GUARANTEE
dated as of March 11, 1998
made by
the GUARANTORS
referred to herein
in favor of
BANKERS TRUST COMPANY,
as Administrative Agent and Collateral Agent
THE CHASE MANHATTAN BANK,
as Syndication Agent
THE VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED AS LENDERS IN THE PARTICIPATION AGREEMENT,
as Lenders
and
THE VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED AS INVESTORS IN THE PARTICIPATION AGREEMENT,
as Investors
GUARANTEE
THIS GUARANTEE (this "Guarantee"), dated as of March 11, 1998, is made by
each of the Guarantors listed on the signature pages hereof under the caption
"Guarantors" (collectively, the "Guarantors"), in favor of FMS TRUST 1997-1, as
Lessor; BANKERS TRUST COMPANY, as Administrative Agent and Collateral Agent (the
"Administrative Agent") under the Participation Agreement (as defined below);
THE CHASE MANHATTAN BANK, as Syndication Agent (the "Syndication Agent"); each
of the financial institutions as are or may from time to time become Lenders
pursuant to the terms of the Participation Agreement (the "Lenders"); and each
of the financial institutions as are or may from time to time become Investors
pursuant to the terms of the Participation Agreement, as Investors (the
"Investors") (each of the Lenders, the Lessor, the Investors, the Administrative
Agent and the Syndication Agent being referred to herein collectively as the
"Guaranteed Parties").
W I T N E S S E T H:
WHEREAS, as a condition to the occurrence of the Initial Closing Date under
the Participation Agreement dated as of the date hereof (together with all
amendments, supplements, amendments and restatements and other modifications, if
any, from time to time thereafter made thereto, the "Participation Agreement"),
among the Lessee and Construction Agent, the Lessor, the Owner Trustee, the
Investors, the Administrative Agent, the Syndication Agent and the Lenders, the
Guarantors are required to execute and deliver this Guarantee in favor of the
Guaranteed Parties;
WHEREAS, each of the Guarantors has duly authorized the execution, delivery
and performance of this Guarantee; and
WHEREAS, it is in the best interests of the Guarantors to execute this
Guarantee inasmuch as the Guarantors will derive substantial benefits from the
transactions contemplated by the Participation Agreement and the other Operative
Agreements;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Guaranteed Parties to enter into
the Participation Agreement, each of the Guarantors agrees, for the benefit of
the Guaranteed Parties, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used but not otherwise defined
in this Guarantee have the respective meanings specified in Annex A to the
Participation Agreement (as such Annex A may be amended, supplemented, amended
and restated or otherwise modified from time to time, "Annex A"); and the rules
of interpretation set forth therein shall apply to this Guarantee.
SECTION 1.2. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the Uniform
Commercial Code as in affect in the State of New York are used in this
Guarantee, including its preamble and recitals, with such meanings.
ARTICLE II
GUARANTEE PROVISIONS
SECTION 2.1. Guarantee. The Guarantors, as primary obligors and not as
sureties, hereby jointly, severally, absolutely, unconditionally and irrevocably
guarantee to each of the Guaranteed Parties the following obligations
(collectively, the "Guaranteed Obligations"):
(a) the due, punctual and full payment by each Loan Party, the Lessor
and the Owner Trustee (for purposes of this Guarantee, each an "Obligor"
and collectively the "Obligors"), whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all
Obligations and amounts to be paid by such Obligor pursuant to any
Operative Agreement to which such Obligor (except to the extent such
payment is to be made by the Trust Company in its individual capacity) is
or is to be a party, whether for Investor Contributions, Investor Yield,
principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
ss.362(a), and the operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506 (b)); and
(b) the due, prompt and faithful performance of, and compliance with,
all other obligations, covenants, terms, conditions and undertakings of
each Obligor (except to the extent such performance and/or compliance is to
be made by the Trust Company in its individual capacity) contained in each
Operative Agreement to which such Obligor is or is to be a party in
accordance with the terms thereof.
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SUBSIDIARY GUARANTEE
Notwithstanding the foregoing, the Guarantors shall not be obligated to (i)
make any payment hereunder in respect of principal of any Tranche B Loans or
outstanding fundings of Investor Contribution unless at such time a Default or
Event of Default has occurred and is continuing or (ii) pay under this Guarantee
any amounts due under the Lease on behalf of any Lessee other than such amount
as such Lessee would be obligated to pay under the Lease assuming the Lease were
enforced in accordance with its terms (and without giving effect to any
discharge or limitation thereon resulting or arising by reason of the bankruptcy
or insolvency of such Lessee).
The Guarantors further agree that they shall jointly and severally
indemnify and hold harmless each Guaranteed Party for any and all costs and
expenses (including reasonable attorney's fees and expenses) incurred by such
Guaranteed Party in enforcing any rights under this Guarantee after the
occurrence of an Event of Default.
This Guarantee constitutes a guarantee of payment when due and not of
collection, and each of the Guarantors specifically agrees that it shall not be
necessary or required that any Guaranteed Party exercise any right, assert any
claim or demand or enforce any remedy whatsoever against any Loan Party (or any
other Person) before or as a condition to the enforcement of its obligations
hereunder.
SECTION 2.2. Guarantee Absolute, etc. This Guarantee shall in all respects
be a continuing, absolute, unconditional and irrevocable guarantee of payment,
and shall remain in full force and effect until all Guaranteed Obligations have
been paid in full and all obligations of each Guarantor hereunder shall have
been paid in full. Each of the Guarantors guarantees that the Guaranteed Obliga
tions will be paid strictly in accordance with the terms of the Lease and each
other Operative Agreement under which they arise, in each case regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Guaranteed Party. The liability
of the Guarantors under this Guarantee shall be joint, several, absolute,
unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of any Operative
Agreement;
(b) the failure of any Guaranteed Party:
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SUBSIDIARY GUARANTEE
(i) to assert any claim or demand or to enforce any right or
remedy against the Lessee or any other Person (including any other
Guarantor) under the provisions of any Operative Agreement or
otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
extension, compromise or renewal of any of the Guaranteed Obligations;
(d) any reduction, limitation, impairment or termination of the
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to
(and each Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the Guaran
xxxx Obligations;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of any Operative Agreement;
(f) any addition, exchange, release, surrender or nonperfection of any
collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guarantee, held by any Guaranteed
Party securing any of the Guaranteed Obligations; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Loan Party, any
surety or any guarantor.
SECTION 2.3. Reinstatement, etc. (a) Each of the Guarantors agrees that
this Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment (in whole or in part) of any of the Guaranteed
Obligations is rescinded or must otherwise be restored by any Guaranteed Party,
upon the insolvency, bankruptcy or reorganization of the Lessee or otherwise, as
though such payment had not been made.
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SUBSIDIARY GUARANTEE
(b) This Guarantee shall be automatically and unconditionally released
and discharged, without any further action required on the part of the
beneficiary hereof or any other party hereto, upon: (i) the release of the
Guarantors from their Subsidiary Guarantees dated as of March 11, 1998 to
Bankers Trust Company, as Administrative Agent in respect of the $3,750,000,000
Loan Agreement dated as of March 11, 1998 among FMI, the lenders set forth on
the signature pages thereof, Bankers Trust Company, as Administrative Agent,
and The Chase Manhattan Bank, as Syndication Agent (the "Loan Agreement"), as
such Loan Agreement may be hereafter amended and any successor facilities
thereto; or (ii) any sale or other disposition (by merger or otherwise) to any
Person which is not a subsidiary of FMI of all of the capital stock in, or all
or substantially all of the assets of, the Guarantors, provided that such sale
or disposition of such capital stock or assets is otherwise in compliance with
the terms of the Operative Agreements. The parties hereto agree that the
foregoing is for the benefit of the lenders party to the Loan Agreement and may
not be amended, modified or waived (and no provision inconsistent therewith
adopted) without the consent of such lenders.
SECTION 2.4. Waiver, etc. Each of the Guarantors hereby waives (i)
promptness, diligence, notice of acceptance and any other notice (other than
those provided for in the Operative Agreements) with respect to any of the
Guaranteed Obligations and this Guarantee and (ii) any requirement that any
Guaranteed Party protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against any Loan Party or any other Person (including any other guarantor or
entity or any collateral securing the Guaranteed Obligations).
SECTION 2.5. Waiver of Subrogation. So long as any of the Guaranteed
Obligations remain unpaid, each of the Guarantors hereby agrees that it will not
claim and hereby irrevocably waives for such period any claim or other rights
which it may now or hereafter acquire against any Loan Party that arise from the
existence, payment, performance or enforcement of the Guarantors' obligations
under this Guarantee or any other Operative Agreement, including any right of
subrogation, reimbursement, exoneration, or indemnification, any right to
participate in the claim or remedy of the Guaranteed Parties against any Lessee
or any collateral which the Administrative Agent or the Lessor now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including the right to take or receive
from such Loan Party, directly or indirectly, in cash or other property or by
set-off or in any manner, payment or security on account of such claim or other
rights until all Guaranteed Obligations are satisfied. If any amount shall be
paid to any of the Guarantors in violation of the preceding sentence and the
Guaranteed Obligations
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SUBSIDIARY GUARANTEE
shall not have been paid in cash in full until all Guaranteed Obligations are
satisfied, such amount shall be deemed to have been paid to such Guarantor for
the benefit of, and held in trust for, the Guaranteed Parties, and shall
forthwith be paid to the Guaranteed Parties to be credited and applied upon the
Guaranteed Obligations, whether matured or unmatured. Each of the Guarantors
acknowledges that it will receive benefits from the financing and other
arrangements contemplated by the Operative Agreements and that the waiver set
forth in this Section is knowingly made in contemplation of such benefits.
SECTION 2.6. Subordination. Any rights of any Guarantor, whether now
existing or later arising, to receive payment on account of any indebtedness
(including interest) owed to it by FMI or to receive any payment from FMI shall
at all times be subordinate as to lien and time of payment and in all other
respects to the full and prior repayment of the Obligations and any obligations
under the Corporate Loan Documents. The Guarantors shall not be entitled to
enforce or receive payment of any sums hereby subordinated until the Obligations
have been paid and performed in full and any such sums received in violation of
this Guarantee shall be received by the Guarantors in trust for the Guaranteed
Parties and immediately turned over to same.
SECTION 2.7. Consent to Jurisdiction; Waiver of Immunities. Each of the
Guarantors hereby acknowledges and agrees that:
(a) It irrevocably submits to the jurisdiction of any federal court
sitting in the Southern District of New York in any action or proceeding
arising out of or relating to this Guarantee, and each Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such federal court. Each Guarantor hereby
irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. Each Guarantor agrees that a final, unappealable judgment in
any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided
by law.
(b) Nothing in this Section shall affect the right of any Guaranteed
Party to serve legal process in any manner permitted by law or affect the
right of any Guaranteed Party to bring any action or proceeding against any
Guarantor or its property in the courts of any other jurisdictions.
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SUBSIDIARY GUARANTEE
SECTION 2.8. Obligations Independent. The obligations of each Guarantor
hereunder are independent of the obligations of any other Guarantor, any other
guarantor or any other Loan Party, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor, any other guarantor or any other Loan Party, and
whether or not any other Guarantor, any other guarantor or any other Loan Party
be joined in any such action or actions.
SECTION 2.9. Bankruptcy. In the event of a rejection of the Lease or any
Lease Supplement in a bankruptcy or insolvency proceeding of the Lessee, each
Guarantor agrees that it will pay forthwith all payments required to be made by
such Lessee under the Lease and Lease Supplements as though such rejection had
not occurred. Each Guarantor confirms that it is the intention of all of the
Participants that neither the guarantee by such Guarantor pursuant to this
Guarantee nor any liability or payment by it hereunder shall (i) render such
Guarantor "insolvent," or (ii) constitute a fraudulent transfer or conveyance,
or (iii) constitute a transaction at an undervalue or preference, or (iv) give
rise to any similar or analogous event, thing or circumstance, in each case, for
purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyances Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law. To
effectuate the foregoing intention, the Guaranteed Parties and each Guarantor
hereby irrevocably agrees that the Guaranteed Obligations of such Guarantor
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the Guaranteed Obligations of such other Guarantor under this
Guarantee, result in the Guaranteed Obligations of such Guarantor hereunder
neither rendering the Guarantor "insolvent" nor constituting such fraudulent
transfer or conveyance, such transaction at an undervalue or preference or such
other event, thing or circumstance, in each case, under any such law.
SECTION 2.10. Contribution. In order to provide for just and equitable
contribution among the Guarantors, the Guarantor agrees, that in the event any
payment or distribution is made by any other Guarantor (a "Funding Guarantor")
under its Guarantee, such Funding Guarantor shall be entitled to a contribution
from all other Guarantors, including the Guarantor, in a pro rata amount based
on the Adjusted Net Assets of each Guarantor (including the Funding Guarantor)
for all payments, damages and expenses incurred by that Funding Guarantor in
discharging the Obligations of the Borrower, and the Guarantor agrees (i) to
cooperate with the other Guarantors to determine whether such contributions are
required and (ii) to make such contribution, if the Guarantors agree that such
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SUBSIDIARY GUARANTEE
contribution is required by the Guarantor. "Adjusted Net Assets" of such Guaran
tor at any date shall mean the lesser of (x) the amount by which the fair value
of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date
(other than liabilities of such Guarantor subject to a Subordination
Agreement)), but excluding liabilities under the Guarantee, of such Guarantor at
such date and (y) the amount by which the present fair salable value of the
assets of such Guarantor at such date exceeds the amount that will be required
to pay the probable liabilities of such Guarantor on its debts, excluding debt
in respect of the Guaranty of such Guarantor, as they become absolute and
matured.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each of the Guarantors hereby
affirms the representations and warranties set forth in Section 7.3 of the
Participation Agreement, which representations and warranties are hereby incorpo
rated by reference.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.1. Operative Agreement. This Guarantee is an Operative Agreement
executed pursuant to the Participation Agreement and shall (unless expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Participation Agreement, including, without
limitation, Section 13 thereof.
SECTION 4.2. Binding on Successors, Transferees and Assigns; Assignment of
Guarantee. This Guarantee shall be binding upon each of the Guarantors and its
successors, transferees and assigns and shall inure to the benefit of and be
enforceable by each Guaranteed Party and their respective, permitted successors
and assigns; provided, however, that no Guarantor may assign any of its obliga
tions hereunder without the prior written consent of each Participant.
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SUBSIDIARY GUARANTEE
SECTION 4.3. Amendments, etc. No amendment to or waiver of any provision of
this Guarantee, nor consent to any departure by any of the Guarantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent and the Lessor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 4.4. Addresses for Notices to the Guarantor. All notices, demands,
requests, consents, approvals and other communications hereunder shall be in
writing and directed to the address described in, and deemed received in
accordance with the provisions of, Section 13.2 of the Participation Agreement.
SECTION 4.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.2 and Section 2.4, no failure on the part of any Guaranteed Party
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 4.6. Section Captions. Section captions used in this Guarantee are
for convenience of reference only, and shall not affect the construction of this
Guarantee.
SECTION 4.7. Setoff. In addition to, and not in limitation of, any rights
of any Guaranteed Party under applicable law, each Guaranteed Party shall, upon
the occurrence of any Lease Event of Default or any Construction Agency Agree
ment Event of Default, have the right to appropriate and apply to the payment of
the obligations of the Guarantors owing to it hereunder, to the extent then due,
and each of the Guarantors hereby grants to each Guaranteed Party a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of such Guarantor then or thereafter maintained with such Guaranteed
Party; provided, however, that any such appropriation and application shall be
subject to the provisions of the Participation Agreement.
SECTION 4.8. Severability. Wherever possible each provision of this
Guarantee shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guarantee shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guarantee.
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SUBSIDIARY GUARANTEE
SECTION 4.9. Termination of Guarantee. The Guarantors' obligations under
this Guarantee shall terminate on the date upon which all Guaranteed Obligations
have been paid in full, and all other Obligations shall have been fully and
finally discharged.
SECTION 4.10. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 4.11. Waiver of Jury Trial. EACH OF THE GUARANTORS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS GUARANTEE. EACH OF THE GUARANTORS
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTICIPANTS ENTERING INTO THE PARTICIPATION AGREEMENT.
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SUBSIDIARY GUARANTEE
IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be
executed and delivered as of the date first above written.
Xxxx Xxxxx Stores, Inc.
Roundup Co.
Xxxx Xxxxx of Alaska, Inc.
Xxxx Xxxxx of California, Inc.
Distribution Trucking Company
B & B Stores, Inc.
B&B Pharmacy, Inc.
CB&S Advertising Agency, Inc.
FM Holding Corporation.
Grand Central, Inc.
F M Retail Services, Inc.
Xxxx Xxxxx Jewelers, Inc.
Merksamer Jewelers, Inc.
FM Inc.
X X Properties, Inc.
Compare, Inc.
Richie's, Inc.
Quality Food Centers, Inc.
Xxxxxx Markets, Inc.
Xxxxxx Realty, Inc.
KU Acquisition Corporation
Second Story, Inc.
Quality Food, Inc.
Quality Food Holdings, Inc.
QFC Sub, Inc.
Natur Glo, Inc.
Western Property Investment Group, Inc.
By: XXXXX X. XXXXX
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Secretary
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SUBSIDIARY GUARANTEE
Xxxxx'x Food & Drug Centers, Inc.
Xxxxx'x Beverage of Wyoming
Smitty's Supermarkets, Inc.
Smitty's Super Valu, Inc.
Saint Xxxxxxxx Holding Company
Smitty's Equipment Leasing, Inc.
Food 4 Less Holdngs, Inc.
Ralphs Gorcery Company
Xxxxxx'x, Inc.
Cala Co.
Bay Area Warehouse Stores, Inc.
Cala Foods, Inc.
Xxxx Markets, Inc.
Food 4 Less of Southern California, Inc.
Alpha Beta Company
Food 4 Less GM, Inc.
Food 4 Less Merchandising, Inc.
Food 4 Less of California, Inc.
Xxxxxxxx Stores, Inc.
All By: XXXXX X. XXXXX
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Secretary
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SUBSIDIARY GUARANTEE
Treasure Valley Land Company, L.C.
By Xxxxx'x Food and Drug Centers, Inc., member
By: XXXXX X. XXXXX
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President and Secretary
S-3
