-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SdEZHIGp8jzLTGVj33aKTYvNdA16wDipKIwstcd+VyqGIUXTFlY8okLeKU3TiJRz d3PpQf7Z0zrtKzU06Q63Vw== 0000950149-01-500627.txt : 20010504 0000950149-01-500627.hdr.sgml : 20010504 ACCESSION NUMBER: 0000950149-01-500627 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLEMING COMPANIES INC /OK/ CENTRAL INDEX KEY: 0000352949 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 480222760 STATE OF INCORPORATION: OK FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-60176 FILM NUMBER: 1621830 BUSINESS ADDRESS: STREET 1: 1945 LAKEPOINTE DRIVE CITY: LEWISVILLE STATE: TX ZIP: 73126 BUSINESS PHONE: 4058407200 MAIL ADDRESS: STREET 1: 1945 LAKEPOINT DRIVE CITY: LEWISVILLE STATE: TX ZIP: 75057 S-3 1 f71894s-3.txt REGISTRATION STATEMENT ON FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2001 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ FLEMING COMPANIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OKLAHOMA 1945 LAKEPOINTE DRIVE 48-0222760 (STATE OR OTHER JURISDICTION OF LEWISVILLE, TEXAS 75057 (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) (972) 906-8000 IDENTIFICATION NUMBER)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) CARLOS M. HERNANDEZ SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY FLEMING COMPANIES, INC. 1945 LAKEPOINTE DRIVE LEWISVILLE, TEXAS 75057 (972) 906-8000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPY TO: JOHN M. NEWELL LATHAM & WATKINS 505 MONTGOMERY STREET, SUITE 1900 SAN FRANCISCO, CALIFORNIA 94111 (415) 391-0600 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this registration statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ____________ If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ____________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- PROPOSED PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) PRICE(1) FEE - --------------------------------------------------------------------------------------------------------------------- Common Stock, par value $2.50 per share......... 3,850,301 $30.075 $115,797,802.58 $28,949.45 - --------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of registration fee, based on the average of the high and low prices for the Common Stock as reported on the New York Stock Exchange on April 30, 2001, in accordance with Rule 457(c). THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 THE INFORMATION IN THIS PROSPECTUS IS INCOMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDER MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED MAY 3, 2001 PRELIMINARY PROSPECTUS [FLEMING COMPANIES, INC. LOGO] 3,850,301 SHARES OF COMMON STOCK This prospectus relates to the public offering, which is not being underwritten, of 3,850,301 shares of our common stock, par value $2.50 per share, which may be offered for sale by the selling stockholder named in this prospectus. The selling stockholder may offer its shares of common stock through one or more broker-dealers, in one or more transactions on the New York Stock Exchange in accordance with its rules, in the over-the-counter market, in negotiated transactions or otherwise, at prices related to the prevailing market prices or at negotiated prices. We will not receive any of the proceeds from the sale of the shares of common stock under this prospectus. Our common stock is traded on the New York Stock Exchange under the symbol "FLM". On April 30, 2001, the last reported sale price for our common stock on the New York Stock Exchange was $29.45 per share. INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 2. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 2001. 3 ------------------------- TABLE OF CONTENTS
PAGE ---- Disclosure Regarding Forward-Looking Statements............. i The Company................................................. 1 Risk Factors................................................ 2 Use of Proceeds............................................. 6 The Selling Stockholder..................................... 6 Plan of Distribution........................................ 7 Legal Matters............................................... 8 Independent Auditors........................................ 9 Incorporation by Reference.................................. 9 Where You Can Find More Information......................... 9
We have not authorized any dealer, salesperson or other person to give any information or to make any representations to you other than the information contained in this prospectus. You must not rely on any information or representations not contained in this prospectus as if we had authorized it. The information contained in this prospectus is current only as of the date on the cover page of this prospectus, and may change after that date. We do not imply that there has been no change in the information contained in this prospectus or in our affairs since that date by delivering this prospectus. THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO YOU UPON WRITTEN OR ORAL REQUEST. IF YOU WOULD LIKE A COPY OF ANY OF THIS INFORMATION, PLEASE SUBMIT YOUR REQUEST TO 1945 LAKEPOINTE DRIVE, BOX 299013, LEWISVILLE, TEXAS 75029, ATTENTION: LEGAL DEPARTMENT, OR CALL (972) 906-8000 AND ASK TO SPEAK TO SOMEONE IN OUR LEGAL DEPARTMENT. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS All statements other than statements of historical facts included in this prospectus and the documents incorporated by reference, including, without limitation, statements in the section entitled "Risk Factors," regarding our future financial position, business strategy and our management's plans and objectives for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct. Important factors that could cause actual results to differ materially from our expectations are disclosed under the section "Risk Factors" and elsewhere in, or incorporated by reference into, this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. i 4 THE COMPANY We are an industry leader in the distribution of consumable goods, and also have a growing presence in operating "price impact" supermarkets. Through our low-cost, high-volume nationwide network of distribution centers, we distribute products to customers that operate approximately 3,000 supermarkets, 3,000 convenience stores and nearly 1,000 supercenters, discount stores, limited assortment stores, drug stores, specialty stores and other stores across the United States. We expect to substantially increase our distribution volume in connection with, among other things, our recently announced ten-year $4.5 billion per year strategic alliance with our largest customer, Kmart Corporation, under which we will supply to Kmart substantially all of the food and consumable products in all current and future Kmart and Kmart supercenter stores in the United States and the Caribbean. As of April 23, 2001, our retail group owned and operated 103 supermarkets, comprised of 38 price impact supermarkets that offer deep-discount, everyday low prices in a warehouse-style format under the Food 4 Less banner, an additional ten supermarkets that we intend to convert to the price impact format, 44 supermarkets that utilize certain elements of the price impact format under our Rainbow Foods banner, and 11 limited assortment stores that offer a narrow selection of low-price, private label food and other consumable goods and general merchandise under our Yes!Less banner. Our principal executive offices are located at 1945 Lakepointe Drive, Lewisville, Texas 75057. Our telephone number at that location is (972) 906-8000. 1 5 RISK FACTORS Purchasing our common stock involves a high degree of risk. You should consider carefully the risks described below, together with the other information in this prospectus, before you make a decision to purchase the common stock. If any of the following risks actually occur, our business, financial condition, operating results and prospects could be materially adversely affected, which in turn could adversely affect your investment. WE NOW DEPEND ON KMART FOR A SUBSTANTIAL PORTION OF OUR BUSINESS. IF WE ARE UNABLE TO REALIZE ANTICIPATED COST SAVINGS RESULTING FROM THE ADDITIONAL VOLUME REPRESENTED BY OUR AGREEMENT, IT COULD HARM OUR FINANCIAL CONDITION. Kmart is our largest customer, accounting for 9.8% of our net sales in 2000. On February 7, 2001, we announced a ten-year agreement with Kmart Corporation, pursuant to which we agreed to supply substantially all of the food and consumable products in all current and future Kmart and Kmart supercenter stores in the U.S. and the Caribbean. As a result of this agreement, we currently anticipate that Kmart will account for a significantly greater percentage of our net sales in 2001. Accordingly, we now depend on Kmart for a substantial portion of our business. We will be required to commit substantial capital expenditures and management resources in order to perform our obligations under the Kmart agreement. If we or Kmart are unable to successfully fulfill our respective obligations under the agreement, it will harm our financial condition. More specifically, the bulk of the benefits that we anticipate receiving from the Kmart agreement depend on Kmart's achievement of certain sales projections. If Kmart fails to meet these sales projections, the benefits that we will receive as a result of the agreement will decrease. Kmart can also elect to terminate the agreement if we materially breach our obligations under the agreement, if we experience certain types of changes of control or if the volume of Kmart's purchases under the agreement declines by certain amounts. Finally, if we are unable to capture anticipated cost savings resulting from our increased purchasing power due to the Kmart agreement, it could adversely affect our results of operations and financial condition. IF THE CUSTOMERS TO WHOM WE LEND MONEY OR FOR WHOM WE GUARANTEE STORE LEASE OBLIGATIONS FAIL TO REPAY US, IT COULD HARM OUR FINANCIAL CONDITION. We provide subleases, extend loans to and make investments in many of our retail store customers, often in conjunction with the establishment of long-term supply contracts. Our loans to our customers are generally not investment grade and, along with our equity investments in our customers, are highly illiquid. We also make investments in our customers through direct financing leases, lease guarantees, operating leases, credit extensions for inventory purchases and the recourse portion of notes sold evidencing such loans. We also invest in real estate to assure market access or to secure supply points. Although we have strict credit policies and apply cost/benefit analyses to these investment decisions, we face the risk that credit losses from existing or future investments or commitments could adversely affect our financial condition. VARIOUS CHANGES IN THE DISTRIBUTION AND RETAIL MARKETS IN WHICH WE OPERATE HAVE LED AND MAY CONTINUE TO LEAD TO REDUCED SALES AND MARGINS AND LOWER PROFITABILITY FOR OUR CUSTOMERS AND, CONSEQUENTLY, FOR US. The distribution and retail markets in which we operate are undergoing accelerated change as distributors and retailers seek to lower costs and provide additional services in an increasingly competitive environment. An example of this is the growing trend of large self-distributing chains consolidating to reduce costs and gain efficiencies. Eating away from home and alternative format food stores, such as warehouse stores and supercenters, have taken market share from traditional supermarket operators, including independent grocers, many of whom are our customers. Vendors, seeking to ensure that more of their promotional fees and allowances are used by retailers to increase sales volume, increasingly direct promotional dollars to large self-distributing chains. We believe that these changes have led to reduced sales, reduced margins and lower profitability among many of our customers and, consequently, for us. If 2 6 the strategies we have developed in response to these changing market conditions are not successful, it could harm our financial condition and business prospects. CONSUMABLE GOODS DISTRIBUTION IS A LOW-MARGIN BUSINESS AND IS SENSITIVE TO ECONOMIC CONDITIONS. We derive most of our revenues from the consumable goods distribution industry. This industry is characterized by a high volume of sales with relatively low profit margins. A significant portion of our sales are at prices that are based on product cost plus a percentage markup. Consequently, our results of operations may be negatively impacted when the price of consumable goods go down, even though our percentage markup may remain constant. The consumable goods industry is also sensitive to national and regional economic conditions, and the demand for our consumable goods has been adversely affected from time to time by economic downturns. Additionally, our distribution business is sensitive to increases in fuel and other transportation-related costs. WE FACE INTENSE COMPETITION IN BOTH OUR DISTRIBUTION AND RETAIL MARKETS, AND IF WE ARE UNABLE TO COMPETE EFFECTIVELY IN THESE MARKETS, IT COULD HARM OUR BUSINESS. Our distribution group operates in a highly competitive market. We face competition from local, regional and national food distributors on the basis of price, quality and assortment, schedules and reliability of deliveries and the range and quality of services provided. We also compete with retail supermarket chains that self-distribute, purchasing directly from vendors and distributing products to their supermarkets for sale to the consumer. Consolidation of self-distributing chains may produce even stronger competition for our distribution group. Our retail group competes with other food outlets on the basis of price, quality and assortment, store location and format, sales promotions, advertising, availability of parking, hours of operation and store appeal. Traditional mass merchandisers have gained a growing foothold in food marketing and distribution with alternative store formats, such as warehouse stores and supercenters, which depend on concentrated buying power and low-cost distribution technology. We expect that stores with alternative formats will continue to increase their market share in the future. Retail consolidations not only produce stronger competition for our retail group, but may also result in declining sales in our distribution group if our existing customers are acquired by self-distributing chains. Some of our competitors have greater financial and other resources than we do. In addition, consolidation in the industry, heightened competition among our vendors, new entrants and trends toward vertical integration could create additional competitive pressures that reduce our margins and adversely affect our business. If we fail to successfully respond to these competitive pressures or to implement our strategies effectively, it could have a material adverse effect on our financial condition and prospects. BECAUSE WE OWN AND OPERATE REAL ESTATE, WE FACE THE RISK OF BEING HELD LIABLE FOR ENVIRONMENTAL DAMAGES THAT MAY OCCUR ON OUR PROPERTIES. Our facilities and operations are subject to various laws, regulations and judicial and administrative orders concerning protection of the environment and human health, including provisions regarding the transportation, storage, distribution, disposal or discharge of certain materials. In conformity with these provisions, we have a comprehensive program for testing, removal, replacement or repair of our underground fuel storage tanks and for site remediation where necessary. Although we have established reserves that we believe will be sufficient to satisfy the anticipated costs of all known remediation requirements, we cannot assure you that these reserves will be sufficient. We and others have been designated by the U.S. Environmental Protection Agency and by similar state agencies as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, or similar state laws, as applicable, with respect to EPA-designated Superfund sites. While liability under CERCLA for remediation at these sites is generally joint and several with other responsible parties, we believe that, to the extent we are ultimately determined to be liable for the expense of remediation at any site, such liability will not result in a material adverse 3 7 effect on our consolidated financial position or results of operations. We are committed to maintaining the environment and protecting natural resources and human health and to achieving full compliance with all applicable laws, regulations and orders. WE ARE CURRENTLY SUBJECT TO A NUMBER OF MATERIAL LITIGATION PROCEEDINGS. IF ANY OF THESE PROCEEDINGS IS RESOLVED AGAINST US, IT COULD HARM OUR FINANCIAL CONDITION AND BUSINESS PROSPECTS. We are currently subject to a number of material litigation proceedings, the costs and other effects of which are impossible to predict with any certainty. An unfavorable outcome in any one of these cases could have a material adverse effect on our financial condition and prospects. From time to time, we are also party to or threatened with litigation in which claims against us are made, or are threatened to be made, by present and former customers, sometimes in situations involving financially troubled or failed customers. We are a party to various other litigation and contingent loss situations arising in the ordinary course of our business including: - disputes with customers and former customers; - disputes with owners and former owners of financially troubled or failed customers; - disputes with employees and former employees regarding labor conditions, wages, workers' compensation matters and alleged discriminatory practices; - disputes with insurance carriers; - tax assessments; and - other matters, some of which are for substantial amounts. The current environment for litigation involving food distributors may increase the risk of litigation being commenced against us. We would incur the costs of defending any such litigation whether or not any claim had merit. BECAUSE WE SELL FOOD AND OTHER PRODUCTS, WE ARE SUBJECT TO PRODUCT LIABILITY CLAIMS. Like any other seller of food and other products, we face the risk of exposure to product liability claims in the event that people who purchase products we sell become injured or experience illness as a result. We believe that we have sufficient primary and excess umbrella liability insurance to protect us against any product liability claims that may arise. However, this insurance may not continue to be available at a reasonable cost, or, even if it is available, it may not be adequate to cover our liabilities. We generally seek contractual indemnification and insurance coverage from parties supplying our products, but this indemnification or insurance coverage is limited, as a practical matter, to the creditworthiness of the indemnifying party and the policy limits of any insurance provided by suppliers. If we do not have adequate insurance or contractual indemnification to cover our liabilities, product liability claims relating to defective food and other products could materially reduce our earnings. WE CANNOT ASSURE YOU THAT WE WILL BE SUCCESSFUL IN INTEGRATING NEWLY-ACQUIRED STORES AND DISTRIBUTION CENTERS. IF WE DO NOT ACHIEVE THE BENEFITS WE EXPECT FROM ANY OF THESE ACQUISITIONS, IT COULD HARM OUR BUSINESS AND FINANCIAL CONDITION. Part of our growth strategy for our retail group involves selective strategic acquisitions of stores operated by others. In addition, our distribution group intends to seek strategic acquisitions of other distribution centers on a limited basis. Achieving the benefits of these acquisitions will depend in part on our ability to integrate those businesses with our business in an efficient manner. We cannot assure you that this will happen or that it will happen in an efficient manner. Our consolidation of operations following these acquisitions may require substantial attention from our management. The diversion of management attention and any difficulties encountered in the transition and integration process could have a material adverse effect on our ability to achieve expected net sales, operating expenses and operating results for the acquired business. We cannot assure you that we will realize any of the anticipated benefits 4 8 of any acquisition, and if we fail to realize these anticipated benefits, our operating performance could suffer. WE OPERATE IN A COMPETITIVE LABOR MARKET, AND THE MAJORITY OF OUR EMPLOYEES ARE COVERED BY COLLECTIVE BARGAINING AGREEMENTS. Our continued success will depend on our ability to attract and retain qualified personnel in both our distribution and retail groups. We compete with other businesses in our markets with respect to attracting and retaining qualified employees. The labor market is currently tight and we expect the tight labor market to continue. A shortage of qualified employees would require us to enhance our wage and benefits packages in order to compete effectively in the hiring and retention of qualified employees or to hire more expensive temporary employees. In addition, about half of our employees are covered by collective bargaining agreements, most of which expire at various times over the course of the next five years. We cannot assure you that we will be able to renew our collective bargaining agreements, that our labor costs will not increase, that we will be able to recover any increases through increased prices charged to customers or that we will not suffer business interruptions as a result of strikes or other work stoppages. If we fail to attract and retain qualified employees, to control our labor costs, or to recover any increased labor costs through increased prices charged to our customers, it could harm our business. OUR STOCK PRICE HAS BEEN AND IS LIKELY TO CONTINUE TO BE VOLATILE, WHICH MAY MAKE IT DIFFICULT FOR YOU TO RESELL THE COMMON STOCK WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE. The trading price of our common stock has been and is likely to be highly volatile. Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following: - actual or anticipated variations in quarterly operating results; - announcements of technological innovations; - new products or services offered by us or our competitors; - changes in financial estimates by securities analysts; - conditions or trends in the distribution and retail industries; - our announcement of significant acquisitions, strategic partnerships, joint ventures or capital commitments; - adverse or unfavorable publicity regarding us or our services; - additions or departures of key personnel; and - sales of common stock. In addition, the stock markets in general have experienced extreme price and volume volatility and a cumulative decline in recent months. Such volatility and decline have affected many companies irrespective of or disproportionately to the operating performance of these companies. These broad market and industry factors may materially and adversely further affect the market price of our common stock, regardless of our actual operating performance. 5 9 USE OF PROCEEDS The selling stockholder will receive all of the proceeds from the sales of the common stock under this prospectus. We will not receive any proceeds from these sales. THE SELLING STOCKHOLDER The 3,850,301 shares of our common stock which may be offered under this prospectus are owned by U.S. Transportation, LLC, a Delaware limited liability company and an affiliate of The Yucaipa Companies LLC. Pursuant to a Stock and Warrant Purchase Agreement dated as of February 6, 2001, U.S. Transportation, LLC paid an aggregate of $50 million as consideration for the 3,850,301 shares and a warrant to purchase additional shares of our common stock. The warrant represents the right to purchase up to $50 million worth of additional shares of our common stock, based on a per share exercise price equal to the average closing price of our common stock on the New York Stock Exchange for the 30 consecutive trading days immediately preceding the applicable exercise date. The warrant is exercisable for a period of one year, subject to certain extensions in the event that the exercise of any portion of the warrant would accelerate indebtedness of Fleming or any of our subsidiaries, obligate Fleming or any of our subsidiaries to make any payment or to incur any additional obligation, or require the approval of the shareholders of Fleming pursuant to the rules of the New York Stock Exchange. The selling stockholder has informed us that while it currently has no intention to sell any of the shares covered by this prospectus, it will take such actions with respect to such shares as it deems appropriate in light of the circumstances existing from time to time. According to the selling stockholder's Schedule 13D filed on March 26, 2001 with the Securities and Exchange Commission, in determining appropriate actions with respect to such shares, the selling stockholder will evaluate various factors, including, without limitation, (a) the investment potential of our common stock, (b) our business prospects and financial position, (c) subsequent developments affecting us, (d) the price level and availability of our common stock, (e) other investment and business opportunities available to it, (f) general stock market and economic or industry conditions, (g) reinvestment opportunities, (h) tax considerations, and (i) other factors deemed relevant by it. Because the selling stockholder may sell all, some portion or none of the shares covered by this prospectus, we cannot estimate the number of shares, and the percentage of outstanding shares of common stock, that will be held by the selling stockholder after completion of this offering. This prospectus also covers any additional shares of common stock which become issuable in connection with shares sold by the prospectus by reason of a stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of our outstanding shares of common stock. The following table sets forth information to our knowledge as of the date of this prospectus with respect to the number of shares of common stock held by the selling stockholder prior to the offering and the number of shares of common stock which may be offered under this prospectus from time to time by the selling stockholder. Percentage ownership is based on the 43,641,772 shares of our common stock that were outstanding on March 22, 2001.
NUMBER OF NUMBER OF SHARES PERCENT OF SHARES BENEFICIALLY OUTSTANDING REGISTERED SELLING STOCKHOLDER OWNED SHARES HEREBY ------------------- ---------------- ----------- ---------- U.S. Transportation, LLC............................. 5,911,307* 12.93% 3,850,301
- ------------------------- * Assuming the selling stockholder's warrant is exercisable into 2,061,006 shares of common stock, based upon an exercise price of $24.26, which is the average closing price of the common stock on the New York Stock Exchange for the 30 consecutive trading days immediately preceding March 22, 2001. 6 10 PLAN OF DISTRIBUTION The selling stockholder and its successors, which term includes their transferees, pledgees or donees or their successors, may sell the common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling stockholder or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved. The common stock may be sold in one or more transactions at: - fixed prices, - prevailing market prices at the time of sale, - prices related to the prevailing market prices, - varying prices determined at the time of sale, or - negotiated prices. These sales may be effected in transactions: - on any national securities exchange or quotation service on which our common stock may be listed or quoted at the time of sale, including the New York Stock Exchange, - in the over-the-counter market, - otherwise than on such exchanges or services or in the over-the-counter market, - through the writing of options, whether the options are listed on an options exchange or otherwise, or - through the settlement of short sales. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as agent on both sides of the trade. In connection with the sale of the common stock, the selling stockholder may enter into hedging transactions with broker-dealers or other financial institutions. These broker-dealers or financial institutions may in turn engage in short sales of the common stock in the course of hedging the positions they assume with selling stockholder. The selling stockholder may also sell the common stock short and deliver these securities to close out such short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The aggregate proceeds to the selling stockholder from the sale of the common stock offered hereby will be the purchase price of the common stock less discounts and commissions, if any. The selling stockholder reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. The selling stockholder and any broker-dealers or agents that participate in the sale of the common stock may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. Profits on the sale of the common stock by the selling stockholder and any discounts, commissions or concessions received by any broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. If the selling stockholder is deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act. To the extent the selling stockholder may be deemed to be an 7 11 "underwriter," it may be subject to statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of the Securities Act. The selling stockholder and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder. Regulation M of the Exchange Act may limit the timing of purchases and sales of the common stock by the selling stockholder and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the common stock to engage in market-making activities with respect to the common stock being distributed for a period of up to five business days before the distribution. The selling stockholder has acknowledged that it understands its obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M, and has agreed that it will not engage in any transaction in violation of such provisions. The selling stockholder has informed us that there are currently no agreements, arrangements or understandings between the selling stockholder and any underwriter, broker-dealer or agent regarding the sale of the common stock. The selling stockholder may decide not to sell the underlying common stock described in this prospectus. We cannot assure you that the selling stockholder will use this prospectus to sell any or all of the common stock. Any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, the selling stockholder may transfer, devise or gift the common stock by other means not described in this prospectus. With respect to a particular offering of the common stock, to the extent required, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement of which this prospectus is a part will be prepared and will set forth the following information: - the specific common stock to be offered and sold, - the name of the selling stockholder, - the respective purchase prices and public offering prices and other material terms of the offering, - the names of any participating agents, broker-dealers or underwriters, and - any applicable commissions, discounts, concessions and other items constituting, compensation from the selling stockholder. We entered into a registration rights agreement for the benefit of the selling stockholder to register the common stock under applicable federal and state securities laws under certain circumstances and at certain times. The registration rights agreement provides that the selling stockholder and Fleming will indemnify each other and their respective directors, officers and controlling persons against specific liabilities in connection with the offer and sale of the common stock, including liabilities under the Securities Act, or will be entitled to contribution in connection with those liabilities. We will pay all of our expenses and specified expenses incurred by the selling stockholder incidental to the registration, offering and sale of the common stock to the public, but the selling stockholder will be responsible for payment of commissions, concessions, fees and discounts of underwriters, broker-dealers and agents. LEGAL MATTERS Certain legal matters in connection with the common stock offered hereby will be passed upon for us by McAfee & Taft, Oklahoma City, Oklahoma. 8 12 INDEPENDENT AUDITORS The consolidated financial statements incorporated in this prospectus by reference from Fleming's Annual Report on Form 10-K for the year ended December 30, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference. INCORPORATION BY REFERENCE We have elected to "incorporate by reference" certain information into this prospectus, which means we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus. We incorporate by reference: - Our Annual Report on Form 10-K for the fiscal year ended December 30, 2000 filed with the SEC on March 23, 2001, as amended by our Amended Annual Report on Form 10-K/A, filed with the SEC on March 23, 2001, including the information specifically incorporated by reference into our Form 10-K from our Proxy Statement for our 2001 Annual Meeting of Shareholders, filed with the SEC on March 28, 2001; - Our Current Report on Form 8-K filed with the SEC on March 16, 2001; - Our Current Report on Form 8-K filed with the SEC on March 13, 2001; - The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on April 19, 1983, including any amendments or reports filed for the purpose of updating such description. We are also incorporating by reference all other reports that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this prospectus and the date of the completion of this offering. You may obtain copies of these documents from us without charge by writing to us at Fleming Companies, Inc., 1945 Lakepointe Drive, Box 299013, Lewisville, Texas 75029, or calling us at (972) 906-8000. WHERE YOU CAN FIND MORE INFORMATION We are subject to the information requirements of the Securities Exchange Act of 1934, as amended (File No. 001-08140). Accordingly, we file annual, quarterly and periodic reports, proxy statements and other information with the SEC relating to our business, financial statements and other matters. You may read and copy any documents we have filed with the SEC at prescribed rates at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. You can obtain copies of these materials at prescribed rates by writing to the SEC's Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549, or by calling (800) SEC-0330. Our SEC filings are also available to you free of charge at the SEC's web site at http://www.sec.gov. Information contained in our web site is not part of this prospectus. 9 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [FLEMING COMPANIES, INC. LOGO] FLEMING COMPANIES, INC. 3,850,301 SHARES OF COMMON STOCK ------------------------- PROSPECTUS ------------------------- YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 14 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the costs and expenses payable by the registrant in connection with the sale of the 3,850,301 shares of common stock being registered. All of the amounts shown are estimates except the Securities and Exchange Commission (the "Commission") registration fee.
AMOUNT -------- Commission Registration Fee................................. $ 28,949 *Costs of Printing.......................................... 10,000 *Legal Fees and Expenses.................................... 100,000 *Accounting Fees and Expenses............................... 20,000 *Miscellaneous Expenses..................................... 16,051 -------- *Total.................................................... $175,000 ========
- ------------------------- * Estimated ITEM 15. LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article Thirteen of the Restated Certificate of Incorporation of the Registrant contains a provision, permitted by Section 1006B.7 of the Oklahoma General Corporation Act (the "OGCA"), limiting the personal monetary liability of directors for breach of fiduciary duty as a director. The OGCA and the Restated Certificate of Incorporation of the Registrant provide that such provision does not eliminate or limit liability, (1) for any breach of the director's duty of loyalty to the Registrant or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) for unlawful payments of dividends or unlawful stock repurchases or redemptions, as provided in Section 1053 of the OGCA, or (4) for any transaction from which the director derived an improper personal benefit. Section 1031 of the OGCA permits indemnification against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with actions, suits or proceedings in which a director, officer, employee or agent is a party by reason of the fact that he or she is or was such a director, officer, employee or agent, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Registrant and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. However, in connection with actions by or in the right of the Registrant, such indemnification is not permitted if such person has been adjudged liable to the Registrant unless the court determines that, under all of the circumstances, such person is nonetheless fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Section 1031 also permits the Registrant to purchase and maintain insurance on behalf of its directors and officers against any liability which may be asserted against, or incurred by, such persons in their capacities as directors or officers of the Registrant whether or not the Registrant would have the power to indemnify such persons against such liabilities under the provisions of such section. Section 1031 further provides that the statutory provision is not exclusive of any other right to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or independent directors, or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. Article 8 of the bylaws of the Registrant contains provisions regarding indemnification which parallel those described above. The Registrant maintains insurance policies that insure its officers and directors against certain liabilities. II-1 15 ITEM 16. INDEX TO EXHIBITS.
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 4.1 Stock and Warrant Purchase Agreement by and between the Registrant and U.S. Transportation, LLC dated February 6, 2001. 4.2 Registration Rights Agreement by and between the Registrant and U.S. Transportation, LLC dated March 22, 2001. 5.1 Opinion of McAfee & Taft. 23.1 Consent of McAfee & Taft (included in Exhibit 5.1). 23.2 Independent Auditors' Consent. 24.1 Power of Attorney (included on signature page hereto).
ITEM 17. UNDERTAKINGS. A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total increase or decrease in volume of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price, set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the registration statement; provided, however, that clauses (i) and (ii) do not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed with or furnished to the Commission by the Company pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) II-2 16 of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions described above, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 17 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Lewisville, state of Texas, on the 3rd day of May, 2001. FLEMING COMPANIES, INC. By /s/ CARLOS M. HERNANDEZ ------------------------------------ Carlos M. Hernandez Senior Vice President, General Counsel and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Carlos M. Hernandez his true and lawful attorney-in-fact and agent, with full power of substitutions and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Registration Statement on Form S-3 and to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission, granting under said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully and to all intents and purposes as he might or could do in person hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ MARK S. HANSEN Chairman and Chief Executive Officer May 3, 2001 - --------------------------------------------------- (Principal Executive Officer) Mark S. Hansen /s/ NEAL J. RIDER Executive Vice President and Chief May 3, 2001 - --------------------------------------------------- Financial Officer (Principal Neal J. Rider Financial and Accounting Officer) Director - --------------------------------------------------- Herbert M. Baum /s/ ARCHIE R. DYKES Director May 3, 2001 - --------------------------------------------------- Archie R. Dykes Director - --------------------------------------------------- Carol B. Hallett /s/ ROBERT S. HAMADA Director May 3, 2001 - --------------------------------------------------- Robert S. Hamada /s/ EDWARD C. JOULLIAN III Director May 3, 2001 - --------------------------------------------------- Edward C. Joullian III /s/ GUY A. OSBORN Director May 3, 2001 - --------------------------------------------------- Guy A. Osborn /s/ ALICE M. PETERSON Director May 3, 2001 - --------------------------------------------------- Alice M. Peterson
II-4 18 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 4.1 Stock and Warrant Purchase Agreement by and between the Registrant and U.S. Transportation, LLC dated February 6, 2001. 4.2 Registration Rights Agreement by and between the Registrant and U.S. Transportation, LLC dated March 22, 2001. 5.1 Opinion of McAfee & Taft. 23.1 Consent of McAfee & Taft (included in Exhibit 5.1). 23.2 Independent Auditors' Consent. 24.1 Power of Attorney (included on signature page hereto).
EX-4.1 2 f71894ex4-1.txt STOCK AND WARRANT PURCHASE AGREEMENT 1 EXHIBIT 4.1 STOCK AND WARRANT PURCHASE AGREEMENT BY AND BETWEEN FLEMING COMPANIES, INC. AS ISSUER AND U.S. TRANSPORTATION, LLC AS INVESTOR DATED AS OF FEBRUARY 6, 2001 2 STOCK AND WARRANT PURCHASE AGREEMENT THIS STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made and entered into as of February 6, 2001, by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and U.S. Transportation, LLC, a Delaware limited liability company (the "Investor"). RECITALS WHEREAS, the Board of Directors of the Company (the "Board") has authorized the sale and issuance of shares of common stock of the Company, $2.50 par value per share (the "Common Stock"), and a warrant to purchase additional shares of Common Stock to the Investor on the terms and conditions set forth herein. WHEREAS, the Company and the Investor agree that the Investor will purchase from the Company, and the Company will issue and sell to the Investor, (a) a number of shares of Common Stock equal to U.S.$50,000,000 divided by the Per Share Price (as defined below), rounded up to the nearest whole share (the "Shares"), and (b) the Common Stock Purchase Warrant in the form attached hereto as Exhibit A (the "Warrant"), for an aggregate purchase price of U.S.$50,000,000, pursuant to this Agreement. WHEREAS, the Company and the Investor have agreed to enter into the Registration Rights Agreement, in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), on the Closing Date (as defined below). NOW, THEREFORE, in consideration of the promises and representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 1. Agreement to Sell and Purchase the Shares and Grant of Warrant. At the Closing (as defined below), the Company will issue and sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions hereinafter set forth, the Shares and the Warrant for the aggregate purchase price of U.S.$50,000,000 (the "Purchase Price"). For purposes of this Agreement, (a) the "Per Share Price" shall be the lower of (i) $12.986 and (ii) the average of the Daily Market Price of a share of the Common Stock for the thirty (30) consecutive trading days on the New York Stock Exchange ("NYSE") immediately preceding the Closing Date, and (b) the "Daily Market Price" shall be the last sale price of a share of Common Stock, regular way, on the NYSE. 2. Closing; Conditions; and Deliveries at the Closing. 2.1 Closing. The completion of the purchase and sale of the Shares and the Warrant (the "Closing") shall occur on a date (the "Closing Date") not later than two (2) business days after satisfaction of all conditions to Closing hereunder (other than conditions to be satisfied at the Closing, but subject to those conditions) at the offices of Latham & Watkins, 505 3 Montgomery Street, Suite 1900, San Francisco, California, or such other time and place agreed upon by the parties hereto. 2.2 Conditions. (a) Conditions to the Company's Obligations. The Company's obligation to issue and sell the Shares and the Warrant to the Investor shall be subject to the following conditions, any one or more of which may be waived in writing by the Company: (i) The representations and warranties made by the Investor herein shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and the Investor shall have performed in all material respect all obligations and agreements, and complied in all material respect with all covenants, contained herein, to be performed and complied with by the Investor on or prior to the Closing Date. The Company shall have received a certificate signed on behalf of the Investor by an officer or the managing member of the Investor, dated as of the date of the Closing Date, to such effect. (ii) All governmental and regulatory approvals and clearances necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained and shall be in full force and effect, including, without limitation, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended (the "HSR Act"), and the Company shall be reasonably satisfied that the consummation of such transactions does not and will not contravene any applicable laws. (iii) There shall be no litigation, proceeding or other action seeking an injunction or other restraining order, damages or other relief from a governmental authority pending or threatened which, in the reasonable judgment of the Company, would materially adversely affect the consummation of the transactions contemplated by this Agreement on the terms contemplated hereby. (b) Conditions to the Investor's Obligations. The Investor's obligation to purchase the Shares and the Warrant shall be subject to the following conditions, any one or more of which may be waived in writing by the Investor: (i) The representations and warranties made by the Company herein shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, and the Company shall have performed in all material respect all obligations and agreements, and complied in all material respect with all covenants, contained herein (including, without limitation, in the Schedules hereto), to be performed and complied with by the Company on or prior to the Closing Date. The Investor shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company, dated as of the date of the Closing Date, to such effect. 2 4 (ii) Since the date hereof, no change, occurrence or development shall have occurred, been threatened or become known to the Investor that could reasonably be expected to have a material adverse effect on the business, operations, prospects, properties, earnings, assets, liabilities or condition (financial or other) of the Company and its subsidiaries, taken as a whole (other than any change, occurrence or development to the extent attributable to conditions generally affecting the industries in which the Company participates, the U.S. economy as a whole, or the equity capital markets generally) or on the ability of the Company to perform its obligations hereunder or under the Warrant or the Registration Rights Agreement ("Material Adverse Effect"). The Investor shall have received a certificate signed on behalf of the Company by the chief executive officer and the chief financial officer of the Company, dated as of the date of the Closing Date, to such effect. (iii) All governmental and regulatory approvals and clearances and all third-party consents necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained and shall be in full force and effect, including, without limitation, expiration of the applicable waiting period under the HSR Act, and the Investor shall be reasonably satisfied that the consummation of such transactions does not and will not contravene any applicable law. (iv) There shall be no litigation, proceeding or other action seeking an injunction or other restraining order, damages or other relief from a governmental authority pending or threatened which, in the reasonable judgment of the Investor, would materially adversely affect the consummation of the transactions contemplated by this Agreement on the terms contemplated hereby. 2.3 Closing Deliveries. (a) Deliveries by the Company. At the Closing, the Company shall deliver to the Investor: (i) One or more duly executed stock certificates representing the number of Shares purchased, each such certificate to be registered in the name of the Investor or its nominee. (ii) One or more duly executed certificates representing the Warrant, each such certificate registered in the name of the Investor or its nominee. (iii) The Registration Rights Agreement duly executed and delivered by the Company. (iv) A certificate, dated as of the Closing Date, executed by an officer of the Company, attaching true and correct copies of the Restated Certificate of Incorporation and bylaws of the Company and the resolutions of the Board made in connection with this Agreement and the transactions contemplated hereby, and certifying as to the genuineness and authenticity of the signature, and the accuracy of the title, of each officer of the Company executing this Agreement or any document delivered at the Closing. 3 5 (v) Such other certificates, instruments and documents in furtherance of the transactions contemplated by this Agreement as the Investor may reasonably request. (b) Deliveries by the Investor. At the Closing, the Investor shall deliver to the Company: (i) A wire transfer of the Purchase Price (net of any fees and expenses due to be reimbursed to the Investor under Section 7 hereof) in immediately available funds to a bank account designated by the Company at least two (2) business days prior to the Closing Date. (ii) The Registration Rights Agreement duly executed and delivered by the Investor. (iii) Such other certificates, instruments and documents in furtherance of the transactions contemplated by this Agreement as the Company may reasonably request. 3. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to the Investor, as follows: 3.1 Organization. The Company is duly incorporated and validly existing in good standing under the laws of the jurisdiction of its organization. The Company has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is duly registered or qualified to do business and in good standing in each jurisdiction in which it owns or leases property or transacts business, except where the failure to be so qualified or be in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. 3.2 Subsidiaries. (a) Schedule 3.2 sets forth a complete and correct list of each subsidiary of the Company, including the respective percentage of the fully diluted capital stock of each such subsidiary owned, directly or indirectly, by the Company. As used in this Agreement, the term "subsidiary" shall mean any person the majority of the equity ownership of which is owned, directly or indirectly, by the Company. (b) Each corporate subsidiary of the Company is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and as proposed to be conducted. Each limited liability company subsidiary of the Company is duly formed, validly existing and in good standing under the laws 4 6 of its jurisdiction of formation and has all requisite limited liability company power and authority to own its properties and assets and to conduct its business as now conducted and as proposed to be conducted. Each subsidiary of the Company is duly registered or qualified to do business and in good standing in each jurisdiction in which it owns or leases property or transacts business, except where the failure to be so qualified or be in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. (c) The outstanding shares of capital stock of each subsidiary of the Company have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth on Schedule 3.2(c), all of the equity interests of each of the subsidiaries are owned of record and beneficially, directly or indirectly, by the Company, free and clear of any liens, encumbrance, claim, security interest or restriction whatsoever which could reasonably be expected to have a Material Adverse Effect ("Liens"), and there are no outstanding options, warrants, agreements, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any issued or unissued shares of capital stock of such subsidiaries, which could reasonably be expected to have a Material Adverse Effect. 3.3 Due Authorization. The Company has all requisite power and authority to execute, deliver and perform its obligations under the Agreement, the Warrant, and the Registration Rights Agreement (collectively, the "Documents"), and each Document has been duly authorized (except for such authorizations as may be required by the rules of the NYSE) and validly executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally, except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except as rights to indemnification may be unenforceable as against public policy. 3.4 Non-Contravention. The execution, delivery and performance of each of the Documents and the consummation of the transactions contemplated hereby and thereby does not and will not (A) conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, (i) any material bond, debenture, note or other evidence of indebtedness, or under any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any subsidiary is a party or by which it or any of its subsidiaries or their respective properties are bound (provided that Investor does not acquire 20% or more of the issued and outstanding voting stock of the Company), (ii) the charter, by-laws or other organizational documents of the Company or any subsidiary, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any subsidiary or their respective properties, or (B) result in the creation or imposition of any Liens upon any of the material properties or assets of the Company or any subsidiary, an acceleration of indebtedness, or obligate the Company or any of its subsidiaries to make any payment or to incur any additional obligation pursuant to any obligation, agreement or condition contained in any 5 7 material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any subsidiary is a party or by which any of them is bound or to which any of the property or assets of the Company or any subsidiary is subject (provided that the Investor does not acquire 20% or more of the issued and outstanding voting stock of the Company), except for potential obligations under covenants relating to transactions with affiliates. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States is required for the execution, delivery and performance of the Agreement, the valid issuance and sale of the Shares and the Warrant to be sold pursuant to the Agreement, other than such as have been made or obtained, and other than approvals under the HSR Act. 3.5 Capitalization. Immediately following the Closing, the authorized capital stock of the Company will consist solely of (a) 100,000,000 shares of Common Stock and (b) 2,000,000 shares of preferred stock of the Company (the "Preferred Stock"). Upon the effectiveness of the Closing, of the 100,000,000 shares of Common Stock authorized, (i) 43,457,507 shares of Common Stock are issued and outstanding, (ii) 4,415,725 shares are reserved for issuance pursuant to outstanding options and warrants (other than the Warrant) and existing employee benefit plans, and (iii) 1,835,871 shares were reserved for issuance under employee benefit plans; provided, however, that the foregoing share amounts do not include shares which may be issued upon exercise of employee stock options, currently outstanding warrants, and shares issuable under the Company's dividend reinvestment plan. Of the 2,000,000 shares of Preferred Stock authorized, no such shares are issued and outstanding. The Shares to be sold pursuant to the Agreement and to be issued on exercise of the Warrant have been duly authorized (and, in the case of the shares of Common Stock underlying the Warrant, duly reserved for issuance), and when issued and paid for in accordance with the terms of the Agreement and the Warrant, will be duly and validly issued, fully paid and nonassessable. The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth on Schedule 3.5, there are no outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Company, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company is a party and relating to the issuance or sale of any capital stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options. Without limiting the foregoing, except as contemplated by the Registration Rights Agreement, no preemptive right, co-sale right, registration right, right of first refusal or other similar right exists with respect to the issuance and sale of the Shares or the Warrant. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Common Stock to which the Company is a party. 3.6 Legal Proceedings. Except as set forth on Schedule 3.6, there is no legal or governmental proceeding pending to which the Company is a party or of which the business or property of the Company is subject which could reasonably be expected to have a Material Adverse Effect. 6 8 3.7 No Violations. Except as set forth on Schedule 3.7, neither the Company nor any subsidiary is in violation of its charter, bylaws, or other organizational document, or in violation of any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or any subsidiary, which violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or is in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in any respect in the performance of any obligation in any indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or by which the properties of the Company or any subsidiary are bound, which could reasonably be expected to have a Material Adverse Effect. 3.8 Governmental Permits, Etc. Each of the Company and its subsidiaries has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company as currently conducted, except where the failure to currently possess could not reasonably be expected to have a Material Adverse Effect. The Company has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department, or body that are currently necessary for the operation of the business of the Company and its subsidiaries as currently conducted and as described in the Company's SEC Documents, except where the failure to currently possess could not reasonably be expected to have a Material Adverse Effect. 3.9 Intellectual Property. (a) Each of the Company and its subsidiaries owns or possesses sufficient rights to use all material patents, patent rights, trademarks, copyrights, licenses, inventions, trade secrets, trade names and know-how (collectively, "Intellectual Property") described or referred to in the Company's SEC Documents as owned by it or that are necessary for the conduct of its business as now conducted or as proposed to be conducted as described in the Company's SEC Documents, except where the failure to currently own or possess could not reasonably be expected to have a Material Adverse Effect, (b) neither the Company nor any of its subsidiaries has received any notice of, or has any knowledge of, any infringement of asserted rights of a third party with respect to any Intellectual Property that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and (c) neither the Company nor any of its subsidiaries has received any notice of any infringement of rights of a third party with respect to any Intellectual Property that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.10 Financial Statements. The financial statements of the Company and the related notes contained in the Company's SEC Documents present fairly, in accordance with generally accepted accounting principles, the financial position of the Company and its subsidiaries as of the dates indicated, and the results of its operations and cash flows for the periods therein specified. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified, except as disclosed in the Company's SEC Documents. The Company has provided the Investor with preliminary unaudited financial 7 9 statements of the Company for the year ended December 31, 2000, which financial statements present fairly in all material respects, in accordance with generally accepted accounting principles (but subject to non-material adjustments in the audit of such statements by the Company's outside auditors), the financial position of the Company and its subsidiaries as of such date, and the results of its operations and cash flows for the period therein specified. 3.11 No Material Adverse Change. Since September 30, 2000, there has not been (i) any material adverse change in the business, operations, prospects, properties, earnings, assets, liabilities or condition (financial or other) of the Company and its subsidiaries, taken as a whole, nor has any material adverse event occurred to the Company or any of its subsidiaries, (ii) except as set forth on Schedule 3.11, any obligation, direct or contingent, that is material to the Company and its subsidiaries, taken as a whole, incurred by the Company, except obligations incurred in the ordinary course of business, (iii) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any of its subsidiaries, other than regular quarterly cash dividends of $.02 per Share, or (iv) any loss or damage (whether or not insured) to the physical property of the Company or any of its subsidiaries which has been sustained which could reasonably be expected to have a Material Adverse Effect. 3.12 Disclosure. Since January 1, 1998, the Company has filed all forms, reports and documents with the Securities and Exchange Commission (including all exhibits thereto) required under the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder (collectively, the "SEC Documents"), each of which complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act as in effect on the dates so filed. None of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 3.13 Compliance with Law. The operations of the Company and its subsidiaries have been conducted in accordance with all applicable laws, including, without limitation, all laws relating to consumer protection, currency exchange, employment (including, without limitation, equal opportunity and wage and hour), safety and health, architectural barriers to the handicapped, fire, zoning and building, occupation safety, pension, securities, and federal, state and local taxes, except for violations or failures so to comply, if any, that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any subsidiary has received notice of any violation of or noncompliance with any applicable laws, except for notices of violations or failures so to comply, if any, that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 3.14 Antitakeover Laws. The Board has approved the Documents and the transactions contemplated thereby, and such approval constitutes approval of the Investor's acquisition of the Shares and the Warrant and the other transactions contemplated hereby by the Board under the provisions of Section 1090.3 of the Oklahoma General Corporation Act (the 8 10 "Oklahoma Act") such that there is no limitation on the Company engaging in any business combination (as defined in Section 1090.3) with the Investor following the acquisition thereof as a result of Section 1090.3. The Control Share Acquisition Act as set forth in Sections 1145 through 1155 of the Oklahoma Act is not applicable to the acquisition of the Shares and the Warrant. No other state takeover statute or similar statute or regulation applies to the Documents or the transactions contemplated thereby. No provision of the Restated Certificate of Incorporation (other than Articles 10 and 11 thereof) or bylaws (or in the case of subsidiaries, other governing documents) of the Company or any of its subsidiaries or the terms of any plan or agreement of the Company would (a) prohibit or restrict the issuance of the Shares and the Warrant, the exercise of the Warrant or the issuance of the shares of Common Stock pursuant thereto, (b) restrict the ability of the Investor to vote, or otherwise to exercise the rights of a stockholder with respect to, securities of the Company that may be acquired or controlled by the Investor pursuant to the Documents or the transactions contemplated thereby or (c) permit any stockholder to acquire securities of the Company, or any of its subsidiaries on a basis not available to the Investor in the event that the Investor were to acquire securities of the Company pursuant to the Documents or the transactions contemplated thereby. 3.14 Private Offering. None of the Company, any of its subsidiaries, nor anyone acting on their behalf, has offered or sold or will offer or sell any securities, or has taken or will take any other action, which could reasonably be expected to subject the offer, issuance or sale of the Shares or the Warrant, as contemplated hereby, to the registration provisions of the Securities Act. 3.16 Brokers. The Company and its subsidiaries and their agents and representatives have incurred no obligation or liability, contingent or otherwise, for brokerage or finders' fees, agents' commissions, investment banking fees, or other similar payment in connection with this Agreement, except fees payable by the Company to Deutsche Bank Alex. Brown. 3.17 Environmental. The Company and its subsidiaries have obtained all permits, licenses and other authorizations which are required in connection with the operations of their businesses under federal, state and local and foreign laws relating to pollution or protection of the environment, including, without limitation, laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, or hazardous or toxic materials or wastes into ambient air, surface water, ground water, or land, or otherwise, relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants or hazardous or toxic materials or wastes (collectively, "Environmental Laws"), except such violations or failures, if any, that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The businesses of the Company and its subsidiaries are in full compliance with all terms and conditions of the required permits, licenses and authorizations, and are also in full compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in these laws or contained in any regulation, code, plan, order, decree, judgment, notice or demand letter issued, entered, promulgated or approved thereunder, except such violations or failures, if any, that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries 9 11 have received notice of any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance by their businesses with applicable Environmental Laws, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, suit, proceeding, hearing or investigation under applicable Environmental Laws, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, or hazardous or toxic material or waste, except with respect to such matters that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 3.18 Labor Matters. Except as set forth on Schedule 3.18, there are, and during the past two (2) years there have been, no unfair labor practice complaints, labor strikes, arbitrations, disputes, work slowdowns or work stoppages pending or, to the best of the Company's knowledge, threatened, between the Company or any of its subsidiaries, on the one hand, and any of their employees, current or former, on the other hand, which had, or could reasonably be expected to have, a Material Adverse Effect. 3.19 ERISA. No events set forth in Section 4043(b) of ERISA (other than those events as to which the thirty (30)-day notice period is waived under PBGC regulations) has occurred during the five(5)-year period prior to the date on which this representation is made with respect to any Plan which had, or could reasonably be expected to have, a Material Adverse Effect. Each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. The Single Employer Plans maintained by the Company, its subsidiaries, or any Commonly Controlled Entity (based on those assumptions used to fund the Plans) are funded in accordance with Section 412 of the Code, and none of the Company, any of its subsidiaries, or any Common Controlled Entity reasonably anticipates that any such plans will be terminated and assets distributed due to such termination within the next three (3) years. None of the Company, any of its subsidiaries, or any Commonly Controlled Entity, has had, or reasonably anticipates that it will have within the next three (3) years, a complete or partial withdrawal from any Multiemployer Plan, which could reasonably be expected to have a Material Adverse Effect. The present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Company, each of its subsidiaries, and each Commonly Controlled Entity for post retirement benefits (excluding benefits required by Section 4980B of the Code) to be provided to their current and former employees under plans which are welfare benefit plans (as defined in Section 3(a) of ERISA) does not, in the aggregate, exceed the value of the assets under all such plans. For purposes of this Section 3.19, (a) "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder; (b) "Commonly Controlled Entity" means, as to any person, an entity, whether or not incorporated, which is under common control with such person within the meaning of Section 4001 of ERISA or is part of a group which includes such person and which is treated as a single employer under Section 414 of the Code; (c) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time; (d) "ERISA Affiliate" means, as to any person, each trade or business including such person, whether or not incorporated, which together with such person would be treated as a single employer under Section 4001(a)(14) of ERISA; (e) "Multiemployer Plan" means a "Multiemployer Plan" as defined in Section 4001(a)(3) of ERISA; (f) "PBGC" means the 10 12 Pension Benefits Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor thereto; (g) "Plan" means, as to any person, any plan (other than a Multiemployer Plan) subject to Title IV of ERISA maintained for employees of such person or any ERISA Affiliate of such person (and any such plan no longer maintained by such person or any of such person's ERISA Affiliates to which such person or any of such person's ERISA Affiliates has made or was required to make any contributions within any of the five (5) preceding years); and (g) "Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. 4. Representations, Warranties and Covenants of the Investor. 4.1 The Investor represents and warrants to the Company that: (i) the Investor is an "accredited investor" as defined in Regulation D under the Securities Act, and the Investor is also knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to, investments in shares presenting an investment decision like that involved in the purchase of the Shares and the Warrant, including investments in securities issued by the Company and investments in comparable companies, and has requested, received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Shares and the Warrant; (ii) the Investor is acquiring the Shares and the Warrant for its own account for investment only and with no present intention of distributing any of such Shares and the Warrant or any arrangement or understanding with any other persons regarding the distribution of such Shares and the Warrant; and (iii) the managing member of the Investor is The Yucaipa Companies LLC, and Mr. Ronald W. Burkle is the managing member of The Yucaipa Companies LLC. The Investor understands that its acquisition of the Shares and the Warrant has not been registered under the Securities Act or registered or qualified under any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Investor's investment intent as expressed herein. 4.2 The Investor hereby covenants with the Company not to make any sale of the Shares without complying with the provisions of this Agreement and the Securities Act, and the Investor acknowledges that the certificates evidencing the Shares will be imprinted with a legend that prohibits their transfer except in accordance therewith. 4.3 The Investor further represents and warrants to, and covenants with, the Company that (i) the Investor has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and (ii) this Agreement constitutes a valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' and contracting parties' rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and except as rights to indemnification may be unenforceable as against public policy. 11 13 4.4 Investor will not use any of the restricted Shares acquired pursuant to this Agreement to cover any short position in the Common Stock of the Company if doing so would be in violation of the applicable securities laws. Except for the Shares and the Warrant, the Investor does not beneficially own any equity securities of the Company. 4.5 The Investor understands that nothing in the Company's SEC Documents, this Agreement or any other materials presented to the Investor in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares and the Warrants. 4.6 The Investor understands that none of the Shares, the Warrant or the shares issuable upon the exercise of the Warrant (the "Securities") have been registered under the Securities Act, or under any state securities laws and unless so registered may not be transferred, sold, pledged, hypothecated or otherwise disposed of unless an exemption from such registration is available. In the event the Investor desires to transfer any of the Securities, the Investor must give the Company prior written notice of such proposed transfer including the name and address of the proposed transferee. To the extent that the Investor is transferring the Securities pursuant to an exemption from registration under the Securities Act, the Company may, in its sole discretion, require that the Investor deliver to the Company an opinion of counsel satisfactory to the Company stating that such transfer is made pursuant to such an exemption. Unless the Securities have been registered under the Securities Act or transferred pursuant to Rule 144, it is understood and agreed that any Securities shall bear any legend considered necessary or desirable by the Company to comply with the Securities Act or other applicable state securities laws, including substantially the following: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED." 5. Standstill Agreement; Transfer Restrictions; Preemptive Rights. 5.1 Definitions. For purposes of this Section 5, "Voting Stock" shall mean the Common Stock and any other security or securities the holders of which are entitled, other than as affected by events of default or the failure to pay dividends, to vote for the election of the members of the Board; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3, as in effect on the date hereof, under the Exchange Act; "Group" shall have the meaning set forth in Rule 13d-5, as in effect on the date hereof, under the Exchange Act; "Person" shall have the meaning set forth in Section 2(2), as in effect on the date hereof, under the Securities Act; "Affiliate" or "Affiliates" shall have the meaning set forth in Rule 12b-2, as in effect on the date hereof, under the Exchange Act; "13D Group" shall mean any group of persons acquiring, holding, voting or disposing of Voting Stock which would be required under Section 13(d) of the 12 14 Exchange Act and the rules and regulations thereunder (as in effect on the date hereof) to file a statement on Schedule 13D with the Securities and Exchange Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially owned Voting Stock representing more than 5% of any class of Voting Stock then outstanding. 5.2 Standstill Restrictions. Investor covenants and agrees that, for so long as the Investor owns at least 3,500,000 Shares (including Shares underlying the Warrant), subject to appropriate adjustment for stock splits, stock dividends, recapitalizations and similar transactions, from the date of this Agreement until the third anniversary of the date of this Agreement, without the prior written consent of the Company approved by a majority of the disinterested members of the Board, it and each of its Affiliates shall not, directly or indirectly, alone or through or with others: (i) acquire, announce an intention to acquire, offer to acquire, or enter into any agreement, arrangement or undertaking of any kind the purpose of which is to acquire, by purchase, exchange or otherwise, (A) any shares of Voting Stock, other than upon exercise of the Warrant, or (B) any other security convertible into, or any option, warrant or right to acquire, Voting Stock, in each case other than pursuant to Section 5.4 hereof; (ii) solicit or propose to effect or negotiate any merger, consolidation, other business combination, liquidation, sale of the Company or all or any substantial portion of the assets of the Company or any other change of control of the Company or similar extraordinary transaction; (iii) solicit, initiate or participate in any "solicitation" of "proxies" or become a "participant" in any "election contest" (as such terms are defined or used in Regulation 14A under the Exchange Act, disregarding clause (iv) of Rule 14a-1(1)(2) and including an exempt solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way participate in a call for, any special meeting of shareholders of the Company (or take any action with respect to acting by written consent of the shareholders of the Company); request, or take any action to obtain or retain any lists of holders of any securities of the Company; or initiate or propose any shareholder proposal or participate in the making of, or solicit shareholders of the Company for the approval of, one or more shareholder proposals; (iv) seek representation on the Board or a change in the composition or size of the Board; (v) deposit any shares of Voting Stock in a voting trust or similar agreement; (vi) act in concert with any other Person or Group by becoming a member of a 13D Group; (vii) take any action to form, join or in any way participate in any partnership, limited partnership, limited liability company, syndicate or other Group with respect 13 15 to the Voting Stock or otherwise act in concert with any Person for the purpose of circumventing the provisions or purposes of this Agreement; (viii) otherwise act in concert with any Person, to seek to control, direct or influence the management, Board (or any individual members thereof), stockholders or policies of the Company; (ix) finance or offer to provide financing for an attempt by any Person to engage in any of the activities or actions which, if taken by Investor, would be prohibited or restricted by the terms of this Agreement; (x) make or in any way advance any request or proposal to amend, modify or waive any provision of this Agreement; or (xi) announce an intention to do, or solicit, assist, prompt, induce or attempt to induce others to do, any of the actions restricted or prohibited under subparagraphs (i) through (x) above; provided, however, that, notwithstanding the foregoing, in the event that there occurs (A) the acquisition by any Group (other than the Investor, its Affiliates or the Board) of 25% of any class of equity securities of the Company and such event has not been endorsed or supported by the Board within ten (10) business days of the occurrence of such event, (B) any person or Group (other than the Investor or its Affiliates) commences a solicitation of proxies seeking to remove a majority of the Board, or (C) any person or Group provides notice to the Board or publicly announces any intention to engage in any of the foregoing actions described in clauses (A) or (B), the Investor shall be permitted to make a confidential proposal to the disinterested members of the Board with respect to a transaction described in clause (i) or (ii) above; and provided, further, that notwithstanding the foregoing, this Section 5.2 shall not prohibit or otherwise limit any actions by any Affiliate of the Investor who is a member of the Board in connection with the exercise of his or her duties as a member of the Board. 5.3 Transfer Restrictions. Until the third anniversary of the date of this Agreement, the Investor will not, and will cause each of its Affiliates not to, directly or indirectly, sell, transfer or otherwise dispose of (collectively, "Transfer") any Shares or all or any part of the Warrant; provided, however, that during the period commencing thirty (30) months after the date of this Agreement until such third anniversary, the Investor shall be permitted to make any such Transfer with the prior written consent of the Board of Directors of the Company, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, this Section 5.3 shall not apply to (i) Transfers made in compliance with the requirements of Rule 144 of the Securities Act, (ii) Transfers pursuant to or in accordance with the Registration Rights Agreement in a bona fide public offering, (iii) Transfers to one or more controlled Affiliates of the Investor who agree to be bound by the terms and conditions of this Agreement, or (iv) Transfers made in connection with swaps, exchanges, hedges or other similar agreements or arrangements designed to protect against fluctuations in the value of the equity securities of the Company. 14 16 5.4 Preemptive Rights. (i) The Investor shall have the right to purchase its Pro Rata Amount of any New Securities that the Company may, from time to time, propose to sell and issue. In the event the Company proposes to issue any New Securities, it shall give the Investor written notice at least five (5) business days before such issuance, describing the type of New Securities, a good faith estimate of the price and number of shares (or principal amount) and its good faith estimate of the general terms upon which the Company proposes to issue the same. The Investor shall have five (5) business days from the date of receipt of any such notice to agree to purchase up to the amount of New Securities equal to its Pro Rata Amount of such New Securities by giving written notice to the Company, at its principal office or such other address as may be specified by the Company in its written notice to the Investor, of its intention to purchase such New Securities at the initial closing of the sale of New Securities and the number of such New Securities that it intends to purchase. (ii) In the event the Investor fails to exercise in full its right of participation within said five (5) business day period as set forth in clause (i) above, the Company shall have thirty (30) days thereafter to sell additional amounts of New Securities respecting which its option was not exercised, on substantially similar terms as those specified in the Company's notice. The Company shall not issue or sell any additional amounts of New Securities after the expiration of such thirty (30)-day period without first offering such securities to the Investor in the manner provided above. (iii) For purposes of this Agreement, (i) "New Securities" shall mean any shares of capital stock of the Company, whether or not now authorized, and securities of any type whatsoever that are, or may become, convertible into or exchangeable or exercisable for shares of capital stock, other than (A) securities issued pursuant to an offering registered under the Securities Act; (B) the Warrant (and Common Stock issuable upon exercise thereof); (C) securities issued pursuant to the Company's bona fide acquisition of another corporation by merger, combination, exchange offer, purchase of substantially all assets or other reorganization, which acquisition has been approved by the Board; (D) securities issued in connection with any stock split, stock dividend or recapitalization of the Company, and (E) securities issued pursuant to options and warrants in existence on the date hereof, securities issued upon exercise of employee stock options granted in the ordinary course of business, and securities issued pursuant to the Company's dividend reinvestment plan and employee stock purchase plan under Section 423 of the Internal Revenue Code, and (ii) "Pro Rata Amount" shall mean, at any time, with respect to the Investor, the ratio of (i) the number of shares of Common Stock held by the Investor (including shares of Common Stock underlying the Warrant at the date of determination) to (ii) the total number of shares of Common Stock issued and outstanding (on a fully-diluted basis). 6. Hart-Scott-Rodino. Each party hereto shall (i) take promptly (but in no event later than February 16, 2001) all actions necessary to make the filings required by it or any of its Affiliates under any applicable antitrust laws in connection with this Agreement, the Warrant, and the transactions contemplated thereby, (ii) comply at the earliest practicable date with any 15 17 formal or informal request for additional information or documentary material received by it or any of its Affiliates from any antitrust authority, and (iii) cooperate with one another in connection with any filing under applicable antitrust laws and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement initiated by any antitrust authority. 7. Expense Reimbursement. Upon the Investor's request from time to time, the Company shall promptly pay or cause to be paid, whether or not any Closing occurs hereunder, all out-of-pocket fees and expenses incurred by the Investor and its Affiliates in connection with the transactions contemplated by this Agreement, the other Documents and all matters related thereto (including, without limitation, HSR Act filing fees, and fees and disbursements of counsel, investment bankers, accountants, and consultants), up to a maximum reimbursement of $600,000. 8. Survival; Indemnification. 8.1 All representations, warranties, covenants and agreements (except covenants and agreements which are expressly required to be performed and are performed on or before a Closing Date) contained in this Agreement shall be deemed made as of the Closing and shall survive the Closing for two (2) years, except that (i) with respect to claims asserted pursuant to this Section 8 before the expiration of the applicable representation or warranty, such claims shall survive until the date they are finally liquidated or otherwise resolved, (ii) Section 3.13 shall survive until the end of the applicable statute of limitations, and (iii) Section 3.5 and this Section 8 shall survive indefinitely. No right of indemnity against any claim of a third party shall arise from any representation, warranty or covenant of an Indemnifying Party herein contained, unless such third-party claim is filed or lodged against the Indemnified Party on or prior to the expiration of the applicable period of survival provided above, and all other conditions hereunder are satisfied. A claim shall be made or commenced hereunder by the Indemnified Party delivering to the Indemnifying Party a written notice specifying in reasonable detail the nature of the claim, the amount claimed (if known or reasonably estimable), and the factual basis for the claim. 8.2 (a) The Company agrees to indemnify and hold harmless the Investor and its partners, Affiliates, officers, directors, employees and duly authorized agents and each of their Affiliates from and against all losses, claims, damages or liabilities resulting from any claim, lawsuit or other proceeding by any person to which any party indemnified under this clause may become subject which is related to or arises out of (i) the transactions contemplated by this Agreement and the other Documents, whether or not consummated, (ii) any breach of, or failure to perform any of the representations, warranties, covenants or agreements made in any of the Documents by the Company or (iii) any action or omission of the Company or any of its subsidiaries in connection with the transactions contemplated hereby or by the other Documents, and will reimburse the Investor and any other party indemnified under this clause for all reasonable out-of-pocket expenses (including reasonable counsel fees and disbursements) incurred by the Investor or any such other party indemnified under this clause. 16 18 (b) Notwithstanding the foregoing clause (a), the Company shall not be liable to any party otherwise entitled to indemnification pursuant thereto: (A) in respect of any loss, claim, damage, liability or expense to the extent the same is determined, in final judgment by a court having jurisdiction, to have resulted from the gross negligence or willful misconduct of such party or (B) for any settlement effected by such party without the written consent of the Company, which consent shall not be unreasonably withheld. 8.3 If a person entitled to indemnity hereunder (an "Indemnified Party") asserts that any party hereto (the "Indemnifying Party") has become obligated to the Indemnified Party pursuant to Section 8.2, or if any suit, action, investigation, claim or proceeding is begun, made or instituted as a result of which the Indemnifying Party may become obligated to the Indemnified Party hereunder, the Indemnified Party agrees to notify the Indemnifying Party promptly and to cooperate with the Indemnifying Party, at the Indemnifying Party's expense, to the extent reasonably necessary for the resolution of such claim or in the defense of such suit, action or proceeding, including making available any information, documents and things in the possession of the Indemnified Party which are reasonably necessary therefor. Notwithstanding the foregoing notice requirement, the right to indemnification hereunder shall not be affected by any failure to give, or delay in giving, notice unless, and only to the extent that, the rights and remedies of the Indemnifying Party shall have been prejudiced as a result of such failure or delay. 8.4 In fulfilling its obligations under this Section 8, after providing each Indemnified Party with a written acknowledgment of any liability under this Section 8 as between such Indemnified Party and the Indemnifying Party, the Indemnifying Party shall have the right to investigate, defend, settle or otherwise handle, with the aforesaid cooperation, any claim, suit, action or proceeding brought by a third party in such manner as the Indemnifying Party may in its sole discretion deem appropriate; provided, however, that (i) counsel retained by the Indemnifying Party is reasonably satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not consent to any settlement imposing any material obligations on any other party hereto other than financial obligations for which such party will be indemnified hereunder, unless such party has consented in writing to such settlement. Notwithstanding the Indemnifying Party's election to assume the defense or investigation of such claim, action or proceeding, the Indemnified Party shall have the right to employ separate counsel at the expense of the Indemnifying Party and to direct the defense or investigation of such claim, action or proceeding if (A) in the written opinion of counsel to the Indemnified Party, use of counsel of the Indemnifying Party's choice could reasonably be expected to give rise to a conflict of interest, or (B) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the assertion of any such claim or institution of any such action or proceeding. In all other situations, the Indemnified Party shall have the right to participate in the defense or investigation of such claim, action or proceeding if the Indemnifying Party shall authorize the Indemnified Party to employ separate counsel at the Indemnifying Party's expense or if the fees and expenses of counsel for the Indemnified Party shall be borne by the Indemnified Party. 9.5 If for any reason (other than the gross negligence or willful misconduct referred to in Section 8.2(b) above) the foregoing indemnification by the Company is unavailable 17 19 to any Indemnified Party or is insufficient to hold it harmless as and to the extent contemplated by Sections 8.2, 8.3, and 8.4 above, then the Company shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative benefits received by the Company and its Affiliates, on the one hand, and the Investors and any other applicable Indemnified Party, as the case may be, on the other hand, as well as any other relevant equitable considerations. 9. Termination. This Agreement may be terminated (a) by mutual agreement of the parties at any time prior to the Closing Date, or (b) if the Closing shall not have occurred on or prior to April 1, 2001, by either party hereto, unless the Closing has not occurred as a result of a breach of this Agreement by the person seeking to terminate. Termination pursuant to the foregoing clauses (a) or (b) notwithstanding, (y) Sections 7 and 8 shall remain in effect, and (z) if this Agreement is terminated by the Company or the Investor because the Closing has not occurred on or prior to April 1, 2001, as a result of a failure of the Investor (in the case of a termination by the Company) or the Company (in the case of a termination by the Investor) to comply with its obligations under this Agreement, or as a result of the failure of the representations and warranties of the Investor (in the case of a termination by the Company) or of the Company (in the case of a termination by the Investor) to be true and correct in all material respects, then the terminating party's right to pursue all legal remedies arising as a result of such failure will survive such termination unimpaired. 10. Access. Upon reasonable notice, the Company shall afford, and shall cause each of its subsidiaries to afford, to the Investor and its accountants, counsel and representatives full access during normal business hours throughout the period prior to the Closing Date to all the Company's and such subsidiaries' properties, books, contracts, commitments and records (including, without limitation, tax returns). 11. Publicity; Listing. 11.1 The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to the Company and the Investor. Thereafter, the Company and the Investor shall not issue any press release or make any public statement with respect to the transactions contemplated by this Agreement prior to consultation with and review by the other party of such release or statement, except as may be required by law, court process or by obligations pursuant to any listing agreement with a national securities exchange. 11.2 On or prior to forty-five (45) days following the Closing Date, the Company shall cause the Shares and the shares of Common Stock underlying the Warrant to be approved for listing on the NYSE. The Company shall use its best efforts to maintain the listing and posting for trading of the Common Stock on the NYSE. In the event that exercise of the Warrant by Investor would require stockholder approval under the rules of the NYSE, the Company shall use its best efforts to promptly seek and obtain such approval. Pending such stockholder approval, the Warrant shall be exercisable only as to such number of Shares as could be issued without stockholder approval under the rules of the NYSE, as set forth in the Warrant. 18 20 12. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within domestic United States by nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by nationally recognized overnight carrier, one (1) business day after so mailed, (ii) if delivered by International Federal Express, two (2) business days after so mailed, and (iii) if delivered by facsimile, upon electric confirmation of receipt and shall be delivered as addressed as follows: (a) if to the Company, to: Fleming Companies, Inc. 1945 Lakepointe Drive Lewisville, TX 75057-6424 Attn: General Counsel Phone: (972) 906-8000 Telecopy: (972) 906-8665 with a copy to: Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, CA 94111 Attn: John M. Newell, Esq. Phone: (415) 391-0600 Telecopy: (415) 395-8095 (b) if to the Investor, to: U.S. Transportation, LLC c/o The Yucaipa Companies 9130 West Sunset Boulevard Los Angeles, CA 90069 Attn: Erika Paulson Phone: (310) 789-7200 Telecopy: (310) 228-2871 with a copy to: Munger, Tolles & Olson LLP 355 South Grand Avenue, Suite 3500 Los Angeles, CA 90071 Attn: Kevin S. Masuda, Esq. Phone: (213) 683-9100 Telecopy: (213) 687-3702 19 21 13. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor. 14. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 15. Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by either the Company or the Investor without the prior written consent of the other party hereto; provided, that, the Investor may assign or delegate its rights, duties and obligations hereunder to any of its Affiliates or to such other person as may be reasonably satisfactory to the Company. Except as provided in the preceding sentence, any assignment or delegation of rights, duties or obligations hereunder made without the prior written consent of the other party hereto shall be void and of no effect. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Sections 8 and 15. 16. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 17. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without giving effect to the principles of conflicts of law. 18. Counterparts; Integration. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. This Agreement, the other Documents, and the documents, schedules and exhibits described herein or attached or delivered pursuant hereto collectively constitute the sole and only agreement between the parties hereto and their Affiliates with respect to the subject matter hereof. Any agreements, representations or documentation respecting the transactions contemplated by this Agreement, including without limitation, any correspondence, discussions or course of dealing (including, without limitation, the letter agreement between The Yucaipa Companies, LLC and the Company, dated February 2, 2001, but excluding the confidentiality letter agreement dated November 28, 2000 between The Yucaipa Companies and the Company), which are not expressly set forth in this Agreement, the other Documents, or the documents, schedules and exhibits described herein or attached or delivered pursuant hereto are null and void. 20 22 IN WITNESS WHEREOF, the parties have executed this Stock and Warrant Purchase Agreement as of the date first written above. Company: FLEMING COMPANIES, INC., An Oklahoma corporation By: /s/ Mark S. Hansen ------------------------------------- Its: Chairman and Chief Executive Officer ------------------------------------- Investor: U.S. TRANSPORTATION, LLC A Delaware Limited Liability Company By: The Yucaipa Companies, LLC, Its Managing Member By: /s/ Ronald W. Burkle ------------------------------------- Ronald W. Burkle Its Managing Member 21 EX-4.2 3 f71894ex4-2.txt REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.2 REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN FLEMING COMPANIES, INC. AS ISSUER AND U.S. TRANSPORTATION, LLC AS INVESTOR DATED AS OF MARCH 22, 2001 2 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into as of March 22, 2001 by and between Fleming Companies, Inc., an Oklahoma corporation (the "Company"), and U.S. Transportation, LLC, a Delaware limited liability company ("Investor"). This Agreement is made pursuant to that certain Stock and Warrant Purchase Agreement, dated as of February 6, 2001, by and between the Company and Investor (the "Stock Purchase Agreement"). In order to induce the Investor to consummate the transactions contemplated by the Stock Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. In consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Definitions As used in this Agreement, the following capitalized terms shall have the following meanings: Affiliate: With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. Board: The Board of Directors of the Company. Common Stock: The Common Stock, par value $2.50 per share, of the Company. Demand-Notice: see Section 3(a) hereof. Demand Registration: A registration pursuant to Section 3(a) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended from time to time. Holder: Any party hereto (other than the Company) and any holder of Registrable Securities who agrees in writing to be bound by the provisions of this Agreement. Investor: Investor and any of its Affiliates which hold Registrable Securities, collectively. NASD: National Association of Securities Dealers, Inc. Person: An individual, partnership, limited liability company, joint venture, corporation, trust or unincorporated organization, a government or any department, agency or political subdivision thereof or other entity. Piggyback Notice: See Section 4(a) hereof. 1 3 Piggyback Registration: A registration pursuant to Section 4 hereof. Prospectus: The prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. Registrable Securities: The Warrant and all shares of Common Stock issuable to the Investor pursuant to the Stock Purchase Agreement or upon exercise of the Warrant and any securities of the Company which may be issued or distributed with respect to, or in exchange or substitution for, or conversion of, such Common Stock and such other securities pursuant to a stock dividend, stock split or other distribution, merger, consolidation, recapitalization or reclassification or otherwise; provided, however, that any Registrable Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such Registrable Securities has been declared effective under the Securities Act and such Registrable Securities have been disposed of in accordance with the plan of distribution set forth in such Registration Statement, (ii) such Registrable Securities are distributed pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or (iii) such Registrable Securities shall have been otherwise transferred to a Person other than an Investor and new certificates for them not bearing a legend restricting further transfer under the Securities Act shall have been delivered by the Company; and provided, further, that any securities that have ceased to be Registrable Securities cannot thereafter become Registrable Securities and any security that is issued or distributed in respect of securities that have ceased to be Registrable Securities is not a Registrable Security. Registration: A Demand Registration or a Piggyback Registration. Registration Expenses: See Section 7 hereof. Registration Statement: Any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement. SEC: The Securities and Exchange Commission. Securities Act: The Securities Act of 1933, as amended from time to time. Underwritten Registration or Underwritten Offering: A sale of securities of the Company to an underwriter for reoffering to the public. Warrant: As defined in the Stock Purchase Agreement. 2 4 2. Securities Subject to this Agreement (a) Registrable Securities. The securities entitled to the benefits of this Agreement are the Registrable Securities. (b) Holders of Registrable Securities. A Person is deemed to be a Holder of Registrable Securities whenever such Person owns Registrable Securities or has the right to acquire such Registrable Securities, whether or not such acquisition has actually been affected and disregarding any legal restrictions upon the exercise of such right. 3. Demand Registration (a) Right to Demand; Demand Notices. Subject to the provisions of this Section 3 at any time and from time to time, the Investor may make a written request to the Company for registration under and in accordance with the provisions of the Securities Act of all or part of the Registrable Securities. The Company shall not be obligated to effect more than three Demand Registrations requested by the Investor pursuant to this Section 3(a), and shall not be obligated to effect a Demand Registration if the amount of Registrable Securities proposed to be registered does not have a fair market value of at least $5 million. Promptly upon receipt of any such request (but in no event more than five business days thereafter), the Company will serve written notice (the "Demand Notice") of such registration request to all Holders, and the Company will include in such registration all Registrable Securities of any Holder with respect to which the Company has received written requests for inclusion therein within 10 days after the Demand Notice has been given to the applicable Holders. All requests made pursuant to this Section 3 will specify the aggregate amount of Registrable Securities to be registered and will also specify the intended methods of disposition thereof. (b) Company's Right to Defer Registration. If the Company is requested to effect a Demand Registration and the Company furnishes to the Investor requesting such registration a copy of a resolution of the Board certified by the secretary of the Company stating that (A)(i) the Company has commenced a financing plan involving an Underwritten Offering, and (ii) the Company's underwriter has notified the Company that it has reasonably determined that a registration at the time and on the terms requested would materially and adversely affect such Underwritten Offering, or (B) such registration would result in premature disclosure of material pending corporate developments, which premature disclosure would reasonably be expected to have a material adverse effect on such developments, the Company shall have the right to defer such filing for a period of not more than 90 days after receipt of the request for such registration from such Investor. If the Company shall so postpone the filing of a registration statement and if the Investor within 30 days after receipt of the notice of postponement advises the Company in writing that such Investor has determined to withdraw such request for registration, then such Demand Registration shall be deemed to be withdrawn and the Company shall pay all Registration Expenses in connection with such withdrawn registration pursuant to Section 3(d) hereof. Notwithstanding the foregoing, the Company shall not be permitted to defer requested registration in reliance on this Section 3(b) more than once in any 12-month period. 3 5 (c) Registration Statement Form. Registrations under this Section 3 shall be on such appropriate registration form of the SEC (i) as shall be selected by the Company and as shall be reasonably acceptable to the Investor and (ii) as shall permit the disposition of such Registrable Securities in accordance with the intended method or methods of disposition specified in the Investor' request for such registration. If, in connection with any registration under this Section 3 which is proposed by the Company to be on Form S-3 or any successor form to such Form, the managing underwriter, if any, shall advise the Company in writing that in its reasonable business judgment the use of another permitted form is of material importance to the success of the offering, then such registration shall be on such other permitted form. (d) Expenses. The Company will pay all Registration Expenses in connection with the Demand Registrations of Registrable Securities requested by the Investor pursuant to this Section 3. (e) Effective Registration Statement. The Company shall be deemed to have effected a Demand Registration if (i) the Registration Statement relating to such Demand Registration is declared effective by the SEC; provided, however, that no Demand Registration shall be deemed to have been effected if (x) such registration, after it has become effective, is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court by reason of an act or omission by the Company or (y) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied because of an act or omission by the Company or (ii) at any time after the Investor requests a Demand Registration and prior to the effectiveness of the Registration Statement, the preparation of such Registration Statement is discontinued or such Registration Statement is withdrawn or abandoned at the request of the Investor unless the Investor has elected to pay and has paid to the Company in full the Registration Expenses in connection with such Registration Statement or the Investor has made such withdrawal request pursuant to the provisions of Section 3(b). (f) Priority on Demand Registrations. If the managing underwriter or agent of a Demand Registration (or, in the case of a Demand Registration not being underwritten, the Investor), advises the Company in writing that in its opinion the number of securities requested to be included in such Demand Registration exceeds the number which can be sold in the offering covered by such Demand Registration without a significant adverse effect on the price, timing or distribution of the securities offered, then the Company will include in such registration only the number of securities that, in the opinion of such underwriter or agent (or any of the Investor, as the case may be), can be sold without a significant adverse effect on the price, timing or distribution of the securities offered, selected pro rata among the Holders which have requested to be included in such Demand Registration based upon the relative aggregate amount of gross proceeds to be received by such Holders in such offering to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such underwriters or agent (or the Investor, as the case may be). The Company and other holders of securities of the Company may include such securities in such Registration if, but only if, such underwriter or agent (or the Investor, as the 4 6 case may be) concludes that such inclusion will not interfere with the successful marketing of all the Registrable Securities requested to be included in such registration. (g) Selection of Underwriters. If any offering pursuant to a Demand Registration involves an Underwritten Offering, the Holders of a majority of the Registrable Securities included in such Demand Registration shall have the right to select the managing underwriter or underwriters to administer the offering, which managing underwriter shall be a firm of nationally recognized standing and reasonably satisfactory to the Company. 4. Piggyback Registrations (a) Participation. Subject to Section 4(b) hereof, if at any time after the date hereof the Company files a Registration Statement (other than a registration on Form S-4 or S-8 or any successor form to such Forms or any registration of securities as it relates to an offering and sale to management of the Company pursuant to any employee stock plan or other employee benefit plan arrangement) with respect to an offering that includes any shares of Common Stock, then the Company shall give prompt notice (the "Initial Notice") to the Investor and the Investor shall be entitled to include in such Registration Statement any Registrable Securities held by it, provided, however, that the Investor shall not be entitled to such participation rights with respect to the Registration Statement to be filed within ninety (90) days following the issuance of securities under the Company's convertible senior subordinated notes offering (and the common stock issued upon conversion thereof) which closed on March 15, 2001, as such offering may be revised, amended, altered or supplemented in the discretion of the Company. If the Investor elects to include any or all of its Registrable Securities in such Registration Statement, then the Company shall give prompt notice (the "Piggyback Notice") to each Holder (excluding the Investor) and each such Holder shall be entitled to include in such Registration Statement any Registrable Securities held by it. The Initial Notice and Piggyback Notice shall offer the Investor and the Holders, respectively, the opportunity to register such number of shares of Registrable Securities as the Investor and each Holder may request and shall set forth (i) the anticipated filing date of such Registration Statement and (ii) the number of shares of Common Stock that is proposed to be included in such Registration Statement. The Company shall include in such Registration Statement such shares of Registrable Securities for which it has received written requests to register such shares within 15 days after the Initial Notice and 7 days after the Piggyback Notice has been given. (b) Underwriter's Cutback. Notwithstanding the foregoing, if a Registration pursuant to this Section 4 involves an Underwritten Offering and the managing underwriter or underwriters of such proposed Underwritten Offering delivers an opinion to the Holders that the total or kind of securities which such Holders and any other persons or entities intend to include in such offering would be reasonably likely to significantly adversely affect the price, timing or distribution of the securities offered in such offering, then the Company shall include in such Registration (i) first, if the Company has initiated such Registration for the purpose of selling securities for its own account, 100% of the securities the Company proposes to sell, and (ii) second, to the extent of the amount of securities which all Holders and any other Person initiating such Registration (and the Company if it has not initiated such Registration for the purpose of 5 7 selling securities for its own account) have requested to be included in such Registration, which, in the opinion of the managing underwriter or underwriters, can be sold without such adverse effect referred to above, such amount to be allocated pro rata among all Holders and any other Person initiating such Registration (and the Company, as the case may be), based upon the relative aggregate amount of gross proceeds to be received by any Holders in the offering. (c) Expenses. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 4. (d) Company Control. The Company may decline to file a Registration Statement after giving the Initial Notice or the Piggyback Notice, or withdraw a Registration Statement after filing and after such Piggyback Notice, but prior to the effectiveness of the Registration Statement, provided that the Company shall promptly notify each Holder in writing of any such action and provided further that the Company shall bear all reasonable expenses incurred by such Holder or otherwise in connection with such withdrawn Registration Statement. (e) No Effect on Demand Registrations. No registration effected under this Section 4 shall be deemed to have been effected pursuant to Section 3 hereof or shall relieve the Company of its obligation to effect any registration upon request under Section 3 hereof. 5. Hold-Back Agreements (a) Restrictions on Public Sale by Holder of Registrable Securities. Each Holder whose Registrable Securities are covered by a Registration Statement filed pursuant to Sections 3 and 4 hereof agrees, if requested by the managing underwriters in an Underwritten Offering, not to effect any public sale or distribution of securities of the Company the same as or similar to those being registered, or any securities convertible into or exchangeable or exercisable for such securities, in such Registration Statement, including a sale pursuant to Rule 144 under the Securities Act (except as part of such Underwritten Registration), during the 7-day period prior to, and during the 90-day period (or such longer period of up to 180 days as may be required by such underwriter of all Persons whose securities are covered by such Registration Statement) beginning on, the effective date of any Registration Statement in which such Holders are participating (except as part of such Registration) or the commencement of the public distribution of securities, to the extent timely notified in writing by the Company or the managing underwriters. (b) Restrictions on Public Sale by the Company and Others. The Company agrees not to effect any public sale or distribution of any securities the same as or similar to those being registered by the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the 7-day period prior to, and during the 90-day period (or such longer period of up to 180 days as may be required by such underwriter) beginning with, the effective date of a Registration Statement filed under Sections 3 and 4 hereof or the commencement of the public distribution of securities to the extent timely notified in writing by a Holder or the managing underwriters (except as part of such registration, if permitted, or pursuant to registrations on Forms S-4 or S-8 or any successor form to such Forms or any registration of securities for offering and sale to management of the Company pursuant to any 6 8 employee stock plan or other employee benefit plan arrangement). The Company agrees to use reasonable efforts to obtain from each holder of its securities the same as or similar to those being registered by the Company, or any securities convertible into or exchangeable or exercisable for any of such securities, an agreement not to effect any public sale or distribution of such securities (other than securities purchased in a public offering) during such period, except as part of any such registration if permitted. 6. Registration Procedures In connection with the Company's Registration obligations pursuant to Sections 3 and 4 hereof, the Company will use its best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Company will as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement or Registration Statements relating to the applicable Demand Registration or Piggyback Registration including all exhibits and financial statements required by the SEC to be filed therewith, and use its best efforts to cause such Registration Statement to become and remain effective for a period of not less than 150 days; provided, that the Company will furnish copies of any amendments or supplements in the form filed with respect to any Piggyback Registration, simultaneously with the filing of such amendments or supplements; (b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for a period of not less than 150 days (or such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold or withdrawn), or, if such Registration Statement relates to an Underwritten Offering, such longer period as in the opinion of counsel for the underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (c) notify the selling Holders and the managing underwriters, if any, and (if requested) confirm such advice in writing, as soon as practicable after notice thereof is received by the Company (i) when the Registration Statement or any amendment thereto has been filed or becomes effective, the Prospectus or any amendment or supplement to the Prospectus has been filed, and, to furnish such selling Holders and managing underwriters with copies thereof, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of any preliminary Prospectus or Prospectus or the initiation or threatening of any 7 9 proceedings for such purposes, (iv) if at any time the representations and warranties of the Company contemplated by paragraph (m) below cease to be true and correct and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (d) (i) promptly notify the selling Holders and the managing underwriters, if any, at any time prior to nine months after the time of issue of the Prospectus, when the Company becomes aware of the happening of any event as a result of which the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the Prospectus and any preliminary Prospectus, in light of the circumstances under which they were made) when such Prospectus was delivered not misleading or, if for any other reason it shall be necessary during such time period to amend or supplement the Prospectus in order to comply with the Securities Act and, (ii) in either case as promptly as practicable thereafter, prepare and file with the SEC, and furnish without charge to the selling Holders and the managing underwriters, if any, a supplement or amendment to such Prospectus which will correct such statement or omission or effect such compliance; (e) make every reasonable effort to prevent the entry, or obtain the withdrawal, of any stop order or other order suspending the use of any preliminary Prospectus or Prospectus or suspending any qualification of the Registrable Securities; (f) if requested by the managing underwriter or underwriters or a Holder of Registrable Securities being sold in connection with an Underwritten Offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters and the Holders of a majority of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the Underwritten (or best efforts underwritten) Offering of the Registrable Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; (g) furnish to each selling Holder and each managing underwriter, without charge, one executed copy and as many conformed copies as they may reasonably request, of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (h) deliver to each selling Holder and the underwriters, if any, without charge, as many copies of the Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto as such Persons may reasonably request (it being understood that the Company consents to the use of the Prospectus or any amendment or supplement thereto by each 8 10 of the selling Holders and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto) and such other documents as such selling Holder may reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder; (i) on or prior to the date on which the Registration Statement is declared effective, use its best efforts to register or qualify, and cooperate with the selling Holders, the managing underwriter or agent, if any, and their respective counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of each state and other jurisdiction of the United States as any such seller, underwriter or agent reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect for so long as such Registration Statement remains in effect and so as to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution of the Registrable Securities covered by the Registration Statement; provided that the Company will not be required to qualify generally to do business in any jurisdiction where it in not then so qualified or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject; (j) cooperate with the selling Holders and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of Registrable Securities to the underwriters; (k) use its best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities; (l) not later than the effective date of the applicable Registration, provide a CUSIP number for all Registrable Securities and provide the applicable trustee or transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company; (m) make such representations and warranties to the Holders of Registrable Securities being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in primary underwritten public offerings; (n) enter into such customary agreements (including an underwriting agreement) and take all such other actions as the majority of the Holders of any Registrable Securities being sold or the managing underwriter or agent, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities; provided that none of such agreements shall increase the potential liability of the Holders of any 9 11 Registrable Securities being registered beyond that otherwise provided in Section 8 of this Agreement; (o) obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company, upon consummation of the sale of such Registrable Securities to the underwriters (the "Closing Date") in customary form and in form, substance and scope reasonably satisfactory to such Holders and their counsel, and the underwriters or agents and their counsel; (p) obtain for delivery to the Company and the underwriter or agent, with copies to the Holders, a cold comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the managing underwriter or the Holders of a majority of the Registrable Securities being sold reasonably request, dated the effective date of the Registration Statement and brought down to the Closing Date; (q) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; (r) make available for inspection by a representative of the Holders of a majority of the Registrable Securities, any underwriter participating in any disposition pursuant to such Registration, and any attorney or accountant retained by such Holders or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration; provided that any records, information or documents that are designated by the Company in writing as confidential shall be kept confidential by such Persons unless disclosure of such records, information or documents is required by law; (s) use its best efforts to comply with all applicable rules and regulations of the SEC and make generally available to its security holders, as soon as reasonably practicable (but not more than eighteen months) after the effective date of the Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (t) as promptly as practicable after filing with the SEC of any document which is incorporated by reference into the Registration Statement or the Prospectus, provide copies of such document to counsel for the selling Holders and to the managing underwriters, if any; (u) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement; and 10 12 (v) use its best efforts to list (if such Registrable Securities are not already listed) all Registrable Securities covered by such Registration Statement on The New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market. The Company may require each Holder of Registrable Securities as to which any Registration is being effected to furnish to the Company such information regarding the distribution of such securities and such other information relating to such Holder and its ownership of Registrable Securities as the Company may from time to time reasonably request in writing. Each Holder agrees to furnish such information to the Company and to cooperate with the Company as necessary to enable the Company to comply with the provisions of this Agreement. Each Holder agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6(d)(i) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(d)(ii) hereof, or until it is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event that the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to Section 6(d)(i) hereof to the date when the Company shall make available to the Holders a Prospectus supplemented or amended to conform with the requirements of Section 6(d)(ii) hereof. 7. Registration Expenses All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange, the SEC and the NASD (including, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules and regulations of the NASD), (ii) all fees and expenses of compliance with state securities or blue sky laws (including fees and disbursements of counsel for the underwriters or selling Holders in connection with blue sky qualifications of the Registrable Securities and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters or the majority of the Holders of the Registrable Securities being sold may designate), (iii) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company (including the expenses of any special audit and "cold comfort" letters required by or incident to such performance), (v) Securities Act liability 11 13 insurance if the Company so desires or the underwriters so require, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange and all rating agency fees, (vii) all reasonable fees and disbursements of one counsel selected by the Holders of the Registrable Securities being registered to represent such Holders in connection with such registration, up to a maximum of $50,000, (viii) all fees and disbursements of underwriters customarily paid by the issuers or sellers of securities, excluding underwriting discounts and commissions and transfer taxes, if any, and fees and disbursements of counsel to underwriters (other than such fees and disbursements incurred in connection with any registration or qualification of Registrable Securities under the securities or blue sky laws of any state), and (ix) fees and expenses of other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), will be borne by the Company, regardless of whether the Registration Statement becomes effective (except as provided in Sections 3(d) and (e) hereof). The Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company. 8. Indemnification (a) Indemnification by Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder and each Person who controls such Holder (within the meaning of the Securities Act), and each of their respective partners, members, officers, directors, employees and agents (collectively, the "Company Indemnified Persons"), against any and all losses, claims, damages, liabilities, reasonable attorneys fees, costs or expenses and costs and expenses of investigating and defending any such claim (collectively, "Damages"), joint or several, and any action in respect thereof to which any such Company Indemnified Person may become subject under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of, or are based upon, any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein, and shall promptly reimburse each Company Indemnified Person for any legal and other expenses reasonably incurred by that Company Indemnified Person in investigating or defending or preparing to defend against any such Damages or proceedings; provided, however, that the Company shall not be liable in any such case to the extent that any such Damages arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such preliminary Prospectus if (i) such offering does not involve an underwriter, (ii) such Holder failed to deliver or cause to be delivered a copy of the Prospectus to the Person asserting such loss, claim, damage, liability or expense after the Company had timely furnished such Holder with a sufficient number of copies of the same and (iii) the Prospectus completely corrected in a timely manner such untrue statement or omission; and provided, further, that the Company shall not be liable in any such case to the extent that any such Damages arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission in the Prospectus, if 12 14 (x) such offering does not involve an underwriter, (y) such untrue statement or alleged untrue statement, omission or alleged omission is completely corrected in an amendment or supplement to the Prospectus and (z) the Holder thereafter fails to deliver such Prospectus as so amended or supplemented prior to or concurrently with the sale of the Registrable Securities to the Person asserting such loss, claim, damage, liability or expense after the Company had furnished such Holder with a sufficient number of copies of the same. The Company also agrees to indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders. (b) Indemnification by Selling Holder of Underlying Securities. In connection with each Registration, each selling Holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any Registration Statement or Prospectus and agrees to indemnify and hold harmless, to the full extent permitted by law, the Company and each Person who controls the Company (within the meaning of the Securities Act), and each of their respective directors, officers, employees and agents, against any and all Damages resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary Prospectus or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such selling Holder to the Company specifically for inclusion in such Registration Statement or Prospectus and has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting such Damages. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such Persons specifically for inclusion in any Prospectus or Registration Statement. (c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt (but in any event within 30 days after such Person has actual knowledge of the facts constituting the basis for indemnification) written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is prejudiced by reason of such delay or failure; provided, further however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (a) the indemnifying party has agreed in writing to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the 13 15 Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person or (c) in the reasonable judgment of any such Person, based upon advice of its counsel, a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld), provided that an indemnified party shall not be required to consent to any settlement involving the imposition of equitable remedies or involving the imposition of any material obligations on such indemnified party other than financial obligations for which such indemnified party will be indemnified hereunder. No indemnifying party will be required to consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. Whenever the indemnified party or the indemnifying party receives a firm offer to settle a claim for which indemnification is sought hereunder, it shall promptly notify the other of such offer. If the indemnifying party refuses to accept such offer within 20 business days after receipt of such offer (or of notice thereof), such claim shall continue to be contested and, if such claim is within the scope of the indemnifying party's indemnity contained herein, the indemnified party shall be indemnified pursuant to the terms hereof. If the indemnifying party notifies the indemnified Party in writing that the indemnifying party desires to accept such offer, but the indemnified party refuses to accept such offer within 20 business days after receipt of such notice, the indemnified party may continue to contest such claim and, in such event, the total maximum liability of the indemnifying party to indemnify or otherwise reimburse the indemnified party hereunder with respect to such claim shall be limited to and shall not exceed the amount of such offer, plus reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees and disbursements) to the date of notice that the indemnifying party desires to accept such offer, provided that this sentence shall not apply to any settlement of any claim involving the imposition of equitable remedies or to any settlement imposing any material obligations on such indemnified party other than financial obligations for which such indemnified party will be indemnified hereunder. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim in any one jurisdiction, unless in the written opinion of counsel to the indemnified party, reasonably satisfactory to the indemnifying party, use of one counsel would be expected to give rise to a conflict of interest between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of one such additional counsel. (d) Other Indemnification. Indemnification similar to that specified in this Section 8 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under federal or state law or regulation of governmental authority other than the Securities Act. 14 16 (e) Contribution. If for any reason the indemnification provided for in the preceding clauses (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by the preceding clauses (a) and (b), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Damages in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that no selling Holder shall be required to contribute in an amount greater than the dollar amount of the proceeds received by such selling Holder with respect to the sale of any securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each selling Holder's obligation to contribute pursuant to this Section 8(e) is several and not joint. The provisions of this Section 8 shall survive, notwithstanding any transfer of the Registrable Securities by any Holder or any termination of this Agreement. 9. Rules 144. The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemption provided by (a) Rule 144 under the Securities Act, as such Rules may be amended from time to time, or (b) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such information and requirements. 10. Participation in Underwritten Registrations No Person may participate in any underwritten registration hereunder unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements, and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement; provided that (i) no selling Holder shall be required to make any representations or warranties except those which relate solely to such selling Holder and its intended method of distribution, and (ii) the liability of each selling Holder to any underwriter under such underwriting agreement will be limited to liability arising from misstatements or omissions regarding such selling Holder and its intended method of distribution and any such liability shall not exceed an amount equal to the amount of net proceeds such selling Holder derives from such registration; provided, however, that in an offering by the Company in which any Holder requests to be included in a Piggyback Registration, the Company shall use its reasonable best efforts to arrange the terms of the offering such that the provisions set forth in clauses (i) and (ii) of this Section 10 are true; provided further, that if the Company fails in its reasonable best efforts to so arrange the terms, the Holder may withdraw all or any part of its 15 17 Registrable Securities from the Piggyback Registration and the Company shall reimburse such Holder for all reasonable out-of-pocket expenses (including counsel fees and expenses) incurred prior to such withdrawal. 11. Miscellaneous (a) Remedies. Remedies for breach by the Company of its obligations to register the Registrable Securities shall be as set forth herein. Each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. Remedies for breach by any Holder of its obligations under this Agreement shall be as set forth in Section 8. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of the Holders of a majority of the outstanding Registrable Securities; provided, however, that the Company and the Investor together may amend, modify or supplement the provisions of this Agreement and may waive or consent to departures from the provisions hereof, without the consent of the Holders of a majority of the outstanding Registrable Securities so long as such amendment, modification, supplement, waiver or consent does not adversely affect the rights of Holders of Registrable Securities hereunder or so long as such amendment, modification, supplement, waiver or consent affects the rights of the Investor and other Holders of Registrable Securities hereunder equally. (c) Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within domestic United States by nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given (i) if delivered by nationally recognized overnight carrier, one (1) business day after so mailed, (ii) if delivered by International Federal Express, two (2) business days after so mailed, and (iii) if delivered by facsimile, upon electric confirmation of receipt and shall be delivered as addressed as follows: (x) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 12(c), which address initially is, with respect to the Investor, U.S. Transportation, LLC, c/o The Yucaipa Companies, 9130 West Sunset Blvd., Los Angeles, CA 90069, Attention: Erika Paulson; and (y) if to the Company, initially at the address set forth below and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 12(c): Fleming Companies, Inc., 1945 Lakepointe Drive, Lewisville, TX 75057, Attention: General Counsel. 16 18 (d) Successors and Assigns. This Agreement including, without limitation, all registration rights in connection with the ownership of all or a portion of the Registrable Securities pursuant to Sections 3 and 4 hereof, shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment subsequent Holders of Registrable Securities. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the 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. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to the principles of conflicts of laws. (h) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (i) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the securities issued pursuant to the Stock Purchase Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matters. (j) Other Registration Rights. Without the written consent of the Holders of a majority of the outstanding Registrable Securities, the Company shall not grant to any person the right to request the Company to register any equity securities of the Company under the Securities Act unless the rights so granted are subject to the prior rights of the Holders of Registrable Securities set forth herein, and are not otherwise in conflict or inconsistent with the provisions of, this Agreement. 17 19 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. The Company: FLEMING COMPANIES, INC., An Oklahoma corporation By: /s/ Carlos M. Hernandez -------------------------------------- Carlos M. Hernandez Senior Vice President, General Counsel and Corporate Secretary The Investor: U.S. TRANSPORTATION, LLC, a Delaware limited liability company By: The Yucaipa Companies, LLC Its Managing Member By: /s/ Ronald W. Burkle -------------------------------------- Ronald W. Burkle Its Managing Member 18 EX-5.1 4 f71894ex5-1.txt OPINION OF MCAFEE & TAFT 1 EXHIBIT 5.1 LAW OFFICES MCAFEE & TAFT A PROFESSIONAL CORPORATION 10TH FLOOR, TWO LEADERSHIP SQUARE 211 NORTH ROBINSON OKLAHOMA CITY, OKLAHOMA 73102-7103 (405) 235-9621 FAX (405) 235-0439 http://www.mcafeetaft.com April 25, 2001 Fleming Companies, Inc. P. O. Box 299013 Lewisville, Texas 75029 Re: Resale of Common Stock by U.S. Transportation, LLC Ladies and Gentlemen: Reference is made to your Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission today with respect to the sale by U.S. Transportation, LLC of 3,850,301 shares of common stock of Fleming Companies, Inc., $2.50 par value per share (the "Common Stock"). The Common Stock was issued pursuant to a Stock and Warrant Purchase Agreement by and between Fleming Companies, Inc., as Issuer, and U.S. Transportation, LLC, as Investor, dated as of February 6, 2001. We have examined such corporate records and made such other investigations as we deemed appropriate for the purposes of this opinion. Based upon the foregoing, we are of the opinion that the shares of Common Stock have been validly issued, fully paid and nonassessable. We hereby consent to the inclusion of this opinion as an exhibit to the above mentioned registration statement. Very truly yours, /s/ MCAFEE & TAFT, a Professional Corporation EX-23.2 5 f71894ex23-2.txt INDEPENDENT AUDITORS' CONSENT 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Fleming Companies, Inc. on Form S-3 of our report dated February 14, 2001 (except for the information under long-term debt and contingencies included in notes to consolidated financial statements as to which the date is March 22, 2001), appearing in the Annual Report on Form 10-K of Fleming Companies, Inc. for the year ended December 30, 2000. We also consent to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Oklahoma City, Oklahoma April 30, 2001 -----END PRIVACY-ENHANCED MESSAGE-----