subordinated Note Indenture;
(xiii) (1) investments made to pay for the repurchase of Putable
Shares with amounts in the Putable Shares Reserve Fund and (2) investments
made to repurchase or retire common stock of the Guarantor owned by the
Guarantor's employee stock ownership plan or key employee stock ownership
plan; and
(xiv) additional investments (including investments in Minority
Investments, Unrestricted Subsidiaries and Acquisition Subsidiaries) in an
aggregate amount at the time of such investment not in excess of the sum of
(1) the Available Amount at such time and (2) the amount equal to one-half
of the Available Foreign Investment Amount at such time.
(f) LIMITATION ON DIVIDENDS. The Guarantor will not declare or
pay any dividends (other than dividends payable solely in its capital stock
or rights, warrants or options to purchase its capital stock) or return any
capital to its stockholders or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for consideration, any
shares of any class of its capital stock or the capital stock of any direct
or indirect parent of the Guarantor now or hereafter outstanding (or any
warrants for or options or stock appreciation rights in respect of any of
such shares), or set aside any funds for any of the foregoing purposes, or
permit any of the Restricted Subsidiaries to purchase or otherwise acquire
for consideration (other than in connection with an investment permitted by
SECTION 8(e)) any shares of any class of the capital stock of the Guarantor,
now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "DIVIDENDS"), PROVIDED that, so long as no Default or
Event of Default exists or would exist after giving effect thereto, (i) the
Guarantor may redeem in whole or in part any capital stock of the Guarantor
for another class of capital stock or rights to acquire capital stock of the
Guarantor or with proceeds from substantially concurrent equity contributions
or issuances of new shares of capital stock, PROVIDED that such other class
of capital stock contains terms and provisions at least as advantageous to
the Lessor as those contained in the capital stock redeemed thereby, (ii) the
Guarantor may repurchase shares of its capital stock (and/or options or
warrants in respect thereof) held by its officers, directors and employees so
long as such repurchase is pursuant to, and in accordance with the terms of,
management and/or employee stock plans, stock subscription agreements or
shareholder agreements, (iii) the Guarantor may make investments permitted by
SECTION 8(e) and (iv) the Guarantor may declare and pay dividends on its
capital stock, PROVIDED that (1) the aggregate amount of dividends paid
pursuant to this clause (iv) shall not at any time exceed 50% of Cumulative
Consolidated Net Income Available to Common Stockholders at such time and (2)
at the time of the payment of any such dividends and after giving effect
thereto, the Consolidated Total Debt to Consolidated EBITDA Ratio on the date
of such payment of such dividends shall be less than 3.50:1.00.
(g) LIMITATIONS ON DEBT PAYMENTS AND AMENDMENTS.
(i) The Guarantor will not optionally prepay, repurchase or
redeem or otherwise defease any Subordinated Notes; PROVIDED, HOWEVER, that
so long as no Default or Event of Default has occurred and is continuing,
the Guarantor may optionally prepay, repurchase or redeem Subordinated
Notes (1) for an aggregate price not in excess of the Available Amount at
the time of such prepayment, repurchase or redemption or (2) with the
proceeds of subordinated Indebtedness that (A) is permitted by SECTION 8(a)
and (B) has terms Material to the interests of the Lessor not Materially
less advantageous to the Lessor.
FORM OF GUARANTY - Page 27
(ii) The Guarantor will not waive, amend, modify, terminate or
release the Subordinated Note Indenture, to the extent that any such
waiver, amendment, supplement, modification, termination or release would
be adverse to the Lessor in any Material respect.
(h) LIMITATIONS ON SALE LEASEBACKS. The Guarantor will not, and will
not permit any of the Restricted Subsidiaries to, enter into or effect any Sale
Leasebacks of Stores, other than Permitted Sale Leasebacks.
(i) CONSOLIDATED LEASE EXPENSE. The Guarantor will not permit
Consolidated Lease Expense for any fiscal year of the Guarantor set forth below
to exceed the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
1998 $ 85,000,000
1999 90,000,000
2000 100,000,000
2001 110,000,000
2002 120,000,000
2003 130,000,000
2004 140,000,000
2005 140,000,000
2006 140,000,000
(j) CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDA RATIO. The
Guarantor will not permit the Consolidated Total Debt to Consolidated EBITDA
Ratio for any Test Period ending during any period set forth below to be
greater than the ratio set forth below opposite such period:
Period Ratio
------ -----
The date hereof through second
fiscal quarter of 1999 6.75:1.00
Last two fiscal quarters of 1999 6.50:1.00
First two fiscal quarters of 2000 5.75:1.00
Last two fiscal quarters of 2000 5.00:1.00
First two fiscal quarters of 2001 4.50:1.00
Last two fiscal quarters of 2001 4.00:1.00
Fiscal year 2002 3.50:1.00
Fiscal year 2003 and thereafter 3.00:1.00
(k) CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE RATIO.
The Guarantor will not permit the Consolidated EBITDA to Consolidated
Interest Expense Ratio for any Test Period ending during any period set forth
below to be less than the ratio set forth below opposite such period:
Period Ratio
------ -----
Fiscal year 1998 1.75:1.00
Fiscal year 1999 1.75:1.00
First two fiscal quarters of 2000 1.90:1.00
Last two fiscal quarters of 2000 2.00:1.00
First two fiscal quarters of 2001 2.25:1.00
Last two fiscal quarters of 2001 2.50:1.00
Fiscal year 2002 2.75:1.00
Fiscal year 2003 and thereafter 3.00:1.00
FORM OF GUARANTY - Page 28
(l CAPITAL EXPENDITURES.
(i) The Guarantor will not, and will not permit any of the
Restricted Subsidiaries to, make any Capital Expenditures (other than
Distribution Capital Expenditures and Permitted Acquisitions that
constitute Capital Expenditures), that would cause the aggregate amount of
such Capital Expenditures made by the Guarantor and the Restricted
Subsidiaries in any fiscal year of the Guarantor set forth below to exceed
the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
1998 $225,000,000
1999 180,000,000
2000 180,000,000
2001 150,000,000
2002 150,000,000
2003 150,000,000
2004 150,000,000
2005 150,000,000
2006 150,000,000
To the extent that Capital Expenditures (other than Distribution Capital
Expenditures and Permitted Acquisitions that constitute Capital
Expenditures) made by the Guarantor and the Restricted Subsidiaries during
any fiscal year are less than the maximum amount permitted to be made for
such fiscal year, 75% of such unused amount (each such amount, a
"CARRY-FORWARD AMOUNT") may be carried forward to the immediately
succeeding fiscal year and utilized to make such Capital Expenditures in
such succeeding fiscal year in the event the amount set forth above for
such succeeding fiscal year has been used (it being understood and agreed
that (1) no carry-forward amount may be carried forward beyond the first
three fiscal years immediately succeeding the fiscal year in which it
arose, (2) no portion of the carry-forward amount available for any fiscal
year may be used until the entire amount of such Capital Expenditures
permitted to be made in such fiscal year (without giving effect to such
carry-forward amount) shall be made and (3) if the carry-forward amount
available for any fiscal year is the sum of amounts carried forward from
each of the two or three immediately preceding fiscal years, no portion of
such carry-forward amount from the earlier of the two or three immediately
preceding fiscal years may be used until the entire portion of such
carry-forward amount from the more recent immediately preceding fiscal year
shall have been used for such Capital Expenditures made in such fiscal
year).
(ii) The Guarantor will not, and will not permit any of the
Restricted Subsidiaries to, make Distribution Capital Expenditures in
excess of $80,000,000 from and after June 27, 1997.
9. EVENTS OF DEFAULT.
(a Any of the following shall constitute an "EVENT OF DEFAULT":
(i) PAYMENTS. The Guarantor shall fail to pay if, when and as
the same becomes due, all sums due and payable under this Guaranty, and
such failure continues for more than five (5) Business Days after such
payment is due and payable hereunder; or
(ii) REPRESENTATIONS, ETC. Any representation, warranty or
statement made or deemed made by the Guarantor herein or in any certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove to be untrue in any Material respect on the date as of which made or
deemed made; or
FORM OF GUARANTY - Page 29
(iii) COVENANTS. The Guarantor shall (1) default in the due
performance or observance by it of any term, covenant or agreement
contained in SECTION 7(a)(v) or SECTION 8 or (2) default in the due
performance or observance by it of any term, covenant or agreement (other
than those referred to in SECTIONS 9(a)(i) or (ii) or CLAUSE (1) of this
SECTION 9(a)(iii)) contained in this Guaranty and such default shall
continue unremedied for a period of at least 30 days after receipt of
written notice by the Guarantor from the Lessor; or
(iv) DEFAULT UNDER OTHER AGREEMENTS. (1) the Guarantor or any
of the Restricted Subsidiaries shall (x) default in any payment with
respect to any Indebtedness (other than the Liabilities) in excess of
$20,000,000 in the aggregate, for the Guarantor and such Subsidiaries,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (y) default in the observance
or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or (except in the case of Indebtedness
consisting of any Hedge Agreement) any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness
to become due prior to its stated maturity; or (2) without limiting the
provisions of CLAUSE (1) above, any such Indebtedness (other than
Indebtedness consisting of any Hedge Agreement) shall be declared to be due
and payable, or required to be prepaid other than by a regularly scheduled
required prepayment or as a mandatory prepayment, prior to the stated
maturity thereof; or
(v) BANKRUPTCY, ETC. The Guarantor or any Specified
Subsidiary shall commence a voluntary case concerning itself under Title 11
of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "BANKRUPTCY CODE"); or an involuntary
case is commenced against the Guarantor or any Specified Subsidiary and the
petition is not controverted within 10 days after commencement of the case;
or an involuntary case is commenced against the Guarantor or any Specified
Subsidiary and the petition is not dismissed within 60 days after
commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Guarantor or any Specified Subsidiary; or the Guarantor or
any Specified Subsidiary commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Guarantor or any
Specified Subsidiary; or there is commenced against the Guarantor or any
Specified Subsidiary any such proceeding that remains undismissed for a
period of 60 days; or the Guarantor or any Specified Subsidiary is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Guarantor or any
Specified Subsidiary suffers any appointment of any custodian or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Guarantor or any Specified
Subsidiary makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Guarantor or any Specified Subsidiary for
the purpose of effecting any of the foregoing; or
(vi) ERISA. (1) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code; any Plan is or shall have been terminated or
is the subject of termination proceedings under ERISA (including the giving
of written notice thereof); an event shall have occurred or condition shall
exist in either case entitling the PBGC to terminate any Plan or to appoint
a trustee to administer the Plan (including the giving of written notice
thereof); any Plan shall have an accumulated funding deficiency (whether or
not waived); the Guarantor or any Subsidiary or any ERISA Affiliate has
incurred or is likely to incur a liability to or on account of a Plan under
Section 409, 502(i), 502(l), 515, 4062, 4064, 4069, 4201 or 4204 of ERISA
or Section 4971 or 4975 of the Code (including the giving of written notice
thereof); (2) there could result from any event or events set forth in
CLAUSE (1) of this SECTION 9(a)(vi) the imposition of a lien, the granting
of a security interest, or a liability, or the reasonable likelihood of
incurring a lien, security interest or liability; and (3) such lien,
security interest or liability will or would be
FORM OF GUARANTY - Page 30
reasonably likely to have a Material Adverse Effect; or
(vii) GUARANTEES. This Guaranty or any Subsidiary Guaranty or
Subsidiary Residual Guaranty or any material provision hereof or thereof
shall cease to be in full force or effect or the Guarantor or any
Subsidiary Guarantor shall deny or disaffirm in writing the Guarantor's or
any applicable Subsidiary Guarantor's obligations hereunder or thereunder,
as the case may be; or
(viii) JUDGMENTS. One or more judgments or decrees shall be
entered against the Guarantor or any of the Restricted Subsidiaries
involving a liability of $20,000,000 or more in the aggregate for all such
judgments and decrees for the Guarantor and the Restricted Subsidiaries (to
the extent not paid or fully covered by insurance provided by a carrier not
disputing coverage) and any such judgments or decrees shall not have been
satisfied, vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof; or
(ix) CHANGE OF CONTROL. A Change of Control shall occur.
10. REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights
or remedies of the Lessor provided for elsewhere in this Guaranty or the
Lease Documents, or by any Requirement of Law, or in equity, or otherwise:
(a) Upon the occurrence of any Event of Default, the Lessor may
without any notice to (except as expressly provided herein or in any Lease
Document) or demand upon Guarantor, which are expressly waived by Guarantor
(except as to notices expressly provided for herein or in any Lease
Document), proceed to protect, exercise and enforce the rights and remedies
of the Lessor against Guarantor hereunder or under the Lease Documents and
such other rights and remedies as are provided by Requirement of Law or
equity.
(b) The rights provided for in this Guaranty and the Lease
Documents are cumulative and are not exclusive of any other rights, powers,
privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
(c) The order and manner in which the Lessor's rights and remedies
are to be exercised shall be determined by the Lessor in its sole discretion,
and all payments received by the Lessor shall be applied first to the costs
and expenses (including reasonable Attorney Costs incurred by the Lessor) of
the Lessor, then to the payment of all accrued and unpaid amounts due under
any Lease Documents to and including the date of such application. To the
extent permitted by applicable law, no application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration, of
amounts payable under the Lease Documents, or prevent the exercise, or
continued exercise, of rights or remedies of the Lessor hereunder or
thereunder or under any Requirement of Law or in equity.
11. PAYMENTS. Each payment by the Guarantor to you under this Guaranty
shall be made by transferring the amount thereof in immediately available
funds without set-off or counterclaim.
12. COSTS, EXPENSES AND TAXES. The Guarantor agrees to pay on demand:
(i) all reasonable out-of-pocket costs and expenses of the Lessor in
connection with the preparation, execution and delivery of this Guaranty and
the Lease Documents and the other documents to be delivered hereunder,
including the reasonable fees and out-of-pocket expenses of counsel for the
Lessor with respect thereto and with respect to advising the Lessor as to its
rights and responsibilities under this Guaranty and the Lease Documents, and
any modification, supplement or waiver of any of the terms of this Guaranty
or any Lease Document, (ii) all reasonable costs and expenses of the Lessor
hereunder and under the Lease Documents, including reasonable legal fees and
expenses, in connection with a default or the enforcement of this Guaranty
and the Lease Documents and (iii) reasonable costs and expenses incurred in
connection with third party professional services reasonably required by the
Lessor pursuant to the Lease Documents such as appraisers, environmental
consultants, accountants or similar Persons; PROVIDED that except during the
continuance of any Event of Default hereunder, the Lessor will first obtain
the consent of the Guarantor to such expense, which consent shall not be
unreasonably withheld. Without prejudice to the survival of any other
obligations of the Guarantor
FORM OF GUARANTY - Page 31
hereunder, the obligations of the Guarantor under this Section shall survive
the termination of this Guaranty.
13. SUBROGATION. The Guarantor shall not be subrogated, in whole or in
part, to your rights or those of any subsequent assignee or transferee of any
of the Liabilities until all the Liabilities to you and every such subsequent
assignee or transferee shall have been paid in full, and Guarantor hereby
waives any and all such rights. The provisions of this SECTION 13 shall
survive the termination of this Guaranty and any satisfaction and discharge
of Lessee by virtue of any payment, court order, or law.
14. NO WAIVER; REMEDIES. No failure on the part of the Lessor to
exercise, and no delay in exercising, any right hereunder or under any Lease
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, or any abandonment or discontinuance of any steps
to enforce such right, preclude any other or further exercise thereof or the
exercise of any other right. No notice to or demand on the Guarantor in any
case shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances. The remedies herein are cumulative and not
exclusive of any other remedies provided by law, at equity or in any other
agreement.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained herein or made in writing by the Guarantor
in connection herewith shall survive the execution and delivery of this
Guaranty and the termination of the Lease Documents and will bind and inure
to the benefit of the respective successors and assigns of the parties
hereto, whether so expressed or not.
16. CONFIDENTIALITY. The Lessor agrees to keep any information
delivered or made available by the Guarantor to it which is clearly indicated
to be confidential information, confidential from anyone other than Persons
employed or retained by the Lessor who are or are expected to become engaged
in evaluating, approving, structuring or administering the Lease Documents;
PROVIDED that nothing herein shall prevent the Lessor from disclosing such
information (a) to the Agent or any Bank, (b) pursuant to subpoena or upon
the order of any court or administrative agency, (c) upon the request or
demand of any regulatory agency or authority having jurisdiction over Lessor,
(d) which has been publicly disclosed, (e) to the extent reasonably required
in connection with any litigation to which the Lessor, the Guarantor or its
respective Affiliates may be a party, (f) to the extent reasonably required
in connection with the exercise of any remedy hereunder and (g) to Lessor's,
Agent's or any Bank's legal counsel and independent auditors. The Lessor
will promptly notify the Guarantor of any information that it is required or
requested to deliver pursuant to clause (b) or (c) of this SECTION 16 and, if
the Guarantor is a party to any such litigation, clause (e) of this SECTION
16.
17. SEPARABILITY. Should any clause, sentence, paragraph or Section of
this Guaranty be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the
remainder of this Guaranty, and the parties hereto agree that the part or
parts of this Guaranty so held to be invalid, unenforceable or void will be
deemed to have been stricken herefrom and the remainder will have the same
force and effectiveness as if such part or parts had never been included
herein.
18. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
19. INTERPRETATION.
(a) In this Guaranty, unless a clear contrary intention appears:
(i the singular number includes the plural number and VICE
VERSA;
(ii reference to any gender includes each other gender;
(iii the words "herein," "hereof" and "hereunder" and other
words of similar import
FORM OF GUARANTY - Page 32
refer to this Guaranty as a whole and not to any particular Article,
Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are not
prohibited by this Guaranty, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
PROVIDED that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Guaranty;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Guaranty) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance with
the terms thereof and, if applicable, the terms hereof;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof
or such Schedule or Exhibit hereto;
(vii) the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of time,
except as expressly provided to the contrary, the word "from" means "from
and including" and the word "to" means "to but excluding"; and
(ix) reference to any law, rule or regulation means such as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein are for convenience
only and shall not affect the construction hereof.
(c) No provision of this Guaranty shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
20. SUBMISSION TO JURISDICTION. The Guarantor, to the extent permitted
by applicable law, hereby agrees as follows:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, IN HARRIS COUNTY OR
ELSEWHERE IN THE STATE OF TEXAS OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE
GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS WITH
RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE GUARANTOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION
23, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LESSOR TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION.
(b) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND
FORM OF GUARANTY - Page 33
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
21. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH, AND AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
22. PARTIES. This Guaranty shall inure to the benefit of you and your
successors, assigns or transferees, and shall be binding upon the Guarantor
and its successors and assigns. The Guarantor may not assign any of its
duties under this Guaranty without the prior written consent of Lessor. You
may assign your rights and benefits under this Guaranty or the Lease
Documents to any financial institution providing financing to you in
connection with the Lease Documents.
23. NOTICES. All notices, consents, requests, approvals, demands and
other communications provided for herein shall be in writing (including
telecopy communications) and mailed, telecopied, sent by overnight courier or
delivered:
(a) If to the Guarantor:
Randall's Food Markets, Inc.
3663 Briarpark
Houston, Texas 77042
Attention: Mr. Lee Straus
Telephone: (713) 268-3617
Telecopy: (713) 268-3605
with copies to
Randall's Properties, Inc.
3663 Briarpark
Houston, Texas 77042
Attention: Mr. Joe R. Rollins
Telephone: (713) 268-3661
Telecopy: (713) 268-3601
and
Vinson & Elkins LLP
2300 First City Tower
1001 Fannin Street
Houston, Texas 77012-6760
Attention: Mr. Sanford A. Weiner
Telephone: (713) 758-2558
Telecopy: (713) 615-5268
FORM OF GUARANTY - Page 34
(b) If to the Lessor:
Brazos Markets Development, L.P.
2911 Turtle Creek Blvd., Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
Telephone: (214) 522-7296
Telecopy: (214) 520-2009
with a copy to
Robert R. Veach, Jr.
2911 Turtle Creek Blvd., Suite 1240A
Dallas, Texas 75219
Telephone: (214) 522-7544
Telecopy: (214) 520-2009
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties given in accordance with the provisions of this SECTION 23.
Other than the service of process set forth in SECTION 20(a) above, all
communications shall be effective three Business Days after the date when
mailed by certified mail, return receipt requested postage prepaid to any
party at its address specified above, or upon receipt if telecopied to any
party to the telecopy number set forth above, or upon receipt if delivered
personally to any party at its address specified above.
24. TERM. This Guaranty is not limited to any particular period of
time, but shall continue in full force and effect until all of the
Liabilities have been fully and finally paid or have been otherwise
discharged by you, and the Guarantor shall not be released from any
obligation or liability hereunder until such full payment or discharge shall
have occurred.
25. GOVERNING LAW. This Guaranty and all other documents executed in
connection herewith shall be deemed to be contracts and agreements executed
by the Guarantor and Lessor under the laws of the State of Texas and of the
United States of America and for all purposes shall be construed in
accordance with, and governed by, the laws of said state and of the United
States of America.
26. INDEMNITY.
(a) The Guarantor shall indemnify the Lessor and each Affiliate
thereof and their respective directors, officers, employees and agents (each,
an "INDEMNIFIED PERSON") from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages (including reasonable legal
fees and expenses) to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from any actual
or proposed use by the Lessee of the proceeds of any extension of credit or
any investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing, and the Guarantor
shall assume the defense thereof, including the employment of counsel at
Guarantor's expense; PROVIDED that Guarantor shall not have such right, to
the extent that such Indemnified Person shall deliver to Guarantor a written
notice waiving the benefits of the indemnification of such Indemnified Person
provided by this SECTION 26(a) in connection with such claim, action,
proceeding or suit. Notwithstanding the foregoing, if (i) any claim, action,
proceeding or suit is brought against an Indemnified Person who is an
individual, (ii) the claim, action, proceeding or suit seeks damages of more
than $500,000, or (iii) independent counsel to an Indemnified Person shall
conclude that there may be defenses available to the Indemnified Person which
may conflict with those available to Guarantor, Guarantor shall not have the
right to assume the defense of any such claim, action, proceeding or suit on
behalf of the Indemnified Person if such Indemnified Person chooses to defend
such claim, action, proceeding or suit (with counsel reasonably acceptable to
Guarantor), and
FORM OF GUARANTY - Page 35
all reasonable costs, expenses and attorneys' fees incurred by the
Indemnified Person in defending such claim, action, proceeding or suit shall
be borne by Guarantor; PROVIDED HOWEVER, if there is more than one (1)
Indemnified Person having a right to defend such claim, action, proceeding or
suit as aforesaid, the obligation of Guarantor to pay the fees and expenses
of such Indemnified Person shall be limited to one (1) firm of attorneys.
Any Indemnified Person shall also have the right to employ separate counsel
and to participate in its defense, but the fees and expenses of such counsel
shall be borne by such Indemnified Person. Any decision by an Indemnified
Person to employ its own counsel (whether or not at Guarantor's expense)
shall in no way affect any rights of such Indemnified Person otherwise
arising under this SECTION 26(a). In addition, Guarantor will not be liable
for any settlement of any claim, action, proceeding or suit unless Guarantor
has consented thereto in writing. The foregoing indemnity and agreement to
hold harmless shall not in any event apply to any losses, liabilities,
claims, damages or expenses incurred by reason of (i) the gross negligence or
willful misconduct of the Person to be indemnified or (ii) any Material
default by Lessor or any other Indemnified Person that is not cured within
any applicable cure period, if any, under any of the Lease Documents or to
any consequential damages or loss of profit or loss of any fees to Brazos
(except to the extent specified in the letter from Brazos to Lessee dated as
of September 10, 1998, designated therein as the "Brazos Margin Letter").
(b) WITHOUT LIMITING ANY PROVISION OF THIS GUARANTY, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY
AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES: (i) ARISING OUT OF OR
RESULTING FROM THE ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR
(ii) IMPOSED UPON SAID PARTY UNDER ANY THEORY OR STRICT LIABILITY. Without
prejudice to the survival of any other obligations of the Guarantor hereunder
and under the Lease Documents, the obligations of the Guarantor under this
Section shall survive the termination of this Guaranty and the Lease
Documents and the payment of the Liabilities.
27. NEW GUARANTY.
(a) In the event that (i) any Lease Document is rejected by a
trustee or debtor-in-possession in any bankruptcy or insolvency proceeding
involving the Lessee or (ii) any Lease Document is terminated as a result of
any bankruptcy or insolvency proceeding involving the Lessee and, if within
sixty (60) days after such rejection or termination, the Lessor or its
Applicable Designee (as hereinafter defined) shall so request and shall agree
in writing with the Lessee to perform the obligations of the Lessor as and to
the extent required under such Lease Document, the Guarantor will, unless
prohibited by bankruptcy or other applicable law, upon the Agent's or its
Applicable Designee's acquiring title to the properties covered by to such
Lease Document and entering into new Lease Documents pursuant to Section 4.4
of the Lessee Consent, execute and deliver to the Lessor or such Applicable
Designee a new Guaranty that shall contain the same conditions, agreements,
terms, provisions and limitations as such original Guaranty (except for any
requirements which have been fulfilled by the Lessee and the Guarantor prior
to such rejection or termination). References in this Guaranty to such "LEASE
DOCUMENT" shall be deemed also to refer to such new Lease Document. As used
herein, the term "APPLICABLE DESIGNEE" means an entity designated by the
Agent and which possesses the power and authority to perform the obligations
of the Borrower under the Lease Documents and is at least as creditworthy as
the Borrower is on the date of this Agreement.
(b) Upon written request by the Lessor to the Lessee given on or
after any foreclosure, trustee sale or conveyance in lieu thereof of the
Mortgaged Premises, the owner of the Mortgaged Premises, as landlord, and the
Lessee, as tenant, shall execute a lease of the Mortgaged Premises containing
all of the same terms, provisions, options and conditions as are contained in
the Lease Documents, which lease shall be for the unexpired portion of the
term of the Lease Documents, as to the Mortgaged Premises. Upon written
request by Lessor to Guarantor relating to the execution by Lessee of a new
lease of the Ground or Facility, the Guarantor hereby agrees to execute a new
Guaranty that shall contain the same conditions, agreements, terms,
provisions and limitations as such original Guaranty (except for any
requirements which have been fulfilled by the Lessee and the Guarantor prior
to such rejection or termination) in form and substance substantially
equivalent to this Guaranty which shall relate to each new lease.
FORM OF GUARANTY - Page 36
Sincerely yours,
RANDALL'S FOOD MARKETS, INC.,
a Texas corporation
By: /s/ Lee Straus
------------------------------------------
Lee Straus, Senior Vice President-Finance,
Secretary and Treasurer
FORM OF GUARANTY - Page 37
ACCEPTED AND AGREED as of the date first above written:
BRAZOS MARKETS DEVELOPMENT, L.P.,
a Delaware limited partnership
By: BRAZOS MARKETS MANAGEMENT,
INC., a Delaware corporation, its
General Partner
By: /s/ Daniel D. Boeckman
-----------------------------------
Daniel D. Boeckman, Executive Vice
President
FORM OF GUARANTY - Page 38
SCHEDULE 6(k)
SUBSIDIARIES
FORM OF GUARANTY - Page 1
SCHEDULE 8(a)
INDEBTEDNESS
FORM OF GUARANTY - Page 1