-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, o05X5U/jLoInm0qzWXoFUyhYidumwNweeHWd8t6G1iHGHC1+kSSVqAQdxqGrN4We aEpkea3ZymE6WQ/MXq0dwg== 0000842913-95-000003.txt : 19950615 0000842913-95-000003.hdr.sgml : 19950615 ACCESSION NUMBER: 0000842913-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19950129 FILED AS OF DATE: 19950315 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KASH N KARRY FOOD STORES INC CENTRAL INDEX KEY: 0000842913 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 954161591 STATE OF INCORPORATION: DE FISCAL YEAR END: 0730 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25260 FILM NUMBER: 95521095 BUSINESS ADDRESS: STREET 1: 6422 HARNEY RD CITY: TAMPA STATE: FL ZIP: 33610 BUSINESS PHONE: 8136210276 10-Q 1 BODY OF 10-Q DOCUMENT FOR 1/29/95 10-Q FILING FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended January 29, 1995 Commission File No. 33-25621 KASH N' KARRY FOOD STORES, INC. (Exact name of registrant as specified in charter) Delaware 95-4161591 (State of incorporation) (IRS employer identification number) 6422 Harney Road, Tampa, Florida 33610 (Address of registrant's principal executive offices) (813) 621-0200 (Registrant's telephone number, including area code) The registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days. The registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. As of March 10, 1995, there were 3,100,000 shares outstanding of the registrant's common stock, $0.01 par value. KASH N' KARRY FOOD STORES, INC. BALANCE SHEETS (Dollar Amounts in Thousands, Except Per Share Amounts) ASSETS Reorganized Predecessor Company Company ------------ ----------- January 29, July 31, 1995 1994 ------------ ----------- (Unaudited) (Note 1) Current assets: Cash and cash equivalents $ 10,517 $ 6,852 Accounts receivable 6,701 8,084 Inventories 78,756 76,094 Prepaid expenses and other current assets 3,246 12,805 --------- --------- Total current assets 99,220 103,835 Property and equipment, at cost, less accumulated depreciation 143,813 160,491 Favorable lease interests, less accumulated amortization of $192 and $13,543 29,762 12,312 Deferred financing costs, less accumulated amortization of $182 and $22,572 4,043 12,630 Reorganization value in excess of amount allocable to identifiable assets, less accumulated amortization of $460 at January 29, 1995 102,059 -- Excess of cost over net assets acquired, less accumulated amortization of $16,288 at July 31, 1994 -- 96,758 Other assets 2,854 3,867 --------- --------- Total assets $381,751 $389,893 ========= ========= See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. BALANCE SHEETS (Dollar Amounts in Thousands, Except Per Share Amounts) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Reorganized Predecessor Company Company ------------ ----------- January 29, July 31, 1995 1994 ------------ ----------- (Unaudited) (Note 1) Current liabilities: Current portion of long-term debt $ 12,764 $ 42,740 Accounts payable 39,883 34,908 Accrued payroll and benefits 9,023 5,579 Accrued interest 4,618 15,849 Taxes, other than income 4,052 6,056 Other accrued expenses 21,673 11,450 --------- --------- Total current liabilities 92,013 116,582 Long-term debt, less current obligations 227,522 317,381 Other long-term liabilities 14,914 12,334 Old Series B Cumulative Preferred Stock of $.01 par value and a stated value of $100 a share. Authorized 50,000 shares; 38,750 shares outstanding at July 31, 1994. -- 3,875 Old Series C Convertible Preferred Stock of $.01 par value. Authorized 100,000 shares; 77,500 shares outstanding at July 31, 1994. -- 775 Stockholders' equity (deficit): New Common Stock of $.01 par value. Authorized 5,500,000 shares; 3,100,000 shares outstanding at January 29, 1995. 31 -- Old Common Stock of $.01 par value. Authorized 4,000,000 shares; 2,819,589 shares outstanding at July 31, 1994. -- 28 Capital in excess of par value 46,464 77,695 Retained earnings (deficit) 807 (138,740) Less cost of treasury stock - 2,437 shares at July 31, 1994 -- (37) --------- --------- Total stockholders' equity (deficit) 47,302 (61,054) --------- --------- Total liabilities & stockholders' equity $381,751 $389,893 ========= ========= See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. CONDENSED STATEMENTS OF OPERATIONS (In Thousands) (Unaudited) Reorganized Predecessor Company Company ----------- -------------------------- Four Nine Thirteen Weeks Ended Weeks Ended Weeks Ended January 29, January 1, January 30, 1995 1995 1994 ----------- ----------- ----------- Sales $ 86,354 $186,535 $278,166 Cost of sales 68,940 149,070 221,706 --------- ----------- ---------- Gross profit 17,414 37,465 56,460 Selling, general and administrative expenses 12,226 28,319 45,300 Depreciation and amortization 1,979 4,161 6,220 --------- --------- ---------- Operating income 3,209 4,985 4,940 Interest expense 2,402 3,159 11,372 --------- --------- ---------- Income (loss) before reorganization items, income taxes, extra- ordinary item and change in accounting principle 807 1,826 (6,432) Reorganization items -- (219) -- --------- --------- ---------- Income (loss) before income taxes, extraordinary item and change in accounting principle 807 1,607 (6,432) Provision for income taxes -- -- -- --------- --------- ---------- Income (loss) before extra- ordinary item and change in accounting principle 807 1,607 (6,432) Extraordinary item - gain on debt discharge -- 70,166 -- Cumulative effect of change in accounting principle - postretirement medical benefits -- (2,000) -- --------- --------- ---------- Net income (loss) $ 807 $69,773 $ (6,432) ========= ========= ========== Net income per common share (A)(B) $ 0.03 ========= (A) Based on a weighted average number of shares of common stock of 3,100,000 outstanding. (B) Net income per common share is not meaningful prior to January 1, 1995 due to the significant change in the capital structure in connection with the Restructuring. See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. CONDENSED STATEMENTS OF OPERATIONS (In Thousands) (Unaudited) Reorganized Predecessor Company Company ----------- -------------------------- Four Twenty-Two Twenty-Six Weeks Ended Weeks Ended Weeks Ended January 29, January 1, January 30, 1995 1995 1994 ----------- ----------- ----------- Sales $ 86,354 $426,681 $534,801 Cost of sales 68,940 340,802 425,915 --------- ----------- ---------- Gross profit 17,414 85,879 108,886 Selling, general and administrative expenses 12,226 68,819 90,128 Depreciation and amortization 1,979 10,234 12,111 Store closing and other costs -- -- 11,016 --------- --------- ---------- Operating income (loss) 3,209 6,826 (4,369) Interest expense 2,402 13,719 22,513 --------- --------- ---------- Income (loss) before reorganization items, income taxes, extra- ordinary item and change in accounting principle 807 (6,893) (26,882) Reorganization items -- (219) -- --------- --------- ---------- Income (loss) before income taxes, extraordinary item and change in accounting principle 807 (7,112) (26,882) Provision for income taxes -- -- -- --------- --------- ---------- Income (loss) before extra- ordinary item and change in accounting principle 807 (7,112) (26,882) Extraordinary item - gain on debt discharge -- 70,166 -- Cumulative effect of change in accounting principle - postretirement medical benefits -- (2,000) -- --------- --------- ---------- Net income (loss) $ 807 $ 61,054 $ (26,882) ========= ========= ========== Net income per common share (A)(B) $ 0.03 ========= (A) Based on a weighted average number of shares of common stock of 3,100,000 outstanding. (B) Net income per common share is not meaningful prior to January 1, 1995 due to the significant change in the capital structure in connection with the Restructuring. See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Reorganized Predecessor Company Company ------------ ----------------------- Four Weeks Twenty-Two Twenty-Six Ended Weeks Ended Weeks Ended January 29, January 1, January 30, 1995 1995 1994 ----------- ----------- ----------- Net cash flow from operating activities: Net income (loss) $ 807 $61,054 $(26,882) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization, excluding deferred financing costs 1,979 11,234 12,111 Store closing and other costs -- -- 11,016 Amortization of deferred financing costs 182 1,152 1,549 Reorganization expense -- 4,329 -- Adjustment of accounts to fair value -- (4,110) -- Change in accounting principle -- 2,000 -- Write-off of transaction costs -- 12,989 -- Gain on discharge of debt -- (70,166) -- (Increase) decrease in assets: Accounts receivable (939) 2,322 660 Inventories 8,358 (5,917) 9,433 Prepaid expenses and other assets (149) (270) (454) Increase (decrease) in liabilities: Accounts payable 3,175 1,800 1,652 Accrued expenses and other liabilities (1,072) (4,012) 2,697 --------- -------- --------- Net cash provided (used) by operating activities 12,341 12,405 11,782 ---------- -------- --------- Cash used by investing activities: Additions to property and equipment (162) (665) (6,194) Leased/financed asset additions -- -- (4,412) Proceeds from sale of property and equipment -- -- 359 ---------- -------- --------- Net cash used by investing activities (162) (665) (10,247) ---------- -------- --------- See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. STATEMENTS OF CASH FLOWS (Continued) (In Thousands) (Unaudited) Reorganized Predecessor Company Company ------------ ----------------------- Four Weeks Twenty-Two Twenty-Six Ended Weeks Ended Weeks Ended January 29, January 1, January 30, 1995 1995 1994 ----------- ----------- ----------- Cash provided (used) by financing activities: Borrowings under revolving loan facility $ 4,200 $ 800 $ 15,700 Additions to obligations under capital leases and notes payable -- -- 799 Repayments on revolving loan facility (6,700) (18,000) (9,100) Repayments on term loan facility -- (3,098) (2,925) Repayments of other long-term liabilities (151) (2,235) (2,642) Sale of Common Stock -- 10,000 -- Other financing activities -- (5,070) (512) --------- --------- ---------- Net cash provided (used) by financing activities (2,651) (17,603) 1,320 --------- --------- ---------- Net increase (decrease) in cash and cash equivalents 9,528 (5,863) 2,855 Cash and cash equivalents at beginning of period 989 6,852 2,145 --------- --------- ---------- Cash and cash equivalents at end of period $ 10,517 $ 989 $ 5,000 ========= ========= ========== See accompanying notes to condensed financial statements. KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) 1. On September 3, 1994, the Company began to solicit acceptances of all impaired parties of a restructuring of the Company which would be implemented through the consummation of a "prepackaged" plan of reorganization under Chapter 11 of the United States Bankruptcy Code (the "Restructuring"). As a result of this solicitation, the voting requirements prescribed by Section 1126 of the Bankruptcy Code were satisfied, and on November 9, 1994 (the "Petition Date") the Company filed with the Bankruptcy Court a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. On December 12, 1994, the Bankruptcy Court confirmed the plan of reorganization, and the Company emerged from bankruptcy on December 29, 1994 (the "Effective Date"). During the pendency of the bankruptcy case, the Company, with the Bankruptcy Court's approval, operated its business in the ordinary course, and paid all pre-petition and post-petition claims of the Company's general unsecured creditors, trade creditors and employees in full. In connection with the Restructuring: (i) Each $1,000 principal amount of the Company's Old Senior Floating Rate Notes was exchanged for (a) new Senior Floating Rate Notes due February 1, 2003 (the "New Senior Floating Rate Notes") in an original principal amount equal to $1,000 plus 100% of the accrued interest under the Old Senior Floating Rate Notes from and including February 3, 1994, through but not including the Petition Date, or, at such holder's election, (b) new 11.5% Senior Fixed Rate Notes due February 1, 2003 (the "New Senior Fixed Rate Notes") in the same original principal amount, or, at such holder's election, (c) an amount of New Senior Floating Rate Notes and an amount of New Senior Fixed Rate Notes equal, in the aggregate, to 100% of such claim; (ii) Each $1,000 principal amount of the Company's Old Senior Fixed Rate Notes was exchanged for (a) New Senior Floating Rate Notes in an original principal amount equal to $1,000 plus 100% of the accrued interest under the Old Senior Fixed Rate Notes from and including February 2, 1994, through but not including the Petition Date, or, at such holder's election, (b) New Senior Fixed Rate Notes in the same original principal amount, or, at such holder's election, (c) an amount of New Senior Floating Rate Notes and an amount of New Senior Fixed Rate Notes equal, in the aggregate, to 100% of such claim; (iii) the Old Subordinated Debentures were exchanged for newly-issued common stock of the Company representing 85 percent of the common stock outstanding on the Effective Date; (iv) Green Equity Investors, L.P. invested $10,000 cash in exchange for newly-issued common stock of the Company representing 15 percent of the common stock outstanding on the Effective Date; (v) the Company entered into a new credit agreement with The CIT Group/Business Credit, Inc. as Administrative Agent, and the lenders under its old bank credit agreement; and KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) (vi) all of the existing preferred stock, common stock, and options and warrants to purchase common stock of the Company was extinguished. 2. The condensed financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the fiscal 1994 Form 10-K filed by the Company. The accompanying condensed financial statements have not been audited by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management the condensed financial statements for the period ended January 30, 1994 includes all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Company's financial position and results of operations. The condensed financial statements as of and for the period ended January 29, 1995 reflect the Company's emergence from Chapter 11 and were prepared according to the principles of fresh start reporting contained in American Institute of Certified Public Accountants' Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Operations during the period from the Effective Date through January 1, 1995 had no significant impact on the emergence transactions and as a result have not been separately identified. As a result of the implementation of fresh start accounting, the Company's condensed financial statements are not comparable to the Company's condensed financial statements of prior periods. Results for the periods ended January 29, 1995 or January 1, 1995 are not necessarily indicative of the results for the full year. The total reorganization value assigned to the Company's assets was estimated by calculating projected cash flows before debt service requirements discounted back to present value using a discount rate of 13.3% (representing the estimated weighted cost of capital), as well as by analyzing market cash flow multiples applied to the Company's adjusted 12-month trailing cash flows. After extensive negotiations between independent investment banking firms representing the Company and an ad hoc committee of bondholders, the reorganization value was agreed to by the parties and confirmed by the Bankruptcy Court. The excess of the reorganization value over the value of the identifiable assets is reported as "Reorganization Value in Excess of Amounts Allocable to Identifiable Assets" and is being amortized over twenty years. Under the principles of fresh start accounting, the Company's total assets were recorded at this assumed reorganization value, with the reorganization value allocated to identifiable tangible and intangible assets on the basis of their estimated fair value. In addition, the Company's accumulated deficit was eliminated. The effect of the Restructuring and the implementation of fresh start accounting on the Company's condensed balance sheet as of January 1, 1995 was as follows: KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) Fresh Start Pre-Fresh Balance Start Balance Adjustments Sheet Sheet January of Fair Value January 1, 1995 Restructuring Adjustment 1, 1995 (A) (B) ------------- ------------- ---------- -------- Cash and cash equivalents $ 9,166 $ (8,177) $ -- $ 989 Accounts receivable 5,762 -- -- 5,762 Inventories 82,011 -- 5,104 87,115 Prepaid expenses and other current assets 3,088 -- -- 3,088 --------- --------- --------- -------- Total current assets 100,027 (8,177) 5,104 96,954 Property and equipment, net 162,754 -- (17,775) 144,979 Favorable lease interests, net 11,673 -- 18,280 29,953 Deferred financing costs 17,769 (7,456) (6,088) 4,225 Reorganization value in excess of amount alloc- able to identifiable assets -- -- 102,519 102,519 Excess of cost over net assets acquired 95,560 -- (95,560) -- Other assets 3,790 -- (928) 2,862 --------- --------- --------- -------- Total assets $391,573 $(15,633) $ 5,552 $381,492 ========= ========== ========= ======== Current liabilities, excluding current portion of long- term debt $ 82,983 $(12,617) $ 6,779 $ 77,145 Long-term debt, including current obligations 366,231 (119,486) (3,959) 242,786 Other long-term liabilities 6,226 -- 8,840 15,066 Redeemable Preferred Stock 4,650 (4,650) -- -- Stockholders' equity (deficit) (68,517) 121,120 (6,108) 46,495 --------- --------- --------- -------- Total liabilities and stockholders' equity $391,573 $(15,633) $ 5,552 $381,492 ========= ========== ========= ======== (A) To record the transactions applicable to the Restructuring as outlined in footnote 1 and eliminate the deficit in accumulated deficit. (B) To record the adjustments to state assets and liabilities at fair value, and to record the cumulative effect of adopting SFAS No. 106 as of the Effective Date. 3. Inventories consist of merchandise held for resale and are stated at the lower of cost or market; cost is determined using average cost, which approximates the first-in, first-out (FIFO) method. KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) 4. The Company had a policy of classifying capital expenditures to be refinanced within one year as prepaid expenses and other current assets. These amounts have been classified as property and equipment at January 29, 1995. At July 31, 1994, prepaid expenses and other current assets included $9,987 of expenditures for construction in progress expected to be financed within one year. 5. Long-term debt consists of the following: January 29, July 31, 1995 1994 ----------- -------- New term loan and revolving credit facilities (A) $ 47,000 $ -- Old bank term and revolving credit facilities (A) -- 59,629 New Senior Floating Rate Notes (B) 22,953 -- New Senior Fixed Rate Notes (C) 121,162 -- Old Senior Floating Rate Notes (B) -- 85,000 Old Senior Fixed Rate Notes (C) -- 50,000 Subordinated Debentures -- 105,000 Mortgages payable 33,555 34,368 Capital lease obligations 8,410 13,877 Other 7,206 12,247 --------- --------- Long-term debt including current portion 240,286 360,121 Less current portion (12,764) (42,740) --------- --------- Long-term debt $227,522 $317,381 ========= ========= (A) In connection with the Restructuring, the Company entered into a new term loan and revolving credit agreement (the "New Credit Agreement") on December 29, 1994. At January 29, 1995, the Company's New Credit Agreement provides for borrowings of up to $35,000 under a term loan facility (with quarterly principal repayments of $1,750 and a $14,000 repayment due when the facility terminates on December 29, 1997) and a $50,000 revolving credit facility with a $25,000 sublimit for letters of credit. At January 29, 1995, the Company had $12,000 in borrowings under the working capital line, and had $17,300 of letters of credit issued against the revolving credit facility. Amounts outstanding under the term facility bear interest (11.0% at January 29, 1995) equal to the prime rate (as defined) plus 250 basis points. Amounts outstanding under the revolving credit facility bear interest (9.50% at January 29, 1995) equal to the prime rate plus 100 basis points. KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) (B) The New Senior Floating Rate Notes mature on February 1, 2003, and bear interest (7.31% at January 29, 1995) payable semiannually, at a rate equal to six-month LIBOR (as defined in the New Senior Floating Rate Note Indenture) plus 200 basis points. The New Senior Floating Rate Notes are redeemable in whole or in part, at the option of the Company, on not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or an integral multiple thereof, at 100% of the principal amount and unpaid interest, if any, to the redemption date. Through August 1, 1995, all interest on the New Senior Floating Rate Notes may, at the option of the Company, be paid by issuing in lieu of cash additional New Senior Floating Rate Notes in an aggregate principal amount equal to the amount of interest due. The Old Senior Floating Rate Notes bore interest (5.88% at July 31, 1994) payable semiannually, at a rate equal to six-month LIBOR plus 250 basis points. (C) The New Senior Fixed Rate Notes mature on February 1, 2003, and bear interest at 11.5% per annum, payable semiannually. The New Senior Fixed Rate Notes are redeemable in whole or in part, at the option of the Company, on not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or an integral multiple thereof, at 100% of the principal amount and unpaid interest, if any, to the redemption date. Through February 1, 1996, all interest on the New Senior Fixed Rate Notes may, at the option of the Company, be paid by issuing in lieu of cash additional New Senior Fixed Rate Notes in an aggregate principal amount equal to the amount of interest due. The Old Senior Fixed Rate Notes bore interest, payable semiannually, at an annual rate of 12.375%. 6. Reorganization items included in the condensed statements of operations consist of restructuring costs, adjustments to fair value, professional fees and other expenses. 7. The Company has a retiree medical plan under which medical coverage is available to current retirees and those active employees who, on August 1, 1993, had attained age 65 with at least 15 years of service. In accordance with SOP 90-7, which the Company adopted on the Effective Date of the Restructuring, the provisions of Financial Accounting Standards Board Statement 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" were also adopted as of that date. The following table sets forth the projected actuarial present value of unfunded postretirement benefit obligations for the plan at January 29, 1995: Accumulated postretirement benefit obligation: Retirees $1,915 Fully eligible active plan participants 85 ------- Accrued postretirement benefit obligation $2,000 ======= KASH N' KARRY FOOD STORES, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (In Thousands) (Unaudited) The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 8.0%. 8. During the first quarter of fiscal 1994, the Company recorded a non-recurring charge of $11,016 which reflects expenses associated with a program of closing twelve underperforming stores and expensing costs associated with unsuccessful financing activities. KASH N' KARRY FOOD STORES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION This analysis should be read in conjunction with the condensed financial statements and related notes thereto included elsewhere in this document. The Company follows a 52/53 week fiscal year ending on the Sunday nearest to July 31. Historical results of operations are given for the four weeks ended January 29, 1995 and the nine weeks ended January 1, 1995 (combined, the "1995 Three-Month Period"); the thirteen weeks ended January 30, 1994 (the "1994 Three-Month Period"); the four weeks ended January 29, 1995 and the twenty-two weeks ended January 1, 1995, (combined, the "1995 Six-Month Period"); and the twenty-six weeks ended January 30, 1994 (the "1994 Six-Month Period"). On November 9, 1994 (the "Petition Date"), the Company filed with the United States Bankruptcy Court a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code; on December 12, 1994, the Bankruptcy Court confirmed the Company's plan of reorganization (the "Restructuring"); and the Restructuring became effective on December 29, 1994 (the "Effective Date") when the Company emerged from bankruptcy. The financial statements as of January 29, 1995 and for the period then ended reflect the Company's emergence from Chapter 11 and were prepared according to the principles of fresh start reporting contained in American Institute of Certified Public Accountant's Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Results of Operations The discussion below compares the results of operations for the 1995 Three-Month Period with the 1994 Three-Month Period; and the 1995 Six-Month Period with the 1994 Six-Month Period. Except as specifically acknowledged below, management believes that the impact of the Restructuring and the implementation of fresh start reporting did not significantly affect the results of operations for the 1995 Three-Month Period or the 1995 Six-Month Period, and that the operating results of the individual four week period and nine week period ended January 29, 1995 and January 1, 1995, respectively, is indicative of the results of operations for the thirteen week period ended January 29, 1995; and that the operating results of the individual four week period and twenty-two week period ended January 29, 1995 and January 1, 1995, respectively, is indicative of the results of operations of the twenty-six week period ended January 29, 1995. Operating cash flow (earnings before interest, taxes, depreciation and amortization, store closing and other costs, reorganization items, extraordinary items and cumulative effect of change in accounting principle) for the 1995 Three-Month Period was $14.3 million compared to $11.2 million for the 1994 Three-Month Period; and for the 1995 Six-Month Period was $22.2 million compared to $18.8 million for the 1994 Six-Month Period. The increases in operating cash flow were attributable to the factors indicated as follows: Sales. 1995 1994 1995 1994 Three-Month Three-Month Six-Month Six-Month Period Period Period Period ----------- ------------ ---------- ------------ Sales (in millions) $272.9 $278.2 $513.0 $534.8 Change in same store sales (0.71%) (0.22%) Average sales per store week (in thousands) $212 $209 $199 $190 The Company closed seventeen stores and opened two new stores over the last year as part of an overall strategic consolidation of its store network. The Company was able to mitigate the sales impact of these store closings by transferring a portion of the sales of the closed stores to operating stores; therefore, there was not a substantial adverse impact on the Company's operating cash flow. In addition, sales have been positively impacted as a result of a recently initiated store remodeling program and aggressive sales promotional activities. Gross Profit. The Company had gross profit of $54.9 million, or 20.1% as a percentage of sales, for the 1995 Three-Month Period; and gross profit of $56.5 million, or 20.3% as a percentage of sales, for the 1994 Three-Month Period. The Company had gross profit of $103.3 million, or 20.1% as a percentage of sales, for the 1995 Six-Month Period; and gross profit of $108.9 million, or 20.4% of sales, for the 1994 Six-Month Period. The decreases in gross margin as a percentage of sales were due to the effect of lower investment in forward buy inventory and receipt of less promotional funds, offset by improved perishable margins and increased efficiency in warehouse and distribution operations. Selling, General and Administrative Expenses. The Company had selling, general and administrative expenses of $40.5 million, or 14.9% as a percentage of sales, for the 1995 Three-Month Period, and $45.3 million, or 16.3% as a percentage of sales, for the 1994 Three-Month Period. The Company had selling, general and administrative expenses of $81.0 million, or 15.8% as a percentage of sales, for the 1995 Six-Month Period and $90.1 million, or 16.9% as a percentage of sales, for the 1994 Six-Month Period. The reductions of selling, general and administrative expenses were due to lower store labor costs, reduced corporate overhead expenses and lower advertising expenditures associated with a comprehensive operational restructuring of the Company initiated during the year; and reduced operating costs associated with stores that were closed during the last twelve months. These improvements were partially offset by an increase in workers' compensation insurance reserves. Depreciation and Amortization. The Company's depreciation and amortization expenses were $6.1 million for the 1995 Three-Month Period, $6.2 million for the 1994 Three-Month Period, $12.2 million for the 1995 Six-Month Period, and $12.1 million for the 1994 Six-Month Period. KASH N' KARRY FOOD STORES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Store Closing and Other Costs. During the first quarter of fiscal 1994, the Company recorded a non-recurring charge of $11.0 million. This charge included $1.9 million of costs associated with unsuccessful financing activities, $4.2 million of favorable lease interests written off in connection with the closing of twelve underperforming stores, $4.0 million representing an adjustment to the expected lease liability on closed stores, net of sublease income, and $.9 million of other store closing and related expenses. Interest Expense. Interest expense for the 1994 Three-Month Period and the 1994 Six-Month Period was primarily comprised of interest under the Old Bank Credit Agreement, the Old Senior Floating Rate Notes, the Old Senior Fixed Rate Notes, the Old Subordinated Debentures, and various mortgages and capital leases. For the 1995 Three-Month Period and the 1995 Six-Month Period, interest expense was reported on the Old Senior Floating Rate Notes, the Old Senior Fixed Rate Notes, and the Old Subordinated Debentures through, but not including the Petition Date; and interest expense was reported on the New Senior Floating Rate Notes and the New Senior Fixed Rate Notes from the Effective Date through January 29, 1995. In accordance with the provisions of the Restructuring, no interest was due to the holders of the Old Senior Floating Rate Notes, Old Senior Fixed Rate Notes, or Old Subordinated Debentures for the period between the Petition Date and the Effective Date, and therefore no interest expense was recorded for this period. As provided in the Restructuring, interest accrued from February 2, 1994, in the case of the Old Senior Fixed Rate Notes, and from February 3, 1994, in the case of the Old Senior Floating Rate Notes, through the Petition Date, was paid by issuing additional New Senior Floating Rate Notes and New Senior Fixed Rate Notes. Interest accrued on the Old Subordinated Debentures from February 1, 1994 through the Petition Date was converted into shareholders' equity. Reorganization Costs. In accordance with SOP 90-7, income and costs directly related to the reorganization have been segregated and are separately disclosed. The major components are restructuring costs, adjustments to fair value, professional fees and other expenses. Gain on Debt Discharge. The gain on debt discharge reflects the conversion of $105.0 million of Old Subordinated Debentures, plus accrued interest from February 1, 1994 through the Petition Date, into $39.5 million of shareholders' equity, resulting in a $70.2 million gain. The gain is presented net of write-offs and costs associated with the repayment of borrowings on the Effective Date. Financial Condition During the pendency of its bankruptcy case discussed above, the Company operated its business in the ordinary course, and paid all pre-petition and post-petition claims of the Company's general unsecured creditors, trade creditors, and employees in full. The provisions of the Restructuring, which are discussed in footnote 1 to the accompanying condensed financial statements, will have an immediate beneficial impact on the Company's financial condition, primarily as a result of significantly deleveraging the Company's balance sheet. Prior to the Petition Date, the Company's Old Bank Credit Agreement provided for a revolving credit facility with individual sublimits of $30.0 million for working capital loans and $25.0 million for letters of credit, with a maximum of $50.0 million outstanding under the total facility at any one time. During the weeks immediately preceding the bankruptcy filing, the Company, with the approval of its bank lenders, increased its cash position by fully drawing the remaining availability under its working capital line. On the Petition Date, the Bankruptcy Court approved the use of cash collateral and a letter of credit facility of $17.7 million under the Old Bank Credit Agreement, and additional debtor-in-possession financing provided by BankAmerica Business Credit, Inc. of $11.2 million, subject to certain terms and conditions. The Company entered into a new term loan and revolving credit agreement with The CIT Group/Business Credit Inc. and other lenders to provide a 3-year $35 million term loan facility and a 3-year $50 million revolving credit facility which took effect on the Effective Date. Beginning August 1, 1994, the Company implemented a short-term business strategy to improve the Company's financial performance. The focus of this strategy is to conserve capital, reduce administrative and operating expenses, and direct management attention toward the operation of existing stores. During the first six months of fiscal 1995 the Company has significantly improved its liquidity as a result of the payment moratorium on interest due on the Old Senior Fixed Rate Notes, Old Senior Floating Rate Notes, and Old Subordinated Debentures; managing working capital; and reducing operating expenses and capital expenditures. These actions have allowed the Company to begin investing in forward buy inventory again. Consistent with its short-term business strategy, the Company does not anticipate opening or acquiring any new stores during the current fiscal year, but expects that capital expenditures of approximately $6.0 million will be used to upgrade its existing store facilities. The Company has entered into an interest rate swap through August 1995 to reduce its exposure to increases in short-term interest rates on the majority of its floating rate debt. The Company does not believe that there would be any material impact on the accompanying financial statements as of January 29, 1995 by liquidating this contract. Based upon the Company's ability to generate working capital through its operations and its new $50.0 million revolving credit facility, the Company believes that it has the financial resources necessary to pay its capital obligations and implement its business plan. Effects of Inflation The Company's primary costs, inventory and labor, are affected by a number of factors that are beyond its control, including availability and price of merchandise, the competitive climate and general and regional economic conditions. As is typical of the supermarket industry, the Company has generally been able to maintain margins by adjusting its retail prices, but competitive conditions may from time to time render it unable to do so while maintaining its market share. PART II - OTHER INFORMATION Item 1. Legal Proceedings. In its Quarterly Report on Form 10-Q for the quarter ended on October 30, 1994, the Company reported on its voluntary petition for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code, styled In re: Kash n' Karry Food Stores, Inc., Chapter 11 Case No. 94-1082 (HSB), which was then pending with the United States District Court for the District of Delaware (the "Bankruptcy Court"). The Company's First Amended Plan of Reorganization, as amended by notices of technical modifications thereto filed with the Bankruptcy Court on November 9, 1994, (the "Petition Date") and December 12, 1994 (the "Plan"), was consummated and became effective on December 29, 1994 (the "Effective Date"), and is no longer pending. Under the terms of the Plan, on the Effective Date, each of the following transactions occurred: (1) each $1,000 principal amount of the Company's $85 million Senior Floating Rate Notes due August 2, 1996 (the "Old Senior Floating Rate Notes") was exchanged for (a) new Senior Floating Rate Notes due February 1, 2003 (the "New Senior Floating Rate Notes") in an original principal amount equal to $1,000 plus 100% of the accrued interest under the Old Senior Floating Rate Notes from and including February 3, 1994, through but not including the Petition Date, or, at such holder's election, (b) new 11.5% Senior Fixed Rate Notes due February 1, 2003 (the "New Senior Fixed Rate Notes") in the same original principal amount, or, at such holder's election, (c) an amount of New Senior Floating Rate Notes and an amount of New Senior Fixed Rate Notes equal, in the aggregate, to 100% of such claim; (2) each $1,000 principal amount of the Company's $50 million 12-3/8% Senior Fixed Rate Notes due February 1, 1999 (the "Old Senior Fixed Rate Notes") was exchanged for (a) New Senior Floating Rate Notes in an original principal amount equal to $1,000 plus 100% of the accrued interest under the Old Senior Fixed Rate Notes from and including February 2, 1994, through but not including the Petition Date, or, at such holder's election, (b) New Senior Fixed Rate Notes in the same original principal amount, or, at such holder's election, (c) an amount of New Senior Floating Rate Notes and an amount of New Senior Fixed Rate Notes equal, in the aggregate, to 100% of such claim; (3) the Company's $105 million 14% Subordinated Debentures due February 1, 2001 were exchanged for approximately 2,635,000 shares of newly-issued common stock of the Company, representing in the aggregate 85 percent of the common stock to be outstanding on the Effective Date; (4) Green Equity Investors, L.P., invested $10 million cash in exchange for 465,000 shares of newly-issued common stock of the Company representing 15 percent of the common stock outstanding on the Effective Date; (5) all of the existing preferred stock, common stock, and options and warrants to purchase common stock of the Company were extinguished; (6) the Company entered into a new credit agreement with The CIT Group/Business Credit, Inc., and the lenders under its old bank credit agreement, pursuant to which the Company has credit availability from and after the Effective Date on the terms set forth therein; and (7) the rights of trade creditors and other creditors of the Company were unimpaired. The Company's former chief executive officer filed a proof of claim in the bankruptcy proceeding stating a claim for payments allegedly owed to him in connection with his severance from the Company. The total principal amount of such former officer's claim is less than $1.5 million. The Company has until March 31, 1995 in which to respond to the proof of claim. Except for the pending proof of claim, there are no material legal proceedings to which the Company is a party or to which any of its property is subject. The Company is a party to ordinary and routine litigation incidental to its business. Item 3. Defaults Upon Senior Securities. The Company did not make interest payments due on August 1, 1994, and August 2, 1994, respectively, under the Old Senior Fixed Rate Notes, the Old Subordinated Debentures, and the Old Senior Floating Rate Notes. Prior to and during the pendency of the Company's bankruptcy proceeding, the holders of such obligations did not enforce any remedies with respect to the occurrences of an event of default thereunder. Pursuant to the Plan, on the Effective Date, the principal and accrued interest under the Old Senior Fixed Rate Notes and the Old Senior Floating Rate Notes were exchanged for either New Senior Fixed Rate Notes or New Senior Floating Rate Notes, and the principal and accrued interest under the Old Subordinated Debentures were exchanged for common stock of the Company. No default by the Company has occurred under the New Senior Fixed Rate Notes or New Senior Floating Rate Notes. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit No. Description 2 First Amended Plan of Reorganization filed by the Company with the United States Bankruptcy Court of the District of Delaware on November 9, 1994, as amended by notices of technical modifications thereto filed on November 9, 1994, and December 12, 1994 (previously filed as Exhibit 2 to the Company's Quarterly Report on Form 10-Q for the period ended October 30, 1994). 3(i) Restated Certificate of Incorporation filed with the Delaware Secretary of State on December 29, 1994. 3(ii)(a) Bylaws adopted October 12, 1988. 3(ii)(b) First Amendment to Bylaws adopted July 30, 1991. 3(ii)(c) Second Amendment to Bylaws adopted December 29, 1994. Exhibit No. Description 4.1 Indenture dated as of December 29, 1994, between the Company and Shawmut Bank Connecticut, N.A., as Trustee, relating to 11.5% Senior Fixed Rate Notes due 2003. 4.2 Indenture dated as of December 29, 1994, between the Company and IBJ Schroder Bank & Trust Company, as Trustee, relating to Senior Floating Rate Notes due 2003. 10.1 Credit Agreement dated as of December 29, 1994, among the Company, certain lenders, The CIT Group/Business Credit, Inc., as administrative agent, and Bank of America National Trust and Savings Association, as co-agent. 10.2 Master Third Amendment to Deferred Compensation Agreements, dated as of September 2, 1994, between the Company and the key employees party thereto. 10.3 Management Services Agreement dated as of December 29, 1994, by and between the Company and Leonard Green & Partners. 27 Financial Data Schedule (b) Reports on Form 8-K: On a Form 8-K dated February 17, 1995, the Company reported on its dismissal of KPMG Peat Marwick LLP, and its engagement of Coopers & Lybrand L.L.P., as its principal accountants. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KASH N' KARRY FOOD STORES, INC. Date: March 15, 1995 /s/ Raymond P. Springer ------------------------------- Raymond P. Springer Senior Vice President, Administration Date: March 15, 1995 /s/ Richard D. Coleman ------------------------------- Richard D. Coleman Vice President, Controller EX-27 2 FINANCIAL DATA SCHEDULES FOR 1/29/95 10-Q
5 0000842913 KASH N' KARRY FOOD STORES, INC. 1,000 3-MOS JUL-30-1995 OCT-31-1994 JAN-29-1995 10,517 0 6,701 0 78,756 99,220 145,140 1,327 381,751 92,013 227,522 31 0 0 47,271 381,751 272,889 272,889 218,010 264,695 0 0 5,561 2,633 0 2,633 0 67,728 0 69,773 0.03 0.03 Income-Pretax is before reorganization item, extraordinary item, and change in accounting principle. Extraordinary includes reorganization items and change in accounting principle. EX-3 3 EXHIBIT 3(I) TO 1/29/95 10-Q AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF KASH N' KARRY FOOD STORES, INC. 1. The name of the corporation is Kash n' Karry Food Stores, Inc. 2. The corporation was originally incorporated in Delaware under the name "LSI ACQUISITION CORP."; the filing date of its original Certificate of Incorporation with the Secretary of State was April 27, 1988. 3. This Amended and Restated Certificate of Incorporation has been adopted and effected in conformity with Sections 245 and 303 of the General Corporation Law of the State of Delaware, pursuant to the Order Confirming Kash n' Karry Food Stores, Inc.'s Plan of Reorganization entered by the United Sates Bankruptcy Court for the District of Delaware of December 12, 1994 in case No. 94-1082(HSB), file name In re Kash n' Karry Food Stores, Inc. The Court has jurisdiction over that proceeding under Title 28 of the United States Code, Section 1334. 4. The Restated Certificate of Incorporation and all amendments and supplements thereto are hereby superseded, amended and restated by the following Second Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation"): FIRST: The name of the corporation (hereinafter referred to as the "Corporation") is Kash n' Karry Food Stores, Inc. SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "GCL"). FOURTH: The Corporation is authorized to issue an aggregate of 6,500,000 shares of capital stock, 5,500,000 shares of which are designated Common Stock, par value $.01 per share, and 1,000,000 of which are designated Preferred Stock, par value $.01 per share. All capital stock of the Corporation will be fully paid and nonassessable. FIFTH: The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and to determine the designation of any such series. The Board of Directors is also authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series. SIXTH: The Corporation shall not issue any non-voting equity securities to the extent prohibited by Section 1123(a)(6) of the Bankruptcy Code (11 U.S.C. 1123(a)(6)); provided, however, that this Article SIXTH (a) will have no further force and effect beyond that required under Section 1123 of the Bankruptcy Code; (b) will have such force and effect, if any, only for so long as Section 1123 of the Bankruptcy Code is in effect and applicable to the Corporation; and (c) in all events may be amended or eliminated in accordance with applicable law from time to time in effect. SEVENTH: No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this Article SEVENTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. The provisions of this Article SEVENTH shall not be deemed to limit or preclude indemnification of a director by the Corporation for any liability of a director that has not been eliminated or limited by the provisions of this Article SEVENTH. EIGHTH: In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to make, amend and repeal the bylaws, except to the extent that the bylaws or this Certificate of Incorporation otherwise provide. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors, and the Directors need not be elected by ballot unless required by the bylaws of the Corporation. NINTH: The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, Kash n' Karry Food Stores, Inc., has caused this certificate to be signed by its Chief Executive Officer and attested by its Secretary this 29th day of December, 1994. KASH N' KARRY FOOD STORES, INC. By: /s/ Raymond P. Springer Raymond P. Springer Executive Vice President, Administration ATTEST: By: /s/ Richard D. Coleman Richard D. Coleman Secretary EX-3 4 EXHIBIT 3(II)(A) TO 1/29/95 10-Q Effective October 6th, 1988 BYLAWS OF KASH N' KARRY FOOD STORES, INC. a Delaware corporation BYLAWS OF KASH N' KARRY FOOD STORES, INC. a Delaware corporation Table of Contents ARTICLE I Offices. . . . . . . . . . . . . . . . . . .1 ARTICLE II Meetings of Stockholders . . . . . . . . . .1 ARTICLE III Directors. . . . . . . . . . . . . . . . . .4 ARTICLE IV Officers . . . . . . . . . . . . . . . . . .7 ARTICLE V Seal . . . . . . . . . . . . . . . . . . . 10 ARTICLE VI Form of Stock Certificate. . . . . . . . . 10 ARTICLE VII Representation of Shares of Other Corporations . . . . . . . . . . . 10 ARTICLE VIII Transfers of Stock . . . . . . . . . . . . 10 ARTICLE IX Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . 11 ARTICLE X Record Date. . . . . . . . . . . . . . . . 11 ARTICLE XI Registered Stockholders. . . . . . . . . . 12 ARTICLE XII Fiscal Year. . . . . . . . . . . . . . . . 12 ARTICLE XIII Notices. . . . . . . . . . . . . . . . . . 12 ARTICLE XIV Amendments . . . . . . . . . . . . . . . . 13 ARTICLE XV Indentification and Insurance. . . . . . . 13 BYLAWS OF KASH N' KARRY FOOD STORES, INC. a Delaware corporation ARTICLE I OFFICES Section 1. Registered Office. The registered office of this Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof is the agent named in the Certificate of Incorporation until changed by the Board of Directors (the "Board"). Section 2. Principal Office. The principal office for the transaction of the business of the Corporation shall be at such place as may be established by the Board. The Board is granted full power and authority to change said principal office from one location to another. Section 3. Other Offices. The Corporation may also have an office or offices at such other places, either within or without the State of Delaware, as the Board may from time to time designate or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of stockholders shall be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. Annual meetings of stockholders shall be held on such date and at such time set by the Board and stated in the notice of the meeting, at which the stockholders shall elect members of the Board, and transact such other business as may properly be brought before the meeting. Section 3. Special Meetings. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the Board, or by a committee of the Board that has been duly designated by the Board and whose powers and authority, as provided in a resolution of the Board or in the Bylaws of the Corporation, include the power to call such meetings, and shall be called by the president or secretary at the request in writing of a majority of the Board, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meeting of stockholders may be called by any other person or persons specified in any provisions of the Certificate of Incorporation or any amendment thereto, or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time hereafter), then such special meeting may also be called by the person or persons in the manner, at the times and for the purposes so specified. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 4. Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or at the place of the meeting, and the list shall also be available at the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Notice of Meetings. Written notice of each meeting of stockholders, whether annual or special, stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 6. Quorum and Adjournment. The holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for holding all meetings of stockholders, except as otherwise provided by applicable law or by the Certificate of Incorporation. If it shall appear that such quorum is not present or represented at any meeting of stockholders, the Chairman of the meeting shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The Chairman of the meeting may determine that a quorum is present based upon any reasonable evidence of the presence in person or by proxy of stockholders holding a majority of the outstanding votes, including without limitation, evidence from any record of stockholders who have signed a register indicating their presence at the meeting. Section 7. Voting. In all matters, the vote of the holders of a majority of the capital stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of applicable law, of the Certificate of Incorporation, or of these Bylaws a different vote is required in which case such express provision shall govern and control the decision of such question. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to cast one vote for each share of the capital stock entitled to vote held by such stockholder. The officer of the Corporation presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 8. Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize in writing another person or persons to act for him or her by proxy, but no proxy shall be voted or acted upon after eleven months from its date, unless the person executing the proxy specifies therein the period of time for which it is to continue in force. Section 9. Inspector of Election. The Board may appoint an Inspector or Inspectors of Election for any meeting of stockholders. Such Inspectors shall decide upon the qualification of the voters and report the number of shares represented at the meeting and entitled to vote, shall conduct the voting and accept the votes, and when the voting is completed shall ascertain and report the number of shares voted respectively for and against each position upon which a vote is taken by ballot. An Inspector need not be a stockholder, and any officer of the Corporation may be an Inspector on any position other than a vote for or against a proposal in which he or she shall have a material interest. Section 10. Action Without Meeting. Subject to Section 228 of the Delaware General Corporation Law, any action which, under any provision of the Delaware General Corporation Law, may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than a minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. ARTICLE III DIRECTORS Section 1. Powers. The Board shall have the power to manage or direct the management of the property, business and affairs of the Corporation, and except as expressly limited by law, to exercise all of its corporate powers. The Board may establish procedures and rules, or may authorize the Chairman of any meeting of stockholders to establish procedures and rules, for the fair and orderly conduct of any stockholders' meeting, including without limitation, registration of the stockholders attending the meeting, adoption of an agenda, establishing the order of business at the meeting, recessing and adjourning the meeting for the purposes of tabulating any votes and receiving the result thereof, the timing of the opening and closing of the polls, and the physical layout of the facilities for the meeting. Section 2. Number. The Board shall consist of one or more members in such number as shall be determined from time to time by resolution of the Board. Until otherwise determined by such resolution, the Board shall consist of six members. Directors need not be stockholders, and each director shall serve until his or her successor is elected and qualified or until his or her death, retirement, resignation or removal. Section 3. Nominations. Nominations of candidates for election as directors of the Corporation may be made by the Board or by any stockholder entitled to vote at a meeting at which one or more directors are to be elected (an "Election Meeting") who complies with the notice procedures set forth in this Section 3. Nominations made by the Board shall be made at a meeting of the Board or by written consent of directors in lieu of a meeting, not less than 30 days prior to the date of an Election Meeting. At the request of the Secretary of the Corporation, each proposed nominee shall provide the Corporation with such information concerning him or herself as is required, under the rules of the Securities and Exchange Commission, to be included in the Corporation's proxy statement soliciting proxies for the election of directors. Not less than 30 days nor more than 60 days prior to the date of an Election Meeting, subject to any other requirements of law, any stockholder who intends to make a nomination at the Election Meeting shall deliver a notice to the Secretary of the Corporation setting forth (i) the name and address of the stockholder and of each nominee proposed in such notice, (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder, (iii) a representation that the stockholder intends to nominate the persons specified in the notice at the meeting, (iv) a description of any arrangements between the stockholder and nominees or any other person with respect to the nomination, (v) such other information concerning each such nominee as would be required under the rules of the Securities and Exchange Commission in a proxy statement soliciting proxies for the election of such nominees, and (vi) the consent to serve as a director of the Corporation, if elected, of each such nominee. In the event that a person is validly designated as a nominee and shall thereafter become unable or unwilling to stand for election to the Board, the Board or the stockholder who proposed such nominee, as the case may be, may designate a substitute nominee. If the Chairman of the Election Meeting determines that a nomination was not made in accordance with the foregoing procedures, such nomination shall be void. Section 4. Vacancies and Newly Created Directorships. Any vacancy in the Board caused by death, resignation, removal or otherwise, or through an increase in the number of directors of a class, shall be filled by a majority vote of the remaining directors, or by the sole remaining director. A director so elected to fill a vacancy shall serve for the remainder of the then present term of the directorship to which he or she was elected. Section 5. Initial Meeting. The Board shall meet as soon as practicable after the annual election of directors and notice of such first meeting shall not be required. Section 6. Regular Meetings. Regular meetings of the Board shall be held without call or notice at such time and place as shall from time to time be fixed by standing resolution of the Board. Section 7. Special Meetings. Special meetings of the Board may be called at any time, and for any purpose permitted by law, by the Chairman of the Board, the President, the Secretary, or any two members of the Board, which meetings shall be held at the time and place designated by the person or persons calling the meeting. Notice of the time, place and purpose of any such meeting shall be given to the directors by the Secretary, or in case of his or her absence, refusal or inability to act, by any other officer. Any such notice may be given by mail, by telegraph, by telephone, by personal service, or by any thereof as to different directors. If the notice is by mail, then it shall be deposited in a United States Post Office at least four days before the time of the meeting; if by telegraph, by deposit of the message with the telegraph company at least forty-eight hours before the time of the meeting; if by telephone or by personal service, at least forty-eight hours before the time of the meeting. Section 8. Quorum. At all meetings of the Board a majority of the whole Board shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by applicable law, by the Certificate of Incorporation or by these Bylaws. Any meeting of the Board may be adjourned to meet again at a stated day and hour. Even though no quorum is present, as required in this Section, a majority of the directors present at any meeting of the Board, either regular or special, may adjourn from time to time until a quorum be had, but no later than the time fixed for the next regular meeting of the Board. Notice of any adjourned meeting need not be given. Section 9. Fees and Compensation. Each Director and each member of a committee of the Board shall receive such fees and reimbursement of expenses incurred on behalf of the corporation or in attending meetings as the Board may from time to time determine. Section 10. Meetings by Telephonic Communication. Members of the Board or any committee thereof may participate in a regular or special meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, if the standing resolutions fixing the time and place of a regular meeting or if the notice of the time and place of any regular or special meeting provides for such participation. Participation in a meeting pursuant to this Section shall constitute presence in person at such meeting. Section 11. Committees. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee and if the Board has not designated one or more alternates (or if such a designation has been made, in the absence or disqualification of such alternate(s)), the member or members there of present at any meeting and not disqualified from voting, whether not he, she or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member or alternate. Any such committee, to the extent provided in a resolution of the Board shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation,and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation or these Bylaws, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution; and, unless a resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of capital stock. Section 12. Action Without Meetings. Unless otherwise restricted by applicable law, the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without meeting if all members of the Board or of such committee consent thereto in writing as the case may be, and the writing or writings are filed with the minutes of proceedings of the Board or committee. Section 13. Removal. Unless otherwise restricted by the Certificate of Incorporation or bylaw, any Director or the entire Board may be removed, with or without cause,by the holders of a majority of shares entitled to vote at an election of Directors. ARTICLE IV OFFICERS Section 1. Officers. The Corporation shall have a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Corporation may also, at the discretion of the Board of Directors, have as officers of the Corporation one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as may be elected or appointed in accordance with; the provisions of Section 3 of this Article. Any two or more of such offices, except those of President and Secretary, may be held by the same person. Section 2. Election. The officers of the Corporation, except such officer as may be elected or appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen annually by, and shall serve at the pleasure of, the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service, or until their respective successors shall be elected. Section 3. Subordinate Officers. The Board may elect, and may empower the President to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as the Board may from time to time determine. Section 4. Removal and Resignation. Any officer may be removed, either with or without cause, by the Board at any time or, except in the case of an officer not chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board. Any such removal shall be without prejudice to the rights, if any, of the officer under any contract of employment of the officer. Any officer may resign at any time by giving written notice to the Corporation, but without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 6. Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation. Subject to the control of the Board and to the powers vested by the Board in any committee or committees appointed by the Board, the Chairman of the Board shall have general supervision, direction and control of the business and officers of the Corporation and shall preside at all meetings of the stockholders and of the Board. The Chairman of the Board shall have the general powers and duties of management usually vested in the chief executive officer of a corporation and shall have such other powers and duties as may be prescribed by the Board or the Bylaws. Section 7. President. The President shall be the chief operating officer of the Corporation and, subject to the direction of the Board, the committees of the Board and the chief executive officer of the Corporation, the President shall have and exercise general supervision over the operations and subordinate officers of the Corporation and shall have such other powers and duties as may be prescribed by the Board of Bylaws. In the absence or disability of the chief executive officer, the President shall perform all the duties of the chief executive officer and when so acting shall have all the powers of and be subject to all the restrictions upon the chief executive officer. Section 8. Vice Presidents. In the absence or disability of the chief executive officer and the President,the Vice Presidents, in order of their rank as fixed by the Board, or, if not ranked, the Vice President designated by the Board shall perform all the duties of the President and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall have such other powers and perform such duties as may be prescribed for them, respectively, from time to time, by the Board or the Bylaws. Section 9. Secretary. The Secretary shall keep or cause to be kept, at the principal executive office and such other place as the Board may order, a book of minutes of all meetings of stockholders, the Board and its committees, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Board and committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, a copy of the Bylaws of the Corporation at the principal executive office or business office. The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation's transfer agent or registrar, if one be appointed, a share register, or a duplicate share register,showing the names of the stockholders and their addresses,the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given,notice of all meetings of the stockholders and of the Board and any committees thereof required by these Bylaws or bylaw to be given, shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board. Section 10. Treasurer. The Treasurer is the chief financial officer of the Corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, and shall send or cause to be sent to the stockholders of the Corporation such financial statements and reports as are by law or these Bylaws required to be sent to them. The books of account shall at all times be open to inspection by any director. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board.The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board, shall render to the President and the directors, whenever they request it, an account of all transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board. ARTICLE V SEAL It shall not be necessary to the validity of any instrument executed by any authorized officer or officers of the Corporation, that the execution of such instrument be evidenced by the corporate seal, and all documents, instruments, contracts, and writings of all kinds signed on behalf of the Corporation by any authorized officer or officers thereof shall be as effectual and binding on the Corporation without the corporate seal, as if the execution of the same had been evidenced by affixing the corporate seal thereto. ARTICLE VI FORM OF STOCK CERTIFICATE Every holder of capital stock in the Corporation shall be entitled to have a certificate signed by, or in the name of, the Corporation by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation,certifying the number of shares owned by him or her in the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent, or registrar at the date of the issue. ARTICLE VII REPRESENTATION OF SHARES OF OTHER CORPORATIONS The Chairman of the Board, the President or any other officer or officers authorized by the Board are each authorized to vote, represent, and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority herein granted may be exercised either by any such officer in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officer. ARTICLE VIII TRANSFERS OF STOCK Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession,assignment, or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. ARTICLE IX LOST, STOLEN, OR DESTROYED CERTIFICATES The Board may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. ARTICLE X RECORD DATE The Board may fix in advance a date, which shall not be more than sixty days nor less than ten days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or ex-change of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend,or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. ARTICLE XI REGISTERED STOCKHOLDERS The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by applicable law. ARTICLE XII FISCAL YEAR The fiscal year of the Corporation shall be fixed by resolution of the Board. ARTICLE XIII NOTICES Section 1. Manner of Notice. Whenever under the provisions of applicable law, the Certificate of Incorporation or these Bylaws, notice is required to be given to any director, committee member, officer, or stockholder, it shall not be construed to mean personal notice, but such notice may be given, in the case of stockholders, in writing, by mail, by depositing the same in the post office or letter box, in a postpaid sealed wrapper, addressed to such stockholder, at such address as appears on the books of the Corporation, or, in default of other address, to such stockholder at the General Post Office in the City of Wilmington, Delaware, and, in the case of directors, commit-tee members and officers, by telephone, or by mail or by telegram to the last business address known to the Secretary of the Corporation, and such notice shall be deemed to be given at the time when the same shall be thus mailed or telegraphed or telephoned. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of applicable law, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE XIV AMENDMENTS The Board shall have the power to make, adopt, alter, amend and repeal from time to time bylaws of this Corporation, subject to the right of the stockholders entitled to vote with respect thereto to adopt, alter, amend, and repeal bylaws made by the Board; provided, however, that these Bylaws shall not be adopted, altered, amended, or repealed by the stockholders of the Corporation, except by the vote of the holders of not less than two-thirds of the outstanding shares of Common Stock. ARTICLE XV INDEMNIFICATION AND INSURANCE Section 1. Right to Indemnification. Each person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware, as the same exist or may hereafter be amended, against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 2 hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding; shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. Section 2. Right of Claimant to Bring Suit. If a claim under Section 1 of this Article is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has failed to meet a standard of conduct which makes it permissible under Delaware law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met such standard of conduct, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, and its stockholders) that the claimant has not met such standard of conduct, shall be a defense to the action or create a presumption that the claimant has failed to meet such standard of conduct. Section 3. Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Section 4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability, loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under Delaware law. Section 5. Expenses as a Witness. To the extent that any director, officer, employee or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he or she shall be indemnified against all costs and expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 6. Indemnity Agreements. The Corporation may enter into agreements with any director, officer, employee or agent of the Corporation providing for indemnification to the full extent permitted by Delaware law. EX-3 5 EXHIBIT (3II)B TO 1/29/95 10-Q FIRST AMENDMENT TO BYLAWS OF KASH N' KARRY FOOD STORES, INC. A Delaware Corporation The following amendments to the Bylaws of the Corporation were adopted on July 30, 1991, by the Written consent of the holders of two-thirds of the outstanding common stock of the Corporation, as permitted by Section 228 of the Delaware General Corporation Law and Article XIV of the Bylaws: 1. The second sentence of Article III, Section 2, of the Bylaws of the Corporation is hereby amended to read in its entirety as follows: "Until otherwise determined by resolution of the Board adopted after August 1, 1991, the Board shall consist of three members." 2. The first sentence of Article III, Section 4, of the Bylaws of the Corporation is hereby amended to read in its entirety as follows: "Any vacancy in the Board caused by death, resignation, removal or otherwise, or through an increase in the number of directors, shall be filled by a majority vote of the remaining directors, by the sole remaining director, or by the stockholders." DATED: October 17, 1991. /s/ Richard D. Coleman Richard D. Coleman, Secretary of Kash n' Karry Food Stores, Inc. EX-3 6 EXHIBIT 3(II)(C)) TO 1/29/95 10-Q SECOND AMENDMENT TO BYLAWS OF KASH N' KARRY FOOD STORES, INC., a Delaware corporation The following amendment to the Bylaws of Kash n' Karry Food Stores, Inc. (the "Corporation") was adopted on December 9, 1994, by the unanimous written consent of the members of the Board of Directors of the Corporation, acting pursuant to Article III, Section 12, of the Bylaws and Section 141(f) of the Delaware General Corporation Law, as permitted by Article XIV of the Bylaws: 1. The first sentence of Article III, Section 8, of the Bylaws of the Corporation is hereby deleted and replaced with the following: "At all meetings of the Board a majority of the whole Board shall be necessary and sufficient to constitute a quorum for the transaction of business; provided, however, that whenever the full Board is nine (9) in number, seven (7) directors shall be necessary and sufficient to constitute a quorum. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by applicable law, by the Certificate of Incorporation or by these Bylaws." 2. The foregoing amendment became effective on December 29, 1994. DATED: ________________________, 1995. _________________________________ Raymond P. Springer, Secretary of Kash n' Karry Food Stores, Inc. EX-4 7 EXHIBIT 4.1 TO 1/29/95 10-Q INDENTURE, dated as of December 29, 1994, between Kash n' Karry Food Stores, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at 6422 Harney Road, Tampa, Florida 33610, telephone number (813) 621-0200, telecopier number (813) 626-9550, and Shawmut Bank Connecticut, N.A., as Trustee (herein called the "Trustee"). RECITALS On November 9, 1994, the Company filed for protection under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. On December 12, 1994, the United States Bankruptcy Court for the District of Delaware entered an order confirming the Plan of Reorganization, dated as of December 12, 1994, of the Company filed in the United States Bankruptcy Court for the District of Delaware in respect of Case No. 94-1082 (HSB) (the "Plan"), which provides for the issuance of the Notes (as hereinafter defined). The Company has duly authorized the creation of an issue of 11.5% Senior Fixed Rate Notes due 2003 (herein called the "Notes") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company as duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, the singular includes the plural and the plural includes the singular; (2) all other terms used herein that are- defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Acceleration Notice" has the meaning specified in Section 502. "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Company or assumed in connection with the acquisition of assets from such Person other than Indebtedness incurred in connection with, or in contemplation of, (i) such Person becoming a Subsidiary of the Company or (ii) such acquisition of assets. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means any conveyance, transfer or lease to a Person other than the Company or any Subsidiary thereof, directly or indirectly, in any consecutive 12-month period, in one or a series of related transactions, of (i) any capital stock of any Subsidiary of the Company; (ii) all or substantially all of the properties and assets of any division or line of business of the Company and its Subsidiaries taken as a whole; or (iii) any other properties and assets of the Company or any Subsidiary thereof, other than in the ordinary course of business, the gross proceeds of which accounted for 15% or more of the book value of the total assets of the Company and its Subsidiaries on a consolidated basis as set forth in the most recent set of financial statements of the Company supplied pursuant to Section 704 preceding the date as of which such determination is made. For the purposes of this definition, the term "Asset Sale" shall not include any consolidation, merger, conveyance, transfer or lease of properties and assets of the Company substantially as an entirety that is permitted by Article Eight. "Authenticating Agent" means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate the Notes. "Bank Credit Agreement" means (i) until clause (ii) below shall become applicable in accordance with its terms, the Credit Agreement dated as of December 29, 1994 among the Company, the financial institutions from time to time parties thereto as Banks, and The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co- Agent for such Banks, as such Credit Agreement may from time to time be amended, renewed, supplemented or otherwise modified in accordance with the terms thereof, or (ii) after the agent under the Bank Credit Agreement or under any successor agreement to such agreement shall have acknowledged, in writing, that all principal, interest and commitment or similar fees owing under such agreement have been paid in full, any successor thereto or replacement thereof (as designated by a duly adopted Board Resolution), as each such successor or replacement may from time to time be amended, renewed, supplemented or otherwise modified in accordance with the terms thereof. "Bank Credit Agreement Indebtedness" means all indebtedness at any time outstanding or arising under or with respect to the Bank Credit Agreement, including (without limitation) Bank Loans and Letter of Credit Liability. "Bank Loans" means borrowings under the Bank Credit Agreement. "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Banks" means the financial institutions and Persons, whether or not they are banks, which are or from time to time become holders of Bank Credit Agreement Indebtedness. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of such board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Bondholder Committee" means the unofficial committee of holders of the Old Notes, which committee participated in the negotiation of the terms of the Plan. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institu- tions in the City of New York or the city in which the Corporate Trust Office is located are authorized or obligated by law or executive order to close. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purposes hereof, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means money, checks, demand deposit accounts and other instruments or investments of equivalent liquidity and safety. "Change of Control" has the meaning specified in Sec- tion 1109. "Change of Control Notice" has the meaning specified in Section 1109. "Change of Control Purchase Date" has the meaning specified in Section 1109. "Change of Control Purchase Notice" has the meaning specified in Section 1109. "Change of Control Purchase Price" has the meaning specified in Section 1109. "Commission" means the Securities and Exchange Commis- sion, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Consolidated Interest Expense" of any Person means, for any period, the sum (without duplication) of the aggregate of the interest expense of such Person and its consolidated Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, including but not limited to the interest portion of Capitalized Lease Obligations and amortization of original issue discount but excluding amortization of debt issuance cost. "Consolidated Net Income" of any Person means, for any period, the consolidated net income of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP, adjusted by excluding (a) any gain or loss realized upon the termination of any employee pension plan, (b) net extraordinary gains or net extraordinary losses, as the case may be, and (c) net gains or losses in respect of dispositions of assets other than in the ordinary course of business. "Consolidated Net Loss" of any Person means, for any period, the consolidated net loss of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP, adjusted by excluding (a) any gain or loss realized upon the termination of any employee pension plan, (b) net extraordinary gains or net extraordinary losses, as the case may be, and (c) net gains or losses in respect of dispositions of assets other than in the ordinary course of business. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person and its consoli- dated Subsidiaries, as determined in accordance with GAAP. "Consolidated Non-cash Charges" of any Person means, for any period, the aggregate depreciation, amortization and other non- cash charges of such Person and its Subsidiaries for such period, as determined in accordance with GAAP. "Consolidated Tax Expense" of any Person means, for any period, the aggregate of the tax expense of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP. "Corporate Trust Office" means the principal office or offices of the Trustee at which at any particular time its corporate trust business shall be principally administered, which, as of the date of this Indenture, is located at 777 Main Street, Hartford, Connecticut 06115. "Corporation" means a corporation, association, company, joint-stock company or business trust. "Cumulative Net Available Cash" of any Person means (1) the sum (without duplication) of (i) 50% of Consolidated Net Income of such Person accrued during the Reference Period (less any previous Restricted Payments and 100% of any Consolidated Net Loss of such Person) plus (ii) all Consolidated Non-cash Charges deducted in computing Consolidated Net Income (or Consolidated Net Loss, as the case may be) of such Person during the Reference Period plus (iii) the aggregate net proceeds (other than with respect to sales to Subsidiaries of such Persons), including cash and the fair market value of property other than cash, received by such Person during the Reference Period from the issuance of capital stock (other than redeemable stock and other than stock issued by the Company pursuant to the Plan) or debt securities (other than the Company's 14% Subordinated Debentures due February 1, 2001) that have been converted into capital stock (other than redeemable stock) other than amounts used to retire or acquire capital stock or Subordinated Debt, less (2) the sum (without duplication) of (i) all capital expenditures (other than with the Net Cash Proceeds from Asset Sales) for any property made by such Person and its Subsidiaries during the Reference Period, (ii) the change (which will be added to the amounts in (i) and (iii) of this clause (2) if an increase, but subtracted therefrom if a decrease) in Working Capital at the end of the Reference Period compared to Working Capital at January 29, 1995 and (iii) the sum (without duplication) of all payments of principal of Indebtedness of such Person or any Subsidiary thereof other than the Notes actually made during the Reference Period, excluding payments under the Revolving Credit Loans but only to the extent the Banks' revolving loan commitments under the Bank Credit Agreement shall not have been reduced on or after the date hereof in connection with such payments. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official under any Bankruptcy Law. "Defaulted Interest" has the meaning specified in Section 307. "Deficiency" has the meaning specified in Section 1013. "Effective Date" means the date on which the Plan becomes effective. "Event of Default" has the meaning specified in Article Five. "Excess Proceeds" has the meaning specified in Section 1013. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fixed Charge Coverage Ratio" of any Person means, for any period, the ratio of (a) the sum of Consolidated Net Income of such Person for such period plus Consolidated Interest Expense, Consolidated Tax Expense and Consolidated Non-cash Charges of such Person deducted in computing Consolidated Net Income of such Person for such period, to (b) Consolidated Interest Expense of such Person for such period; provided, that in making such computation, the Consolidated Interest Expense of such Person attributable to interest on any Indebtedness computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period. "GAAP" means generally accepted accounting principles as in effect in the United States on the date of the relevant computation, consistently applied. "Guarantee" has the meaning set forth in Section 1014 hereof. "Holder" means a Person in whose name a Note is regis- tered in the Note Register and, when used with respect to any Note or Notes, means the Person or Persons in whose name such Note is, or Notes are, registered in the Note Register. "Incur" means, directly or indirectly, to create, incur, assume, guarantee or otherwise become liable for any obligation of any kind whatsoever; "incurrence" has a correlative meaning. "Indebtedness" means, without duplication (a) any liability of any Person, to the extent it would appear as a liability upon a balance sheet of such Person prepared on a consolidated basis in accordance with GAAP (i) for borrowed money, (ii) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind (other than a trade payable or a current liability arising in the ordinary course of business), or (iii) for the payment of money relating to a Capitalized Lease Obligation; (b) any liability of any Person under any reimbursement obligation relating to a letter of credit; (c) any liability of others described in the preceding clauses (a) and (b) that the Person has guaranteed or that is otherwise its legal liability; and (d) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a), (b) and (c), above. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Notes. "Interest Rate Protection Obligations" means, with respect to any Person, any obligation of such Person pursuant to any arrangement whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a floating or fixed rate of interest on the same notional amount. "Investment" means, as applied to any Person, any direct or indirect purchase or other acquisition by that Person of Securities, or of a beneficial interest in Securities, of any other Person, and any direct or indirect loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advances to employees and similar items made or incurred in the ordinary course of business), or capital contribution by such Person to any other Person, including all Indebtedness and accounts owed by that other Person which are not current assets or did not arise from sales of goods or services to that person in the ordinary course of business. The amount of any investment shall be determined in conformity with GAAP. "Investment Cash Equivalents" means (i) U.S. Government Obligations maturing within one year after the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within 90 days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") (or, if at any time neither S&P nor Moody's shall be rating such obligations, then from such other nationally recognized rating services acceptable to the Trustee) and not listed in Credit Watch published by S&P; (iii) commercial paper, other than commercial paper issued by the Company or any of its Affiliates, maturing no more than 90 days after the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or P-1 from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then the highest rating from other nationally recognized rating services acceptable to the Trustee); (iv) domestic and Eurodollar certificates of deposit or time deposits or bankers' acceptances maturing within 90 days after the date of acquisition thereof issued by any commercial bank (including the Trustee and its affiliates) organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 and (v) repurchase agreements and reverse repurchase agreements with any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 or with any Bank which is a party to the Bank Credit Agreement relating to U.S. Government Obligations; provided, that the terms of such agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy-Repurchase Agreements of Depository Institutions with Securities Dealers and Others as adopted by the Comptroller of the Currency on October 31, 1985. "Letter of Credit Liability" means the Letter of Credit Liability as defined in and under the Bank Credit Agreement as originally executed or any similar letter of credit reimbursement obligations, whether or not contingent, under the Bank Credit Agreement. "Material Subsidiary" means, at any time, any Subsidiary of the Company that, together with the Subsidiaries of such Subsidiary, (a) accounted for more than 5% of the consolidated revenues of the Company and its Subsidiaries for the most recently completed fiscal year of the Company or (b) was the owner of more than 5% of the consolidated assets of the Company and its Subsidiaries at the end of such fiscal year, all as shown on the consolidated financial statements of the Company and its Sub- sidiaries for such fiscal year. "Maturity", when used with respect to any Note, means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, required repurchase or otherwise. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary thereof) net of (i) brokerage commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) payments made to retire Indebtedness where payment of such Indebtedness is required in connection with such Asset Sale, and (iv) appropriate amounts to be provided by the Company or any Subsidiary thereof, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary thereof, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "New Notes" means, collectively, the Notes and the Senior Floating Rate Notes. "Note Register" and "Note Registrar" have the respective meanings specified in section 305. "Notes" has the meaning specified in the second recital of this Indenture, and includes the Secondary Notes. "Offer" has the meaning specified in Section 1013. "Offered Price" has the meaning specified in Section 1013. "Officers' Certificate" means a certificate which complies with Section 102 and which is signed by the Chairman of the Board, the President, a Vice President or the Treasurer, and by the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Old Notes" means, collectively, the Company's 12 3/8% Senior Notes due 1999, the Company's Senior Floating Rate Notes due August 2, 1996 and the Company's 14% Subordinated Debentures due February 1, 2001. "Opinion of Counsel" means a written opinion, which complies with Section 102, of legal counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Original Stockholder" means any member of (x) any group consisting of members of the Board of Directors or (y) the Bondholder Committee or any other group of Holders consisting in whole or in part of members of the Bondholder Committee. "Outstanding", when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (i) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Notes, or portions thereof, for which payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided, that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; provided, further, that if for any reason the Company shall default in the payment of the Redemption Price and accrued interest, such Notes will be deemed Outstanding; and (iii) Notes which have been replaced or paid pursuant to Section 306 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company, or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company pursuant to this Indenture to pay the principal of, premium (if any) or interest on, any Notes on behalf of the Company, which term may include the Company. "Permitted Indebtedness" means: (a) Indebtedness of the Company or any Subsidiary thereof (excluding Bank Loans and Letter of Credit Liability), outstanding at the time of, and after giving effect to, the initial issuance of the Notes. (b) Indebtedness of the Company evidenced by the Notes (including, without limitation, Indebtedness evidenced by additional Notes issued in accordance with the provisions hereof (including, without limitation, Secondary Notes)). (c) Indebtedness of the Company evidenced by the Senior Floating Rate Notes. (d) Bank Loans and Letter of Credit Liability, in an aggregate principal amount at any one time outstanding, not to exceed the sum of (i) $125,000,000 less the aggregate principal amount of Bank Loans and Letter of Credit Liability actually paid on or after the date hereof, but without deduction for payments under the Revolving Credit Loans or in respect of Letter of Credit Liability except to the extent the Banks' revolving loan commitments or commitments to extend or participate in letters of credit under the Bank Credit Agreement shall have been reduced on or after the date hereof in connection with such payments, minus (ii) the aggregate principal amount of commercial paper outstanding under clause (f) below less such aggregate principal amount that is supported by letters of credit issued for the account of the Company under and pursuant to the Bank Credit Agreement. (e) Indebtedness of the Company either (i) arising out of sale and leaseback transactions or (ii) bearing a fixed rate of interest for a term of not less than ten years and secured by stores and other real property owned by the Company; provided, that the aggregate principal amount of such Indebtedness at any one time outstanding shall not exceed the sum of $25,000,000 plus the amount of such In- debtedness outstanding on the Effective Date. (f) Indebtedness of the Company evidenced by commercial paper. (g) Interest Rate Protection Obligations to the extent that the notional principal amount thereof does not exceed the aggregate amount of Indebtedness referred to in clauses (c) and (d) above. (h) Indebtedness of the Company or any Subsidiary thereof, the proceeds of which are used to pay Store Opening Costs in connection with the opening or acquisition of Permitted Stores. (i) Indebtedness of the Company or any Subsidiary thereof evidenced by promissory notes representing the Company's or such Subsidiary's obligations under casualty insurance policies to reimburse the issuing casualty insurance companies for claims against the Company or such Subsidiary paid by such insurance companies. (j) Indebtedness of the Company or any Subsidiary thereof in respect of performance or surety bonds provided by the Company or such Subsidiary in the ordinary course of business. (k) Indebtedness of the Company or any Subsidiary thereof for reimbursement of payments made under commercial documentary letters of credit issued for the account of the Company or such Subsidiary in the ordinary course of business, having expiry dates not more than one year after the date of issuance, and issued for the purpose of financing the purchase of goods. (l) Indebtedness of the Company constituting obligations of the Company to redeem shares, or cancel options to purchase shares, of the Company's capital stock under the terms and conditions of management equity subscription agreements and management stock option agreements. (m) Indebtedness of the Company or any Subsidiary thereof represented by or in respect of industrial revenue or development bonds not to exceed an aggregate principal amount at any one time outstanding of $5,000,000. (n) Indebtedness of (i) any Subsidiary of the Company to the Company or any other Subsidiary of the Company or (ii) the Company to any Subsidiary thereof. (o) Indebtedness of the Company (which may be Bank Credit Agreement Indebtedness), in addition to that described in clauses (a) through (n) above; provided, that the aggregate principal amount of such Indebtedness at any one time outstanding shall not exceed the sum of $25,000,000 plus the amount of such Indebtedness outstanding on the Effective Date. (p) All renewals, extensions, substitutions, refinancings or replacements (collectively, "refinancings") of any Indebtedness described in clauses (a) through (m) and (o) above, including replacements with creditors other than the Banks (or successive refinancings) so long as any such refinancing does not result in an increase of the amount of such Indebtedness and, in the case of refinancings of Subordinated Debt, such Indebtedness (i) is Subordinated Debt containing subordination provisions no less favorable to the Holders than the subordination provisions of the Indebtedness being refinanced, (ii) does not require principal repayments or sinking fund payments to be made prior to the Stated Maturity of any payments of principal of the Notes and (iii) otherwise conforms to the requirements hereof. For the purpose of determining at any time the Indebtedness that is permitted to be incurred pursuant to any of the foregoing clauses (each, the "specified clause"), there shall be included in each specified clause: (x) all then outstanding Indebtedness that has been incurred pursuant to such specified clause and (y) all then outstanding Indebtedness incurred pursuant to this clause (p) to refinance Indebtedness incurred pursuant to such specified clause and all then outstanding subsequent refinancings thereof. No limitation contained in the foregoing clauses (a) through (p) shall prohibit the Company from incurring Indebtedness pursuant to any other such clause. "Permitted Stores" means (a) during the period from the date hereof through August 2, 1998, seven stores and (b) thereafter, an average of no more than four stores per year during each three-year period ending on the last day of each fiscal year of the Company, with the first such three-year period ending on July 29, 2001. "Person" means any individual, corporation, partnership joint venture, trust, unincorporated organization or any other entity, or any government or any agency or political subdivision thereof. "Plan" has the meaning specified in the first recital of this Indenture. "Predecessor Note" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 306 in exchange for a mutilated security or in lieu of a destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "Redemption Date", when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, including as applicable and without duplication, any accrued interest due upon such redemption pursuant to the terms of this Indenture. "Reference Period" means, with respect to any Restricted Payment, the period from the Effective Date through the end of the last full fiscal quarter immediately preceding the date of such Restricted Payment (taken as one accounting period). "Regular Record Date" for the interest payable on any Interest Payment Date means the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer", when used with respect to the Trustee, means any officer assigned to the Corporate Trust Office and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. "Restricted Payments" has the meaning specified in Section 1010. "Retirement" has the meaning specified in Section 1010. "Revolving Credit Loans" means the Revolving Credit Loans (as defined in the Bank Credit Agreement), or any similar revolving credit facility or swing line facility under the Bank Credit Agreement. "Secondary Notes" has the meaning specified in Section 303. "Securities" means any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities", or any certificates of interest, shares, or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing. "Senior Floating Rate Notes" means the Senior Floating Rate Notes due 2003, created and issued by the Company pursuant to the Senior Floating Rates Notes Indenture. "Senior Floating Rate Notes Indebtedness" means the Indebtedness of the Company on the Senior Floating Rate Notes. "Senior Floating Rate Notes Indenture" means the Indenture, dated as of the Effective Date, as such indenture may from time to time be amended, renewed, supplemented or otherwise modified, between the Company and IBJ Schroder Bank & Trust Company, as Trustee. "Special Record Date" has the meaning specified in Section 307. any Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable. "Store Opening Costs" means the costs and expenses (including, without limitation, capitalized interest) incurred by the Company in connection with (i) the opening of a new store, including the purchase price or lease expense with respect to the real property on which such store is located and the costs of furniture, fixtures, equipment and inventory used in connection with such store, or (ii) the acquisition of the fee or leasehold interest in the real property on which an existing store is located, together with the costs of furniture, fixtures, equipment and inventory used in connection with such acquired store. "Subordinated Debt" means Indebtedness that ranks junior or is expressly subordinate in right of payment to the Notes upon terms substantially in the form of Exhibit A attached hereto, provided, however, that the definition of "Senior Debt" for the purposes of such Indebtedness may include Indebtedness other than the New Notes. "Subsidiary" of any Person means (i) a corporation a majority of the Voting Stock of which is at the time owned, directly or indirectly, by such Person or by one or more other Subsidiaries, or by such Person and one or more other Subsidiaries or (ii) any other Person (other than a corporation) in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has the power to elect or direct the election of at least a majority of the persons comprising the governing body of such Person. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, until such time as this Indenture is qualified under such Act, and thereafter means such Act as in force at the date on which this Indenture is so qualified, in each case except as provided in Section 905. "U.S. Government Obligations" means direct noncallable obligations of, or non-callable obligations guaranteed by, the United States of America or any agency thereof for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "Voting Stock" means stock of the class or classes having general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "Working Capital" (which may be a positive or negative amount) means the consolidated current assets (excluding cash and Cash Equivalents) of the Company less the consolidated current liabilities of the Company (excluding the current portion of Indebtedness under the Bank Credit Agreement and of long-term debt). Section 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such applica- tion or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion rendered by or on behalf of the Company with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certifi- cate or opinion are based; (3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instru- ment or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 104. (b) The fact and date of the execution by any person of any such instrument or writing shall be established in any reasonable manner which the Trustee deems sufficient, which shall include but not be limited to, notarization of such instrument. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Note. (e) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to sign any instrument evidencing or embodying an Act of Holders. If a record date is fixed, those Persons who were Holders at such record date (or their duly appointed agents), and only those Persons, shall be entitled to sign any such instrument evidencing or embodying an Act of Holders or to revoke any such instrument previously signed, whether or not such Persons continue to be Holders after such record date. Section 105. Notices, Etc., to Trustee and the Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing and hand delivered, mailed first-class postage prepaid, sent by telecopier or delivered by recognized overnight courier to or with the Trustee at its corporate trust office, located at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration, or at any other address previously furnished in writing to the Holders, the Company or any other obligor of the Notes by the Trustee, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and hand delivered, mailed first-class postage prepaid, sent by telecopier or delivered by recognized overnight courier to the Company, addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company, in any case, Attention: President. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Section 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and hand delivered, mailed first-class postage prepaid, sent by telecopier or delivered by recognized overnight courier to each Holder affected by such event, at its address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail as may be required by any provision of this Indenture, then any method of giving such notice as shall be reasonably satisfactory to the Trustee shall, under such circumstances, be deemed to be a sufficient giving of such notice. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with the duties imposed by the Trust Indenture Act or another provision which is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, the imposed duties shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company and any other obligor of the Notes shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. Nothing contained in this Indenture or in the Notes, expressly or impliedly, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CON- FLICTS OF LAWS THEREOF. Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Maturity or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal of, or premium (if any) or interest on, the Notes need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Maturity or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, as the case may be, if such payment is made on the next succeeding Business Day. Section 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement of this Indenture or any indenture supplemental hereto or of any Note, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation to the Company, either directly or through the Company, or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors, as such, of the Company or of any such successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom are hereby expressly waived and released as a condition of, and as consideration for, the execution of this Indenture and the issue of such Notes. Section 115. Counterparts. This Indenture 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. ARTICLE TWO FORMS OF NOTES Section 201. Forms Generally. The Notes and the Trustee's certificates of authentication thereon shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods on engraved steel borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes, as evidenced by their execution thereof. Section 202. Form of Face of Note. KASH N' KARRY FOOD STORES, INC. 11.5% Senior Fixed Rate Notes due 2003 No. ____ $__________ Kash n' Karry Food Stores, Inc., a Delaware corporation (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on February 1, 2003, and to pay interest thereon from December 29, 1994 or from the most recent Interest Payment Date to which interest has been paid semi-annually on February 1 and August 1 in each year, commencing August 1, 1995, at the rate of 11.5% per annum, until the principal hereof is paid or made available for payment. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid will forthwith cease to be payable to the Holder so registered on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. On or prior to February 1, 1996, the Company may, at its option and in its sole discretion, in lieu of paying interest in cash, issue additional Notes (the "Secondary Notes") in an aggregate principal amount equal to the amount of cash interest due and payable on any Interest Payment Date, provided that the Company may not issue Secondary Notes in lieu of paying interest in cash if an Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing immediately prior to or as a result of such issuance of Secondary Notes. In any such case, the Trustee or any Authenticating Agent (upon Company Order given not less than 5 nor more than 45 Business Days prior to such Interest Payment Date) shall authenticate for original issue Secondary Notes in an aggregate principal amount equal to the amount of cash interest due and payable on such Interest Payment Date. Such Company Order shall specify the amount of the Notes to be authenticated and the date on which such Secondary Notes are to be authenticated. Each issuance of Secondary Notes in lieu of payment of interest in cash shall be made pro rata with respect to the outstanding Notes; provided, however, that the Company may at its option pay cash in lieu of issuing Secondary Notes in any denomination of less than $100. Subject to the provisions of the immediately preceding paragraph, payment of the principal of, premium, if any, and interest on, and the Change of Control Purchase Price, if any, and Redemption Price with respect to, this Note will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York or at any other office or agency maintained by the Company for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Notwithstanding the foregoing, at the option of any Holder of at least $1,000,000 aggregate principal amount of Notes upon written notice to the Company at least 30 days prior to the respective payment date, but subject to the immediately preceding paragraph, payments of principal, premium, if any, and interest will be made by wire transfer to an account within the United States maintained by such Holder with a bank which is a member of the Federal Reserve System. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, or by the Authenticating Agent appointed as provided in the Indenture, by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: KASH N' KARRY FOOD STORES, INC. By_________________________________ [SEAL] Attest: ____________________________ Authorized Signatory Section 203. Form of Reverse of Note. This Note is one of a duly authorized issue of Notes of the Company designated as its 11.5% Senior Fixed Rate Notes due 2003 (herein called the "Notes"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $135,000,000 issued and to be issued under an Indenture, dated as of December 29, 1994 (herein called the "Indenture"), between the Company and Shawmut Bank Connecticut, N.A., as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. If at any time either (a) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall beneficially own at least 50% of the total voting stock of the Company or (b) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall succeed in having a sufficient number of its nominees elected to the Board of Directors of the Company to constitute a majority of the Board of Directors of the Company (each, a "Change of Control"), then the Company shall make an offer to repurchase any or all of the Outstanding Notes at a price, payable in cash, in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date (the "Change of Control Purchase Price") in accordance with the procedures set forth in the Indenture; provided that such repurchase shall be conditioned upon receipt by the Company of the Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes. The Notes are subject to redemption upon not less than 30 nor more than 60 days' notice by first-class mail, at any time, as a whole or in part, at the election of the Company, at 100% of the principal amount thereof together, in the case of any such redemption, with accrued and unpaid interest, if any, to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, of record at the close of business on the relevant Regular Record Dates referred to on the face hereof, all as provided in the Indenture. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof, if any, will be issued in the name of the Holder hereof upon the cancellation hereof. Notes may be redeemed in part in integral multiples of $1,000 only. The Notes to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price herein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. If, at any time prior to maturity hereof, the Company engages in an Asset Sale which results in Excess Proceeds, then at the option of the Holder, this Note shall be subject to repurchase by the Company out of such Excess Proceeds pursuant to the Indenture. If an Event of Default shall occur and be continuing, the principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions (including certain amendments permitted without the consent of any Holders) as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and the Notes and certain past defaults under the Indenture and their consequences. Any such consent or waiver by or on behalf of the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company or other obligor of the Notes, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on this Note at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York or at any other office or agency maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar, duly executed by the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof, provided, however, that if the Company elects to pay interest to the Holder hereof by issuing Secondary Notes and the amount of such interest is not an integral multiple of $1,000, the Company may issue to the Holder hereof a Secondary Note in a denomination of less than $1,000 and in a principal amount equal to the excess of the amount of such interest over an integral multiple of $1,000, and provided further that if the aggregate principal amount of Notes to be issued to any beneficial holder of the Company's 12 3/8% Senior Notes due 1999 or the Company's Senior Floating Rate Notes due August 2, 1996 on December 29, 1994, pursuant to the Plan (whether on account of interest accrued thereon at the contract rate from February 3, 1994 and February 2, 1994, respectively, through but not including November 9, 1994, or on account of an election of such holder to receive both Notes and Senior Floating Rate Notes, or both) is not an integral multiple of $1,000, the Company may issue to such beneficial holder a Note in a denomination of less than $1,000 and in a principal amount equal to the excess of such aggregate principal amount over an integral multiple of $1,000. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by a Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to and at the time of due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not any amount due in respect of this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Note which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. Section 204. Form of Trustee's Certificate of Authentication. Certificate of Authentication This is one of the 11.5% Senior Fixed Rate Notes due 2003 referred to in the within-mentioned Indenture. Dated: , as Trustee By_________________________ Authorized Signatory Section 205. Form of Assignment. To assign this Note, fill in the form below: I or we assign and transfer this Note to: -------------------------- : : -------------------------- (Insert assignee's social security or tax ID no.) _____________________________________ _____________________________________ _____________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _____________________________________ _____________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. Date:______________ Your Signature:_______________________* (Sign exactly as your name appears on the other side of this Security) * Your signature must be guaranteed by an eligible guarantor institution which is a member of the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Signature Program. Section 2 Form of Option of Holder to Elect Redemption. If you wish to elect to have this Note purchased by the Company pursuant to Section 1013 or Section 1109 of the Indenture, check the box: ______ $___________ Date:___________________ Signature _________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________________ Member firm of an eligible guarantor institution which is a member of the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Signature Program ARTICLE THREE THE NOTES Section 301. Title and Terms. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited (except as otherwise provided in this Indenture or the Plan) to $135,000,000, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906, 1013 or 1108. The Notes shall be known and designated as the "11.5% Senior Fixed Rate Notes due 2003" of the Company. Their Stated Maturity shall be February 1, 2003, and they shall bear interest at the rate of 11.5% per annum, from the date of issuance or from the most recent Interest Payment Date to which interest has been paid, payable semiannually on February 1 and August 1 in each year, commencing August 1, 1995 until the principal thereof is paid or made available for payment. On or prior to February 1, 1996, the Company may, at its option and in its sole discretion, in lieu of paying interest in cash, issue additional Notes (the "Secondary Notes") in an aggregate principal amount equal to the amount of cash interest due and payable on any Interest Payment Date, provided that the Company may not issue Secondary Notes in lieu of paying interest in cash if an Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing immediately prior to or as a result of such issuance of Secondary Notes. In any such case, the Trustee or any Authenticating Agent (upon Company Order given not less than 5 nor more than 45 Business Days prior to such Interest Payment Date) shall authenticate for original issue Secondary Notes in an aggregate principal amount equal to the amount of cash interest due and payable on such Interest Payment Date. Such Company Order shall specify the amount of the Notes to be authenticated and the date on which such Secondary Notes are to be authenticated. Each issuance of Secondary Notes in lieu of payment of interest in cash shall be made pro rata with respect to the outstanding Notes; provided, however, that the Company may at its option pay cash in lieu of issuing Secondary Notes in any denomination of less than $100. The principal of, premium, if any, and interest on the Notes shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York maintained for such purpose or at any other office or agency maintained by the Company for such purpose; provided, however, that, at the option of the Company and subject to the immediately preceding paragraph, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Notwithstanding the foregoing, at the option of any Holder of at least $1,000,000 aggregate principal amount of Notes upon written notice to the Company at least 30 days prior to the respective payment date, but subject to the immediately preceding paragraph, payments of principal, premium, if any, and interest will be made by wire transfer to an account within the United States maintained by such Holder with a bank which is a member of the Federal Reserve System. Section 302. Denominations. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof, provided, however, that if the Company elects to pay interest to the Holder of a Note by issuing Secondary Notes and the amount of such interest is not an integral multiple of $1,000, the Company may issue to such Holder a Secondary Note in a denomination of less than $1,000 and in a principal amount equal to the excess of the amount of such interest over an integral multiple of $1,000, and provided further that if the aggregate principal amount of Notes to be issued to any beneficial holder of the Company's 12 3/8% Senior Notes due 1999 or the Company's Senior Floating Rate Notes due August 2, 1996 on December 29, 1994, pursuant to the Plan (whether on account of interest accrued thereon at the contract rate from February 3, 1994 and February 2, 1994, respectively, through but not including November 9, 1994, or on account of an election of such holder to receive both Notes and Senior Floating Rate Notes, or both) is not an integral multiple of $1,000, the Company may issue to such beneficial holder a Note in a denomination of less than $1,000 and in a principal amount equal to the excess of such aggregate principal amount over an integral multiple of $1,000. Section 303. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents under its corporate seal, and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwith- standing that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes as provided in this Indenture and not otherwise. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authenti- cation substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. In case the Company, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer or lease substantially all of its properties and assets to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer or lease as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer or lease may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee or Authenticating Agent, upon Company Request of the successor Person, shall authenticate and deliver Notes as specified in such request for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time Outstanding for Notes authenticated and delivered in such new name. Section 304. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, a like principal amount of defini- tive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes endorsed thereon. Section 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. The Note Registrar may resign as Note Registrar at any time by giving written notice thereof to the Company. Upon surrender for registration of transfer of any Note at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder thereof or its attorney duly authorized in writing. No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 304, the second sentence of Section 906 or Sections 1013 or 1108 not involving any transfer. The Company shall not be required to (i) issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes selected for redemption and ending at the close of business on the day of such mailing, or (ii) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portions of any Note being redeemed in part. Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note, of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be reasonably required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section, the Company may require the payment of its reasonable expenses (including the reasonable fees and ex- penses of the Trustee) connected therewith and any documentary, stamp or similar issue or transfer tax or governmental charge imposed in relation to such issuance. Every new Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. Section 307. Payment of Interest; Interest Rights Preserved. Interest on any Note that is payable on any Interest Payment Date shall be paid by the Paying Agent to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Note that is payable, but is not punctually paid, on any Interest Payment Date and interest on such defaulted interest at the then applicable interest rate borne by the Notes plus 2%, to the extent lawful (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date notwithstanding the fact that such Holder was a Holder on such Regular Record Date, and such Defaulted Interest may be paid by the Company, at its election, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and (subject to the provisions of the third paragraph of Section 301) at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this Clause. Thereupon the Trustee shall fix a record date (the "Special Record Date") for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the pro- posed payment and not less than 5 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at its address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may then be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee (acting reasonably). Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 308. Persons Deemed Owners. Prior to and at the time of due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 307) interest on such Note and for all other purposes whatsoever, whether or not any payment due in respect of such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 309. Cancellation. All Notes surrendered for payment, purchase, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder, which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be returned promptly to the Company upon its written request. Section 310. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Section 311. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction, Discharge of the Indenture and Defeasance of the Notes. The Company shall be deemed to have paid and discharged the entire indebtedness on the Notes and the provisions of this Indenture shall cease to be of further effect (subject to this Section 401 and Section 403), if: (1) The Company irrevocably deposits in trust with the Trustee for the benefit of the Holders, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trust- ee, cash in United States dollars, U.S. Government Obligations, or a combination thereof, in an amount sufficient (in the opinion of a nationally recognized firm of independent public accountants, which opinion shall be expressed in a certificate delivered to the Trustee) to pay the principal of, premium, if any, and each installment of principal, premium (if any) and interest on the Notes then outstanding at the Maturity or the Redemption Date, as the case may be, of such principal, premium, if any, or installment of principal, premium (if any) or interest in accordance with the terms of the Indenture and of the Notes; (2) Such deposits shall not cause the Trustee to have a "conflicting interest" as defined in and for purposes of the Trust Indenture Act; (3) Such deposit will not result in a default under this Indenture or a breach or violation of, or constitute a default under, any other material instrument to which either the Company or any Subsidiary is a party or by which it or its property is bound; (4) The Company shall have delivered to the Trustee an opinion of independent counsel reasonably satisfactory to the Trustee based on the fact that (x) a ruling has been published by the Internal Revenue Service or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case, to the effect that, and such opinion shall confirm that, the deposit, defeasance and discharge will not be deemed, or result in, a taxable event to the Holders of the Notes and the Holders will be subject to income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; (5) The Company shall not be subject to regulation pursuant to the provisions of the Investment Company Act of 1940; (6) The Company shall have delivered to the Trustee an opinion of independent counsel to the effect that after the passage of 90 days (or any greater period of time in which any such deposit of trust funds may remain subject to Bankruptcy Laws insofar as those laws apply to the Company) following the deposit of the trust funds, such funds will not be sub- ject to any Bankruptcy Laws affecting creditors' rights generally; (7) The Company shall have delivered to the Trustee an opinion of independent counsel to the effect that the Holders of the Notes will have a valid, perfected and unavoidable (under applicable Bankruptcy Laws), subject to the passage of time referred to in clause (6), first-priority security interest in the trust funds; (8) No Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing (A) on the date of the deposit of such trust funds with the Trustee or (B) during the period ending on the 91st day (or one day after such other greater period of time in which any such deposit of trust funds may remain subject to bankruptcy or insolvency laws) after such date; and (9) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel (who may be outside counsel to the Company), each in form and substance satisfactory to the Trustee, each stating that all conditions precedent specified herein relating to the satisfaction and discharge contemplated by this Section 401 have been complied with. In the event all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. In the event that the Company takes the necessary action to comply with the provisions described in this Section 401 and the Notes are declared due and payable because of the occurrence of an Event of Default, the Company will remain liable for all amounts due on the Notes at the time of acceleration resulting from such Event of Default in excess of the amount of money and U.S. Government Obligations deposited with the Trustee pursuant to this Section 401 at the time of such acceleration. Section 402. Termination of Obligations upon Cancellation of the Notes. In addition to the Company's rights under Section 401, the Company may terminate all of its obligations under this Indenture (subject to Section 403) when: (1) all Notes theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306) have been delivered to the Trustee for cancellation; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel (who may be outside counsel to the Company), each in form and substance satisfactory to the Trustee, each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with. Section 403. Survival of Certain Obligations. Notwithstanding the satisfaction and discharge of this Indenture and of the Notes referred to in Sections 401 and 402, the respective obligations of the Company and the Trustee under Sections 303, 305, 306, 307, 405, 406, 407, 408, 607, 609, 610, 701, 1001, 1002, 1003 and 1101 shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Company and the Trustee under Sections 305, 405, 406, 407, 408 and 607 shall survive. Nothing contained in this Article Four shall abrogate any of the obligations or duties of the Trustee under this Indenture. Section 404. Acknowledgement of Discharge by Trustee. After (i) the conditions of Sections 401 or 402 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in Sections 401 or 402, as applicable, relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in Section 403. Section 405. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment to the persons entitled thereto (as determined by the Trustee), either directly or through any Paying Agent as the Trustee may determine, of the principal, premium, if any, and interest for whose payment such money has been deposited with the Trustee. Section 406. Repayment to the Company. Upon termination of the trust established pursuant to Sections 401 or 402, the Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or U.S. Government Obligations held by them. Section 407. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Sections 401 or 402 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Sections 401 or 402 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government obligations in accordance with Sections 401 or 402; provided, however, that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government obligations held by the Trustee or Paying Agent. Section 408. Indemnity. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 401 or the principal or interest received in respect of such obligations, and shall pay and indemnify the Holders against any tax, fee or charge that would not have been imposed or assessed but for the deposit of cash or U.S. Government Obligations pursuant to Section 401. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of any such default for a period of 30 days; or (2) default in the payment of the principal of, or premium, if any, on any Note at its Maturity; or (3) default in the performance of, or breach of, any covenant, agreement or warranty of the Company contained in this Indenture (other than a default in the performance of any covenant, agreement or warranty, the breach of which is specifically dealt with elsewhere in this Section 501), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 40% in aggregate principal amount of the Outstanding Notes, a written notice specifying such default or breach, requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) default by the Company or any Subsidiary thereof in the payment of any principal of, or premium, if any, or interest due (and such default, with respect to payments of interest, shall continue after the applicable grace period, if any) on any Indebtedness of the Company or such Subsidiary in excess of $5,000,000 in the aggregate, or the holder of any lien securing In- debtedness of $5,000,000 or more shall have commenced foreclosure of such lien upon property of the Company or such Subsidiary; or (5) an event of default as defined in any indenture, loan agreement, mortgage, bond, promissory note or other agreement or instrument under which there may be issued, or by which there may be secured or evi- denced, any Indebtedness of the Company or any Subsidiary thereof in excess of $5,000,000 in the aggregate shall happen and shall result in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; or (6) final judgments or orders rendered against the Company or any Subsidiary thereof which require the payment in money, either individually or in an aggregate amount, that is more than $5,000,000 and there shall have been a period of 60 days during which a stay of the enforcement of such judgment or order, by reason of pending appeal or otherwise, was not in effect; or (7) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Material Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Material Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Material Subsidiary under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Material Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 30 consecutive days; or (8) the commencement by the Company or any Material Subsidiary of a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or any Material Subsidiary to the entry of a decree or order for relief in respect of the Company or such Material Subsidiary in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing of the Company or any Material Subsidiary of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state law, or the consent by the Company or any Material Subsidiary to the filing of such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or such Material Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the adoption by the Board of Directors (or any committee thereof) of the Company or any Material Subsidiary of any resolution to ap- prove any of the foregoing. Section 502. Acceleration of Maturity Date; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 501(7) or (8)) occurs and is continuing, then, the Trustee or the Holders of not less than 33-1/3% in aggregate principal amount of the Outstanding Notes, by a notice in writing to the Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), in the case of an Event of Default described in clause (i), (ii) or (iii) above and 40% in aggregate principal amount of the Outstanding Notes in the case of any other Event of Default, may declare all of the principal of all the Notes (or the Change of Control Purchase Price if the Event of Default includes failure to pay the Change of Control Purchase Price), determined as set forth below, together with accrued interest thereon, to be due and payable immediately, and upon any such declaration such amount shall become due and payable. If an Event of Default specified in Section 501(7) or (8) occurs and is continuing, then the principal and accrued interest of all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in aggregate principal amount of the Outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (1) all overdue interest on all Notes, (2) the principal of, and premium, if any, on any Notes, which would become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes, (3) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes plus 2%, (4) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and (b) all Events of Default, other than the nonpayment of the principal of the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. Notwithstanding the foregoing, in the event of a declaration of acceleration in respect of the Notes because of an Event of Default specified in Section 501(4) or (5) shall have occurred and be continuing, such declaration of acceleration shall be automatically annulled if the past due indebtedness that is the subject of such Event of Default has been discharged or the holders thereof have rescinded their declaration of acceleration in respect of such Indebtedness or, with respect to an Event of Default consisting solely of the commencement of a foreclosure proceeding as described in Section 501(4) (a "Foreclosure Default"), if such foreclosure shall have been stayed or the Company shall have obtained a bond in the full amount claimed in such foreclosure proceeding, and written notice of such discharge, rescission, stay or bond, as the case may be, shall have been given to the Trustee by the Company and by the holders of such Indebtedness or a trustee, fiduciary or agent for such holders, within 60 days after such declaration of acceleration in respect of the Notes, and no other Event of Default has occurred during such 60-day period which has not been cured or waived during such period. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of, or premium, if any, on any Note at the Maturity thereof, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal, premium, if any, and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium, if any, and on any overdue interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. The rights and remedies under this Section 503 are in addition to the other rights and remedies under this Article Five. Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal and premium, if any, and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, liquidation, arrangement, adjustment, or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 505. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. Section 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article Five or otherwise on behalf of the Holders or the Trustee pursuant to this Article or through any proceeding or any amendment or restructuring in anticipation or in lieu of any proceeding contemplated by this Article shall be applied, subject to applicable laws, in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of, and premium, if any, and interest on, the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium, if any, and interest, respectively; and THIRD: To the payment of the remainder, if any, to the Company, its successors or assigns or to whomsoever may be lawfully entitled thereto, or as a court of competent jurisdiction may direct. Section 507. Limitation on Suits. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 33-1/3% in the case of an Event of Default described in Section 501(l), (2) or (3) and 40% in the case of any other Event of Default in principal amount of the outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Defaults in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Notes shall have the right, which is absolute and unconditional, to receive payment of the principal of, and premium, if any, and (subject to Section 307) interest on, such Note on the respective Stated Maturities of such payments as expressed in such Notes (and in the case of redemption, the Redemption Price on the applicable Redemption Date and in the case of a Change of Control, the Change of Control Purchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, (a) the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and (b) thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 512. Control by Holders. The Holders of a majority in aggregate principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. The Company shall set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted by this Indenture. Unless the Company provides otherwise, in the form of an Officers' Certificate provided to the Trustee, such record date shall be 30 days prior to the first such vote or solicitation of such consent. Section 513. Waiver of Past Default. The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may, on behalf of all Holders, waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, premium, if any, or interest on, any Security as specified in clauses (1), (2) or (3) of Section 501, or (2) in respect of a covenant or provision hereof which, under Article Nine, cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may in its discre- tion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Notes, or to any suit instituted by any Holder for enforcement of the payment of principal of, or premium (if any) or interest on, any Note on or after the respective Stated Maturities expressed in such Note (or, in the case of redemption, on or after the Redemption Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which, by any provision hereof, are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection (c) shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. (d) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording pro- tection to the Trustee shall be subject to the provisions of this Section. Section 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder known to the Trustee, the Trustee shall transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) each Holder who has, within the two years preceding such transmission, filed its name and address with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any Note at its Maturity, Redemption Date or otherwise or in the payment of the Change of Control Purchase Price on the Change of Control Purchase Date, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the character specified in Section 501(3), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution thereof; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate or an Opinion of Counsel or both; (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete autho- rization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 604. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T- 1, if any, supplied to the Company will be true and accurate subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof. Section 605. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Section 612, may other- wise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. Section 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee shall from time to time agree upon in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, dis- bursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its non-employee agents and counsel), except to the extent any such expense, disbursement or advance may be attributable to its negligence, willful misconduct or bad faith; and (3) to indemnify each of the Trustee or any predecessor Trustee for, and to hold it harmless against, any and all loss, damage, claims, liability or expense, including taxes (other than taxes based upon or determined by the income of the Trustee), except to the extent arising out of negligence, willful misconduct or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall have a claim prior to the Notes as to all property and funds properly held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Notes. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(7) or Section 501(8), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. Section 608. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation or association organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal or state authority and, to the extent there is such an institution eligible, and willing to serve, having its Corporate Trust Office in the City of Los Angeles, California, the City of New York, New York or the City of Hartford, Connecticut. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six. The Trustee shall comply with Sections 310(a)(5) and 310(b) of the Trust Indenture Act. Section 609. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 610. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in aggregate principal amount of the outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall cease to be eligible under Section 608 and shall fail to resign after written request therefor by the Company or by any Holder, or (2) the Trustee shall become incapable of acting or shall be judged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. If an instrument of acceptance by a Successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 610. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges pursuant to Section 607, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article Six. Section 611. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 612. Preferential Collection of Claims Against Company. The Trustee shall comply with Trust Indenture Act 311(a), excluding any creditor relationship listed in Trust Indenture Act 311(b). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act 311(a) to the extent indicated. Section 613. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents acceptable to the Company which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon original issue and upon exchange, registration of transfer or partial redemption or pursuant to Section 306, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. The Company agrees to pay each Authenticating Agent, as appointed from time to time, such reasonable fees as may be agreed to in writing by the Company, for services rendered under this Section 613. If an appointment is made pursuant to this Section 613, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Notes described in the within-mentioned Indenture. , as Trustee By: As Authenticating Agent By: Authorized Officer Section 614. Paying Agent. (a) There shall at all times be a Paying Agent hereunder which shall be a corporation or association organized and doing business under the laws of the United States of America or of any State and having a combined capital and surplus of at least $50,000,000, to the extent there is such an institution eligible and willing to serve. If there is no such institution eligible and willing to serve, the Company may act as its own Paying Agent. (b) The Paying Agent may resign at any time by giving written notice thereof to the Company. The Company, by a Board Resolution and upon giving written notice thereof to the Paying Agent, may remove the Paying Agent at any time. (c) If the Paying Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Paying Agent for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Paying Agent. (d) The Company shall give notice of each resignation and each removal of the Paying Agent and each appointment of a successor Paying Agent by mailing written notice of such event by first-class mail, postage prepaid, to the Trustee. Each notice shall include the name and address of the successor Paying Agent. (e) The Trustee is hereby initially appointed "Paying Agent". ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. (a) The Company shall furnish or cause to be furnished to the Trustee (i) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (ii) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list in similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Note Registrar, no such list need be furnished. (b) If and whenever the Company or any Affiliate acquires any Notes, the Company shall promptly, and in any event within 15 days, provide the Trustee with written notice of such acquisition, the aggregate principal amount acquired, the Holder from whom such Notes were acquired and the date of such acquisition. Section 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) If one Holder (herein referred to as an "applicant") applies in writing to the Trustee, and furnishes to the Trustee reasonable proof that such appli- cant has owned a Note for a period of at least six months preceding the date of such application, and such application states that the applicant desires to communicate with other Holders with respect to their rights under this Indenture or under the Notes and is accompanied by a copy of the form of proxy or other communication which such applicant proposes to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford to such applicant access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicant as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the ap- proximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicant access to such information, the Trustee shall, upon the written request of such applicant, mail to each Holder whose name and address appears in the information preserved at the time by the Trustee in accordance with Section 702(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicant and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such a mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender. (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). Section 703. Reports by Trustee. This Section 703 shall not be operative as a part of this Indenture until this Indenture is qualified under the Trust Indenture Act, and, until such qualification, this Indenture shall be construed as if this Section 703 were not contained herein. Within 60 days after May 15 of each year commending with the year 1995, the Trustee shall transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) all Holders who have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, a brief report dated as of such May 15 with respect to: (1) its eligibility under Section 608 and its qualifications under the Trust Indenture Act or, in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under said statute, a written statement to such effect; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of Trust Indenture Act 310(b); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Notes, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of 1% of the principal amount of the Notes outstanding on the date of such report; (4) any change to the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Notes) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 612; (5) any change to the property and funds physically in the possession of the Trustee as such on the date of such report; (6) any additional issue of Notes which the Trustee has not previously reported; and (7) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Notes, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602. (b) The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Note Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section 703 (or if no such report has yet been so transmitted, since the date of execution of this Indenture) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Notes, on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Notes outstanding at such time, such report to be transmitted within 90 days after such time. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Notes are listed, with the Commission and with the Company. The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 704. Reports by Company. (a) The Company shall: (1) file with the Commission copies of the audited annual reports, unaudited quarterly reports and other information, documents and reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such Sections, then the Company shall file with the Commission, in accordance with rules and regula- tions prescribed from time to time by the Commission and to the extent permitted under the Exchange Act, such of the supplementary and periodic information, documents and reports which the Company would have been required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act if the Company had a class of securities listed and registered on a national securities exchange; and in either of the foregoing cases the Company (a) shall file such information, documents and reports with the Commission on or prior to the respective dates by which the Company is or would have been required so to file such documents, and (b) shall deliver to the Trustee copies of such information, documents and reports which the Company is required to file with the Commission (or would have been required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act if the Company had a class of securities listed and registered on a national securities exchange) within 15 days after the Company is (or would have been) required to file the same with the Commission; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) all Holders who have, within the two years preceding such transmission, filed their name and address with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. (b) If filing such information, documents or reports by the Company with the Commission is not permitted under the Exchange Act or the rules and regulations prescribed from time to time by the Commission thereunder, the Company shall promptly upon written request supply copies of such information, documents or reports to any Holder and to any prospective purchaser of a Note designated by a Holder unless the provision of such information shall no longer be required by law to effect resales of the Notes without registration under the Securities Act. Section 705. Certain Obligations of the Trustee. (a) The Trustee, within five Business Days of its receipt thereof, will mail to each Holder, as its name and address appears in the Note Register, copies of all notices, reports, financial statements, certificates and other documents received by the Trustee from the Company under this Indenture. (b) The Trustee, concurrently with any notice or other document provided by the Trustee to the Company hereunder, will mail to each Holder as its name appears on the Note Register a copy of such notice or other document. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. The Company May Consolidate, etc., Only on Certain Terms. The Company shall not, in a single transaction or a series of related transactions, directly or indirectly (i) consolidate with or merge with or into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person or permit any Subsidiaries to enter into any such transaction or transactions if such transaction or transactions in the aggregate would result in a sale of all or substantially all of the assets of the Company and any Subsidiaries on a consolidated basis or (ii) adopt a plan of liquidation unless: (a) either (1) the Company shall be the continuing corporation or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be a corporation, partnership or trust organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Company or a Subsidiary of the Company in connection with or as a result of such transaction as having been incurred at the time of such transaction), the Company (in the case of clause (1) of Subsection (a) above) or such Person (in the case of clause (2) thereof) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction; (c) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Company or a Subsidiary of the Company in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Event of Default under the Indenture, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; (d) immediately after giving effect to any such transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the surviving entity is at least 1:1; provided, that, if the Fixed Charge Coverage Ratio of the Company is within the range set forth in Column A below, then the Fixed Charge Coverage Ratio of the surviving entity, shall be at least equal to the percentage of the Fixed Charge Coverage Ratio of the Company set forth in Column B below: (A) (B) 1.1111:1 to 1.9999:1.............................90% 2:1 to 2.9999:1.............................80% 3:1 to 3.9999:1.............................70% 4:1 to 4.9999:1.............................60% 5:1 or more.................................50% and provided, further, that if the Fixed Charge Coverage Ratio of the surviving entity is 3:1 or more, the calculation in the preceding proviso shall be inapplicable and such transaction shall be deemed to have complied with the requirements of such provision; and (e) the Company or such Person shall have delivered to the Trustee an Officers' Certificate stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been satisfied. Section 802. Successor Substituted for the Company. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any sale, lease, transfer or other conveyance of all or substantially all of the assets of the Company in accordance with Section 801, the surviving entity shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; when a successor corporation assumes all of the obligations of the Company hereunder and under the Notes, in accordance with Section 801, the predecessor shall be released from such obligations. ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holder, the Company, in each case when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the obligations of the Company herein and in the Notes, in accordance with Article Eight; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action pursuant to this clause (3) shall not adversely affect the interests of the Holders; or appointment of a successor Trustee hereunder. Section 902. Amendments, Supplemental Indentures and Waivers with Consent of Holders. Subject to Section 508, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by Board Resolution, and the Trustee may amend this Indenture or enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall without the consent of the Holder of each Outstanding Note affected thereby: (1) change the Stated Maturity of the principal of, or any in- stallment of interest on, any Note, or reduce the principal amount thereof or the rate of interest thereon, or change the place of payment where, or the coin or currency in which, the principal of any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or alter the redemption provisions hereof in a manner which is adverse to any Holder, or (2) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 1109, including amending, changing or modifying any of the definitions with respect thereto, or (3) reduce the percentage in principal amount of Outstanding Notes, the consent of whose Holders is required for any such amendment, supplemental indenture or waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (4) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, supplemental indenture or waiver, but it shall be sufficient if such Act shall approve the substance thereof. After an amendment, supplemental indenture or waiver under this Section becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplemental indenture or waiver. Any failure of the Company to mail such notice, or defect therein, shall not, however, in any way impair or affect the validity of such amendment, supplemental indenture or waiver. Section 903. Execution of Amendment or Supplemental Indentures. In executing, or accepting the additional trusts created by, any amendment or supplemental indenture permitted by this Article Nine or the modifications thereby of the trusts created by this Indenture, the Trustee shall be en- titled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel or Officers' Certificate or both of the Company stating that the execution of such amendment or supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such amendment or supplemental indenture which adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Amendment or Supplemental Indentures. Upon the execution of any amendment or supplemental indenture under this Article Nine, this Indenture shall be modified in accordance therewith, and such amendment or supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every amendment or supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 906. Reference in Notes to Amendments or Supplemental Indentures. Notes authenticated and delivered after the execution of any amendment or supplemental indenture pursuant to this Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplemental indenture may be prepared and executed by the Company, and authenticated and made available for delivery by the Trustee in exchange for Outstanding Notes. ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium and Interest. The Company will duly and punctually pay, in immediately available funds, the principal of, premium, if any, and interest on, the Notes and the Redemption Price and Change of Control Purchase Price as and when due, in accordance with the terms of the Notes and this Indenture. The Company shall pay interest on overdue amounts at the rate set forth in paragraph 1 of the Notes, and it shall pay interest on overdue interest at the same rate compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue. Section 1002. Maintenance of Office or Agency. The Company shall maintain in the City of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon on the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside the City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time re- scind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 1003. Money for Note Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it shall, on or before each due date of the principal of, premium, if any, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, premium, if any, or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act; provided, that, with respect to any such sums, such trust shall arise and be enforceable only on and after the date on which payment is due with regard to such sums; and only to the extent payment is then due and only as to funds actually segregated and appropriated to such payments. Whenever the Company shall have one or more Paying Agents, it shall, on or prior to each due date of the principal of, premium, if any, or interest on, any Note, deposit with a Paying Agent a sum sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act. The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall: (1) hold all sums held by it for the payment of the principal of, premium, if any, or interest on, Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal, premium, if any, or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may, at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, be or being required to make any such repayment, may, at the expense of the Company, cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Company. Section 1004. Statements of Officers of the Company as to Default; Notice of Default. (a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, as the case may be, a certificate, signed by the principal executive officer and by either the principal financial officer or the principal accounting officer, stating that such officers have conducted or supervised a review of the activities of the Company and its Subsidiaries and of performance under this Indenture and whether or not to the best knowledge of the signers thereof the Company has fulfilled all of its obligations under this Indenture or is in default (without regard to periods of grace or requirements of notice) in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. (b) The Company shall file with the Trustee written notice of the occurrence of any default or Event of Default or event or condition which with notice or the lapse of time or both would become an Event of Default within five Business Days of its becoming aware of any such default, Event of Default or event or condition. Section 1005. Existence. Subject to Article Eight, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises of the Company and each Subsidiary thereof; provided, however, that the Company shall not be required to preserve any such right or franchise if its Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders; provided, further, that any Subsidiary of the Company with a net worth greater than zero may consolidate with, merge into, or transfer or distribute all or part of its properties and assets to, the Company or any Subsidiary thereof. Section 1006. Maintenance of Properties; Insurance. (a) The Company shall cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 1006 shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. (b) The Company will at all times keep all of its and its Subsidiaries' properties which are of an insurable nature insured with insurers, believed by the Company to be responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties. In lieu of or supplemental to such insurance the Company may adopt such other plan or method of protection, whether by the establishment of an insurance fund or reserve to be held and applied to make good losses from casualties, or otherwise, and conforming to the practices of similar corporations maintaining systems of self-insurance, as may be determined by the Board of Directors. Section 1007. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed (i) upon the Company or any Subsidiary thereof or (ii) upon the income, profits or property of the Company or any Subsidiary, and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Sub- sidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings or any such tax, assessment, charge or claim referred to in clause (a)(i) or (b) above if the failure to so pay or discharge such tax assessment, charge or claim would not have or would not be likely to have material adverse effect on the business operations, properties or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. Section 1008. Further Instruments and Acts. Upon request of the Trustee, the Company shall execute and deliver such further instruments and perform such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. Section 1009. Limitation on Indebtedness. The Company will not, and will not permit any Subsidiary of the Company to, create, incur, assume or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Indebtedness (including Acquired Indebtedness), other than Permitted Indebtedness, unless at the time of such event and after giving effect thereto the Company's Fixed Charge Coverage Ratio on a pro forma basis for its last four completed fiscal quarters, taken as a whole and calculated on the assumption that such Indebtedness had been incurred on the first day of such four-quarter period, and in the case of Acquired Indebtedness, on the assumption that the related acquisition (whether by means of purchase, merger or otherwise) also had occurred on such date, would have been greater than the ratios set forth below during the periods commencing on the dates indicated below: Period Commencing Ending Ratio Effective Date January 28, 1996 2.000 January 29, 1996 January 26, 1997 2.150 January 27, 1997 January 25, 1998 2.250 January 26, 1998 January 31, 1999 2.350 Thereafter 2.450 Section 1010. Limitation on Restricted Payments. The Company will not, directly or indirectly, (i) declare or pay any dividend on or make any distributions in respect of the capital stock of the Company or any Subsidiary thereof (except for (x) dividends or distributions payable solely to the Company or any Subsidiary of the Company and (y) dividends or distributions of a Subsidiary of the Company solely on the capital stock of such Subsidiary), or purchase, redeem or retire for value, or make any payment on account of the purchase, redemption or other acquisition or retirement for value of, any capital stock or warrants, rights or options to purchase such capital stock, (ii) make any principal payment on, or redeem, repurchase or defease, or otherwise acquire or retire for value, Subordinated Debt, prior to any scheduled principal payment, scheduled sinking fund payment or maturity thereof, or (iii) make any loan or advance to, or any other Investment in, any of its Affiliates other than a Subsidiary of the Company (such payments or any other actions described in (i), (ii) and (iii), collectively, "Restricted Payments") unless (1) at the time of and after giving effect to the proposed Restricted Payment, no Event of Default or event that, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing, and (2) at the time of and after giving effect to the proposed Restricted Payment (the amount of any such payment, if other than cash, to be determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) (A) the Consolidated Net Worth of the Company shall be at least $75,000,000 and (B) the aggregate amount of all Restricted Payments after the Effective Date shall not exceed 50% of Cumulative Net Available Cash of the Company and (C) the Fixed Charge Coverage Ratio calculated on a pro forma basis for the full twelve-month period ending on the last day of the Company's fiscal quarter immediately preceding such proposed Restricted Payment shall be at least 1.50 to 1. Notwithstanding the foregoing, this provision will not prohibit the redemption, by the Company, of its common stock (on a fully diluted basis) from time to time under the terms and conditions of management equity subscription agreements or stock option agreements and related exhibits, so long as such redemption does not otherwise result in an Event of Default or event that, after notice or lapse of time or both, would become an Event of Default. The foregoing provisions shall not be deemed to prohibit (1) the payment of any dividend within 60 days after the date of declaration thereof, if at such declaration date such declaration complied with the provisions of the Indenture, or (2) the redemption, repurchase or other acquisition or retirement (a "retirement") of any shares of any class of capital stock of the Company or of any Subsidiary thereof in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the proceeds of a substantially concurrent issue and sale (other than to a Subsidiary of the Company) of, other shares of capital stock of the Company, or (3) the retirement of Subordinated Debt out of the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company) of shares of capital stock of the Company or issuance other than to a Subsidiary of the Company of new Indebtedness which has a weighted average life to maturity at least as long as the Stated Maturity of the Notes and no sinking fund or scheduled principal payments prior to the maturity of the Notes and the payment of which is subordinated in right of payment and otherwise to the Notes at least to the same extent as such Subordinated Debt, or (4) the payment of dividends or the making of distributions on shares of capital stock of the Company solely in shares of capital stock of the Company. Section 1011. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not permit any Subsidiary of the Company to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of the Company to (a) pay dividends or make any other distribution on its capital stock, (b) pay any Indebtedness owed to the Company or any other Subsidiary of the Company, (c) make loans or advances to the Company or any other Subsidiary of the Company or (d) transfer any of its property or assets to the Company or any other Subsidiary of the Company except as set forth in the instrument evidencing or the agreement governing Acquired Indebtedness of any acquired entity which be- comes a Subsidiary of the Company, provided, that any restriction or encumbrance under such instrument or agreement existed at the time of acquisition, was not put in place in anticipation of such acquisition, and is not applicable to any Person, other than the Person or property or assets of the Person so acquired. Section 1012. Limitation on Transactions with Affiliates. The Company will not enter into, renew or extend, or permit any Subsidiary of the Company to enter into, renew or extend any agreement relating to the sale, purchase or lease of any assets, property or services from or to any Affiliate of the Company (other than a wholly owned Subsidiary of the Company) on terms that are less favorable to the Company or such Subsidiary of the Company, as the case may be, than would be available in a comparable transaction with an unaffiliated third party; provided, however, that the Company will not enter into, renew or extend any such agreement or series of related agreements which, individually or in the aggregate, involve payments in excess of $500,000, unless the Board of Directors determines that such transaction is fair to the Company; provided, further, that notwithstanding the foregoing, the Company may enter into and perform the Management Services Agreement, dated as of the Effective Date, between the Company and Leonard Green & Partners, L.P., in the form attached as Exhibit A to the Plan. Section 1013. Disposition of Proceeds of Asset Sale. (a) If all or a portion of the Net Cash Proceeds of any Asset Sale are not required to be applied to repay any outstanding Bank Credit Agreement Indebtedness as required by the terms thereof, or the Company determines not to apply such Net Cash Proceeds to the prepayment of such Indebtedness or if no such Indebtedness is outstanding, then the Company may (i) use the Net Cash Proceeds, or a portion thereof, as working capital in the ordinary course of business or (ii) within 12 months of the Asset Sale, invest the Net Cash Proceeds in properties and assets to replace the properties and assets that were the subject of the Asset Sale or in properties and assets that (as determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) will be used in the business of the Company and its Subsidiaries existing on the date of the Indenture or in businesses similar or related thereto. The amount of such Net Cash Proceeds neither used to repay such Indebtedness nor used or invested as set forth in the foregoing clause (i) or (ii) constitutes "Excess Proceeds". When the aggregate amount of Excess Proceeds equals $3,000,000 or more, the Company shall offer to purchase (an "Offer") from all holders of New Notes the maximum principal amount (expressed as a multiple of $1,000) of New Notes that may be purchased out of the Excess Proceeds, provided that the Company may satisfy its obligations to make an Offer in whole or in part by delivering to the Trustee (or the trustee under the Senior Floating Rate Notes Indenture, as the case may be) for cancellation New Notes purchased by it not earlier than six months prior to the date of the Offer; provided, further, that if the Company elects to satisfy its obligations to make an Offer in the manner set forth in the preceding clause, the Company shall deliver for cancellation the Notes and the Senior Floating Rate Notes so purchased in proportionate amounts. In the event the Excess Proceeds are less than the aggregate Offered Price (as defined below) of all New Notes tendered, the New Notes to be purchased shall be purchased out of the Excess Proceeds pro rata in integral multiples of $1,000 only. The offer price (the "Offered Price") shall be an amount in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of the Offer. To the extent that the aggregate Offered Price of all New Notes tendered pursuant to an Offer plus the principal amount of all New Notes purchased by the Company and canceled in satisfaction of the Offer is less than the Excess Proceeds relating thereto (such shortfall constituting a "Deficiency"), the Company may use such Deficiency, or a portion thereof, for general corporate purposes. Upon completion of the purchase of all New Notes tendered pursuant to an Offer, the amount of Excess Proceeds shall be reset at zero. (b) Within 30 days after the date on which the amount of Excess Proceeds equals $3,000,000 or more, the Company shall send by first-class mail, postage prepaid, to each Holder of the New Notes, at his address appearing in the Note Registrar, a notice stating: (1) that the Holder has the right to require the Company to repurchase such Holder's New Notes at the Offered Price, subject to proration in the event the Excess Proceeds are less than the aggregate Offered Price of all New Notes tendered; (2) the date of the Offer (the "Offer Date") which shall be no earlier than 45 days nor later than 60 days from the date such notice is mailed; and (3) the instructions a Holder must follow in order to have its New Notes purchased in accordance with paragraph (c) of this Section. (c) Holders electing to have their New Notes purchased will be required to give notice of such election (an "Election Notice") to the Company at the address specified in the notice at least five Business Days prior to the Offer Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Offer Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the New Notes as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such New Notes purchased. If the aggregate principal amount of their New Notes as to which Holders have given an Election Notice exceeds the amount of Excess Proceeds, the Company shall purchase the New Notes to be purchased out of the Excess Proceeds pro rata. Holders whose New Notes are purchased only in part will be issued New Notes equal in principal amount to the unpurchased portion of the New Notes surrendered. (d) In the event that the Company shall be unable to purchase Notes from Holders in an Offer because of provisions of the Bank Credit Agreement or in the event the Company shall be unable to purchase Notes from Holders in an Offer because of provisions of applicable law, the Company need not make an Offer. The Company shall then be obligated to use the Excess Proceeds as working capital or to invest the Excess Proceeds in replacement properties and assets, in accordance with clause (i) or (ii) of Subsection (a) of this Section. (e) Whenever Net Cash Proceeds received by the Company, and prior to the purchase of New Notes or an allocation to the payment of Bank Credit Agreement Indebtedness, as set forth in Subsection (a) of this Section 1013, exceeds $1,500,000, such Net Cash Proceeds shall be set aside by the Company in a separate account pending (i) deposit with the depositary for the amount required to repay the New Notes tendered in an Offer, (ii) delivery by the Company of the Offered Price to the Holders of the Notes and the holders of the other New Notes tendered in an Offer or (iii) allocation, as set forth in Subsection (a) of this Section, of Net Cash Proceeds to the payment of Bank Credit Agreement Indebtedness or to working capital or investment in properties and assets. Such Net Cash Proceeds may be invested in (A) any U.S. Government Obligations maturing not more than one year after the date of issue, (B) any certificate of deposit, maturing not more than 90 days after the Offer Date, issued by, or time deposit of, a commercial banking institution that is a member of the Federal Reserve System and that has combined capital and surplus and undivided profits of not less than $200,000,000, (C) commercial paper, maturing not more than 90 days after the date of the Offer, issued by a corporation (other than an Affiliate or Subsidiary of the Company) organized and existing under the laws of the United States of America that is rated, at the time as of that any investment therein is made, "P-2" (or higher) by Moody's Investors Service, Inc., or "A-2" (or higher) by Standard and Poor's Corporation, and (D) adjustable rate preferred stock that is readily marketable, provided that the maturity date of any investment permitted by clauses (A), (B) and (C) shall not be later than the Offer Date in the case of an Offer. Section 1014. Guarantees of Indebtedness. The Company (x) will not permit an Affiliate of the Company (a "guarantor") to guarantee or secure the payment of any Indebtedness of the Company or any Subsidiary thereof and (y) will not, and will not permit a Subsidiary of the Company (each of the Company and its Subsidiaries, a "guarantor") to, guarantee or secure the payment of any Indebtedness of any Person, unless, in either case, the payment of the Notes is also guaranteed by any such guarantor pursuant to a guarantee in form and substance satisfactory to the Trustee (a "Guarantee"); provided, however, that any such Guarantee shall provide by its terms that it shall be automatically and unconditionally released and discharged upon either (i) the release or discharge of such guarantee of, or security for (or both such guarantee and such security, if applicable), the payment of such Indebtedness, except a discharge by or as a result of payment under such guarantee or security or payment of such Indebtedness or (ii) any sale, exchange or transfer, to any person not an Affiliate of the Company, of the Company's stock in, or of all or substantially all the assets of, such guarantor if such guarantor is a Subsidiary of the Company which sale, exchange or transfer does not result in a breach of Sections 1005, 1012, 1013, 1014, 1015, 1016 and 1017. Section 1015. Limitation on Certain Liens. (a) The Company will not, and will not permit any Subsidiary of the Company to, permit to exist any security interest or pledge any asset to secure the payment of any Indebtedness which ranks junior to or is subordinate in right of payment to the Notes. (b) The Company will not, and will not permit any Subsidiary of the Company to, permit to exist any security interest or pledge any asset to secure the Senior Floating Rate Notes or any Indebtedness incurred to refinance the Senior Floating Rate Notes unless it shall make effective provision whereby the Notes shall be directly secured equally and ratably with the Indebtedness so secured (the "Secured Debt"), and in the same proportion as the Secured Debt in an amount equal to the product of (i) a ratio the numerator of which is the aggregate principal amount of Secured Debt and the denominator of which is the aggregate principal amount of Senior Floating Rate Notes and the Indebtedness incurred to refinance the Senior Floating Rate Notes, outstanding immediately after such security interest is granted multiplied by (ii) the aggregate principal amount of Notes outstanding at the time such security is granted. Section 1016. Investments. The Company will not, and will not permit any Subsidiary of the Company to, directly or indirectly make or own any Investment in any Person except: (a) Investments in Investment Cash Equivalents; (b) promissory notes of purchasers in sales by the Company of properties or assets not exceeding an aggregate principal balance of $5,000,000 outstanding at any one time; (c) amounts due from landlords for remodelling work done by the Company for account of a landlord, not exceeding an aggregate principal balance of $4,000,000 outstanding at any one time; (d) other Investments not in excess of an aggregate amount of $1,000,000 outstanding at any one time; and (e) Investments in respect of Securities of another Person received by the Company in connection with a plan of reorganization or readjustment of such Person or its debts. Section 1017. Conduct of Business. The Company shall not engage in any business other than (a) the business engaged in by the Company on the date hereof, and (b) any business activities substantially similar or related thereto. Section 1018. Limitations on Subordinated Debt. The Company shall not, and shall not permit any Subsidiary of the Company to, (a) create, incur, assume or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Indebtedness that is expressly subordinate in right of payment to any Indebtedness of the Company or any Subsidiary thereof unless such subordinate Indebtedness both constitutes Subordinated Debt and does not require principal repayments or sinking fund payments to be made prior to the Stated Maturity of the Notes, or (b) amend the provisions of any instrument evidencing or agreement governing Subordinated Debt to (i) require principal repayments or sinking fund payments to be made prior to the Stated Maturity of the Notes or (ii) alter the subordination provisions of such Subordinated Debt. ARTICLE ELEVEN REDEMPTION OF NOTES Section 1101. Right of Redemption. The Notes may be redeemed, otherwise than upon a Change in Control as defined in and required by Section 1109, at the election of the Company, as a whole or from time to time in part, at the Redemption Price specified in the form of Note set forth in Article Two for redemptions, together with accrued interest to the Redemption Date. Section 1102. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article Eleven. Section 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 1101 shall be evidenced by a Board Resolution of the Company. In case of any redemption at the election of the Company, the Company shall, at least 30 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satis- factory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Notes to be redeemed. Section 1104. Selection by Trustee of Notes to Be Redeemed. If less than all the Notes are to be redeemed, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Notes not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1,000 or any integral multiple thereof) of the principal amount of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company and the Note Registrar (if other than the Trustee) in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed. Section 1105. Notice of Redemption. Notice of Redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at its address appearing in the Note Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Notes to be redeemed, (4) that New Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any, (5) that, unless the Company defaults in making the redemption payment, interest on New Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such New Notes is to receive payment of the Redemption Price plus accrued interest, if any, upon surrender to the Paying Agent of the Notes redeemed, (6) if any New Note is being redeemed in part, the portion of the principal amount of such New Note to be redeemed and that, after the Redemption Date, and upon surrender of such New Note, a New Note or New Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued, (7) if fewer than all the New Notes are to be redeemed, the identification of the particular New Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of New Notes to be redeemed and the aggregate principal amount of New Notes to be outstanding after such partial redemption, (8) that on the Redemption Date the Redemption Price will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and after said date, (9) the place or places where such Notes are to be surrendered for payment of the Redemption Price, and (10) the CUSIP number, if any, of the Notes to be redeemed. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Section 1106. Deposit of Redemption Price. On or prior to 11:00 a.m. (New York time) on the Business Day immediately preceding any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money in same day funds sufficient to pay the Redemption Price of, and accrued interest on, all the Notes or portions thereof which are to be redeemed on that date. Section 1107. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid for by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant Regular Record Dates or Special Record Dates, as the case may be, according to their terms and the provisions of Section 307. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium (if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Note. Section 1108. Notes Redeemed in Part. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note without service charge, a new Note or Notes of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 1109. Offer to Purchase Upon a Change in Control. (a) If at any time either (a) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall beneficially own at least 50% of the total voting stock of the Company or (b) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall succeed in having a sufficient number of its nominees elected to the board of directors of the Company to constitute a majority of the board of directors of the Company (each, a "Change of Control"), then the Company shall make an offer to repurchase any or all of the Outstanding Notes at a price, payable in cash, equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date (the "Change of Control Purchase Price"), in accordance with the procedures set forth in this Section 1109; provided that such repurchase shall be conditioned upon receipt by the Company of Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes. (b) Within 30 days after a Change of Control, the Company shall send by first-class mail postage prepaid, to each Holder of the Outstanding Notes, at its address appearing in the Note Register, a notice (a "Change of Control Purchase Notice") stating: (1) that a Change of Control has occurred and that the Holder has the right to require the Company to repurchase such Holder's Notes at the Change of Control Purchase Price subject to the conditions contained herein; (2) that unless Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes are tendered, the Company shall not redeem any Notes pursuant to this Section; (3) the purchase date (the "Change of Control Purchase Date") which shall be no earlier than 30 days nor later than 50 days from the date such notice is mailed or such later date as is necessary to comply with requirements under the Exchange Act or any applicable securities laws or regulations; and (4) the instructions a Holder must follow in order to have its Notes purchased in accordance with paragraph (c) of this Section. (c) Holders electing to have Notes purchased will be required to give notice of such election to the Company at the address specified in the Change of Control Purchase Notice at least five Business Days prior to the Change of Control Purchase Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes as to which its election is to be withdrawn and a statement that such Holder is withdrawing its election to have such Notes purchased. INDENTURE SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. KASH N' KARRY FOOD STORES, INC. By: Attest: Name: Title: By Name: Title: SHAWMUT BANK CONNECTICUT, N.A. By: Name: Title: By: Name: Title: TERMS OF SUBORDINATED DEBT Payment of the principal of and premium, if any, and interest on and any other amounts payable with respect to any Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt shall be (to the extent set forth below) subordinate and subject in right of payment to the prior payment in full, in cash or Cash Equivalents, of all principal or, premium, if any, and interest on, and any other amounts due on or in respect of all New Notes (including interest on unpaid principal and interest at the rate provided in the respective instruments creating the New Notes accruing on or after the filing of any petition in bankruptcy or reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceeding) (the "Senior Debt"). 1.In the event of (a) any insolvency, bankruptcy or similar case or proceeding relative to the Company or to its creditors, as such, or to its assets, or (b) any liquidation, dissolution or other winding up of the Company, or (c) any assignment for the benefit of creditors or any other action or proceeding involving the readjustment of all or any of the indebtedness of the Company, the holders of New Notes shall be entitled to receive payment in full, in cash or Cash Equivalents, of all the Senior Debt before the holders of such Subordinated Debt are entitled to receive any direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character on account of principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to such Subordinated Debt, to the payment of all amounts due on or in respect of New Notes at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment (collectively, "Permitted Junior Securities"). 2.Unless paragraph 1 is applicable, upon the occurrence of any default in the payment of any principal of (or premium, if any) or interest on any New Note when due (each a "Payment Default"), no direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character shall be made by the Company on account of principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt unless and until such Payment Default shall have been cured or waived in writing or shall have ceased to exist or all of the New Notes shall have been discharged. 3.Unless either paragraph 1 or paragraph 2 is applicable, upon the occurrence of any event the occurrence of which entitles the Holders of the requisite aggregate principal amount of the Outstanding Notes as set forth in Section 502 (the "Requisite Holders") to accelerate the maturity of any New Note (each a "Non-payment Event of Default"), no direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character shall be made by the Company on account of any principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt for a period (the "Payment Blockage Period") commencing on the date written notice of such default shall have been given to the Company by the Requisite Holders unless and until (i) more than 179 days shall have elapsed since receipt of such written notice by the Company, (ii) such Non-payment Event of Default shall have been cured or waived in writing or shall have ceased to exist or all of the New Notes shall have been discharged or (iii) such Payment Blockage Period shall have been terminated by written notice to the Company from the Requisite Holders; provided, that, subject to the following sentence, the commencement of a Payment Blockage Period hereunder shall not bar the commencement of another Payment Blockage Period by the Requisite Holders due to another Non-payment Event of Default. Notwithstanding anything herein to the contrary, in no event will any one or more consecutive Payment Blockage Periods extend beyond 179 days from a date on which any payment with respect to the Subordinated Debt was due. 4.Any payment or distribution, whether in cash, securities or other property (other than Permitted Junior Securities), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of such Subordinated Debt shall be paid or delivered directly to the holders of New Notes in accordance with the priorities then existing among such holders until all the Senior Debt shall have been paid in full. If any payment or distribution of any character or any security, whether in cash, securities or other property (other than Permitted Junior Securities), shall be received by any holder of such Subordinated Debt in contravention of any of the terms hereof and before all the Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the New Notes at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt in full. Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of Trust Indenture Act Section Indenture Section 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .608 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .608 (a)(3). . . . . . . . . . . . . . . . . . . . Not Applicable (a)(4). . . . . . . . . . . . . . . . . . . . Not Applicable (a)(5). . . . . . . . . . . . . . . . . . . . . . . . . .608 (b) . . . . . . . . . . . . . . . . . . . . . . . . 608, 609 (c) . . . . . . . . . . . . . . . . . . . . . Not Applicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .612 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .612 (c) . . . . . . . . . . . . . . . . . . . . . Not Applicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . 701, 702(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . 702(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . 702(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . 703(a) (b)(1). . . . . . . . . . . . . . . . . . . . Not Applicable (b)(2). . . . . . . . . . . . . . . . . . . . . . . . 703(b) (c) . . . . . . . . . . . . . . . . . . . . . 703(a), 703(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . 703(c) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .704 (b) . . . . . . . . . . . . . . . . . . . . . Not Applicable (c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(3). . . . . . . . . . . . . . . . . . . Not Applicable (d) . . . . . . . . . . . . . . . . . . . . . Not Applicable (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .102 (f) . . . . . . . . . . . . . . . . . . . . . Not Applicable 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 601(a) (b) . . . . . . . . . . . . . . . . . . . . . . .602, 703(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . 601(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . 601(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 514 316(a)(last sentence). . . . . . . . . . . . . . . . . . . .101 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 512 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 513 (a)(2). . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .503 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . 504 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 1003 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Note:This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS PAGE ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. . . . . . . . . . . . . . . . 2 Section 102. Compliance Certificates and Opinions . . . 19 Section 103. Form of Documents Delivered to Trustee . . 20 Section 104. Acts of Holders. . . . . . . . . . . . . . 21 Section 105. Notices, Etc., to Trustee and the Company. 22 Section 106. Notice to Holders; Waiver. . . . . . . . . 23 Section 107. Conflict with Trust Indenture Act. . . . . 23 Section 108. Effect of Headings and Table of Contents . 24 Section 109. Successors and Assigns . . . . . . . . . . 24 Section 110. Separability Clause. . . . . . . . . . . . 24 Section 111. Benefits of Indenture. . . . . . . . . . . 24 Section 112. Governing Law. . . . . . . . . . . . . . . 24 Section 113. Legal Holidays . . . . . . . . . . . . . . 24 Section 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability . . . . . . . . . . . 25 Section 115. Counterparts . . . . . . . . . . . . . . . 26 ARTICLE TWO FORMS OF NOTES Section 201. Forms Generally. . . . . . . . . . . . . . 26 Section 202. Form of Face of Note . . . . . . . . . . . 26 Section 203. Form of Reverse of Note. . . . . . . . . . 29 Section 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . 33 Section 205. Form of Assignment . . . . . . . . . . . . 33 Section 206. Form of Option of Holder to Elect Redemption 34 ARTICLE THREE THE NOTES Section 301. Title and Terms. . . . . . . . . . . . . . . . 34 Section 302. Denominations. . . . . . . . . . . . . . . . . 36 Section 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . 36 Section 304. Temporary Notes. . . . . . . . . . . . . . . . 37 Section 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . 38 Section 306. Mutilated, Destroyed, Lost and Stolen Notes . .39 Section 307. Payment of Interest; Interest Rights Preserved 40 Section 308. Persons Deemed Owners. . . . . . . . . . . . . 42 Section 309. Cancellation . . . . . . . . . . . . . . . . . 42 Section 310. Computation of Interest. . . . . . . . . . . . 43 Section 311. CUSIP Numbers. . . . . . . . . . . . . . . . . 43 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction, Discharge of the Indenture and Defeasance of the Notes. . . . . . . . . . . 43 Section 402. Termination of Obligations upon Cancellation of the Notes. .. . . . . . . . . . . . . . . 45 Section 403. Survival of Certain Obligations. . . . . . . 46 Section 404. Acknowledgement of Discharge by Trustee. . . 46 Section 405. Application of Trust Money . . . . . . . . . 46 Section 406. Repayment to the Company . . . . . . . . . . 47 Section 407. Reinstatement. . . . . . . . . . . . . . . . 47 Section 408. Indemnity. . . . . . . . . . . . . . . . . . 47 ARTICLE FIVE REMEDIES Section 501. Events of Default. . . . . . . . . . . . . 48 Section 502. Acceleration of Maturity Date; Rescission and Annulment. . . . . . . . . . . . . . . . . 50 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . 52 Section 504. Trustee May File Proofs of Claim . . . . . 53 Section 505. Trustee May Enforce Claims Without Possession of Notes. .. . . . . . . . . . . . . . . . 54 Section 506. Application of Money Collected . . . . . . 54 Section 507. Limitation on Suits. . . . . . . . . . . . 55 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . 56 Section 509. Restoration of Rights and Remedies . . . . 56 Section 510. Rights and Remedies Cumulative . . . . . . 56 Section 511. Delay or Omission Not Waiver . . . . . . . 57 Section 512. Control by Holders . . . . . . . . . . . . 57 Section 513. Waiver of Past Default.. . . . . . . . . . 57 Section 514. Undertaking for Costs. . . . . . . . . . . 58 Section 515. Waiver of Stay or Extension Laws . . . . . 58 ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. . . . 59 Section 602. Notice of Defaults . . . . . . . . . . . . 60 Section 603. Certain Rights of Trustee. . . . . . . . . 61 Section 604. Not Responsible for Recitals or Issuance of Notes . . . . . . . . . . . . . . . . . . 62 Section 605. May Hold Notes . . . . . . . . . . . . . . 62 Section 606. Money Held in Trust. . . . . . . . . . . . 63 Section 607. Compensation and Reimbursement . . . . . . 63 Section 608. Corporate Trustee Required; Eligibility. . 64 Section 609. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . 65 Section 610. Acceptance of Appointment by Successor . . 66 Section 611. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . 67 Section 612. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . 67 Section 613. Appointment of Authenticating Agent. . . . 67 Section 614. Paying Agent . . . . . . . . . . . . . . . 68 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . 69 Section 702. Preservation of Information; Communications to Holders. . . . . . . . . . . . . . . . 70 Section 703. Reports by Trustee . .. . . . . . . . . . 71 Section 704. Reports by Company . . . . . . . . . . . 73 Section 705. Certain Obligations of the Trustee . . . 75 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. The Company May Consolidate, etc., Only on Certain Terms. . . . . . . . . . . . . .. 75 Section 802. Successor Substituted for the Company. . . . . 77 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . . . . . . . . . .77 Section 902. Amendments, Supplemental Indentures and Waivers with Consent of Holders. . . . . . . .78 Section 903. Execution of Amendment or Supplemental Indentures. . . . . . . . . . . . . . . . . .79 Section 904. Effect of Amendment or Supplemental Indentures . . . . . . . . . . . . . . . . . 80 Section 905. Conformity with Trust Indenture Act. . . . . .80 Section 906. Reference in Notes to Amendments or Supplemental Indentures . . . . . . . . . . . . . . . . . 80 ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium and Interest . .80 Section 1002. Maintenance of Office or Agency. . . . . . . .81 Section 1003. Money for Note Payments to Be Held in Trust . 81 Section 1004. Statements of Officers of the Company as to De- fault; Notice of Default . . . . . . . . . . .83 Section 1005. Existence. . . . . . . . . . . . . . . . . . .84 Section 1006. Maintenance of Properties; Insurance . . . . 84 Section 1007. Payment of Taxes and Other Claims. . . . . . .85 Section 1008. Further Instruments and Acts . . . . . . . . .85 Section 1009. Limitation on Indebtedness . . . . . . . . . .85 Section 1010. Limitation on Restricted Payments. . . . . . .86 Section 1011. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. . . . . 88 Section 1012. Limitation on Transactions with Affiliates . .88 Section 1013. Disposition of Proceeds of Asset Sale. . . . .89 Section 1014. Guarantees of Indebtedness . . . . . . . . . .91 Section 1015. Limitation on Certain Liens. . . . . . . . . 92 Section 1016. Investments. . . . . . . . . . . . . . . . . .93 Section 1017. Conduct of Business. . . . . . . . . . . . . .93 Section 1018. Limitations on Subordinated Debt . . . . . . .93 ARTICLE ELEVEN REDEMPTION OF NOTES Section 1101. Right of Redemption. . . . . . . . . . . . . 94 Section 1102. Applicability of Article . . . . . . . . . . .94 Section 1103. Election to Redeem; Notice to Trustee. . . . 94 Section 1104. Selection by Trustee of Notes to Be Redeemed .94 Section 1105. Notice of Redemption.. . . . . . . . . . . . 95 Section 1106. Deposit of Redemption Price. . . . . . . . . 96 Section 1107. Notes Payable on Redemption Date . . . . . . 96 Section 1108. Notes Redeemed in Part . . . . . . . . . . . 97 Section 1109. Offer to Purchase Upon a Change in Control . 97 EXHIBIT A INDENTURE KASH N' KARRY FOOD STORES, INC., Issuer AND SHAWMUT BANK CONNECTICUT, N.A., Trustee 11.5% Senior Fixed Rate Notes due 2003 Dated as of December 29, 1994 EX-4 8 EXHIBIT 4.2 TO 1/29/95 10-Q INDENTURE, dated as of December 29, 1994, between Kash n' Karry Food Stores, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at 6422 Harney Road, Tampa, Florida 33610, telephone number (813) 621-0200, telecopier number (813) 626-9550, and IBJ Schroder Bank & Trust Company, as Trustee (herein called the "Trustee"). RECITALS On November 9, 1994, the Company filed for protection under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. On December 12, 1994, the United States Bankruptcy Court for the District of Delaware entered an order confirming the Plan of Reorganization, dated as of December 12, 1994, of the Company filed in the United States Bankruptcy Court for the District of Delaware in respect of Case No. 94-1082(HSB) (the "Plan"), which provides for the issuance of the Notes (as hereinafter defined). The Company has duly authorized the creation of an issue of Senior Floating Rate Notes due 2003 (herein called the "Notes") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company as duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: 1. the terms defined in this Article have the meanings assigned to them in this Article, the singular includes the plural and the plural includes the singular; 2. all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; 3. all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; and 4. the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Acceleration Notice" has the meaning specified in Section 502. "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Company or assumed in connection with the acquisition of assets from such Person other than Indebtedness incurred in connection with, or in contemplation of, (i) such Person becoming a Subsidiary of the Company or (ii) such acquisition of assets. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means any conveyance, transfer or lease to a Person other than the Company or any Subsidiary thereof, directly or indirectly, in any consecutive 12-month period, in one or a series of related transactions, of (i) any capital stock of any Subsidiary of the Company; (ii) all or substantially all of the properties and assets of any division or line of business of the Company and its Subsidiaries taken as a whole; or (iii) any other properties and assets of the Company or any Subsidiary thereof, other than in the ordinary course of business, the gross proceeds of which accounted for 15% or more of the book value of the total assets of the Company and its Subsidiaries on a consolidated basis as set forth in the most recent set of financial statements of the Company supplied pursuant to Section 704 preceding the date as of which such determination is made. For the purposes of this definition, the term "Asset Sale" shall not include any consolidation, merger, conveyance, transfer or lease of properties and assets of the Company substantially as an entirety that is permitted by Article Eight. "Authenticating Agent" means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate the Notes. "Bank Credit Agreement" means (i) until clause (ii) below shall become applicable in accordance with its terms, the Credit Agreement dated as of December 29, 1994 among the Company, the financial institutions from time to time parties thereto as Banks, and The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co- Agent, for such Banks, as such Credit Agreement may from time to time be amended, renewed, supplemented or otherwise modified in accordance with the terms thereof, or (ii) after the agent under the Bank Credit Agreement or under any successor agreement to such agreement shall have acknowledged, in writing, that all principal, interest and commitment or similar fees owing under such agreement have been paid in full, any successor thereto or replacement thereof (as designated by a duly adopted Board Resolution), as each such successor or replacement may from time to time be amended, renewed, supplemented or otherwise modified in accordance with the terms thereof. "Bank Credit Agreement Indebtedness" means all indebted- ness at any time outstanding or arising under or with respect to the Bank Credit Agreement, including (without limitation) Bank Loans and Letter of Credit Liability. "Bank Loans" means borrowings under the Bank Credit Agreement. "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Banks" means the financial institutions and Persons, whether or not they are banks, which are or from time to time become holders of Bank Credit Agreement Indebtedness. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of such board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Bondholder Committee" means the unofficial committee of holders of the Old Notes, which committee participated in the negotiation of the terms of the Plan. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institu- tions in the City of New York are authorized or obligated by law or executive order to close. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purposes hereof, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means money, checks, demand deposit accounts and other instruments or investments of equivalent liquidity and safety. "Change of Control" has the meaning specified in Sec- tion 1109. "Change of Control Notice" has the meaning specified in Section 1109. "Change of Control Purchase Date" has the meaning specified in Section 1109. "Change of Control Purchase Notice" has the meaning specified in Section 1109. "Change of Control Purchase Price" has the meaning specified in Section 1109. "Commission" means the Securities and Exchange Commis- sion, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Consolidated Interest Expense" of any Person means, for any period, the sum (without duplication) of the aggregate of the interest expense of such Person and its consolidated Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, including but not limited to the interest portion of Capitalized Lease Obligations and amortization of original issue discount but excluding amortization of debt issuance cost. "Consolidated Net Income" of any Person means, for any period, the consolidated net income of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP, adjusted by excluding (a) any gain or loss realized upon the termination of any employee pension plan, (b) net extraordinary gains or net extraordinary losses, as the case may be, and (c) net gains or losses in respect of dispositions of assets other than in the ordinary course of business. "Consolidated Net Loss" of any Person means, for any period, the consolidated net loss of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP, adjusted by excluding (a) any gain or loss realized upon the termination of any employee pension plan, (b) net extraordinary gains or net extraordinary losses, as the case may be, and (c) net gains or losses in respect of dispositions of assets other than in the ordinary course of business. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person and its consoli- dated Subsidiaries, as determined in accordance with GAAP. "Consolidated Non-cash Charges" of any Person means, for any period, the aggregate depreciation, amortization and other non- cash charges of such Person and its Subsidiaries for such period, as determined in accordance with GAAP. "Consolidated Tax Expense" of any Person means, for any period, the aggregate of the tax expense of such Person and its consolidated Subsidiaries for such period, as determined in accordance with GAAP. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which, as of the date of this Indenture, is located at One State Street, New York, New York 10004, Attention: Corporate Trust Department. "Corporation" means a corporation, association, company, joint-stock company or business trust. "Cumulative Net Available Cash" of any Person means (1) the sum (without duplication) of (i) 50% of Consolidated Net Income of such Person accrued during the Reference Period (less any previous Restricted Payments and 100% of any Consolidated Net Loss of such Person) plus (ii) all Consolidated Non-cash Charges deducted in computing Consolidated Net Income (or Consolidated Net Loss, as the case may be) of such Person during the Reference Period plus (iii) the aggregate net proceeds (other than with respect to sales to Subsidiaries of such Persons), including cash and the fair market value of property other than cash, received by such Person during the Reference Period from the issuance of capital stock (other than redeemable stock and other than stock issued by the Company pursuant to the Plan) or debt securities (other than the Company's 14% Subordinated Debentures due February 1, 2001) that have been converted into capital stock (other than redeemable stock) other than amounts used to retire or acquire capital stock or Subordinated Debt, less (2) the sum (without duplication) of (i) all capital expenditures (other than with the Net Cash Proceeds from Asset Sales) for any property made by such Person and its Subsidiaries during the Reference Period, (ii) the change (which will be added to the amounts in (i) and (iii) of this clause (2) if an increase, but subtracted therefrom if a decrease) in Working Capital at the end of the Reference Period compared to Working Capital at January 29, 1995 and (iii) the sum (without duplication) of all payments of principal of Indebtedness of such Person or any Subsidiary thereof other than the Notes actually made during the Reference Period, excluding payments under the Revolving Credit Loans but only to the extent the Banks' revolving loan commitments under the Bank Credit Agreement shall not have been reduced on or after the date hereof in connection with such payments. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official under any Bankruptcy Law. "Defaulted Interest" has the meaning specified in Section 307. "Deficiency" has the meaning specified in Section 1013. "Effective Date" means the date on which the Plan becomes effective. "Event of Default" has the meaning specified in Article Five. "Excess Proceeds" has the meaning specified in Section 1013. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fixed Charge Coverage Ratio" of any Person means, for any period, the ratio of (a) the sum of Consolidated Net Income of such Person for such period plus Consolidated Interest Expense, Consolidated Tax Expense and Consolidated Non-cash Charges of such Person deducted in computing Consolidated Net Income of such Person for such period, to (b) Consolidated Interest Expense of such Person for such period; provided, that in making such computation, the Consolidated Interest Expense of such Person attributable to interest on any Indebtedness computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period. "GAAP" means generally accepted accounting principles as in effect in the United States on the date of the relevant computation, consistently applied. "Guarantee" has the meaning set forth in Section 1014 hereof. "Holder" means a Person in whose name a Note is regis- tered in the Note Register and, when used with respect to any Note or Notes, means the Person or Persons in whose name such Note is, or Notes are, registered in the Note Register. "Incur" means, directly or indirectly, to create, incur, assume, guarantee or otherwise become liable for any obligation of any kind whatsoever; "incurrence" has a correlative meaning. "Indebtedness" means, without duplication (a) any liability of any Person, to the extent it would appear as a liability upon a balance sheet of such Person prepared on a consolidated basis in accordance with GAAP (i) for borrowed money, (ii) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind (other than a trade payable or a current liability arising in the ordinary course of business), or (iii) for the payment of money relating to a Capitalized Lease Obligation; (b) any liability of any Person under any reimbursement obligation relating to a letter of credit; (c) any liability of others described in the preceding clauses (a) and (b) that the Person has guaranteed or that is otherwise its legal liability; and (d) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a), (b) and (c), above. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Notes. "Interest Rate Determination Date" means, with respect to any Semi-Annual Period, the January 31 or July 31 next preceding such Semi-Annual Period or, if such date is not a Business Day, the next preceding Business Day. "Interest Rate Protection Obligations" means, with respect to any Person, any obligation of such Person pursuant to any arrangement whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a floating or fixed rate of interest on the same notional amount. "Investment" means, as applied to any Person, any direct or indirect purchase or other acquisition by that Person of Securities, or of a beneficial interest in Securities, of any other Person, and any direct or indirect loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advances to employees and similar items made or incurred in the ordinary course of business), or capital contribution by such Person to any other Person, including all Indebtedness and accounts owed by that other Person which are not current assets or did not arise from sales of goods or services to that person in the ordinary course of business. The amount of any investment shall be determined in conformity with GAAP. "Investment Cash Equivalents" means (i) U.S. Government Obligations maturing within one year after the date of acquisition thereof; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within 90 days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") (or, if at any time neither S&P nor Moody's shall be rating such obligations, then from such other nationally recognized rating services acceptable to the Trustee) and not listed in Credit Watch published by S&P; (iii) commercial paper, other than commercial paper issued by the Company or any of its Affiliates, maturing no more than 90 days after the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or P-1 from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then the highest rating from other nationally recognized rating services acceptable to the Trustee); (iv) domestic and Eurodollar certifi- cates of deposit or time deposits or bankers' acceptances maturing within 90 days after the date of acquisition thereof issued by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 and (v) repurchase agreements and reverse repurchase agreements with any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 or with any Bank which is a party to the Bank Credit Agreement relating to U.S. Government Obligations; provided, that the terms of such agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy- Repurchase Agreements of Depository Institutions with Securities Dealers and Others as adopted by the Comptroller of the Currency on October 31, 1985. "Letter of Credit Liability" means the Letter of Credit Liability as defined in and under the Bank Credit Agreement as originally executed or any similar letter of credit reimbursement obligations, whether or not contingent, under the Bank Credit Agreement. "LIBOR" means for each Semi-Annual Period during which any Notes are Outstanding, the rate determined by the Company equal to the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%) of the offered rates for deposits in U.S. dollars for a period of six months, as set forth on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the Interest Rate Determination Date for such Semi-Annual Period; provided, that if fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR for such Semi-Annual Period shall mean the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%) of the interest rates per annum at which deposits in a Representative Amount in U.S. dollars are offered by the Reference Banks to prime banks in London interbank market for a period of six months as of 11:00 a.m., London time, on the Interest Rate Determination Date for such Semi-Annual Period. If on any Interest Rate Determination Date at least two of the Reference Banks provide such offered quotations, then LIBOR for such Semi-Annual Period shall be determined in accordance with the preceding sentence on the basis of the offered quotation of those Reference Banks providing such quotation, provided, that, if less than two of the Reference Banks are so quoting such interest rate as mentioned above, then LIBOR for such Semi-Annual Period shall be deemed to be LIBOR for the next preceding Semi-Annual Period. All U.S. dollar amounts used in or resulting from the calculations set forth in this paragraph will be rounded to the nearest cent (with one half cent being rounded up). For purposes of this definition "Representative Amount" means an amount that is representative for a single transaction in the relevant market at the relevant time. "Material Subsidiary" means, at any time, any Subsidiary of the Company that, together with the Subsidiaries of such Subsidiary, (a) accounted for more than 5% of the consolidated revenues of the Company and its Subsidiaries for the most recently completed fiscal year of the Company or (b) was the owner of more than 5% of the consolidated assets of the Company and its Sub- sidiaries at the end of such fiscal year, all as shown on the consolidated financial statements of the Company and its Sub- sidiaries for such fiscal year. "Maturity", when used with respect to any Note, means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, required repurchase or otherwise. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary thereof) net of (i) brokerage commissions and other reasonable fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, (iii) payments made to retire Indebtedness where payment of such Indebtedness is required in connection with such Asset Sale, and (iv) appropriate amounts to be provided by the Company or any Subsidiary thereof, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associat- ed with such Asset Sale and retained by the Company or any Subsidiary thereof, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "New Notes" means, collectively, the Notes and the Senior Fixed Rate Notes. "Note Register" and "Note Registrar" have the respective meanings specified in section 305. "Notes" has the meaning specified in the second recital of this Indenture, and includes the Secondary Notes. "Offer" has the meaning specified in Section 1013. "Offered Price" has the meaning specified in Section 1013. "Officers' Certificate" means a certificate which complies with Section 102 and which is signed by the Chairman of the Board, the President, a Vice President or the Treasurer, and by the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. "Old Notes" means, collectively, the Company's 12 3/8% Senior Notes due 1999, the Company's Senior Floating Rate Notes due August 2, 1996 and the Company's 14% Subordinated Debentures due February 1, 2001. "Opinion of Counsel" means a written opinion, which complies with Section 102, of legal counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Original Stockholder" means any member of (x) any group consisting of members of the Board of Directors or (y) the Bondholder Committee or any other group of Holders consisting in whole or in part of members of the Bondholder Committee. "Outstanding", when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: a. Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; b. Notes, or portions thereof, for which payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided, that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; provided, further, that if for any reason the Company shall default in the payment of the Redemption Price and accrued interest, such Notes will be deemed Outstanding; and c. Notes which have been replaced or paid pursuant to Section 306 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satis- factory to it that such Notes are held by a bona fide pur- chaser in whose hands such Notes are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company, or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company pursuant to this Indenture to pay the principal of, premium (if any) or interest on, any Notes on behalf of the Company, which term may include the Company. "Permitted Indebtedness" means: A. Indebtedness of the Company or any Subsidiary thereof (excluding Bank Loans and Letter of Credit Liability), outstanding at the time of, and after giving effect to, the initial issuance of the Notes. B. Indebtedness of the Company evidenced by the Notes (including, without limitation, Indebtedness evidenced by addition- al Notes issued in accordance with the provisions hereof (including, without limitation, Secondary Notes)). C. Indebtedness of the Company evidenced by the Senior Fixed Rate Notes. D. Bank Loans and Letter of Credit Liability, in an aggregate principal amount at any one time outstanding, not to exceed the sum of (i) $125,000,000 less the aggregate principal amount of Bank Loans and Letter of Credit Liability actually paid on or after the date hereof, but without deduction for payments under the Revolving Credit Loans or in respect of Letter of Credit Liability except to the extent the Banks' revolving loan commitments or commitments to extend or participate in letters of credit under the Bank Credit Agreement shall have been reduced on or after the date hereof in connection with such payments, minus (ii) the aggregate principal amount of commercial paper outstanding under clause (f) below less such aggregate principal amount that is supported by letters of credit issued for the account of the Company under and pursuant to the Bank Credit Agreement. E. Indebtedness of the Company either (i) arising out of sale and leaseback transactions or (ii) bearing a fixed rate of interest for a term of not less than ten years and secured by stores and other real property owned by the Company; provided, that the aggregate principal amount of such Indebtedness at any one time outstanding shall not exceed the sum of $25,000,000 plus the amount of such Indebtedness outstanding on the Effective Date. F. Indebtedness of the Company evidenced by commercial paper. G. Interest Rate Protection Obligations to the extent that the notional principal amount thereof does not exceed the aggregate amount of Indebtedness referred to in clauses (c) and (d) above. H. Indebtedness of the Company or any Subsidiary thereof, the proceeds of which are used to pay Store Opening Costs in connection with the opening or acquisition of Permitted Stores. I. Indebtedness of the Company or any Subsidiary thereof evidenced by promissory notes representing the Company's or such Subsidiary's obligations under casualty insurance policies to reimburse the issuing casualty insurance companies for claims against the Company or such Subsidiary paid by such insurance companies. J. Indebtedness of the Company or any Subsidiary thereof in respect of performance or surety bonds provided by the Company or such Subsidiary in the ordinary course of business. K. Indebtedness of the Company or any Subsidiary thereof for reimbursement of payments made under commercial documentary letters of credit issued for the account of the Company or such Subsidiary in the ordinary course of business, having expiry dates not more than one year after the date of issuance, and issued for the purpose of financing the purchase of goods. L. Indebtedness of the Company constituting obligations of the Company to redeem shares, or cancel options to purchase shares, of the Company's capital stock under the terms and conditions of management equity subscription agreements and management stock option agreements. M. Indebtedness of the Company or any Subsidiary thereof represented by or in respect of industrial revenue or development bonds not to exceed an aggregate principal amount at any one time outstanding of $5,000,000. N. Indebtedness of (i) any Subsidiary of the Company to the Company or any other Subsidiary of the Company or (ii) the Company to any Subsidiary thereof. O. Indebtedness of the Company (which may be Bank Credit Agreement Indebtedness), in addition to that described in clauses (a) through (n) above; provided, that the aggregate principal amount of such Indebtedness at any one time outstanding shall not exceed the sum of $25,000,000 plus the amount of such Indebtedness outstanding on the Effective Date. P. All renewals, extensions, substitutions, refinancings or replacements (collectively, "refinancings") of any Indebtedness described in clauses (a) through (m) and (o) above, including replacements with creditors other than the Banks (or successive refinancings) so long as any such refinancing does not result in an increase of the amount of such Indebtedness and, in the case of refinancings of Subordinated Debt, such Indebtedness (i) is Subordinated Debt containing subordination provisions no less favorable to the Holders than the subordination provisions of the Indebtedness being refinanced, (ii) does not require principal repayments or sinking fund payments to be made prior to the Stated Maturity of any payments of principal of the Notes and (iii) other- wise conforms to the requirements hereof. For the purpose of determining at any time the Indebtedness that is permitted to be incurred pursuant to any of the foregoing clauses (each, the "specified clause"), there shall be included in each specified clause: (x) all then outstanding Indebtedness that has been incurred pursuant to such specified clause and (y) all then outstanding Indebtedness incurred pursuant to this clause (p) to refinance Indebtedness incurred pursuant to such specified clause and all then outstanding subsequent refinancings thereof. No limitation contained in the foregoing clauses (a) through (p) shall prohibit the Company from incurring Indebtedness pursuant to any other such clause. "Permitted Stores" means (a) during the period from the date hereof through August 2, 1998, seven stores and (b) thereafter, an average of no more than four stores per year during each three-year period ending on the last day of each fiscal year of the Company, with the first such three-year period ending on July 29, 2001. "Person" means any individual, corporation, partnership joint venture, trust, unincorporated organization or any other entity, or any government or any agency or political subdivision thereof. "Plan" has the meaning specified in the first recital of this Indenture. "Predecessor Note" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 306 in exchange for a mutilated security or in lieu of a destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. "Redemption Date", when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture, including as applicable and without duplication, any accrued interest due upon such redemption pursuant to the terms of this Indenture. "Reference Banks" means four major banks in the London interbank market. "Reference Period" means, with respect to any Restricted Payment, the period from the Effective Date through the end of the last full fiscal quarter immediately preceding the date of such Restricted Payment (taken as one accounting period). "Regular Record Date" for the interest payable on any Interest Payment Date means the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer", when used with respect to the Trustee, means any officer assigned to the Corporate Trust Office and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. "Restricted Payments" has the meaning specified in Section 1010. "Retirement" has the meaning specified in Section 1010. "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London Interbank offered rates of major banks). "Revolving Credit Loans" means the Revolving Credit Loans (as defined in the Bank Credit Agreement), or any similar revolving credit facility or swing line facility under the Bank Credit Agreement. "Secondary Notes" has the meaning specified in Section 303. "Securities" means any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities", or any certificates of interest, shares, or partici- pations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing. "Semi-Annual Period" means the period from and including an Interest Payment Date through and including the day next preceding the following Interest Payment Date; provided that the initial Semi-Annual Period commences on the date the Notes are issued. "Senior Fixed Rate Notes" means the Senior Fixed Rate Notes due 2003, created and issued by the Company pursuant to the Senior Fixed Rates Notes Indenture. "Senior Fixed Rate Notes Indebtedness" means the Indebtedness of the Company on the Senior Fixed Rate Notes. "Senior Fixed Rate Notes Indenture" means the Indenture, dated as of the Effective Date, as such indenture may from time to time be amended, renewed, supplemented or otherwise modified, between the Company and Shawmut Bank Connecticut, N.A., as Trustee. "Special Record Date" has the meaning specified in Section 307. "Stated Maturity", when used with respect to any Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable. "Store Opening Costs" means the costs and expenses (including, without limitation, capitalized interest) incurred by the Company in connection with (i) the opening of a new store, including the purchase price or lease expense with respect to the real property on which such store is located and the costs of furniture, fixtures, equipment and inventory used in connection with such store, or (ii) the acquisition of the fee or leasehold interest in the real property on which an existing store is located, together with the costs of furniture, fixtures, equipment and inventory used in connection with such acquired store. "Subordinated Debt" means Indebtedness that ranks junior or is expressly subordinate in right of payment to the Notes upon terms substantially in the form of Exhibit A attached hereto, provided, however, that the definition of "Senior Debt" for the purposes of such Indebtedness may include Indebtedness other than the New Notes. "Subsidiary" of any Person means (i) a corporation a majority of the Voting Stock of which is at the time owned, directly or indirectly, by such Person or by one or more other Subsidiaries, or by such Person and one or more other Subsidiaries or (ii) any other Person (other than a corporation) in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has the power to elect or direct the election of at least a majority of the persons comprising the governing body of such Person. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, until such time as this Indenture is qualified under such Act, and thereafter means such Act as in force at the date on which this Indenture is so qualified, in each case except as provided in Section 905. "U.S. Government Obligations" means direct noncallable obligations of, or non-callable obligations guaranteed by, the United States of America or any agency thereof for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged. "Voting Stock" means stock of the class or classes having general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of a corporation (irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "Working Capital" (which may be a positive or negative amount) means the consolidated current assets (excluding cash and Cash Equivalents) of the Company less the consolidated current liabilities of the Company (excluding the current portion of Indebtedness under the Bank Credit Agreement and of long-term debt). Section 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenants compliance with which consti- tutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certifi- cate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: 1. a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; 2. a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 3. a statement that, in the opinion of each such individual, he or she has made such examination or investi- gation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and 4. a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 104. Acts of Holders. A. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 104A. B. The fact and date of the execution by any person of any such instrument or writing shall be established in any reasonable manner which the Trustee deems sufficient, which shall include but not be limited to, notarization of such instrument. C. The ownership of Notes shall be proved by the Note Register. D. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Note. E. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to sign any instrument evidencing or embodying an Act of Holders. If a record date is fixed, those Persons who were Holders at such record date (or their duly appointed agents), and only those Persons, shall be entitled to sign any such instrument evidencing or embodying an Act of Holders or to revoke any such instrument previously signed, whether or not such Persons continue to be Holders after such record date. Section 105. Notices, Etc., to Trustee and the Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, 1. the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing and hand delivered, mailed first-class, registered or certified with postage prepaid, sent by telecopier or delivered by recognized overnight courier to or with the Trustee at its corporate trust office, located at One State Street, New York, New York 10004, Attention: Corporate Trust Department, or at any other address previously furnished in writing to the Holders, the Company or any other obligor of the Notes by the Trustee, or 2. the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and hand delivered, mailed first-class postage prepaid, sent by telecopier or delivered by recognized overnight courier to the Company, addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company, in any case, Attention: President. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, registered or certified with postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Section 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and hand delivered, mailed first-class postage prepaid, sent by telecopier or delivered by recognized overnight courier to each Holder affected by such event, at its address as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail as may be required by any provision of this Indenture, then any method of giving such notice as shall be reasonably satisfactory to the Trustee shall, under such circumstances, be deemed to be a sufficient giving of such notice. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with the duties imposed by the Trust Indenture Act or another provision which is required or deemed to be included in this Indenture by any of the provisions of the Trust Indenture Act, the imposed duties shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company and any other obligor of the Notes shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. Nothing contained in this Indenture or in the Notes, expressly or impliedly, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF. Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Maturity or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of principal of, or premium (if any) or interest on, the Notes need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Maturity or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date, Maturity or Stated Maturity, as the case may be, if such payment is made on the next succeeding Business Day. Section 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement of this Indenture or any indenture supplemental hereto or of any Note, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation to the Company, either directly or through the Company, or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or direct- ors, as such, of the Company or of any such successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Notes or implied therefrom are hereby expressly waived and released as a condition of, and as consideration for, the execution of this Indenture and the issue of such Notes. Section 115. Counterparts. This Indenture may be executed in any number of counter- parts 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. ARTICLE TWO FORMS OF NOTES Section 201. Forms Generally. The Notes and the Trustee's certificates of authentica- tion thereon shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Inden- ture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods on engraved steel borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes, as evidenced by their execution thereof. Section 202. Form of Face of Note. KASH N' KARRY FOOD STORES, INC. Senior Floating Rate Notes due 2003 No. ____ $__________ Kash n' Karry Food Stores, Inc., a Delaware corporation (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on February 1, 2003, and to pay interest thereon from December 29, 1994 or from the most recent Interest Payment Date to which interest has been paid semi-annually on February 1 and August 1 in each year, commencing August 1, 1995, at the rate of LIBOR (as defined below) plus 2% per annum, until the principal hereof is paid or made available for payment. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. "LIBOR" means for each Semi-Annual Period during which any Notes are Outstanding, the rate determined by the Company equal to the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%) of the offered rates for deposits in U.S. dollars for a period of six months, as set forth on the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the Interest Rate Determination Date for such Semi-Annual Period; provided, that if fewer than two offered rates appear on the Reuters Screen LIBO Page. LIBOR for such Semi-Annual Period shall mean the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100,000 of 1%) of the interest rates per annum at which deposits in a Representative Amount in U.S. dollars are offered by the Reference Banks to prime banks in London interbank market for a period of six months as of 11:00 a.m., London time, on the Interest Rate Determination Date for such Semi-Annual Period. If on any Interest Rate Determination Date at least two of the Reference Banks provide such offered quotations, then LIBOR for such Semi-Annual Period shall be determined in accordance with the preceding sentence on the basis of the offered quotation of those Reference Banks providing such quotation, provided, that, if less than two of the Reference Banks are so quoting such interest rate as mentioned above, then LIBOR for such Semi-Annual Period shall be deemed to be LIBOR for the next preceding Semi-Annual Period. All U.S. dollar amounts used in or resulting from the calculations set forth in this paragraph will be rounded to the nearest cent (with one half cent being rounded up). For purposes of this definition "Representative Amount" means an amount that is representative for a single transaction in the relevant market at the relevant time. The interest so payable on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid will forthwith cease to be payable to the Holder so registered on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. On or prior to August 1, 1995, the Company may, at its option and in its sole discretion, in lieu of paying interest in cash, issue additional Notes (the "Secondary Notes") in an aggregate principal amount equal to the amount of cash interest due and payable on any Interest Payment Date, provided that the Company may not issue Secondary Notes in lieu of paying interest in cash if an Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing immediately prior to or as a result of such issuance of Secondary Notes. In any such case, the Trustee or any Authenticating Agent (upon Company Order given not less than 10 nor more than 45 days prior to such Interest Payment Date) shall authenticate for original issue Secondary Notes in an aggregate principal amount equal to the amount of cash interest due and payable on such Interest Payment Date. Such Company Order shall specify the amount of the Notes to be authenticated and the date on which such Secondary Notes are to be authenticated. Each issuance of Secondary Notes in lieu of payment of interest in cash shall be made pro rata with respect to the outstanding Notes; provided, however, that the Company may at its option pay cash in lieu of issuing Secondary Notes in any denomination of less than $100. Subject to the provisions of the immediately preceding paragraph, payment of the principal of, premium, if any, and interest on, and the Change of Control Purchase Price, if any, and Redemption Price with respect to, this Note will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York or at any other office or agency maintained by the Company for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Notwithstanding the foregoing, at the option of any Holder of at least $1,000,000 aggregate principal amount of Notes upon written notice to the Company at least 30 days prior to the respective payment date, but subject to the immediately preceding paragraph, payments of principal, premium, if any, and interest will be made by wire transfer to an account maintained by such Holder with a bank which is a member of the Federal Reserve System. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, or by the Authenticating Agent appointed as provided in the Indenture, by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instru- ment to be duly executed under its corporate seal. Dated: KASH N' KARRY FOOD STORES, INC. By_________________________________ [SEAL] Attest: ____________________________ Authorized Signatory Section 203. Form of Reverse of Note. This Note is one of a duly authorized issue of Notes of the Company designated as its Senior Floating Rate Notes due 2003 (herein called the "Notes"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $135,000,000 issued and to be issued under an Indenture, dated as of December 29, 1994 (herein called the "Indenture"), between the Company and IBJ Schroder Bank & Trust Company, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. The Notes are general unsecured obligations of the Company. If at any time either (a) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall beneficially own at least 50% of the total voting stock of the Company or (b) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act, as amended, shall succeed in having a sufficient number of its nominees elected to the Board of Directors of the Company to constitute a majority of the Board of Directors of the Company (each, a "Change of Control"), then the Company shall make an offer to repurchase any or all of the Outstanding Notes at a price, payable in cash, in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Control Purchase Date (the "Change of Control Purchase Price") in accordance with the procedures set forth in the Indenture; provided that such repur- chase shall be conditioned upon receipt by the Company of Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes. The Notes are subject to redemption upon not less than 30 nor more than 60 days' notice by first-class mail, at any time, as a whole or in part, at the election of the Company, at 100% of the principal amount thereof together, in the case of any such redemption, with accrued and unpaid interest, if any, to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, of record at the close of business on the relevant Regular Record Dates referred to on the face hereof, all as provided in the Indenture. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof, if any, will be issued in the name of the Holder hereof upon the cancellation hereof. Notes may be redeemed in part in integral multiples of $1,000 only. The Notes to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price herein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. If, at any time prior to maturity hereof, the Company engages in an Asset Sale which results in Excess Proceeds, then at the option of the Holder, this Note shall be subject to repurchase by the Company out of such Excess Proceeds pursuant to the Indenture. If an Event of Default shall occur and be continuing, the principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions (including certain amendments permitted without the consent of any Holders) as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and the Notes and certain past defaults under the Inden- ture and their consequences. Any such consent or waiver by or on behalf of the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company or other obligor of the Notes, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on this Note at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York or at any other office or agency maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar, duly executed by the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof, provided, however, that if the Company elects to pay interest to the Holder hereof by issuing Secondary Notes and the amount of such interest is not an integral multiple of $1,000, the Company may issue to the Holder hereof a Secondary Note in a denomination of less than $1,000 and in a principal amount equal to the excess of the amount of such interest over an integral multiple of $1,000, and provided further that if the aggregate principal amount of Notes to be issued to any beneficial holder of the Company's 12 3/8% Senior Notes due 1999 or the Company's Senior Floating Rate Notes due August 2, 1996 on December 29, 1994, pursuant to the Plan (whether on account of interest accrued thereon at the contract rate from February 3, 1994 and February 2, 1994, respectively, through but not including November 9, 1994, or on account of an election of such holder to receive both Notes and Senior Fixed Rate Notes, or both) is not an integral multiple of $1,000, the Company may issue to such beneficial holder a Note in a denomination of less than $1,000 and in a principal amount equal to the excess of such aggregate principal amount over an integral multiple of $1,000. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by a Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to and at the time of due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not any amount due in respect of this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Note which are defined in the Indenture and not otherwise defined herein shall have the meanings assigned to them in the Indenture. Section 204. Form of Trustee's Certificate of Authentication. Certificate of Authentication This is one of the Senior Floating Rate Notes due 2003 referred to in the within-mentioned Indenture. Dated: , as Trustee By_______________________ Authorized Signatory Section 205. Form of Assignment. To assign this Note, fill in the form below: I or we assign and transfer this Note to: -------------------------- : : -------------------------- (Insert assignee's social security or tax ID no.) _____________________________________ _____________________________________ _____________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _____________________________________ _____________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. Date:______________ Your Signature:_______________________* (Sign exactly as your name appears on the other side of this Security) * Your signature must be guaranteed by an eligible guarantor institution which is a member of the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Signature Program. Section 206. Form of Option of Holder to Elect Redemption. If you wish to elect to have this Note purchased by the Company pursuant to Section 1013 or Section 1109 of the Indenture, check the box: ____ $___________ Date:___________________ Signature _________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: Member firm of an eligible guarantor institution which is a member of the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Signature Program. ARTICLE THREE THE NOTES Section 301. Title and Terms. The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is limited (except as otherwise provided in this Indenture or the Plan) to $135,000,000, except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906, 1013 or 1108. The Notes shall be known and designated as the "Senior Floating Rate Notes due 2003" of the Company. Their Stated Maturity shall be February 1, 2003, and they shall bear interest at the rate of LIBOR plus 2% per annum, from the date of issuance or from the most recent Interest Payment Date to which interest has been paid, payable semiannually on February 1 and August 1 in each year, commencing August 1, 1995 until the principal thereof is paid or made available for payment. On or prior to August 1, 1995, the Company may, at its option and in its sole discretion, in lieu of paying interest in cash, issue additional Notes (the "Secondary Notes") in an aggregate principal amount equal to the amount of cash interest due and payable on any Interest Payment Date, provided that the Company may not issue Secondary Notes in lieu of paying interest in cash if an Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing immediately prior to or as a result of such issuance of Secondary Notes. In any such case, the Trustee or any Authenticating Agent (upon Company Order given not less than 5 nor more than 45 days prior to such Interest Payment Date) shall authenticate for original issue Secondary Notes in an aggregate principal amount equal to the amount of cash interest due and payable on such Interest Payment Date. Such Company Order shall specify the amount of the Notes to be authenticated and the date on which such Secondary Notes are to be authenticated. Each issuance of Secondary Notes in lieu of payment of interest in cash shall be made pro rata with respect to the outstanding Notes; provided, however, that the Company may at its option pay cash in lieu of issuing Secondary Notes in any denomination of less than $100. The principal of, premium, if any, and interest on the Notes shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York maintained for such purpose or at any other office or agency maintained by the Company for such purpose; provided, however, that, at the option of the Company and subject to the immediately preceding paragraph, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Notwithstanding the foregoing, at the option of any Holder of at least $1,000,000 aggregate principal amount of Notes upon written notice to the Company at least 30 days prior to the respective payment date, but subject to the immediately preceding paragraph, payments of principal, premium, if any, and interest will be made by wire transfer to an account maintained by such Holder with a bank which is a member of the Federal Reserve System. Section 302. Denominations. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof, provided, however, that if the Company elects to pay interest to the Holder of a Note by issuing Secondary Notes and the amount of such interest is not an integral multiple of $1,000, the Company may issue to such Holder a Secondary Note in a denomination of less than $1,000 and in a principal amount equal to the excess of the amount of such interest over an integral multiple of $1,000, and provided further that if the aggregate principal amount of Notes to be issued to any beneficial holder of the Company's 12 3/8% Senior Notes due 1999 or the Company's Senior Floating Rate Notes due August 2, 1996 on December 29, 1994, pursuant to the Plan (whether on account of interest accrued thereon at the contract rate from February 3, 1994 and February 2, 1994, respectively, through but not including November 9, 1994, or on account of an election of such holder to receive both Notes and Senior Fixed Rate Notes, or both) is not an integral multiple of $1,000, the Company may issue to such beneficial holder a Note in a denomination of less than $1,000 and in a principal amount equal to the excess of such aggregate principal amount over an integral multiple of $1,000. Section 303. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents under its corporate seal, and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authenti- cation and delivery of such Notes or did not hold such offices at the date of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes as provided in this Indenture and not otherwise. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly au- thenticated and delivered hereunder. In case the Company, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer or lease substantially all of its properties and assets to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer or lease as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Notes authenticated or delivered prior to such consolidation, merger, conveyance, transfer or lease may, from time to time, at the request of the successor Person, be exchanged for other Notes executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee or Authenticating Agent, upon Company Request of the successor Person, shall authenticate and deliver Notes as specified in such request for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Notes, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time Outstanding for Notes authenticated and delivered in such new name. Section 304. Temporary Notes. Pending the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at any office or agency of the Company designated pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, a like principal amount of defini- tive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes endorsed thereon. Section 305. Registration, Registration of Transfer and Ex- change. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. The Note Registrar may resign as Note Registrar at any time by giving written notice thereof to the Company. Upon surrender for registration of transfer of any Note at an office or agency of the Company designated pursuant to Section 1002 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. At the option of the Holder, Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the ex- change is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder thereof or its attorney duly authorized in writing. No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 304, the second sentence of Section 906 or Sections 1013 or 1108 not involving any transfer. The Company shall not be required to (i) issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes selected for redemption and ending at the close of business on the day of such mailing, or (ii) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portions of any Note being redeemed in part. Section 306. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note, of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be reasonably required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section, the Company may require the payment of its reasonable expenses (including the reasonable fees and expenses of the Trustee) connected therewith and any documentary, stamp or similar issue or transfer tax or governmental charge imposed in relation to such issuance. Every new Note issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. Section 307. Payment of Interest; Interest Rights Preserved. Interest on any Note that is payable on any Interest Payment Date shall be paid by the Paying Agent to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest. Any interest on any Note that is payable, but is not punctually paid, on any Interest Payment Date and interest on such defaulted interest at the then applicable interest rate borne by the Notes plus 2%, to the extent lawful (such defaulted interest and interest thereon herein collectively called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date notwithstanding the fact that such Holder was a Holder on such Regular Record Date, and such Defaulted Interest may be paid by the Company, at its election, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and (subject to the provisions of the third paragraph of Section 301) at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this Clause. Thereupon the Trustee shall fix a record date (the "Special Record Date") for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 5 days after the re- ceipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at its address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the pro- posed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may then be listed, and upon such notice as may be required by such exchange, if, after not less than five days' notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee (acting reasonably). Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 308. Persons Deemed Owners. Prior to and at the time of due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of, premium, if any, and (subject to Section 307) interest on such Note and for all other purposes whatsoever, whether or not any payment due in respect of such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 309. Cancellation. All Notes surrendered for payment, purchase, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder, which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be returned promptly to the Company upon its written request. Section 310. Computation of Interest. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. Section 311. CUSIP Numbers. The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no repre- sentation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction, Discharge of the Indenture and De- feasance of the Notes. The Company shall be deemed to have paid and discharged the entire indebtedness on the Notes and the provisions of this Indenture shall cease to be of further effect (subject to this Section 401 and Section 403), if: (1) The Company irrevocably deposits in trust with the Trustee for the benefit of the Holders, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trustee, cash in United States dollars, U.S. Government Obligations, or a combination thereof, in an amount sufficient (in the opinion of a nationally recognized firm of independent public accountants) to pay the principal of, premium, if any, and each installment of principal, premium (if any) and interest on the Notes then outstanding at the Maturity or the Redemp- tion Date, as the case may be, of such principal, premium, if any, or installment of principal, premium (if any) or interest in accordance with the terms of the Indenture and of the Notes; (2) Such deposits shall not cause the Trustee to have a "conflicting interest" as defined in and for purposes of the Trust Indenture Act; (3) Such deposit will not result in a default under this Indenture or a breach or violation of, or constitute a default under, any other material instrument to which either the Company or any Subsidiary is a party or by which it or its property is bound; (4) The Company shall have delivered to the Trustee an opinion of independent counsel reasonably satisfactory to the Trustee based on the fact that (x) a ruling has been published by the Internal Revenue Service or (y) since the date hereof, there has been a change in the applicable Federal income tax law, in either case, to the effect that, and such opinion shall confirm that, the deposit, defeasance and discharge will not be deemed, or result in, a taxable event to the Holders of the Notes and the Holders will be subject to income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; (5) The Company shall not be subject to regu- lation pursuant to the provisions of the Investment Company Act of 1940; (6) The Company shall have delivered to the Trustee an opinion of independent counsel to the effect that after the passage of 90 days (or any greater period of time in which any such deposit of trust funds may remain subject to Bankruptcy Laws insofar as those laws apply to the Company) following the deposit of the trust funds, such funds will not be subject to any Bankruptcy Laws affecting creditors' rights generally; (7) The Company shall have delivered to the Trustee an opinion of independent counsel to the effect that the Holders of the Notes will have a valid, perfected and unavoidable (under applicable Bankruptcy Laws), subject to the passage of time referred to in clause (6), first- priority security interest in the trust funds; (8) No Event of Default, or an event or condition which with notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing (A) on the date of the deposit of such trust funds with the Trustee or (B) during the period ending on the 91st day (or one day after such other greater period of time in which any such deposit of trust funds may remain subject to bankruptcy or insolvency laws) after such date; and (9) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel (who may be outside counsel to the Company), each in form and substance satisfactory to the Trustee, each stating that all conditions precedent specified herein relating to the satisfaction and discharge contemplated by this Section 401 have been complied with. In the event all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. In the event that the Company takes the necessary action to comply with the provisions described in this Section 401 and the Notes are declared due and payable because of the occurrence of an Event of Default, the Company will remain liable for all amounts due on the Notes at the time of acceleration resulting from such Event of Default in excess of the amount of money and U.S. Government Obligations deposited with the Trustee pursuant to this Section 401 at the time of such acceleration. Section 402. Termination of Obligations upon Cancellation of the Notes. In addition to the Company's rights under Section 401, the Company may terminate all of its obligations under this Indenture (subject to Section 403) when: (1) all Notes theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306) have been delivered to the Trustee for cancellation; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel (who may be outside counsel to the Company), each in form and substance satisfactory to the Trustee, each stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with. Section 403. Survival of Certain Obligations. Notwithstanding the satisfaction and discharge of this Indenture and of the Notes referred to in Sections 401 and 402, the respective obligations of the Company and the Trustee under Sections 303, 305, 306, 307, 405, 406, 407, 607, 609, 610, 701, 1001, 1002, 1003 and 1101 shall survive until the Notes are no longer outstanding, and thereafter the obligations of the Company and the Trustee under Sections 305, 405, 406, 407 and 607 shall survive. Nothing contained in this Article Four shall abrogate any of the rights (including, without limitation, those set forth in Article 104), obligations or duties of the Trustee under this Indenture. Section 404. Acknowledgement of Discharge by Trustee. After (i) the conditions of Sections 401 or 402 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in Sections 401 or 402, as applicable, relating to the satisfaction and discharge of this Indenture have been com- plied with, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in Section 403. Section 405. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment to the persons entitled thereto (as determined by the Trustee), either directly or through any Paying Agent as the Trustee may determine, of the principal, premium, if any, and interest for whose payment such money has been deposited with the Trustee. Section 406. Repayment to the Company. Upon termination of the trust established pursuant to Sections 401 or 402, the Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or U.S. Government Obligations held by them. Section 407. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Sections 401 or 402 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Sections 401 or 402 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Govern- ment obligations in accordance with Sections 401 or 402; provided, however, that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government obligations held by the Trustee or Paying Agent. Section 408. Indemnity. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 401 or the principal or interest received in respect of such obligations, and shall pay and indemnify the Holders against any tax, fee or charge that would not have been imposed or assessed but for the deposit of cash or U.S. Government Obligations pursuant to Section 401. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of any such default for a period of 30 days; or (2) default in the payment of the principal of, or premium, if any, on any Note at its Maturity; or (3) default in the performance of, or breach of, any covenant, agreement or warranty of the Company contained in this Indenture (other than a default in the performance of any covenant, agreement or warranty, the breach of which is specifically dealt with elsewhere in this Section 501), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by Holders of at least 40% in aggregate principal amount of the Outstanding Notes, a written notice specifying such default or breach, requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) default by the Company or any Subsidiary thereof in the payment of any principal of, or premium, if any, or interest due (and such default, with respect to payments of interest, shall continue after the applicable grace period, if any) on any Indebtedness of the Company or such Subsidiary in excess of $5,000,000 in the aggregate, or the holder of any lien securing Indebtedness of $5,000,000 or more shall have commenced foreclosure of such lien upon property of the Company or such Subsidiary; or (5) an event of default as defined in any inden- ture, loan agreement, mortgage, bond, promissory note or other agreement or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness of the Company or any Subsidiary thereof in excess of $5,000,000 in the aggregate shall happen and shall result in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; or (6) final judgments or orders rendered against the Company or any Subsidiary thereof which require the payment in money, either individually or in an aggregate amount, that is more than $5,000,000 and there shall have been a period of 60 days during which a stay of the enforcement of such judgment or order, by reason of pending appeal or otherwise, was not in effect; or (7) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Material Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Material Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Material Subsidiary under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Material Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 30 consecutive days; or (8) the commencement by the Company or any Material Subsidiary of a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or any Material Subsidiary to the entry of a decree or order for relief in respect of the Company or such Material Subsidiary in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing of the Company or any Material Subsidiary of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state law, or the consent by the Company or any Material Subsidiary to the filing of such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or such Material Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the adoption by the Board of Directors (or any committee thereof) of the Company or any Material Subsidiary of any resolution to approve any of the foregoing. Section 502. Acceleration of Maturity Date; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 501(7) or (8)) occurs and is continuing, then, the Trustee or the Holders of not less than 33-1/3% in aggregate principal amount of the Outstanding Notes, by a notice in writing to the Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), in the case of an Event of Default described in clause (1) or (2) above and 40% in aggregate principal amount of the Outstanding Notes in the case of any other Event of Default, may declare all of the principal of all the Notes (or the Change of Control Purchase Price if the Event of Default includes failure to pay the Change of Control Purchase Price), determined as set forth below, together with accrued interest thereon, to be due and payable immediately, and upon any such declaration such amount shall become due and payable. If an Event of Default specified in Section 501(7) or (8) occurs and is continuing, then the principal and accrued interest of all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in aggregate principal amount of the Outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (1) all overdue interest on all Notes, (2) the principal of, and premium, if any, on any Notes, which would become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes, (3) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes plus 2%, (4) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and (b) all Events of Default, other than the nonpayment of the principal of the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. Notwithstanding the foregoing, in the event of a declaration of acceleration in respect of the Notes because of an Event of Default specified in Section 501(4) or (5) shall have occurred and be continuing, such declaration of acceleration shall be automatically annulled if the past due indebtedness that is the subject of such Event of Default has been discharged or the holders thereof have rescinded their declaration of accelera- tion in respect of such Indebtedness or, with respect to an Event of Default consisting solely of the commencement of a foreclosure proceeding as described in Section 501(4) (a "Foreclosure Default"), if such foreclosure shall have been stayed or the Company shall have obtained a bond in the full amount claimed in such foreclosure proceeding, and written notice of such discharge, rescission, stay or bond, as the case may be, shall have been given to the Trustee by the Company and by the holders of such Indebtedness or a trustee, fiduciary or agent for such holders, within 60 days after such declaration of acceleration in respect of the Notes, and no other Event of Default has occurred during such 60-day period which has not been cured or waived during such period. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of, or premium, if any, on any Note at the Maturity thereof, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal, premium, if any, and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium, if any, and on any overdue interest, at the rate borne by the Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. The rights and remedies under this Section 503 are in addition to the other rights and remedies under this Article Five. Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insol- vency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal and premium, if any, and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, liquidation, arrangement, adjustment, or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 505. Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. Section Any money collected by the Trustee pursuant to this Article Five or otherwise on behalf of the Holders or the Trustee pursuant to this Article or through any proceeding or any amendment or restructuring in anticipation or in lieu of any proceeding contemplated by this Article shall be applied, subject to applicable laws, in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, premium, if any, or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of, and premium, if any, and interest on, the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium, if any, and interest, respectively; and THIRD: To the payment of the remainder, if any, to the Company, its successors or assigns or to whomsoever may be lawfully entitled thereto, or as a court of competent juris- diction may direct. Section 507. Limitation on Suits. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 33-1/3% in the case of an Event of Default described in Section 501(l), (2) or (3) and 40% in the case of any other Event of Default in principal amount of the outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Defaults in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Notes; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Notes shall have the right, which is absolute and unconditional, to receive payment of the principal of, and premium, if any, and (subject to Section 307) interest on, such Note on the respective Stated Maturities of such payments as expressed in such Notes (and in the case of redemption, the Redemption Price on the applicable Redemption Date and in the case of a Change of Control, the Change of Control Purchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, (a) the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and (b) thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 512. Control by Holders. Subject to Section 601, the Holders of a majority in aggregate principal amount of the Outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) subject to the provisions of Section 315 of the Trust Indenture Act, the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. The Company shall set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted by this Indenture. Unless the Company provides otherwise, in the form of an Officers' Certificate provided to the Trustee, such record date shall be 30 days prior to the first such vote or solicitation of such consent. Section 513. Waiver of Past Default. The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may, on behalf of all Holders, waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of, premium, if any, or interest on, any Security as specified in clauses (1), (2) or (3) of Section 501, or (2) in respect of a covenant or provision hereof which, under Article Nine, cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Notes, or to any suit instituted by any Holder for enforcement of the payment of principal of, or premium (if any) or interest on, any Note on or after the respective Stated Maturities expressed in such Note (or, in the case of redemption, on or after the Redemption Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith or willful misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which, by any provision hereof, are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Subsection (c) shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Notes re- lating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. (d) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder known to the Trustee, the Trustee shall transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) each Holder who has, within the two years preceding such transmission, filed its name and address with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any Note at its Maturity, Redemption Date or otherwise or in the payment of the Change of Control Purchase Price on the Change of Control Purchase Date, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the character specified in Section 501(3), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certi- ficate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution thereof; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate or an Opinion of Counsel or both; (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 604. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1, if any, supplied to the Company will be true and accurate subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof. Section 605. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Section 612, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. Section 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee shall from time to time agree upon in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its non-employee agents and counsel), except to the extent any such expense, disbursement or advance may be attributable to its negligence, willful misconduct or bad faith; and (3) to indemnify each of the Trustee or any predecessor Trustee for, and to hold it harmless against, any and all loss, damage, claims, liability or expense, including taxes (other than taxes based upon or determined by the income of the Trustee), except to the extent arising out of negligence, willful misconduct or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall have a claim prior to the Notes as to all property and funds properly held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Notes. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(7) or Section 501(8), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture. Section 608. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $75,000,000 and subject to supervision or examination by Federal or state authority and, to the extent there is such an institution eligible, and willing to serve, having its Corporate Trust Office in the City of Los Angeles, California or the City of New York, New York. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six. The Trustee shall comply with Sections 310(a)(5) and 310(b) of the Trust Indenture Act. Section 609. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 610. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in aggregate principal amount of the outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall cease to be eligible under Section 608 and shall fail to resign after written request therefor by the Company or by any Holder, or (2) the Trustee shall become incapable of acting or shall be judged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. If an instrument of acceptance by a Successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of removal, the Trustee being removed may petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Section 610. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges pursuant to Section 607, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article Six. Section 611. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 612. Preferential Collection of Claims Against Company. The Trustee shall comply with Trust Indenture Act 311(a), excluding any creditor relationship listed in Trust Indenture Act 311(b). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act 311(a) to the extent indicated. Section 613. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents acceptable to the Company which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon original issue and upon exchange, registration of transfer or partial redemption or pursuant to Section 306, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. The Company agrees to pay each Authenticating Agent, as appointed from time to time, such reasonable fees as may be agreed to in writing by the Company, for services rendered under this Section 613. If an appointment is made pursuant to this Section 613, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Notes described in the within- mentioned Indenture. , as Trustee By: As Authenticating Agent By: Authorized Officer Section 614. Paying Agent. (a) There shall at all times be a Paying Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State and having a combined capital and surplus of at least $75,000,000, to the extent there is such an institution eligible and willing to serve. If there is no such institution eligible and willing to serve, the Company may act as its own Paying Agent. (b) The Paying Agent may resign at any time by giving written notice thereof to the Company. The Company, by a Board Resolution and upon giving written notice thereof to the Paying Agent, may remove the Paying Agent at any time. (c) If the Paying Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Paying Agent for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Paying Agent. (d) The Company shall give notice of each resignation and each removal of the Paying Agent and each appointment of a successor Paying Agent by mailing written notice of such event by first-class mail, postage prepaid, to the Trustee. Each notice shall include the name and address of the successor Paying Agent. (e) The Trustee is hereby initially appointed "Paying Agent". ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. (a) The Company shall furnish or cause to be furnished to the Trustee (i) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date, and (ii) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list in similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Note Registrar, no such list need be furnished. (b) If and whenever the Company or any Affiliate acquires any Notes, the Company shall promptly, and in any event within 15 days, provide the Trustee with written notice of such acquisition, the aggregate principal amount acquired, the Holder from whom such Notes were acquired and the date of such acquisi- tion. Section 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) If one Holder (herein referred to as an "ap- plicant") applies in writing to the Trustee, and furnishes to the Trustee reasonable proof that such applicant has owned a Note for a period of at least six months preceding the date of such application, and such application states that the applicant desires to communicate with other Holders with respect to their rights under this Indenture or under the Notes and is accompanied by a copy of the form of proxy or other communication which such applicant proposes to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either (i) afford to such applicant access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicant as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accor- dance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicant access to such information, the Trustee shall, upon the written request of such applicant, mail to each Holder whose name and address appears in the information preserved at the time by the Trustee in accordance with Section 702(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicant and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such a mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender. (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). Section 703. Reports by Trustee. This Section 703 shall not be operative as a part of this Indenture until this Indenture is qualified under the Trust Indenture Act, and, until such qualification, this Indenture shall be construed as if this Section 703 were not contained herein. (a) Within 60 days after May 15 of each year commencing with the year 1995, the Trustee shall transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) all Holders who have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, a brief report dated as of such May 15 with respect to: (1) its eligibility under Section 608 and its qualifications under the Trust Indenture Act or, in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under said statute, a written statement to such effect; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10) of Trust Indenture Act 310(b); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Notes, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of 1% of the principal amount of the Notes outstanding on the date of such report; (4) any change to the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Notes) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 612; (5) any change to the property and funds physically in the possession of the Trustee as such on the date of such report; (6) any additional issue of Notes which the Trustee has not previously reported; and (7) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Notes, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602. (b) The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Note Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section 703 (or if no such report has yet been so transmitted, since the date of execution of this Inden- ture) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Notes, on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this subsection (b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Notes outstanding at such time, such report to be transmitted within 90 days after such time. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Notes are listed, with the Commission and with the Company. The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 704. Reports by Company. (a) The Company shall: (1) file with the Commission copies of the audited annual reports, unaudited quarterly reports and other information, documents and reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such Sections, then the Company shall file with the Commission, in accordance with rules and regulations prescribed from time to time by the Commission and to the extent permitted under the Exchange Act, such of the supplementary and periodic information, documents and reports which the Company would have been required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act if the Company had a class of securities listed and registered on a national securities exchange; and in either of the foregoing cases the Company (a) shall file such information, documents and reports with the Commission on or prior to the respective dates by which the Company is or would have been required so to file such documents, and (b) shall deliver to the Trustee copies of such information, documents and reports which the Company is required to file with the Commission (or would have been required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act if the Company had a class of securities listed and registered on a national securities exchange) within 15 days after the Company is (or would have been) required to file the same with the Commission; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to (i) all Holders, as their names and addresses appear in the Note Register, (ii) all Holders who have, within the two years preceding such trans- mission, filed their name and address with the Trustee for that purpose, and (iii) all Holders whose names and addresses have been furnished to or obtained by the Trustee pursuant to Section 701, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. (b) If filing such information, documents or reports by the Company with the Commission is not permitted under the Exchange Act or the rules and regulations prescribed from time to time by the Commission thereunder, the Company shall promptly upon written request supply copies of such information, documents or reports to any Holder and to any prospective purchaser of a Note designated by a Holder unless the provision of such information shall no longer be required by law to effect resales of the Notes without registration under the Securities Act. Section 705. Certain Obligations of the Trustee. (a) The Trustee, within five Business Days of its receipt thereof, will mail to each Holder, as its name and address appears in the Note Register, to the extent required by the Indenture, copies of all notices, reports, financial statements, certificates and other documents received by the Trustee from the Company under this Indenture. (b) The Trustee, concurrently with any notice or other document provided by the Trustee to the Company hereunder, will mail to each Holder as its name appears on the Note Register, to the extent required by the Indenture, a copy of such notice or other document. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. The Company May Consolidate, etc., Only on Certain Terms. The Company shall not, in a single transaction or a series of related transactions, directly or indirectly (i) consolidate with or merge with or into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person or permit any Subsidiaries to enter into any such transaction or transactions if such transaction or transactions in the aggregate would result in a sale of all or substantially all of the assets of the Company and any Sub- sidiaries on a consolidated basis or (ii) adopt a plan of liquidation unless: (a) either (1) the Company shall be the continuing corporation or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be a corporation, partnership or trust organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all the Notes and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such trans- action (and treating any Indebtedness which becomes an obligation of the Company or a Subsidiary of the Company in connection with or as a result of such transaction as having been incurred at the time of such transaction), the Company (in the case of clause (1) of Subsection (a) above) or such Person (in the case of clause (2) thereof) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction; (c) immediately after giving effect to such trans- action (and treating any Indebtedness which becomes an obligation of the Company or a Subsidiary of the Company in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Event of Default under the Indenture, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; (d) immediately after giving effect to any such transaction on a pro forma basis, the Fixed Charge Coverage Ratio of the surviving entity is at least 1:1; provided, that, if the Fixed Charge Coverage Ratio of the Company is within the range set forth in Column A below, then the Fixed Charge Coverage Ratio of the surviving entity, shall be at least equal to the percentage of the Fixed Charge Coverage Ratio of the Company set forth in Column B below: (A) (B) 1.1111:1 to 1.9999:1......................... 90% 2:1 to 2.9999:1............................. 80% 3:1 to 3.9999:1............................. 70% 4:1 to 4.9999:1............................. 60% 5:1 or more.................................. 50% and provided, further, that if the Fixed Charge Coverage Ratio of the surviving entity is 3:1 or more, the calculation in the preceding proviso shall be inapplicable and such transaction shall be deemed to have complied with the requirements of such provision; and (e) the Company or such Person shall have delivered to the Trustee an Officers' Certificate stating that such con- solidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been satisfied. Section 802. Successor Substituted for the Company. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any sale, lease, transfer or other conveyance of all or substantially all of the assets of the Company in accordance with Section 801, the surviving entity shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; when a successor corporation assumes all of the obligations of the Company hereunder and under the Notes, in accordance with Section 801, the predecessor shall be released from such obligations. ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holder, the Company, in each case when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the obligations of the Company herein and in the Notes, in accordance with Article Eight; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action pursuant to this clause (3) shall not adversely affect the interests of the Holders; or (4) to evidence, and provide for the acceptance of, the appointment of a successor Trustee hereunder. Section 902. Amendments, Supplemental Indentures and Waivers with Consent of Holders. Subject to Section 508, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by Board Resolution, and the Trustee may amend this Indenture or enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modify- ing in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall without the consent of the Holder of each Outstanding Note affected thereby: (1) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the rate of interest thereon, or change the place of payment where, or the coin or currency in which, the principal of any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or alter the redemption provisions hereof in a manner which is adverse to any Holder, or (2) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 1109, including amending, changing or modifying any of the definitions with respect thereto, or (3) reduce the percentage in principal amount of Outstanding Notes, the consent of whose Holders is required for any such amendment, supplemental indenture or waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (4) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, supplemental indenture or waiver, but it shall be sufficient if such Act shall approve the substance thereof. After an amendment, supplemental indenture or waiver under this Section becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplemental indenture or waiver. Any failure of the Company to mail such notice, or defect therein, shall not, however, in any way impair or affect the validity of such amendment, supplemental indenture or waiver. Section 903. Execution of Amendment or Supplemental Indentures. In executing, or accepting the additional trusts created by, any amendment or supplemental indenture permitted by this Article Nine or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel or Officers Certificate or both stating that the execution of such amendment or supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such amendment or supplemental indenture which adversely affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Amendment or Supplemental Indentures. Upon the execution of any amendment or supplemental indenture under this Article Nine, this Indenture shall be modified in accordance therewith, and such amendment or supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every amendment or supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 906. Reference in Notes to Amendments or Supplemental Indentures. Notes authenticated and delivered after the execution of any amendment or supplemental indenture pursuant to this Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplemental indenture may be prepared and executed by the Company, and authenticated and made available for delivery by the Trustee in exchange for Outstanding Notes. ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium and Interest. The Company will duly and punctually pay the principal of, premium, if any, and interest on, the Notes and the Redemption Price and Change of Control Purchase Price as and when due, in accordance with the terms of the Notes and this Indenture. The Company shall pay interest on overdue amounts at the rate set forth in paragraph 1 of the Notes, and it shall pay interest on overdue interest at the same rate compounded semi- annually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue. Section 1002. Maintenance of Office or Agency. The Company shall maintain in the City of New York an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon on the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presenta- tions, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside the City of New York) where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 1003. Money for Note Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it shall, on or before each due date of the principal of, premium, if any, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal, premium, if any, or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act; provided, that, with respect to any such sums, such trust shall arise and be enforceable only on and after the date on which payment is due with regard to such sums; and only to the extent payment is then due and only as to funds actually segregated and appropriated to such payments. Whenever the Company shall have one or more Paying Agents, it shall, on or prior to each due date of the principal of, premium, if any, or interest on, any Note, deposit with a Paying Agent a sum sufficient to pay the principal, premium, if any, or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act. The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall: (1) hold all sums held by it for the payment of the principal of, premium, if any, or interest on, Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal, premium, if any, or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may, at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, be or being required to make any such repayment, may, at the expense of the Company, cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Company. Section 1004. Statements of Officers of the Company as to De- fault; Notice of Default. (a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company, as the case may be, a certificate, signed by the principal executive officer and by either the principal financial officer or the principal accounting officer, stating that such officers have conducted or supervised a review of the activities of the Company and its Subsidiaries and of performance under this Indenture and whether or not to the best knowledge of the signers thereof the Company has fulfilled all of its obligations under this Indenture or is in default (without regard to periods of grace or re- quirements of notice) in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. (b) The Company shall file with the Trustee written notice of the occurrence of any default or Event of Default or event or condition which with notice or the lapse of time or both would become an Event of Default within five Business Days of its becoming aware of any such default, Event of Default or event or condition. Section 1005. Existence. Subject to Article Eight, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises of the Company and each Subsidiary thereof; provided, however, that the Company shall not be required to preserve any such right or franchise if its Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders; provided, further, that any Subsidiary of the Company with a net worth greater than zero may consolidate with, merge into, or transfer or distribute all or part of its properties and assets to, the Company or any Subsidiary thereof. Section 1006. Maintenance of Properties; Insurance. (a) The Company shall cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 1006 shall prevent the Company from dis- continuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders. (b) The Company will at all times keep all of its and its Subsidiaries' properties which are of an insurable nature insured with insurers, believed by the Company to be responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties. In lieu of or supplemental to such insurance the Company may adopt such other plan or method of protection, whether by the establishment of an insurance fund or reserve to be held and applied to make good losses from casualties, or otherwise, and conforming to the practices of similar corporations maintaining systems of self-insurance, as may be determined by the Board of Directors. Section 1007. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed (i) upon the Company or any Subsidiary thereof or (ii) upon the income, profits or property of the Company or any Subsidiary, and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings or any such tax, assessment, charge or claim referred to in clause (a)(i) or (b) above if the failure to so pay or discharge such tax assessment, charge or claim would not have or would not be likely to have material adverse effect on the business operations, properties or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. Section 1008. Further Instruments and Acts. Upon request of the Trustee, the Company shall execute and deliver such further instruments and perform such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. Section 1009. Limitation on Indebtedness. The Company will not, and will not permit any Subsidiary of the Company to, create, incur, assume or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Indebtedness (including Acquired Indebtedness), other than Permitted Indebtedness, unless at the time of such event and after giving effect thereto the Company's Fixed Charge Coverage Ratio on a pro forma basis for its last four completed fiscal quarters, taken as a whole and calculated on the assumption that such Indebtedness had been incurred on the first day of such four-quarter period, and in the case of Acquired Indebtedness, on the assumption that the related acquisition (whether by means of purchase, merger or otherwise) also had occurred on such date, would have been greater than the ratios set forth below during the periods commencing on the dates indicated below: Period Commencing Ending Ratio Effective Date January 28, 1996 2.000 January 29, 1996 January 26, 1997 2.150 January 27, 1997 January 25, 1998 2.250 January 26, 1998 January 31, 1999 2.350 Thereafter 2.450 Section 1010. Limitation on Restricted Payments. The Company will not, directly or indirectly, (i) declare or pay any dividend on or make any distributions in respect of the capital stock of the Company or any Subsidiary thereof (except for (x) dividends or distributions payable solely to the Company or any Subsidiary of the Company and (y) dividends or distributions of a Subsidiary of the Company solely on the capital stock of such Subsidiary), or purchase, redeem or retire for value, or make any payment on account of the purchase, redemption or other acquisition or retirement for value of, any capital stock or warrants, rights or options to purchase such capital stock, (ii) make any principal payment on, or redeem, repurchase or defease, or otherwise acquire or retire for value, Subordinated Debt, prior to any scheduled principal payment, scheduled sinking fund payment or maturity thereof, or (iii) make any loan or advance to, or any other Investment in, any of its Affiliates other than a Subsidiary of the Company (such payments or any other actions described in (i), (ii) and (iii), collectively, "Restricted Payments") unless (1) at the time of and after giving effect to the proposed Restricted Payment, no Event of Default or event that, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing, and (2) at the time of and after giving effect to the proposed Restricted Payment (the amount of any such payment, if other than cash, to be determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) (A) the Consolidated Net Worth of the Company shall be at least $75,000,000 and (B) the aggregate amount of all Restricted Payments after the Effective Date shall not exceed 50% of Cumulative Net Available Cash of the Company and (C) the Fixed Charge Coverage Ratio calculated on a pro forma basis for the full twelve-month period ending on the last day of the Company's fiscal quarter immediately preceding such proposed Restricted Payment shall be at least 1.50 to 1. Notwithstanding the foregoing, this provision will not prohibit the redemption, by the Company, of its common stock (on a fully diluted basis) from time to time under the terms and conditions of management equity subscription agreements or stock option agreements and related exhibits, so long as such redemption does not otherwise result in an Event of Default or event that, after notice or lapse of time or both, would become an Event of Default. The foregoing provisions shall not be deemed to prohibit (1) the payment of any dividend within 60 days after the date of declaration thereof, if at such declaration date such declaration complied with the provisions of the Indenture, or (2) the redemption, repurchase or other acquisition or retirement (a "retirement") of any shares of any class of capital stock of the Company or of any Subsidiary thereof in exchange for (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares or scrip), or out of the proceeds of a substantially concurrent issue and sale (other than to a Subsidiary of the Company) of, other shares of capital stock of the Company, or (3) the retirement of Subordinated Debt out of the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company) of shares of capital stock of the Company or issuance other than to a Subsidiary of the Company of new Indebtedness which has a weighted average life to maturity at least as long as the Stated Maturity of the Notes and no sinking fund or scheduled principal payments prior to the maturity of the Notes and the payment of which is subordinated in right of payment and otherwise to the Notes at least to the same extent as such Subordinated Debt, or (4) the payment of dividends or the making of distributions on shares of capital stock of the Company solely in shares of capital stock of the Company. Section 1011. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries. The Company will not, and will not permit any Subsidiary of the Company to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of the Company to (a) pay dividends or make any other distribution on its capital stock, (b) pay any Indebtedness owed to the Company or any other Subsidiary of the Company, (c) make loans or advances to the Company or any other Subsidiary of the Company or (d) transfer any of its property or assets to the Company or any other Subsidiary of the Company except as set forth in the instrument evidencing or the agreement governing Acquired Indebtedness of any acquired entity which becomes a Subsidiary of the Company, provided, that any restriction or encumbrance under such instrument or agreement existed at the time of acquisition, was not put in place in anticipation of such acquisition, and is not applicable to any Person, other than the Person or property or assets of the Person so acquired. Section 1012. Limitation on Transactions with Affiliates. The Company will not enter into, renew or extend, or permit any Subsidiary of the Company to enter into, renew or extend any agreement relating to the sale, purchase or lease of any assets, property or services from or to any Affiliate of the Company (other than a wholly owned Subsidiary of the Company) on terms that are less favorable to the Company or such Subsidiary of the Company, as the case may be, than would be available in a comparable transaction with an unaffiliated third party; provided, however, that the Company will not enter into, renew or extend any such agreement or series of related agreements which, individually or in the aggregate, involve payments in excess of $500,000, unless the Board of Directors determines that such transaction is fair to the Company; provided, further, that notwithstanding the foregoing, the Company may enter into and perform the Management Services Agreement, dated as of the Effective Date, between the Company and Leonard Green & Partners, L.P., in the form attached as Exhibit A to the Plan. Section 1013. Disposition of Proceeds of Asset Sale. (a) If all or a portion of the Net Cash Proceeds of any Asset Sale are not required to be applied to repay any outstanding Bank Credit Agreement Indebtedness as required by the terms thereof, or the Company determines not to apply such Net Cash Proceeds to the prepayment of such Indebtedness or if no such Indebtedness is outstanding, then the Company may (i) use the Net Cash Proceeds, or a portion thereof, as working capital in the ordinary course of business or (ii) within 12 months of the Asset Sale, invest the Net Cash Proceeds in properties and assets to replace the properties and assets that were the subject of the Asset Sale or in properties and assets that (as determined by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) will be used in the business of the Company and its Subsidiaries existing on the date of the Indenture or in businesses similar or related thereto. The amount of such Net Cash Proceeds neither used to repay such Indebtedness nor used or invested as set forth in the foregoing clause (i) or (ii) constitutes "Excess Proceeds". When the aggregate amount of Excess Proceeds equals $3,000,000 or more, the Company shall offer to purchase (an "Offer") from all holders of New Notes the maximum principal amount (expressed as a multiple of $1,000) of New Notes that may be purchased out of the Excess Proceeds, provided that the Company may satisfy its obligations to make an Offer in whole or in part by delivering to the Trustee (or the trustee under the Senior Fixed Rate Notes Indenture, as the case may be) for cancellation New Notes purchased by it not earlier than six months prior to the date of the Offer, provided further that if the Company elects to satisfy its obligation to make an Offer in the manner set forth in the preceding clause, the Company shall deliver for cancellation the Notes and the Senior Fixed Rate Notes so purchased in proportionate amounts. In the event the Excess Proceeds are less than the aggregate Offered Price (as defined below) of all New Notes tendered, the New Notes to be purchased shall be purchased out of the Excess Proceeds pro rata in integral multiples of $1,000 only. The offer price (the "Offered Price") shall be an amount in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of the Offer. To the extent that the aggregate Offered Price of all New Notes tendered pursuant to an Offer plus the principal amount of all New Notes purchased by the Company and canceled in satisfaction of the Offer is less than the Excess Proceeds relating thereto (such shortfall constituting a "De- ficiency"), the Company may use such Deficiency, or a portion thereof, for general corporate purposes. Upon completion of the purchase of all New Notes tendered pursuant to an Offer, the amount of Excess Proceeds shall be reset at zero. (b) Within 30 days after the date on which the amount of Excess Proceeds equals $3,000,000 or more, the Company shall send by first-class mail, postage prepaid, to each Holder of the New Notes, at his address appearing in the Note Registrar, a notice stating: (1) that the Holder has the right to require the Company to repurchase such Holder's New Notes at the Offered Price, subject to proration in the event the Excess Proceeds are less than the aggregate Offered Price of all New Notes tendered; (2) the date of the Offer (the "Offer Date") which shall be no earlier than 45 days nor later than 60 days from the date such notice is mailed; and (3) the instructions a Holder must follow in order to have its New Notes purchased in accordance with paragraph (c) of this Section. (c) Holders electing to have their New Notes purchased will be required to give notice of such election (an "Election Notice") to the Company at the address specified in the notice at least five Business Days prior to the Offer Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Offer Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the New Notes as to which his election is to be withdrawn and a statement that such Holder is withdrawing his election to have such New Notes purchased. If the aggregate principal amount of their New Notes as to which Holders have given an Election Notice exceeds the amount of Excess Proceeds, the Company shall purchase the New Notes to be purchased out of the Excess Proceeds pro rata. Holders whose New Notes are purchased only in part will be issued New Notes equal in principal amount to the unpurchased portion of the New Notes surrendered. (d) In the event that the Company shall be unable to purchase Notes from Holders in an Offer because of provisions of the Bank Credit Agreement or in the event the Company shall be unable to purchase Notes from Holders in an Offer because of provisions of applicable law, the Company need not make an Offer. The Company shall then be obligated to use the Excess Proceeds as working capital or to invest the Excess Proceeds in replacement properties and assets, in accordance with clause (i) or (ii) of Subsection (a) of this Section. (e) Whenever Net Cash Proceeds received by the Company, and prior to the purchase of New Notes or an allocation to the payment of Bank Credit Agreement Indebtedness, as set forth in Subsection (a) of this Section 1013, exceeds $1,500,000, such Net Cash Proceeds shall be set aside by the Company in a separate account pending (i) deposit with the depositary for the amount required to repay the New Notes tendered in an Offer, (ii) delivery by the Company of the Offered Price to the Holders of the Notes and the holders of the other New Notes tendered in an Offer or (iii) allocation, as set forth in Subsection (a) of this Section, of Net Cash Proceeds to the payment of Bank Credit Agreement Indebtedness or to working capital or investment in properties and assets. Such Net Cash Proceeds may be invested in (A) any U.S. Government Obligations maturing not more than one year after the date of issue, (B) any certificate of deposit, maturing not more than 90 days after the Offer Date, issued by, or time deposit of, a commercial banking institution that is a member of the Federal Reserve System and that has combined capital and surplus and undivided profits of not less than $200,000,000, (C) commercial paper, maturing not more than 90 days after the date of the Offer, issued by a corporation (other than an Affiliate or Subsidiary of the Company) organized and existing under the laws of the United States of America that is rated, at the time as of that any investment therein is made, "P- 2" (or higher) by Moody's Investors Service, Inc., or "A-2" (or higher) by Standard and Poor's Corporation, and (D) adjustable rate preferred stock that is readily marketable, provided that the maturity date of any investment permitted by clauses (A), (B) and (C) shall not be later than the Offer Date in the case of an Offer. Section 1014. Guarantees of Indebtedness. The Company (x) will not permit an Affiliate of the Company (a "guarantor") to guarantee or secure the payment of any Indebtedness of the Company or any Subsidiary thereof and (y) will not, and will not permit a Subsidiary of the Company (each of the Company and its Subsidiaries, a "guarantor") to, guarantee or secure the payment of any Indebtedness of any Person, unless, in either case, the payment of the Notes is also guaranteed by any such guarantor pursuant to a guarantee in form and substance satisfactory to the Trustee (a "Guarantee"); provided, however, that any such Guarantee shall provide by its terms that it shall be automatically and unconditionally released and discharged upon either (i) the release or discharge of such guarantee of, or security for (or both such guarantee and such security, if applicable), the payment of such Indebtedness, except a discharge by or as a result of payment under such guar- antee or security or payment of such Indebtedness or (ii) any sale, exchange or transfer, to any person not an Affiliate of the Company, of the Company's stock in, or of all or substantially all the assets of, such guarantor if such guarantor is a Subsidiary of the Company which sale, exchange or transfer does not result in a breach of Sections 1005, 1012, 1013, 1014, 1015, 1016 and 1017. Section 1015. Limitation on Certain Liens. (a) The Company will not, and will not permit any Subsidiary of the Company to, permit to exist any security interest or pledge any asset to secure the payment of any Indebtedness which ranks junior to or is subordinate in right of payment to the Notes. (b) The Company will not, and will not permit any Subsidiary of the Company to, permit to exist any security interest or pledge any asset to secure the Senior Fixed Rate Notes or any Indebtedness incurred to refinance the Senior Fixed Rate Notes unless it shall make effective provision whereby the Notes shall be directly secured equally and ratably with the Indebtedness so secured (the "Secured Debt"), and in the same proportion as the Secured Debt in an amount equal to the product of (i) a ratio the numerator of which is the aggregate principal amount of Secured Debt and the denominator of which is the aggregate principal amount of Senior Fixed Rate Notes and the Indebtedness incurred to refinance the Senior Fixed Rate Notes, outstanding immediately after such security interest is granted multiplied by (ii) the aggregate principal amount of Notes outstanding at the time such security is granted. Section 1016. Investments. The Company will not, and will not permit any Subsidiary of the Company to, directly or indirectly make or own any Investment in any Person except: (a) Investments in Investment Cash Equivalents; (b) promissory notes of purchasers in sales by the Company of properties or assets not exceeding an aggregate principal balance of $5,000,000 outstanding at any one time; (c) amounts due from landlords for remodelling work done by the Company for account of a landlord, not exceeding an aggregate principal balance of $4,000,000 outstanding at any one time; (d) other Investments not in excess of an aggregate amount of $1,000,000 outstanding at any one time; and (e) Investments in respect of Securities of another Person received by the Company in connection with a plan of reorganization or readjustment of such Person or its debts. Section 1017. Conduct of Business. The Company shall not engage in any business other than (a) the business engaged in by the Company on the date hereof, and (b) any business activities substantially similar or related thereto. Section 1018. Limitations on Subordinated Debt. The Company shall not, and shall not permit any Sub- sidiary of the Company to, (a) create, incur, assume or directly or indirectly guarantee or in any other manner become directly or indirectly liable for the payment of any Indebtedness that is expressly subordinate in right of payment to any Indebtedness of the Company or any Subsidiary thereof unless such subordinate Indebtedness both constitutes Subordinated Debt and does not require principal repayments or sinking fund payments to be made prior to the Stated Maturity of the Notes, or (b) amend the provisions of any instrument evidencing or agreement governing Subordinated Debt to (i) require principal repayments or sinking fund payments to be made prior to the Stated Maturity of the Notes or (ii) alter the subordination provisions of such Subordi- nated Debt. ARTICLE ELEVEN REDEMPTION OF NOTES Section 1101. Right of Redemption. The Notes may be redeemed, otherwise than upon a Change in Control as defined in and required by Section 1109, at the election of the Company, as a whole or from time to time in part, at the Redemption Price specified in the form of Note set forth in Article Two for redemptions, together with accrued interest to the Redemption Date. Section 1102. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article Eleven. Section 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Notes pursuant to Section 1101 shall be evidenced by a Board Resolution of the Company. In case of any redemption at the election of the Company, the Company shall, at least 45 days prior to the Redemp- tion Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemp- tion Date and of the principal amount of Notes to be redeemed. Section 1104. Selection by Trustee of Notes to Be Redeemed. If less than all the Notes are to be redeemed, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Notes not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $1,000 or any integral multiple thereof) of the principal amount of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company and the Note Registrar (if other than the Trustee) in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed. Section 1105. Notice of Redemption. Notice of Redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at its address appearing in the Note Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Notes to be redeemed, (4) that New Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any, (5) that, unless the Company defaults in making the redemption payment, interest on New Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such New Notes is to receive payment of the Redemption Price plus accrued interest, if any, upon surrender to the Paying Agent of the Notes redeemed, (6) if any New Note is being redeemed in part, the portion of the principal amount of such New Note to be redeemed and that, after the Redemption Date, and upon surrender of such New Note, a New Note or New Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued, (7) if fewer than all the New Notes are to be redeemed, the identification of the particular New Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of New Notes to be redeemed and the aggregate principal amount of New Notes to be outstanding after such partial redemption, (8) the place or places where such Notes are to be surrendered for payment of the Redemption Price, and (9) the CUSIP number, if any, of the Notes to be redeemed. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Section 1106. Deposit of Redemption Price. On or prior to 11:00 a.m. (New York time) on the Business Day immediately preceding any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money in same day funds sufficient to pay the Redemption Price of, and accrued interest on, all the Notes or portions thereof which are to be redeemed on that date. Section 1107. Notes Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid for by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant Regular Record Dates or Special Record Dates, as the case may be, according to their terms and the provisions of Section 307. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium (if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Note. Section 1108. Notes Redeemed in Part. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note without service charge, a new Note or Notes of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 1109. Offer to Purchase Upon a Change in Control. (a) If at any time either (a) any person or any persons acting together (excluding the Original Stockholders) that constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall beneficially own at least 50% of the total voting stock of the Company or (b) any person or any persons acting together (excluding the Original Stockholders) that constitutes a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, shall succeed in having a sufficient number of its nominees elected to the board of directors of the Company to constitute a majority of the board of directors of the Company (each, a "Change of Control"), then the Company shall make an offer to repurchase any or all of the Outstanding Notes at a price, payable in cash, equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the Change of Con- trol Purchase Date (the "Change of Control Purchase Price"), in accordance with the procedures set forth in this Section 1109; provided that such repurchase shall be conditioned upon receipt by the Company of Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes. (b) Within 30 days after a Change of Control, the Company shall send by first-class mail postage prepaid, to each Holder of the Outstanding Notes, at its address appearing in the Note Register, a notice (a "Change of Control Purchase Notice") stating: (1) that a Change of Control has occurred and that the Holder has the right to require the Company to repurchase such Holder's Notes at the Change of Control Purchase Price subject to the conditions contained herein; (2) that unless Notes representing at least 50% of the aggregate principal amount of the Outstanding Notes are tendered, the Company shall not redeem any Notes pursuant to this Section; (3) the purchase date (the "Change of Control Purchase Date") which shall be no earlier than 30 days nor later than 50 days from the date such notice is mailed or such later date as is necessary to comply with requirements under the Exchange Act or any applicable securities laws or regulations; and (4) the instructions a Holder must follow in order to have its Notes purchased in accordance with paragraph (c) of this Section. (c) Holders electing to have Notes purchased will be required to give notice of such election to the Company at the address specified in the Change of Control Purchase Notice at least five Business Days prior to the Change of Control Purchase Date. Holders will be entitled to withdraw their election if the Company receives, not later than three Business Days prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes as to which its election is to be withdrawn and a statement that such Holder is withdrawing its election to have such Notes purchased. INDENTURE SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corpo- rate seals to be hereunto affixed and attested, all as of the day and year first above written. KASH N' KARRY FOOD STORES, INC. By: Attest: Name: Title: By Name: Title: IBJ SCHRODER BANK & TRUST COMPANY By: Name: Title: By: Name: Title: TERMS OF SUBORDINATED DEBT Payment of the principal of and premium, if any, and interest on and any other amounts payable with respect to any Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt shall be (to the extent set forth below) subordinate and subject in right of payment to the prior payment in full, in cash or Cash Equivalents, of all principal or, premium, if any, and interest on, and any other amounts due on or in respect of all New Notes (including interest on unpaid principal and interest at the rate provided in the respective instruments creating the New Notes accruing on or after the filing of any petition in bankruptcy or reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceeding) (the "Senior Debt"). 1. In the event of (a) any insolvency, bankruptcy or similar case or proceeding relative to the Company or to its creditors, as such, or to its assets, or (b) any liquidation, dissolution or other winding up of the Company, or (c) any assignment for the benefit of creditors or any other action or proceeding involving the readjustment of all or any of the indebtedness of the Company, the holders of New Notes shall be entitled to receive payment in full, in cash or Cash Equivalents, of all the Senior Debt before the holders of such Subordinated Debt are entitled to receive any direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character on account of principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt (other than securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to such Subordinated Debt, to the payment of all amounts due on or in respect of New Notes at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment (collectively, "Permitted Junior Securities"). 2. Unless paragraph 1 is applicable, upon the occurrence of any default in the payment of any principal of (or premium, if any) or interest on any New Note when due (each a "Payment Default"), no direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character shall be made by the Company on account of principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt unless and until such Payment Default shall have been cured or waived in writing or shall have ceased to exist or all of the New Notes shall have been discharged. 3. Unless either paragraph 1 or paragraph 2 is applicable, upon the occurrence of any event the occurrence of which entitles the Holders of the requisite aggregate principal amount of the Outstanding Notes as set forth in Section 502 (the "Requisite Holders") to accelerate the maturity of any New Note (each a "Non-payment Event of Default"), no direct or indirect payment or distribution (in cash, property or securities or by set-off or otherwise) of any assets of the Company of any kind or character shall be made by the Company on account of any principal of, premium, if any, or interest on or any other amounts payable with respect to such Subordinated Debt or on account of the purchase or other acquisition of such Subordinated Debt for a period (the "Payment Blockage Period") commencing on the date written notice of such default shall have been given to the Company by the Requisite Holders unless and until (i) more than 179 days shall have elapsed since receipt of such written notice by the Company, (ii) such Non-payment Event of Default shall have been cured or waived in writing or shall have ceased to exist or all of the New Notes shall have been discharged or (iii) such Payment Blockage Period shall have been terminated by written notice to the Company from the Requisite Holders; provided, that, subject to the following sentence, the commencement of a Payment Blockage Period hereunder shall not bar the commencement of another Payment Blockage Period by the Requisite Holders due to another Non-payment Event of Default. Notwithstanding anything herein to the contrary, in no event will any one or more consecutive Payment Blockage Periods extend beyond 179 days from a date on which any payment with respect to the Subordinated Debt was due. 4. Any payment or distribution, whether in cash, securities or other property (other than Permitted Junior Securities), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of such Subordinated Debt shall be paid or delivered directly to the holders of New Notes in accordance with the priorities then existing among such holders until all the Senior Debt shall have been paid in full. If any payment or distribution of any character or any security, whether in cash, securities or other property (other than Permitted Junior Securities), shall be received by any holder of such Subordinated Debt in contravention of any of the terms hereof and before all the Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the New Notes at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt in full. Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of Trust Indenture Act Section Indenture Section 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .608 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .608 (a)(3). . . . . . . . . . . . . . . . . . . . Not Applicable (a)(4). . . . . . . . . . . . . . . . . . . . Not Applicable (a)(5). . . . . . . . . . . . . . . . . . . . . . . . . .608 (b) . . . . . . . . . . . . . . . . . . . . . . . . 608, 609 (c) . . . . . . . . . . . . . . . . . . . . . Not Applicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .612 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .612 (c) . . . . . . . . . . . . . . . . . . . . . Not Applicable 312(a) . . . . . . . . . . . . . . . . . . . . . . .701, 702(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . 702(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . 702(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . 703(a) (b)(1). . . . . . . . . . . . . . . . . . . . Not Applicable (b)(2). . . . . . . . . . . . . . . . . . . . . . . . 703(b) (c) . . . . . . . . . . . . . . . . . . . . . 703(a), 703(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . 703(c) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .704 (b) . . . . . . . . . . . . . . . . . . . . . Not Applicable (c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(3). . . . . . . . . . . . . . . . . . . . Not Applicable (d) . . . . . . . . . . . . . . . . . . . . . Not Applicable (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .102 (f) . . . . . . . . . . . . . . . . . . . . . Not Applicable 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 601(a) (b) . . . . . . . . . . . . . . . . . . . . . . .602, 703(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . 601(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . 601(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .514 316(a)(last sentence). . . . . . . . . . . . . . . . . . . .101 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . .512 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . .513 (a)(2). . . . . . . . . . . . . . . . . . . . Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .508 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .512 317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .503 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .504 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 1003 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS PAGE ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. . . . . . . . . . . . . . . . 2 Section 102. Compliance Certificates and Opinions . . . 20 Section 103. Form of Documents Delivered to Trustee . . 21 Section 104. Acts of Holders. . . . . . . . . . . . . . 22 Section 105. Notices, Etc., to Trustee and the Company. . . . . . . . . . . . . . . . . . 23 Section 106. Notice to Holders; Waiver. . . . . . . . . 24 Section 107. Conflict with Trust Indenture Act. . . . . 24 Section 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . 25 Section 109. Successors and Assigns . . . . . . . . . . 25 Section 110. Separability Clause. . . . . . . . . . . . 25 Section 111. Benefits of Indenture. . . . . . . . . . . 25 Section 112. Governing Law. . . . . . . . . . . . . . . 25 Section 113. Legal Holidays . . . . . . . . . . . . . . 25 Section 114. Incorporators, Stockholders, Officers and Directors of the Company Exempt from Individual Liability . . . . . . . . . . . 26 Section 115. Counterparts . . . . . . . . . . . . . . . 27 ARTICLE TWO FORMS OF NOTES Section 201. Forms Generally. . . . . . . . . . . . . . 27 Section 202. Form of Face of Note . . . . . . . . . . . 27 Section 203. Form of Reverse of Note. . . . . . . . . . 31 Section 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . 34 Section 205. Form of Assignment . . . . . . . . . . . . 34 Section 206. Form of Option of Holder to Elect Redemption . . . . . . . . . . . . . . . . 35 ARTICLE THREE THE NOTES Section 301. Title and Terms. . . . . . . . . . . . . . 36 Section 302. Denominations. . . . . . . . . . . . . . . 37 Section 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . 38 Section 304. Temporary Notes. . . . . . . . . . . . . . 39 Section 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . 40 Section 306. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . . . . . 41 Section 307. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . . 42 Section 308. Persons Deemed Owners. . . . . . . . . . . 43 Section 309. Cancellation . . . . . . . . . . . . . . . 44 Section 310. Computation of Interest. . . . . . . . . . 44 Section 311. CUSIP Numbers. . . . . . . . . . . . . . . 44 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction, Discharge of the Indenture and Defeasance of the Notes. . . . . . . . 45 Section 402. Termination of Obligations upon Cancellation of the Notes. . . . . . . . . 47 Section 403. Survival of Certain Obligations. . . . . . 47 Section 404. Acknowledgement of Discharge by Trustee. . 48 Section 405. Application of Trust Money . . . . . . . . 48 Section 406. Repayment to the Company . . . . . . . . . 48 Section 407. Reinstatement. . . . . . . . . . . . . . . 48 Section 408. Indemnity. . . . . . . . . . . . . . . . . 49 ARTICLE FIVE REMEDIES Section 501. Events of Default. . . . . . . . . . . . . 49 Section 502. Acceleration of Maturity Date; Rescission and Annulment . . . . . . . . . 52 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . 53 Section 504. Trustee May File Proofs of Claim . . . . . 54 Section 505. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . 55 Section 506. Application of Money Collected . . . . . . 56 Section 507. Limitation on Suits. . . . . . . . . . . . 56 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. . 57 Section 509. Restoration of Rights and Remedies . . . . 58 Section 510. Rights and Remedies Cumulative . . . . . . 58 Section 511. Delay or Omission Not Waiver . . . . . . . 58 Section 512. Control by Holders . . . . . . . . . . . . 58 Section 513. Waiver of Past Default.. . . . . . . . . . 59 Section 514. Undertaking for Costs. . . . . . . . . . . 59 Section 515. Waiver of Stay or Extension Laws . . . . . 60 ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. . . . 60 Section 602. Notice of Defaults . . . . . . . . . . . . 62 Section 603. Certain Rights of Trustee. . . . . . . . . 62 Section 604. Not Responsible for Recitals or Issuance of Notes . . . . . . . . . . . . . . . . . 64 Section 605. May Hold Notes . . . . . . . . . . . . . . 64 Section 606. Money Held in Trust. . . . . . . . . . . . 64 Section 607. Compensation and Reimbursement . . . . . . 64 Section 608. Corporate Trustee Required; Eligibility. . 66 Section 609. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . 66 Section 610. Acceptance of Appointment by Successor . . 68 Section 611. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . 68 Section 612. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . 69 Section 613. Appointment of Authenticating Agent. . . . 69 Section 614. Paying Agent . . . . . . . . . . . . . . . 70 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . 71 Section 702. Preservation of Information; Communications to Holders. . . . . . . . . 71 Section 703. Reports by Trustee . . . . . . . . . . . . 73 Section 704. Reports by Company . . . . . . . . . . . . 75 Section 705. Certain Obligations of the Trustee . . . . 76 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. The Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . 77 Section 802. Successor Substituted for the Company. . . 78 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . 79 Section 902. Amendments, Supplemental Indentures and Waivers with Consent of Holders. . . . . . 80 Section 903. Execution of Amendment or Supplemental Indentures . . . . . . . . . . . . . . . . 81 Section 904. Effect of Amendment or Supplemental Indentures. . . . . . . . . . 81 Section 905. Conformity with Trust Indenture Act. . . . 82 Section 906. Reference in Notes to Amendments or Supplemental Indentures. . . . . . . . . . 82 ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium and Inter- est. . . . . . . . . . . . . . . . . . . . 82 Section 1002. Maintenance of Office or Agency. . . . . . 82 Section 1003. Money for Note Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . 83 Section 1004. Statements of Officers of the Company as to Default; Notice of Default. . . . . . . 85 Section 1005. Existence. . . . . . . . . . . . . . . . . 85 Section 1006. Maintenance of Properties; Insurance . . . 86 Section 1007. Payment of Taxes and Other Claims. . . . . 86 Section 1008. Further Instruments and Acts . . . . . . . 87 Section 1009. Limitation on Indebtedness . . . . . . . . 87 Section 1010. Limitation on Restricted Payments. . . . . 88 Section 1011. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . 89 Section 1012. Limitation on Transactions with Affili- ates . . . . . . . . . . . . . . . . . . . 90 Section 1013. Disposition of Proceeds of Asset Sale. . . 90 Section 1014. Guarantees of Indebtedness . . . . . . . . 93 Section 1015. Limitation on Certain Liens. . . . . . . . 94 Section 1016. Investments. . . . . . . . . . . . . . . . 94 Section 1017. Conduct of Business. . . . . . . . . . . . 95 Section 1018. Limitations on Subordinated Debt . . . . . 95 ARTICLE ELEVEN REDEMPTION OF NOTES Section 1101. Right of Redemption. . . . . . . . . . . . 95 Section 1102. Applicability of Article . . . . . . . . . 96 Section 1103. Election to Redeem; Notice to Trustee. . . 96 Section 1104. Selection by Trustee of Notes to Be Redeemed . . . . . . . . . . . . . . . . . 96 Section 1105. Notice of Redemption.. . . . . . . . . . . 97 Section 1106. Deposit of Redemption Price. . . . . . . . 98 Section 1107. Notes Payable on Redemption Date . . . . . 98 Section 1108. Notes Redeemed in Part . . . . . . . . . . 98 Section 1109. Offer to Purchase Upon a Change in Control. . . . . . . . . . . . . . . . . . 99 EXHIBIT A INDENTURE KASH N' KARRY FOOD STORES, INC., Issuer AND IBJ SCHRODER BANK & TRUST COMPANY Senior Floating Rate Notes due 2003 Dated as of December 29, 1994 EX-10 9 EXHIBIT 10.1 TO 1/29/95 10-Q KASH N' KARRY FOOD STORES, INC. _____________________________ CREDIT AGREEMENT Dated as of December 29, 1994 THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent TABLE OF CONTENTS This Table of Contents is not part of the Agreement to which it is attached but is inserted for convenience of reference only. Page Section 1. Definitions and Accounting Matters. . . . . . 1 1.01 Certain Defined Terms . . . . . . . . . 1 1.02 Accounting Terms and Determinations. . . . . . . . . . . . . 22 1.03 Classes of Loans. . . . . . . . . . . . 22 1.04 Interpretation. . . . . . . . . . . . . 22 Section 2. Commitments, Loans, Notes and Prepayments . . . . . . . . . . . . . . . . . 23 2.01 Loans . . . . . . . . . . . . . . . . . 23 2.02 Borrowings of Loans . . . . . . . . . . 24 2.03 Letters of Credit . . . . . . . . . . . 25 2.04 Changes of Commitments. . . . . . . . . 33 2.05 Fees. . . . . . . . . . . . . . . . . . 33 2.06 Lending Offices . . . . . . . . . . . . 34 2.07 Several Obligations; Remedies Independent . . . . . . . . . . . . . . 34 2.08 Notes and Loan Account. . . . . . . . . 34 2.09 Optional Prepayments. . . . . . . . . . 36 2.10 Mandatory Prepayments and Reductions of Commitments . . . . . . . 36 2.11 Casualty Proceeds. . . . . . . . . . . . 39 Section 3. Payments of Principal and Interest. . . . . . 40 3.01 Repayment of Loans. . . . . . . . . . . 40 3.02 Interest. . . . . . . . . . . . . . . . 41 Section 4. Payments; Pro Rata Treatment; Computations; Etc.. . . . . . . . . . . . . . 42 4.01 Payments. . . . . . . . . . . . . . . . 42 4.02 Pro Rata Treatment. . . . . . . . . . . 44 4.03 Computations. . . . . . . . . . . . . . 44 4.04 Minimum Amounts . . . . . . . . . . . . 45 4.05 Certain Notices . . . . . . . . . . . . 45 4.06 Non-Receipt of Funds by the Administrative Agent. . . . . . . . . . 45 4.07 Sharing of Payments, Etc. . . . . . . . 46 Section 5. Yield Protection, Etc.. . . . . . . . . . . . 47 5.01 Additional Costs. . . . . . . . . . . . 47 5.02 Certain Protections in Respect of Letters of Credit. . . . . . . . . . 48 5.03 Taxes . . . . . . . . . . . . . . . . . 49 Section 6. Conditions Precedent. . . . . . . . . . . . . 50 6.01 Initial Extension of Credit . . . . . . 50 6.02 Initial and Subsequent Extensions of Credit. . . . . . . . . . 57 Section 7. Representations and Warranties. . . . . . . . 57 7.01 Corporate Existence . . . . . . . . . . 57 7.02 Financial Condition . . . . . . . . . . 58 7.03 Litigation. . . . . . . . . . . . . . . 58 7.04 No Breach . . . . . . . . . . . . . . . 58 7.05 Action. . . . . . . . . . . . . . . . . 59 7.06 Approvals . . . . . . . . . . . . . . . 59 7.07 Use of Credit . . . . . . . . . . . . . 59 7.08 ERISA . . . . . . . . . . . . . . . . . 59 7.09 Taxes . . . . . . . . . . . . . . . . . 59 7.10 Certain Regulations . . . . . . . . . . 60 7.11 Material Agreements and Liens . . . . . 60 7.12 Environmental Matters . . . . . . . . . 60 7.13 Capitalization. . . . . . . . . . . . . 62 7.14 Subsidiaries. . . . . . . . . . . . . . 63 7.15 Title to Assets . . . . . . . . . . . . 63 7.16 True and Complete Disclosure. . . . . . 63 Section 8. Covenants of the Company. . . . . . . . . . . 63 8.01 Financial Statements, Etc.. . . . . . . 64 8.02 Litigation. . . . . . . . . . . . . . . 68 8.03 Existence, Etc. . . . . . . . . . . . . 68 8.04 Insurance . . . . . . . . . . . . . . . 69 8.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . 71 8.06 Limitation on Liens . . . . . . . . . . 72 8.07 Indebtedness. . . . . . . . . . . . . . 74 8.08 Investments . . . . . . . . . . . . . . 74 8.09 Dividend Payments . . . . . . . . . . . 75 8.10 Leverage Ratio. . . . . . . . . . . . . 75 8.11 Net Worth . . . . . . . . . . . . . . . 75 8.12 Working Capital . . . . . . . . . . . . 76 8.13 Fixed Charges Ratio . . . . . . . . . . 76 8.14 Capital Expenditures. . . . . . . . . . 77 8.15 Funded Debt to Operating Cash Flow Ratio. . . . . . . . . . . . . . . 78 8.16 Lease Obligations.. . . . . . . . . . . 79 8.17 Lines of Business . . . . . . . . . . . 79 8.18 Transactions with Affiliates. . . . . . 79 8.19 Use of Proceeds . . . . . . . . . . . . 79 8.20 Modifications of Certain Documents . . . . . . . . . . . . . . . 80 8.21 After Acquired Real Property. . . . . . 80 8.22 Inventory and Receivables . . . . . . . 80 8.23 Subsidiaries. . . . . . . . . . . . . . 81 8.24 Statutory Notice. . . . . . . . . . . . 81 8.25 Intangible Personal Property Taxes . . . . . . . . . . . . . . . . . 81 Section 9. Events of Default . . . . . . . . . . . . . . 82 Section 10. The Administrative Agent . . . . . . . . . . 86 10.01 Appointment, Powers and Immunities. . . . . . . . . . . . . . . 86 10.02 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . 87 10.03 Defaults . . . . . . . . . . . . . . . 87 10.04 Rights as a Lender . . . . . . . . . . 87 10.05 Indemnification. . . . . . . . . . . . 88 10.06 Nonreliance on Administrative Agent, Co-Agent and Other Lenders . . . . . . . . . . . . . . . . 88 10.07 Failure to Act . . . . . . . . . . . . 89 10.08 Resignation or Removal of Administrative Agent. . . . . . . . . . 89 10.09 Agency Fees. . . . . . . . . . . . . . 90 10.10 Authorization of the Co- Agent . . . . . . . . . . . . . . . . . 90 10.11 Collateral Sub-Agent . . . . . . . . . 90 Section 11. Miscellaneous. . . . . . . . . . . . . . . . 90 11.01 Waiver . . . . . . . . . . . . . . . . 90 11.02 Notices. . . . . . . . . . . . . . . . 90 11.03 Expenses, Etc. . . . . . . . . . . . . 91 11.04 Amendments, Etc. . . . . . . . . . . . 92 11.05 Successors and Assigns . . . . . . . . 94 11.06 Assignments and Participations. . . . . . . . . . . . . 94 11.07 Survival . . . . . . . . . . . . . . . 96 11.08 Agreements Superseded. . . . . . . . . 97 11.09 Severability . . . . . . . . . . . . . 97 11.10 Captions . . . . . . . . . . . . . . . 97 11.11 Counterparts . . . . . . . . . . . . . 97 11.12 Treatment of Certain Information . . . . . . . . . . . . . . 97 11.13 GOVERNING LAW; SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . 98 11.14 WAIVER OF JURY TRIAL . . . . . . . . . 98 ANNEX 1 - Addresses for Notices and Commitments of the Lenders SCHEDULE I - Material Agreements and Liens SCHEDULE II - Hazardous Materials SCHEDULE III - Existing Letters of Credit SCHEDULE IV - Litigation EXHIBIT A-1 - Form of Revolving Credit Note EXHIBIT A-2 - Form of Tranche A Term Loan Note EXHIBIT A-3 - Form of Tranche B Term Loan Note EXHIBIT A-4 - Form of Tranche C Term Loan Note EXHIBIT B - Form of Borrowing Base Certificate EXHIBIT C - Form of Security Agreement EXHIBIT D - Form of Mortgage EXHIBIT E-1 - Form of Opinion of Counsel to the Company EXHIBIT E-2 - Form of Opinion of Florida Counsel to the Company EXHIBIT F-1 - Form of Opinion of Special Counsel to the Administrative Agent EXHIBIT F-2 - Form of Opinion of Special Florida Counsel to the Administrative Agent EXHIBIT G- Form of Confidentiality Agreement This CREDIT AGREEMENT (this "Agreement"), dated as of December 29, 1994, is made among KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"); each of the lenders that is a signatory to this Agreement identified under the caption "LENDERS" on the signature pages of this Agreement or which, pursuant to Section 11.06(b), shall become a "Lender" under this Agreement (individually, a "Lender" and, collectively, the "Lenders"); and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "Administrative Agent") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as co-agent for the Lenders (in such capacity, together with its successors in such capacity, the "Co-Agent"). The Company has requested the Lenders to extend credit to the Company in an aggregate principal amount not exceeding $85,000,000 to finance the operations of the Company, to refinance certain existing indebtedness of the Company and for other purposes. To induce the Lenders to extend such credit, the Company, the Lenders, the Administrative Agent and the Co-Agent propose to enter into this Agreement pursuant to which the Lenders agree to make loans to, and issue (or participate in) letters of credit for the account of, the Company, and the Company agrees to execute and deliver, mortgages, deeds of trust, and security agreements providing for security interests and liens to be granted by the Company on substantially all of its Properties as collateral security for the obligations of the Company to the Lenders, the Administrative Agent and the Co-Agent under the Basic Documents. Accordingly, the parties hereto agree as follows: Section 1. Definitions and Accounting Matters. 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Administrative Agent" shall have the meaning assigned to that term in the introductory paragraph to this Agreement. "Affiliate" shall mean any Person that directly or indirectly controls, or is under common control with, or is controlled by, the Company. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of power to direct or cause the direction of the management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person that owns directly or indirectly securities having 10% or more of the voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. Notwithstanding the foregoing, the definition of "Affiliate" shall not encompass (a) any individual solely by reason of his or her being a director, officer or employee of the Company and (b) the Administrative Agent, the Co- Agent or any Lender. "Applicable Lending Office" shall mean, for each Lender, the "Lending Office" of such Lender (or of an affiliate of such Lender) designated on Annex 1 or such other office of such Lender (or of an affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Company as the lending office for its Loans. "Applicable Margin" shall mean, with respect to each Class of Loan at any time, the percentage per annum set forth in Column A under the heading for that Class of Loan opposite the period in which such time occurs: Column A Applicable Margin (% p.a.) Revolving Credit Tranche B Loans and Tranche A and Tranche C Period Term Loan Term Loan Effective Date through and including the first anniversary of the Effective Date 1.00 2.50 Thereafter through and including the second anniversary of the Effective Date 1.50 3.00 Thereafter 2.00 3.50 "Bank of America" shall mean Bank of America National Trust and Savings Association. "Bankruptcy Code" shall mean Title 11 of the United States Code. "Bankruptcy Court" shall mean the United States Bankruptcy Court for the District of Delaware. "Base Rate" shall mean, for any day, a rate per annum equal to the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day. Each interest rate that this Agreement provides is to be based upon the Base Rate shall change upon any change in the Base Rate, effective as of the opening of business on the first day of the month following the month in which such change in the Base Rate occurs. "Basic Documents" shall mean, collectively, this Agreement, the Notes, the Letter of Credit Documents and the Security Documents. "Basle Accord" shall mean the proposals for risk-based capital framework described by the Basic Committee on Banking Regulations and Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988. "Blocked Account" shall mean the account of the Company subject to the Blocked Account Agreement. "Blocked Account Agreement" shall mean the agreement, in substantially the form attached as Annex 8 of the Security Agreement, executed by the Company, Barnett Bank of Tampa and the Administrative Agent. "Borrowing Base" shall mean, as at any date, the sum of (a) 85% of the aggregate amount of Eligible Receivables at that date plus (b) 80% of the aggregate value of Eligible Inventory at that date minus (c) the aggregate amount of Revolving Credit Loans, Tranche A Term Loan and Letter of Credit Liabilities outstanding at that date minus (d) an amount equal to 105% of the aggregate amount of Other Pari Passu Obligations at that date minus (e) the amount of all unpaid sales taxes due any state that have been collected by the Company minus (f) reserves as may be required by the Administrative Agent for intangible personal property taxes that may be payable to the State of Florida as contemplated in Section 8.25 minus (g) reserves as may be required by the Administrative Agent for Liens or trusts created in favor of fresh and frozen fruit and vegetable suppliers (and similar Liens or trusts in favor of other suppliers) of the Company and other statutory Liens plus (h) the aggregate amount of cover for Letter of Credit Liabilities held by the Administrative Agent in the Collateral Account as contemplated in Section 2.10(h) plus (i) the aggregate amount on deposit in the Special Collateral Account (after giving effect to any permitted disbursements to the Company as contemplated in Section 4.01(f)) on such day. The "value" of Eligible Inventory shall be determined at the lower of cost or market in accordance with GAAP, with cost being determined on an average cost basis. In order to assist the Administrative Agent in determining the amount of reserves for Liens and trusts referred to in clause (g) above, the Company, at the time of delivery of each Borrowing Base Certificate pursuant to Section 8.01(f), shall notify the Administrative Agent of the aggregate amount payable by the Company to fresh and frozen fruit and vegetable suppliers as at the date of each such Borrowing Base Certificate. "Borrowing Base Certificate" shall mean a certificate of the chief financial or accounting officer of the Company, in substantially the form of Exhibit B and appropriately completed. "Business Day" shall mean any day on which (a) commercial banks are not authorized or required to close in New York City, New York or Los Angeles, California, and (b) CITBC is not closed for business. "Capital Expenditures" shall mean, for any period, expenditures (including the aggregate amount of Capital Lease Obligations incurred during such period) made during such period by the Company to acquire or to construct fixed assets, plant and equipment (including renewals, improvements and replacements, but excluding repairs in the ordinary course), computed in accordance with GAAP. "Capital Lease Obligations" shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount of such obligation, determined in accordance with GAAP (including such Statement No. 13). "Cash Flow" shall mean, for any period, the sum, for the Company (determined without duplication in accordance with GAAP), of the following: (a) Operating Cash Flow minus (b) the sum of (i) taxes paid in cash during such period plus (ii) Capital Expenditures made in cash (and not financed with the proceeds of borrowings) during such period. "Casualty Event" shall mean, with respect to any Property of any Person, any loss of or damage to, or any condemnation or other taking of, such Property for which such Person or any of its Subsidiaries receives insurance proceeds (including proceeds of business interruption insurance), or proceeds of a condemnation award or other compensation. "Chapter 11 Case" shall mean that certain case pending before the Bankruptcy Court under Chapter 11 of the Bankruptcy Code identified as Case No. 94-1082 (HSB). "CITBC" shall mean The CIT Group/Business Credit, Inc., a New York corporation. "CITBC Share" shall mean, at any time of determination, (a) a fraction (expressed as a percentage) the numerator of which shall be the outstanding principal amount of Loans and Letter of Credit Liabilities then held by CITBC for its own account and the denominator of which shall be the outstanding principal amount of Loans (excluding the Tranche C Term Loan) and Letter of Credit Liabilities then held by or for the account of all of the Lenders or (b) if no such Loans shall then be outstanding, the Revolving Credit Commitment Percentage of CITBC at such time. "Class" shall have the meaning assigned to that term in Section 1.03. "Co-Agent" shall have the meaning assigned to that term in the introductory paragraph to this Agreement. "Code" shall mean the Internal Revenue Code of 1986. "Collateral Account" shall have the meaning assigned to that term in Section 3.01 of the Security Agreement. "Commitments" shall mean the Revolving Credit Commitments and the Term Loan Commitments. "Company" shall have the meaning assigned to that term in the introductory paragraph of this Agreement. "Confirmation Order" shall mean a final and nonappealable order of the Bankruptcy Court entered on the docket of the Clerk of the Bankruptcy Court confirming the Plan of Reorganization pursuant to Section 1129 of the Bankruptcy Code. "Debt Service" shall mean, for any period, the sum, for the Company (determined without duplication in accordance with GAAP), of the following: (a) all payments of principal of Indebtedness scheduled to be made during such period (before giving effect to the application of prepayments of Term Loans made pursuant to Section 2.09 during such period) plus (b) all Interest Expense for such period. "Default" shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default. "Disclosure Statement" shall mean that certain Disclosure Statement dated September 2, 1994 filed in the Chapter 11 Case, as supplemented by a Supplement to Disclosure Statement dated October 28, 1994 filed in the Chapter 11 Case (without regard to any amendments, modifications or supplements made without the consent of the Lenders after October 28, 1994). "Disposition" shall mean any sale, assignment, transfer or other disposition of any Property (whether now owned or hereafter acquired) by the Company to any Person excluding any sale, assignment, transfer or other disposition of any Property sold or disposed of in the ordinary course of business and on ordinary business terms. "Dividend Payment" shall mean dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any class of stock of the Company or of any warrants, options or other rights to acquire the same (or to make any payments to any Person, such as "phantom stock" payments, where the amount is calculated with reference to the fair market or equity value of the Company), but excluding dividends payable solely in shares of common stock of the Company. "Dollars" and "$" shall mean lawful money of the United States of America. "Effective Date" shall mean the date upon which the initial extension of credit under this Agreement is made. "Eligible Inventory" shall mean, as at any date, the sum of the following (determined without duplication): all Inventory (a) that is owned by (and in the possession or under the control of) the Company as at such date, (b) that is located in a jurisdiction in the United States of America, (c) as to which (i) appropriate Uniform Commercial Code financing statements have been filed naming the Company as "debtor" and the Administrative Agent as "secured party" and (ii) the Administrative Agent (for the benefit of the Lenders, the Administrative Agent and the Co-Agent) has a first priority Lien, (d) that is in good condition, (e) that meets all standards imposed by any Governmental Person having regulatory authority over such Inventory, its use or sale and (f) that is either currently usable or currently saleable in the normal course of the Company's business without any notice to, or consent of, any Governmental Person; provided that: (x) in no event shall any of the following be "Eligible Inventory": (i) Inventory that is perishable or that has exceeded its shelf life or otherwise been held by the Company as inventory for more than 300 days; (ii) Inventory to be returned to the Company's suppliers; (iii) Inventory in transit to or from third parties (other than warehouses owned by third parties at which the Company stores a portion of its Inventory from time to time, provided that the Administrative Agent shall have received acknowledgements from each such warehouse consenting to the security interest of the Administrative Agent for the benefit of the Lenders, the Administrative Agent and the Co-Agent and any related original negotiable warehouseman's receipts duly endorsed by the Company to the order of the Administrative Agent); (iv) supplies used in the ordinary course of the Company's business; or (v) shrinkage; and (y) the Administrative Agent may at any time exclude from Eligible Inventory any type of Inventory that the Administrative Agent (in its reasonable business judgment) determines to be unmarketable or otherwise ineligible for any reason. In addition, Eligible Inventory shall be reduced by the amount of reserves required by the Administrative Agent (in its reasonable judgment as set forth below) for (A) special order Inventory, (B) market value declines (to the extent the Inventory's value is below its cost), (C) bill and hold (deferred shipment or consignment sales), (D) markdowns (to the extent the Inventory's value is below its cost), (E) Inventory that is not located at the Company's retail store locations or its warehouses (or warehouses referred to in clause (iii) above) or in transit between such stores or warehouses, (F) demonstration items (to the extent the Inventory's value is below its cost) and (G) Inventory held for rent. The amount of such reserves shall be determined solely by the Administrative Agent in its reasonable business judgment using standards, consistently applied by the Administrative Agent. Such standards shall take into consideration amounts representing, historically, the Company's reserves, discounts, returns, claims, credits and allowances. "Eligible Receivables" shall mean, as at any date, the aggregate amount of all Receivables at such date payable to the Company other than the following (determined without duplication): (a) any Receivable not payable in Dollars, (b) any Receivable that, at the date of issuance of the original invoice for the related Inventory, was payable more than 60 days after shipment of such Inventory, (c) any Receivable due from an Affiliate of the Company, (d) any Receivable due from an account debtor whose principal place of business is located outside of the United States of America, (e) any Receivable due from an account debtor that the Administrative Agent has notified the Company does not have a satisfactory credit standing (as determined in the sole discretion of the Administrative Agent), (f) any Receivable that is more than 90 days past due, (g) all Receivables of any account debtor if more than 25% of the aggregate amount of the Receivables due from such account debtor shall at the time be more than 30 days past due, (h) all Receivables due from any account debtor if the Receivables due from such account debtor and its Affiliates at the time exceed 15% of all Receivables then payable to the Company, (i) any Receivable as to which there is any unresolved dispute with the respective account debtor (but only to the extent of the amount so in dispute), (j) any Receivable due from an account debtor to whom the Company is or may become liable for goods sold or services rendered by such account debtor to the Company (but only to the extent of the amount of the liability to such account debtor), (k) any Receivable representing an obligation for goods sold on consignment, approval or a sale-or-return basis or subject to any other repurchase or return arrangement, (l) any Receivable as to which the Administrative Agent determines that it has insufficient information to determine eligibility, and (m) any Receivable that the Administrative Agent may otherwise determine (in its reasonable business judgment) from time to time to be uncollectible or otherwise ineligible for any reason. "Environmental Claim" shall mean, with respect to any Person, any written or oral notice, claim, demand or other communication (collectively, a "claim") by any other Person alleging or asserting such Person's liability for investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term "Environmental Claim" shall include any claim by any Governmental Person for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to human or animal health or safety or to the environment. "Environmental Laws" shall mean any and all present and future Governmental Rules relating to the regulation or protection of human or animal health or safety or of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes (including Hazardous Materials) into the indoor or outdoor environment, including ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes. The term "Environmental Law" shall include the terms and conditions of any Governmental Approval issued under any Environmental Law or with respect to any Hazardous Material. "Equity Issuance" shall mean (a) any issuance or sale by the Company after the Effective Date of (i) any capital stock (other than capital stock issued on customary terms to directors, officers or employees of the Company), (ii) any warrants or options exercisable in respect of capital stock (other than any warrants or options issued on customary terms to directors, officers or employees of the Company and any capital stock of the Company issued upon the exercise of such warrants or options) or (iii) any other security or instrument representing an equity interest (or the right to obtain any equity interest) in the issuing or selling Person or (b) the receipt by the Company after the Effective Date of any capital contribution (whether or not evidenced by any equity security issued by the recipient of such contribution). "Equity Rights" shall mean, with respect to any Person, any outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any stockholders' or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership interests of any type in, such Person. "ERISA" shall mean the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" shall mean any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which the Company is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which the Company is a member. "Event of Default" shall have the meaning assigned to that term in Section 9. "Excess Cash Flow" shall mean, for any period, the excess of (i) the sum of (A) Cash Flow for such period plus (B) any decrease in the amount of the Company's investment in forward buy Inventory over such period (determined by reference to the first and last days of such period) minus (C) any increase in the amount of the Company's investment in forward buy Inventory over such period (determined by reference to the first and last days of such period) over (ii) the sum of the aggregate amount of (A) Debt Service for such period plus (B) payments made by the Company during such period pursuant to leases of retail store locations that are no longer being operated by the Company. "Existing Interest Rate Protection Agreement" shall mean that certain Interest Rate Protection Agreement dated January 27, 1989 (as amended March 8, 1989, and November 3, 1994 and the Effective Date) between the Company and Bank of America. "Existing Letters of Credit" shall mean the letters of credit identified on Schedule III. "Existing Senior Credit Agreement" shall mean the Credit Agreement referred to in numbered paragraph 1 of Part A of Schedule I. "Federal Funds Rate" shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the Federal Funds Rate for such Business Day shall be the average rate charged to Chemical Bank on such Business Day on such transactions as determined by the Administrative Agent. "Fixed Charges Ratio" shall mean, as at any date and for any period, the ratio of (a) Cash Flow for such period to (b) Debt Service for such period. "Funded Debt" shall mean, at any time, the aggregate unpaid principal amount of Indebtedness of the Company (determined without duplication in accordance with GAAP) outstanding at such time. "Funded Debt to Operating Cash Flow Ratio" shall mean, as at any date and for any period, the ratio of (a) Funded Debt at such date to (b) Operating Cash Flow for such period. "GAAP" shall mean accounting principles set forth as generally accepted in currently effective opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and in statements of the Financial Accounting Standards Board, together with interpretive rulings and bulletins issued in connection therewith, as in effect from time to time but applied on a consistent basis with those principles used in the preparation of the financial statements referred to in Section 7.02. "GEI" shall mean Green Equity Investors, L.P., a Delaware limited partnership. "Governmental Approvals" shall mean any authorization, consent, approval, license, lease, ruling, permit, waiver, exemption, filing, registration or notice by or with any Governmental Person. "Governmental Person" shall mean any national (Federal or foreign), state or local government, any political subdivision or any governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, agency, body or entity, including the PBGC, Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, any central bank or any comparable authority. "Governmental Rules" shall mean any law, rule, regulation, ordinance, order, code, judgment, decree, directive, guideline, policy, or any similar form of decision of, or any interpretation or administration of any of the foregoing by, any Governmental Person. "Guarantee" shall mean a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or to become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor's obligations or an agreement to assure a creditor against loss, including causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms "Guarantee" and "Guaranteed" used as verbs shall have correlative meanings. "Hazardous Material" shall mean, collectively, (a) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could reasonably be expected to become friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," "contaminants," "infectious wastes," "pollutants" or words of similar import under any Environmental Law and (c) any other chemical or other material or substance, exposure to which or use of which is now or hereafter prohibited, limited or regulated under any Environmental Law. "Indebtedness" shall mean, for any Person (without duplication): (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) obligations of others secured by a Lien on the Property of such Person, whether or not the respective obligations so secured have been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; (e) Capital Lease Obligations of such Person and obligations of such Person in respect of Special Operating Leases; and (f) obligations of others Guaranteed by such Person. "Interest Expense" shall mean, for any period, the sum, for the Company (determined without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued, added to principal or paid in kind during such period (whether or not actually paid during such period), net of interest income of the Company during such period, plus (b) the net amounts payable (or minus the net amounts receivable) under Interest Rate Protection Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Rate Protection Agreement" shall mean, for any Person, an interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more financial institutions, or (in connection with any such agreement or arrangement which is a master agreement providing for separate transactions to be entered into from time to time pursuant thereto) any such separate transaction. For purposes of this Agreement, the "credit exposure" at any time of any Person under an Interest Rate Protection Agreement to which such Person is a party shall be determined at such time in accordance with the customary methods of calculating credit exposure under similar arrangements by the counterparty to such arrangements (and, in the case of the Existing Interest Rate Protection Agreement, as determined monthly by Bank of America), taking into account potential interest rate movements and the respective termination provisions and notional principal amount and term of such Interest Rate Protection Agreement. "Inventory" shall have the meaning assigned to that term in the Security Agreement. "Investment" shall mean, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities (including Equity Rights) of any other Person or any agreement to make any such acquisition (including any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding (i) any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business and (ii) advances to employees in the ordinary course of business); (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of any Interest Rate Protection Agreement. "Issuing Bank" shall mean Chemical Bank or The Dai-Ichi Kangyo Bank, Limited, as the case may be, as an issuer of Letters of Credit under Section 2.03 and, to the extent set forth in Section 2.03(n), each Lender which has issued an Existing Letter of Credit. "Lenders" shall have the meaning assigned to that term in the introductory paragraph of this Agreement. "Letter of Credit" shall have the meaning assigned to such term in Section 2.03. "Letter of Credit Documents" shall mean, with respect to any Letter of Credit, collectively, any application for any Letter of Credit and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations. "Letter of Credit Interest" shall mean, for each Revolving Credit Lender, such Lender's participation interest in (a) the Administrative Agent's liability with respect to Letters of Credit and (b) Existing Letters of Credit and such Lender's rights and interests in Reimbursement Obligations and fees, interest and other amounts payable in connection with Letters of Credit and Reimbursement Obligations. "Letter of Credit Liability" shall mean, without duplication, at any time and in respect of any Letter of Credit, the sum of (a) the undrawn face amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Company at such time due and payable in respect of all drawings made under such Letter of Credit. For purposes of this Agreement, a Revolving Credit Lender shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest in the Administrative Agent's liability with respect to the Letters of Credit and its participation interest in Existing Letters of Credit under Section 2.03. "Leverage Ratio" shall mean, at any time, the ratio of Total Liabilities to Net Worth of the Company at such time. "Lien" shall mean, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property or any agreement to give, or notice of, any of the foregoing. For purposes of this Agreement and the other Basic Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property. "Loans" shall mean Revolving Credit Loans and Term Loans. "Majority Lenders" shall mean, subject to the last paragraph of Section 11.04, Lenders having at least 61% (or 75% if the CITBC Share is greater than 40%) of the aggregate amount of the Commitments (excluding the Tranche C Term Loan Commitment) or, if such Commitments shall have terminated, Lenders holding at least 61% (or 75% if the CITBC Share is greater than 40%) of the sum of (a) the aggregate unpaid principal amount of the Loans (excluding the Tranche C Term Loan) plus (b) the aggregate amount of all Letter of Credit Liabilities. "Margin Stock" shall mean "margin stock" within the meaning of Regulations U and X. "Material Adverse Effect" shall mean a material adverse effect on (a) the Property, business, operations, financial condition, prospects, liabilities or capitalization of the Company taken as a whole, (b) the ability of the Company to consummate the transactions contemplated by the Plan of Reorganization, (c) the ability of the Company to perform its obligations under any of the Basic Documents, (d) the validity or enforceability of any of the Basic Documents, (e) the rights, remedies, powers and privileges of the Lenders, the Co-Agent and the Administrative Agent under any of the Basic Documents or (f) the timely payment of the Obligations. "Monthly Dates" shall mean the last day of each calendar month in each year, the first of which shall be the first such day after the Effective Date. "Mortgage" shall mean a Mortgage, Assignment of Rents and Fixture Filing, in substantially the form of Exhibit D, executed by the Company in favor of the Administrative Agent for the benefit of the Administrative Agent, the Co-Agent and the Lenders. "Multiemployer Plan" shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Company or any ERISA Affiliate and which is covered by Title IV of ERISA. "Net Available Proceeds" shall mean: (a) in the case of any Disposition, the amount of Net Cash Payments received in connection with such Disposition; (b) in the case of any Casualty Event, the aggregate amount of proceeds of insurance, condemnation awards and other compensation received by the Company in respect of such Casualty Event net of (A) reasonable expenses incurred by the Company in connection with such Casualty Event and (B) contractually required repayments of Indebtedness to the extent secured by a Lien on such Property and any income and transfer taxes payable or estimated to be payable by the Company in respect of such Casualty Event (but, in the case of estimated taxes, only to the extent that such taxes are in fact paid to the relevant Governmental Person within three months of the date of such Casualty Event or (solely with respect to Federal income taxes in respect of any Casualty Event occurring within one year after the Effective Date to the extent the Company is not required by law to make quarterly estimated Federal tax payments prior to the end of such one-year period) within one year after the Effective Date) or other payments required by the terms of existing arrangements with landlords or mortgagees; (c) in the case of any Equity Issuance, the aggregate amount of all cash received by the Company in respect of such Equity Issuance net of reasonable expenses incurred by the Company in connection with such Equity Issuance; and (d) in the case of any incurrence of Indebtedness, the aggregate amount of all cash received by the Company in respect of such Indebtedness net of reasonable expenses incurred by the Company in connection with such Indebtedness. "Net Cash Payments" shall mean, with respect to any Disposition, the aggregate amount of all cash payments, and the fair market value of any noncash consideration, received by the Company directly or indirectly in connection with such Disposition; provided that (a) Net Cash Payments shall be net of (i) the amount of any legal, title and recording tax expenses, commissions and other fees and expenses paid by the Company in connection with such Disposition and (ii) any Federal, state and local income or other taxes estimated to be payable by the Company as a result of such Disposition (but only to the extent that such estimated taxes are in fact paid to the relevant Governmental Person within three months of the date of such Disposition or (solely with respect to Federal income taxes in respect of any Disposition occurring within one year after the Effective Date to the extent the Company is not required by law to make quarterly estimated Federal tax payments prior to the end of such one-year period) within one year after the Effective Date), and (b) Net Cash Payments shall be net of (i) any repayments by the Company of Indebtedness to the extent that (A) such Indebtedness is secured by a Lien on the Property that is the subject of such Disposition and (B) the transferee of (or holder of a Lien on) such Property requires that such Indebtedness be repaid as a condition to the Disposition of such Property and (ii) other payments required by the terms of existing arrangements with landlords or mortgagees. "Net Worth" shall mean, as at any date for the Company, the excess of (a) Total Assets at such date over (b) the sum of (i) Total Liabilities at such date plus (ii) the aggregate amount of preferred stock of the Company outstanding at such date (other than preferred stock as to which the payment of dividends are solely within the discretion of the Company). "Notes" shall mean the Revolving Credit Notes and the Term Notes. "Obligations" shall mean the principal of any Loan, Reimbursement Obligations, interest, fees and any other amount payable by the Company to any Lender, the Administrative Agent or the Co-Agent under any Basic Document (including, if the Company becomes a debtor in a case under the Bankruptcy Code, all such amounts which would accrue under the terms of any Basic Document whether or not such amounts constitute allowed claims in such bankruptcy). "Old Subordinated Debentures" shall have the meaning assigned to that term in the Disclosure Statement. "Operating Cash Flow" shall mean, for any period, the sum, for the Company (determined without duplication in accordance with GAAP), of the following: (a) operating income (calculated before Interest Expense, taxes, extraordinary and unusual items and income or loss attributable to equity in Affiliates) for such period plus (b) depreciation and amortization (to the extent deducted in determining operating income) for such period. "Other Pari Passu Obligations" shall mean, as at any date, the aggregate credit exposure of the Company at such date under the Existing Interest Rate Protection Agreement. "Patent and Trademark Assignments" shall mean the assignments, in substantially the form attached as Annexes 6 and 7 of the Security Agreement, executed by the Company in favor of the Administrative Agent for the benefit of the Administrative Agent, the Co-Agent and the Lenders. "PBGC" shall mean the Pension Benefit Guaranty Corporation. "Permitted Investments" shall mean: (a) direct obligations of the United States of America, or of any of its agencies, or obligations guaranteed as to principal and interest by the United States of America, or of any of its agencies, in either case maturing not more than 90 days from the date of acquisition of such obligation; (b) certificates of deposit issued by any bank or trust company organized under the laws of the United States of America or any state and having capital, surplus and undivided profits of at least $500,000,000, maturing not more than 90 days from the date of acquisition; and (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's Corporation or Moody's Investors Services, Inc., respectively, maturing not more than 90 days from the date of acquisition. "Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or Governmental Person. "Plan" shall mean an employee benefit or other plan established or maintained by the Company or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan. "Plan of Reorganization" shall mean that certain "First Amended Plan of Reorganization of Kash n' Karry Food Stores, Inc." dated December 12, 1994 (without regard to any amendments, modifications or supplements made without the consent of the Lenders after December 12, 1994). "Post-Default Rate" shall mean (a) in respect of the Loans, a rate per annum equal to 2.0% plus the Base Rate as in effect from time to time plus the Applicable Margin for such Loans as in effect from time to time and (b) in respect of all other Obligations, a rate per annum equal to 2.0% plus the Base Rate as in effect from time to time plus the Applicable Margin for Revolving Credit Loans as in effect from time to time. "Prime Rate" shall mean the rate of interest from time to time announced by Chemical Bank, New York City, New York, as its prime rate. Such announced rate is not necessarily the lowest rate offered by Chemical Bank, and any extension of credit by Chemical Bank may be at rates above, below or at such announced rate. "Principal Office" shall mean the principal office of Chemical Bank, located on the Effective Date at 270 Park Avenue, New York, New York 10017. "Principal Payment Dates" shall mean (a) the first Business Day following each Quarterly Date, commencing with the first such day after the Effective Date, and (b) the Termination Date. "Property" shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Quarterly Dates" shall mean the Sunday closest to the last day of January, April, July and October in each year, the first of which shall be the first such day after the Effective Date. "Receivables" shall mean all "Accounts" (as such term is defined in the Security Agreement) of the Company and rights of the Company to the payment of money from or in respect of (a) manufacturers on account of coupons issued by such manufacturers and honored by the Company, (b) insurance companies and third party health care providers in respect of reimbursements for prescription drugs sold by the Company and (c) open accounts with customers arising from the sale of Inventory. "Regulations A, D, U and X" shall mean, respectively, Regulations A, D, U and X of the Board of Governors of the Federal Reserve System. "Regulatory Change" shall mean, with respect to any Lender (or its Applicable Lending Office), the occurrence after the Effective Date of any of the following events: (a) the adoption of any applicable Governmental Rule, (b) any change in any applicable Governmental Rule or in the interpretation or administration of any Governmental Rule by any Governmental Person charged with its interpretation or administration or (c) the adoption or making of any interpretation, directive, guideline, policy or request applying to a class of banks including such Lender of or under any Governmental Rule or in the interpretation or administration of any Governmental Rule (whether or not having the force of law and whether or not failure to comply would be unlawful) by any Governmental Person charged with its interpretation or administration. "Reimbursement Obligations" shall mean, at any time, the obligations of the Company then outstanding, or which may thereafter arise in respect of all Letters of Credit then outstanding, to reimburse amounts paid by (or debited from the Administrative Agent's account by) an Issuing Bank or the Administrative Agent in respect of any drawings under a Letter of Credit. "Release" shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata. "Retained Cash" shall mean coin and currency for the Company to conduct business in the ordinary course of its operations and consistent with past business practices of the Company. "Revolving Credit Commitment" shall mean, for each Revolving Credit Lender, the obligation of such Lender to make Revolving Credit Loans in an aggregate amount at any one time outstanding up to but not exceeding the amount set opposite the name of such Lender on Annex 1 (as the same may be reduced from time to time pursuant to Section 2.04). The original aggregate principal amount of the Revolving Credit Commitments is $50,000,000. "Revolving Credit Commitment Percentage" shall mean, with respect to any Revolving Credit Lender, the ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b) the aggregate amount of the Revolving Credit Commitments of all of the Lenders. "Revolving Credit Lenders" shall mean (a) on the Effective Date, the Lenders having Revolving Credit Commitments as specified on Annex 1 and (b) thereafter, the Lenders from time to time holding Revolving Credit Loans and Revolving Credit Commitments after giving effect to any assignments permitted by Section 11.06. "Revolving Credit Loans" shall mean the loans provided for by Section 2.01(a). "Revolving Credit Notes" shall mean the promissory notes provided for by Section 2.08(a). "Securities Purchase Agreement" shall mean the Securities Purchase Agreement dated as of December 29, 1994 between the Company and GEI. "Security Agreement" shall mean a Security Agreement, in substantially the form of Exhibit C, executed by the Company in favor of the Administrative Agent for the benefit of the Administrative Agent, the Co-Agent and the Lenders. "Security Documents" shall mean, collectively, the Security Agreement, the Mortgage, the Patent and Trademark Assignments, the Blocked Account Agreement, all Uniform Commercial Code financing statements and all other filings or recordings with any Governmental Person required by this Agreement, the Security Agreement or the Mortgage to be filed or recorded with respect to each of the security interests in personal Property and fixtures created pursuant to the Security Agreement and the Mortgage. "Senior Notes" shall mean the Indebtedness of the Company in respect of the Senior Floating Rate Notes of the Company due February 1, 2003 and the 11.5% Senior Fixed Rate Notes of the Company due February 1, 2003, in each case issued pursuant to the Senior Note Documents. "Senior Note Documents" shall mean the (a) the Indenture dated as of December 29, 1994 between the Company and Shawmut Bank Connecticut, N.A., as Trustee, relating to the 11.5% Senior Fixed Rate Notes of the Company due 2003 and (b) the Indenture dated as of December 29, 1994 between the Company and IBJ Schroder Bank & Trust Company, as Trustee, relating to the Senior Floating Rate Notes of the Company due 2003. "Special Collateral Account" shall have the meaning assigned to that term in Section 4.01(f). "Special Operating Lease" shall mean, for any Person, each arrangement, however described, under which such Person accounts for its interest in the Property covered thereby under GAAP as lessee of a lease which is not a capital lease and accounts for its interest in such Property for Federal income tax purposes as the owner. The amount of the obligations of such Person under any Special Operating Lease at any time of determination shall be the amount of such Person's liability in respect of such Special Operating Lease that would be required to be capitalized on the balance sheet of such Person at such time if such lease were required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP. "Subsidiary" shall mean, for any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Termination Date" shall mean the third anniversary of the Effective Date. "Term Loan Commitment" shall mean, for each Term Loan Lender, the Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment and the Tranche C Term Loan Commitment (if any) of such Lender. "Term Loan Lenders" shall mean (a) on the Effective Date, the Lenders having Term Loan Commitments as specified on Annex 1 and (b) thereafter, the Lenders from time to time holding Term Loans after giving effect to any assignments permitted by Section 11.06. "Term Loan Notes" shall mean the promissory notes provided for by Sections 2.08(b), 2.08(c) and 2.08(d). "Term Loans" shall mean the Tranche A Term Loan, the Tranche B Term Loan and the Tranche C Term Loan. "Total Assets" shall mean, as at any date for the Company (determined in accordance with GAAP), all assets which should be classified as assets on a balance sheet of the Company at such date. "Total Liabilities" shall mean, as at any date, the sum, for the Company (determined without duplication in accordance with GAAP), of the following: (a) all Indebtedness of the Company at such date and (b) all other liabilities which should be classified as liabilities on a balance sheet of the Company at such date, including all reserves and all deferred taxes and other deferred items. "Tranche A Term Loan" shall mean, individually or collectively, the loans provided for by Section 2.01(b). "Tranche B Term Loan" shall mean, individually or collectively, the loans provided for by Section 2.01(c). "Tranche C Term Loan" shall mean, individually or collectively, the loans provided for by Section 2.01(d). "Tranche A Term Loan Commitment" shall mean, for each Term Loan Lender, the obligation of such Lender to make a single Tranche A Term Loan in the amount set opposite the name of such Lender on Annex 1 under the caption "Tranche A Term Loan Commitment." The original aggregate principal amount of the Tranche A Term Loan Commitments is $0. "Tranche B Term Loan Commitment" shall mean, for each Term Loan Lender, the obligation of such Lender to make a single Tranche B Term Loan in the amount set opposite the name of such Lender on Annex 1 under the caption "Tranche B Term Loan Commitment." The original aggregate principal amount of the Tranche B Term Loan Commitments is $34,048,871.42. "Tranche C Term Loan Commitment" shall mean the obligation of Bank of America to make a single Tranche C Term Loan in the amount set opposite its name on Annex 1 under the caption "Tranche C Term Loan Commitment." The original principal amount of the Tranche C Term Loan Commitment is $951,128.58. "Working Capital" shall mean, as at any date for the Company, the excess of current assets of the Company at such date over current liabilities of the company at such date. For purposes of this Agreement, the terms "current assets" and "current liabilities" shall have the respective meanings assigned to them by GAAP, provided that in any event there shall be excluded from current liabilities the current portion of all Indebtedness under the Basic Documents to the extent exceeding $7,000,000. 1.02 Accounting Terms and Determinations. (a) Except as otherwise expressly provided in this Agreement, all accounting terms used in this Agreement shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Administrative Agent, the Co-Agent or the Lenders under this Agreement shall be prepared, in accordance with GAAP in effect from time to time; provided that the covenants set forth in Sections 8.07, 8.09, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, the determination of Excess Cash Flow and related definitions, certificates and accounting terms shall be determined, prepared and interpreted, as the case may be, in accordance with GAAP in effect on the date of the financial statements of the Company referred to in Section 7.02. (b) To enable the ready and consistent determination of compliance with the covenants set forth in Section 8, the Company will not change the last day of its fiscal year from the Sunday closest to the last day of July of each year, or the last days of the first three fiscal quarters in each of its fiscal years from the Sunday closest to the last day of October, January and April of each year, respectively. 1.03 Classes of Loans. Loans are distinguished by "Class." The "Class" of a Loan (or of a Commitment to make a Loan) refers to whether such Loan is a Revolving Credit Loan, a Tranche A Term Loan, a Tranche B Term Loan or a Tranche C Term Loan, each of which constitutes a Class. 1.04 Interpretation. In this Agreement, unless otherwise indicated, the singular includes the plural and plural the singular; words importing any gender include the other gender; references to statutes or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending or replacing the statute or regulation referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words "including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to this Agreement; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments, extensions and other modifications to such instruments (without, however, limiting any prohibition on any such amendments, extensions and other modifications by the terms of this Agreement); and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. Section 2. Commitments, Loans, Notes and Prepayments. 2.01 Loans. (a) Revolving Credit Loans. Each Revolving Credit Lender severally agrees, on the terms and conditions of this Agreement, to make loans to the Company in Dollars during the period from and including the Effective Date to but not including the Termination Date in an aggregate principal amount at any one time outstanding up to but not exceeding the amount of the Revolving Credit Commitment of such Lender as in effect from time to time, provided that in no event shall the aggregate principal amount of all Revolving Credit Loans outstanding, together with the aggregate amount of all Letter of Credit Liabilities outstanding, exceed the aggregate amount of the Revolving Credit Commitments as in effect from time to time. Subject to the terms and conditions of this Agreement, during such period the Company may borrow, repay and reborrow the amount of the Revolving Credit Commitments. (b) Tranche A Term Loan. Each Term Loan Lender severally agrees, on the terms and conditions of this Agreement, to make a single term loan to the Company in Dollars on the Effective Date in an aggregate amount up to but not exceeding the amount of the Tranche A Term Loan Commitment of such Lender. (c) Tranche B Term Loan. Each Term Loan Lender severally agrees, on the terms and conditions of this Agreement, to make a single term loan to the Company in Dollars on the Effective Date in an aggregate amount up to but not exceeding the amount of the Tranche B Term Loan Commitment of such Lender. (d) Tranche C Term Loan. Bank of America agrees, on the terms and conditions of this Agreement, to make a single term loan to the Company in Dollars on the Effective Date in an aggregate amount up to but not exceeding the Tranche C Term Loan Commitment of Bank of America. 2.02 Borrowings of Loans. (a) The Company shall give the Administrative Agent notice of each borrowing of Loans as provided in Section 4.05. (b) Subject to the terms and conditions of this Agreement, not later than 10:00 a.m. Los Angeles time on the date specified for each borrowing of Loans or, if the Administrative Agent in its sole and absolute discretion requests funds from the Revolving Credit Lenders to fund the borrowing, after receipt of funds relating thereto from the Revolving Credit Lenders (but not later than 1:00 p.m. Los Angeles time on such date), the Administrative Agent shall make available to the Company the amount of such borrowing by transferring the same, in immediately available funds, to an account of the Company maintained with Chemical Bank at the Principal Office as designated by the Company. (c) Unless and until otherwise directed in writing by the Majority Lenders (or, if the CITBC Share is greater than 40%, each Lender other than CITBC), the Administrative Agent in its sole and absolute discretion may make Revolving Credit Loans requested by the Company or assist in the issuance of Letters of Credit pursuant to Section 2.03 (each, a "Discretionary Extension"), in excess of the Borrowing Base or at a time when one or more of the other conditions set forth in Section 6.02 have not been satisfied (including at a time when a Default has occurred and is continuing); provided that, unless the Majority Lenders (or, if the CITBC Share is greater than 40%, each Lender other than CITBC) shall have otherwise consented in writing, the Administrative Agent agrees with the Lenders that it will not make on any date any Discretionary Extension if such Discretionary Extension would result in the principal amount of the Revolving Credit Loans and Letter of Credit Liabilities outstanding on such date (after giving effect thereto) exceeding the Borrowing Base by more than $5,000,000, nor will it make any such Discretionary Extension during any period commencing upon the occurrence of an Event of Default and ending on the date on which such Event of Default shall no longer be continuing (each such period, a "Default Period") if, in the case of any Event of Default other than one caused by the failure to make mandatory prepayments under Section 2.10(a), (i) such Discretionary Extension would result in the principal amount of the Revolving Credit Loans and Letter of Credit Liabilities outstanding on the date such Discretionary Extension is made (after giving effect thereto) exceeding by more than $5,000,000 the principal amount of the Revolving Credit Loans and Letter of Credit Liabilities outstanding at the end of the day immediately preceding the first day of the Default Period or (ii) such Discretionary Extension would occur more than thirty (30) days after commencement of such Default Period and the Administrative Agent has actual knowledge of such Event of Default. Any such discretionary Revolving Credit Loans shall be due on demand, and the making of any such discretionary Revolving Credit Loans and the Administrative Agent's assistance in the issuance of any such Letters of Credit at any time shall not be deemed to constitute a waiver of any condition applicable to any future borrowing or other extension of credit nor a waiver of any Default, and the Administrative Agent, the Co-Agent and the Lenders reserve all of their rights with respect thereto. (d) The Administrative Agent shall from time to time, but no less frequently than weekly, notify each Lender of the date such Lender is to fund its Revolving Credit Loans and the amount to be made available by it. At the discretion of the Administrative Agent, the amount to be made available by a Lender on any date may be netted against any amount owing to such Lender and otherwise payable by the Administrative Agent on account of payments received by it from the Company on such date. The amount to be made available by each Lender on any date shall be made available by it on such date to the Administrative Agent, at account number 144054227 maintained by the Administrative Agent with Chemical Bank at the Principal Office, in immediately available funds (not later than 1:00 p.m. Los Angeles time on any day in the case of fundings required pursuant to Section 2.02(b) of which the Lenders have received notice not later than 10:00 a.m. Los Angeles time on such day). Except to the extent the Administrative Agent shall have made Revolving Credit Loans or other extensions of credit under this Agreement available to the Company after the Majority Lenders (or, if the CITBC Share is greater than 40%, each Lender other than CITBC) shall have instructed the Administrative Agent in writing not to make such Loans or other extensions of credit available because the conditions set forth in Section 6.02 have not been satisfied or because a Default then exists and is continuing or otherwise in contravention of Section 2.02(c), the obligation of each Revolving Credit Lender to fund its Revolving Credit Loans on the date specified by the Administrative Agent (even if made available by the Administrative Agent to the Company prior to requiring the funding by such Lender) or to participate in such Letters of Credit pursuant to Section 2.03 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Administrative Agent, the Company or any other Person for any reason whatsoever, (ii) the occurrence or continuation of a Default or a Material Adverse Effect, whether the same shall occur before or after the Administrative Agent shall have made the Revolving Credit Loans available to the Company, (iii) the financial condition or prospects of the Company, (iv) the failure of any other Revolving Credit Lender to make its Revolving Credit Loans available to the Administrative Agent, or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 2.03 Letters of Credit. On the terms and subject to the conditions of this Agreement, the Revolving Credit Commitments may be utilized, in addition to the Revolving Credit Loans provided for by Section 2.01(a), by the Company requesting the issuance by one of the Issuing Banks of letters of credit (collectively, "Letters of Credit") for the account of the Company, provided that in no event shall (i) the aggregate amount of all Letter of Credit Liabilities, together with the aggregate principal amount of the Revolving Credit Loans, exceed the aggregate amount of the Revolving Credit Commitments as in effect from time to time, (ii) the outstanding aggregate amount of all Letter of Credit Liabilities exceed $25,000,000 or (iii) the expiration date of any Letter of Credit extend beyond the earlier of fifteen (15) days prior to the Termination Date (or such earlier date on which the Revolving Credit Commitment shall terminate) and the date one year following the issuance of such Letter of Credit. The Administrative Agent shall assist in the issuance of each Letter of Credit (whether by co-signing an application therefor, guaranteeing the Company's obligations with respect thereto or otherwise). The following additional provisions shall apply to Letters of Credit: (a) The Company shall give the Administrative Agent at least five Business Days' irrevocable prior notice (effective upon receipt) specifying the Business Day (which shall be no later than 30 days preceding the Termination Date or such earlier date on which the Revolving Credit Commitment shall terminate) each Letter of Credit is to be issued and describing in reasonable detail the proposed terms of such Letter of Credit (including its beneficiary) and the nature of the transactions or obligations proposed to be supported (including whether such Letter of Credit is to be a commercial letter of credit or a standby letter of credit); provided that, no Letter of Credit shall be issued except for the purpose of supporting (i) workers' compensation obligations of the Company, (ii) the purchase and importation of Inventory of the Company (iii) other obligations of the Company of the type supported by the Existing Letters of Credit or (iv) other obligations of the Company approved in writing by the Administrative Agent. Upon receipt of any such notice for a Letter of Credit and satisfaction of the provisions of the foregoing proviso, the Administrative Agent shall advise one of the Issuing Banks of the contents thereof and assist the Company in obtaining the issuance of such Letter of Credit. The Administrative Agent shall periodically (but no less frequently than weekly) notify the Lenders of the issuance of and payments under Letters of Credit. (b) On each day during the period commencing with the issuance by an Issuing Bank of any Letter of Credit and until such Letter of Credit shall have expired or been terminated or, if drawn upon, until the resulting Reimbursement Obligations have been reimbursed in full by the Company (whether by a borrowing under this Agreement or otherwise), the Revolving Credit Commitment of each Revolving Credit Lender shall be deemed to be utilized for all purposes of this Agreement in an amount equal to such Lender's Revolving Credit Commitment Percentage of the then Letter of Credit Liabilities associated with such Letter of Credit. Each Revolving Credit Lender agrees that, upon the issuance in accordance with this Agreement of any Letter of Credit it shall automatically acquire a participation in the Administrative Agent's (or, in the case of any Existing Letter of Credit issued by a Lender, such issuing Lender's) liability with respect to such Letter of Credit in an amount equal to such Lender's Revolving Credit Commitment Percentage of such liability, and each Revolving Credit Lender thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to the Administrative Agent (or, in the case of an Existing Letter of Credit issued by a Lender, such issuing Lender) to pay and discharge when due, its Revolving Credit Commitment Percentage of the Administrative Agent's (or, in the case of any Existing Letter of Credit issued by a Lender, such issuing Lender's) liability with respect to such Letter of Credit. (c) Upon receipt by the Administrative Agent from an Issuing Bank of notice that such Issuing Bank has made a payment or received any demand for payment under a Letter of Credit, or upon receipt by the Administrative Agent from an Issuing Bank that such Issuing Bank has debited the Administrative Agent's account with such Issuing Bank in respect of the payment by it of a drawing under a Letter of Credit issued by it, the Administrative Agent shall promptly notify the Company of the amount paid or to be paid by such Issuing Bank as a result of such demand or payment, or the amount debited from the Administrative Agent's account in respect of such payment, and the date on which such payment or debit was or is to be made in respect of such Letter of Credit. Notwithstanding the identity of the account party of any Letter of Credit, the Company hereby unconditionally agrees to pay and reimburse the Administrative Agent for the account of such Issuing Bank for the amount of each payment or demand for payment under such Letter of Credit, or for the account of the Administrative Agent for the amount of each such debit to the Administrative Agent's account in respect of such Letter of Credit, at or prior to the date on which payment was or is to be made by such Issuing Bank to the beneficiary under such Letter of Credit or on which any such debit is made to the Administrative Agent's account, as the case may be, without presentment, demand, protest or other formalities of any kind. (d) Forthwith upon its receipt of a notice referred to in clause (c) of this Section 2.03, the Company shall advise the Administrative Agent whether or not the Company intends to borrow under Section 2.01 to finance its obligation to reimburse an Issuing Bank for the amount of the related payment or demand for payment, or to reimburse the Administrative Agent for the amount debited from its account with an Issuing Bank in respect of any drawing under a Letter of Credit, and, if it does, submit a notice of such borrowing as provided in Section 4.05. In the event that the Company fails to so advise the Administrative Agent, or if the Company fails to reimburse an Issuing Bank for a demand for payment under a Letter of Credit, or fails to reimburse the Administrative Agent for the amount debited from its account with an Issuing Bank in respect of a drawing under a Letter of Credit, by the date of such payment or debit, as the case may be, the Administrative Agent shall have the right (in its sole discretion) to make a Revolving Credit Loan pursuant and subject to Section 2.02(c) in order to effect any such reimbursement or, if it shall not make such a Loan for any reason, the Administrative Agent shall give each Revolving Credit Lender prompt notice of the amount of the demand for payment or the amount of the debit, as the case may be, specifying such Lender's Revolving Credit Commitment Percentage of the amount of the related demand for payment or debit, as the case may be. (e) Each Revolving Credit Lender shall pay to the Administrative Agent at the Principal Office in Dollars and in immediately available funds, the amount of such Lender's Revolving Credit Commitment Percentage of any payment under a Letter of Credit or any debit of the Administrative Agent's account with an Issuing Bank in respect of a drawing under a Letter of Credit, as the case may be, upon notice by the Administrative Agent to such Revolving Credit Lender requesting such payment and specifying such amount as provided in clause (d) of this Section 2.03. Each such Revolving Credit Lender's obligation to make such payments to the Administrative Agent under this clause (e) shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including (i) the failure of any other Revolving Credit Lender to make its payment under this clause (e), the financial condition of the Company (or any other account party), the existence of any Default or (ii) the termination of the Commitments. Each such payment to the Administrative Agent shall be made without any offset, abatement, withholding or reduction whatsoever. (f) Upon the making of each payment by a Revolving Credit Lender to the Administrative Agent pursuant to clause (e) above in respect of any Letter of Credit, such Lender shall, automatically and without any further action on the part of the Administrative Agent, the Issuing Bank with respect to such Letter of Credit or such Lender, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation in respect of such Letter of Credit and under any applicable Letter of Credit Documents relating to such Letter of Credit and (ii) a participation in a percentage equal to such Lender's Revolving Credit Commitment Percentage in any interest or other amounts payable under such Letter of Credit Documents and the other Basic Documents in respect of such Reimbursement Obligation (other than the commissions, charges, costs and expenses payable to such Issuing Bank). (g) The Company shall pay to the Administrative Agent for its account in respect of each Letter of Credit a letter of credit fee in an amount equal to 1-1/2% per annum of the daily average undrawn face amount of such Letter of Credit for the period from and including the date of issuance of such Letter of Credit to and including the date such Letter of Credit is drawn in full, expires or is terminated (such fee to be nonrefundable, to be paid in arrears on each Monthly Date and on the Termination Date and to be calculated, for any day, after giving effect to any payments made under such Letter of Credit on such day). The Administrative Agent shall pay to each Revolving Credit Lender, from time to time at reasonable intervals (but in any event at least monthly), but only to the extent actually received from the Company, an amount equal to such Lender's Revolving Credit Commitment Percentage of all such fees in respect of each Letter of Credit (including any such fee in respect of any period of any renewal or extension of such Letter of Credit). In addition, the Company shall pay to the Administrative Agent for the account of each Issuing Bank with respect to a Letter of Credit all commissions, charges, costs and expenses in the amounts customarily charged by such Issuing Bank from time to time in like circumstances with respect to the issuance of such Letter of Credit and drawings and other transactions relating thereto. (h) The issuance of each Letter of Credit, and the obligation of the Administrative Agent to provide the assistance in its issuance herein described, shall be subject, in addition to the conditions precedent set forth in Section 6, to the conditions precedent that (i) such Letter of Credit shall be in such form, contain such terms and support such transactions as shall be satisfactory to the Issuing Bank with respect to such Letter of Credit and the Administrative Agent consistent with their respective then current practices and procedures with respect to letters of credit of the same type and (ii) the Company shall have executed and delivered such applications, agreements and other instruments relating to such Letter of Credit as such Issuing Bank shall have reasonably requested consistent with its then current practices and procedures with respect to letters of credit of the same type. (i) To the extent that any Revolving Credit Lender fails to pay any amount required to be paid pursuant to clause (e) or (f) of this Section 2.03 when due, such Lender shall pay interest to the Administrative Agent on such amount from and including such due date to but excluding the date such payment is made (i) during the period from and including such due date to but excluding the date three Business Days thereafter, at a rate per annum equal to the Federal Funds Rate (as in effect from time to time) and (ii) thereafter, at a rate per annum equal to the Federal Funds Rate (as in effect from time to time) plus 2%. (j) The issuance of any modification or supplement to any Letter of Credit shall be subject to the same conditions applicable under this Section 2.03 to the issuance of new Letters of Credit. (k) The obligations of the Company under this Section 2.03 shall be unconditional and absolute and shall not be affected, modified or impaired, upon the happening at any time or from time to time of any event, including any of the following, whether or not with notice to or the consent of the Company: (i) the compromise, settlement, release, modification, amendment (whether material or otherwise) or termination of any or all of the obligations, conditions, covenants or agreements of any Person in respect of any of the Basic Documents; (ii) the occurrence, or the failure by the Administrative Agent, the Co-Agent, any Lender or any other Person to give notice to the Company of the occurrence, of any Default or any default under any of the other Basic Documents; (iii) the waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements of any Person contained in any of the Basic Documents; (iv) the extension of the time for performance of any other obligations, covenants or agreements of any Person under or arising out of any of the Basic Documents; (v) the taking or the omission of any of the actions referred to in any of the Basic Documents; (vi) any failure, omission or delay on the part of the Administrative Agent, the Co-Agent, any Lender, the Company or the beneficiary of any Letter of Credit to enforce, assert or exercise any right, remedy, power or privilege conferred by this Agreement or any of the Basic Documents, or any other act or acts on the part of the Administrative Agent, the Co-Agent, any Lender, the Company or the beneficiary of any Letter of Credit; (vii) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets of, the marshalling of assets and liabilities, conservatorship, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings which affect, the Company or any other party to any of the Basic Documents; (viii) any lack of validity or enforceability of this Agreement, any Letter of Credit or any other Basic Document, or any allegation of invalidity or unenforceability or any contest of such validity or enforceability; (ix) the existence of any claim, set-off, defense or other right which the Company may have at any time against the Administrative Agent, the Co-Agent, any Lender or any beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom the Lender or any such beneficiary or transferee may be acting), or any other Person, whether in connection with this Agreement or any of the other Basic Documents or any of the transactions contemplated by any Basic Document or any unrelated transaction; (x) any statement in any certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any such statement being untrue or inaccurate in any respect whatsoever; (xi) payment by an Issuing Bank under any Letter of Credit against presentation of a demand or certificate which does not comply with the terms of such Letter of Credit; (xii) the release or discharge by operation of law of the Company from the performance or observance or any obligation, covenant or agreement contained in any of the Basic Documents; or any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; provided that nothing in this Section 2.03(k) shall preclude the assertion by the Company of a separate claim against an Issuing Bank for any damages which the Company proves were suffered directly by or as a result of the gross negligence or willful misconduct of such Issuing Bank in honoring or refusing to honor any drawing under any Letter of Credit. (l) Without affecting the Company's liability under Section 11.03, the Company agrees to indemnify each of the Issuing Banks, the Administrative Agent, the Co-Agent and the Revolving Credit Lenders and their respective affiliates, directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any and all losses, liabilities, damages or expenses incurred by any of them in connection with or by reason of any actual or threatened investigation, litigation or other proceeding (including, in respect of the Issuing Banks and the Administrative Agent, any such investigations, litigation or other proceeding between the Issuing Banks or the Administrative Agent and any Lender) relating to (a) the execution and delivery of any Letter of Credit; (b) the use of the proceeds of any drawing under any Letter of Credit; or (c) the transfer or substitution of, or payment or failure to pay under, any Letter of Credit, including the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding, but excluding damages, losses, liabilities or expenses to the extent, but only to the extent, incurred by any such Person by reason of the willful misconduct or gross negligence of such Person in performing its respective obligations under any Letter of Credit or this Agreement, as the case may be. It shall not be a condition to any such indemnification that the Issuing Banks, the Administrative Agent, the Co-Agent or any Revolving Credit Lender shall be a party to any such investigations, litigation or other proceeding. Nothing in this Section 2.03 is intended to limit the Company's payment obligations under this Agreement. (m) The Company assumes all risks of the acts or omissions of any beneficiary of any Letter of Credit with respect to the use of the Letter of Credit. None of the Administrative Agent, the Co-Agent, any Lender nor any of its affiliates, officers, directors, employees, attorneys or agents shall be liable or responsible for: (a) the use which may be made of the Letter of Credit or for any acts or omissions of any beneficiary of any Letter of Credit in connection with such Letter of Credit; (b) the validity, sufficiency or genuineness of documents presented to the Issuing Banks or the Administrative Agent, or of any endorsement on such documents, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Banks against presentation of documents which vary in immaterial respects from the terms of any Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit. (n) From and after the Effective Date, the Existing Letters of Credit shall be deemed to be Letters of Credit issued under this Agreement (including for purposes of determining Letter of Credit Liabilities, Reimbursement Obligations and usage of the Revolving Credit Commitment at any time and from time to time) as of the Effective Date and the Lenders that issued such Existing Letters of Credit shall be afforded all of the rights and protections, and shall be subject to all of the obligations, of an Issuing Bank under this Agreement solely with respect to such Existing Letters of Credit (and such Lenders shall be deemed to be the "Issuing Bank" under this Agreement with respect to such Existing Letters of Credit). Each Revolving Credit Lender shall participate in the Existing Letters of Credit on the same terms and conditions on which it participates in the Letters of Credit as set forth above in this Section 2.03. (o) The Company agrees either (i) to provide cover for all Letter of Credit Liabilities relating to any Existing Letter of Credit that have not expired or been terminated on or prior to the Termination Date by paying to the Administrative Agent, not later than 15 days prior to the Termination Date, immediately available funds in an amount equal to the then aggregate undrawn face amount of each such Existing Letter of Credit, which funds shall be held by the Administrative Agent in the Collateral Account (as collateral security in the first instance for such Letter of Credit Liabilities as set forth in the Security Agreement) until such time as such Existing Letters of Credit shall have been terminated and all of such Letter of Credit Liabilities paid in full or (ii) to cause the termination and surrender of any such Existing Letter of Credit not later than 15 days prior to the Termination Date. 2.04 Changes of Commitments. (a) The aggregate amount of the Revolving Credit Commitments shall be automatically reduced to zero on the Termination Date. (b) The Company shall have the right at any time or from time to time (i) so long as no Revolving Credit Loans, Tranche A Term Loan, Tranche B Term Loan or Letter of Credit Liabilities are outstanding, to terminate the Revolving Credit Commitments and (ii) to reduce the aggregate unused amount of the Revolving Credit Commitments; provided that (x) the Company shall give notice of each such termination or reduction as provided in Section 4.05 and (y) each partial reduction shall be in an aggregate amount at least equal to $1,000,000 or in any larger multiple of $100,000. (c) The Term Loan Commitments shall automatically terminate at the close of business on the Effective Date. (d) The Commitments of any Class once terminated or reduced may not be reinstated. 2.05 Fees. (a) The Company shall pay to the Administrative Agent for the account of the Lenders a commitment fee on the daily average unused amount of the aggregate Revolving Credit Commitments of the Lenders for the period from and including the Effective Date to but not including the earlier of the date such Revolving Credit Commitments are terminated and the Termination Date, at a rate per annum equal to 1/2 of 1%. Accrued commitment fees shall be payable in arrears on each Monthly Date and on the earlier of the date such Commitments are terminated and the Termination Date, and shall be allocated to the Lenders as set forth in Section 4.02. (b) The Company shall pay to the Administrative Agent for the account of the Lenders a facility fee on the aggregate daily average outstanding amount of the Tranche B Term Loan for the period from and including the Effective Date to but not including the earlier of the date the Tranche B Term Loan is paid in full and the Termination Date, at a rate per annum equal to 1/4 of 1%. Accrued facility fees under this Section 2.05(b) shall be payable in arrears on each Quarterly Date and on the earlier of the date the Tranche B Term Loan is paid in full and the Termination Date, and shall be allocated to the Lenders as set forth in Section 4.02. (c) The Company shall pay to the Administrative Agent for the account of Bank of America a facility fee on the daily average outstanding amount of the Tranche C Term Loan for the period from and including the Effective Date to but not including the earlier of the date the Tranche C Term Loan is paid in full and the Termination Date, at a rate per annum equal to 1/4 of 1%. Such accrued facility fee under this Section 2.05(c) shall be payable in arrears on each Quarterly Date and on the earlier of the date the Tranche C Term Loan is paid in full and the Termination Date. (d) The Company shall pay to CITBC for its own account a non-refundable structuring fee equal to $530,000, payable on the Effective Date. (e) The Company shall pay to Bank of America for the account of the Lenders under the Existing Senior Credit Agreement in accordance with their Pro Rata Shares (as defined in the Existing Credit Agreement) a non-refundable structuring fee equal to $525,000, payable on the Effective Date. (f) The Company shall pay to the Administrative Agent and the Co-Agent the agency fees provided for in Section 10.09. 2.06 Lending Offices. The Loans made by each Lender shall be made and maintained at such Lender's Applicable Lending Office. 2.07 Several Obligations; Remedies Independent. The failure of any Lender to make any Loan to be made by it on the date specified for such Loan shall not relieve any other Lender of its obligation to make its Loan on such date, but neither any Lender nor the Administrative Agent nor the Co-Agent shall be responsible for the failure of any other Lender to make a Loan to be made by such other Lender, and no Lender shall have any obligation to the Administrative Agent, the Co-Agent or any other Lender for the failure by such Lender to make any Loan required to be made by such Lender. No Lender shall be entitled to take any action to protect or enforce its rights arising out of any Basic Document without the prior written consent of the Majority Lenders or the Administrative Agent. 2.08 Notes and Loan Account. (a) The Revolving Credit Loans made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-1, dated the Effective Date, payable to such Lender in a principal amount equal to the amount of its Revolving Credit Commitment as originally in effect and otherwise duly completed. (b) The Tranche A Term Loan made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-2, dated the Effective Date, payable to such Lender in a principal amount equal to the amount of its Tranche A Term Loan and otherwise duly completed. (c) The Tranche B Term Loan made by each Lender shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-3, dated the Effective Date, payable to such Lender in a principal amount equal to the amount of its Tranche B Term Loan and otherwise duly completed. (d) The Tranche C Term Loan made by Bank of America shall be evidenced by a single promissory note of the Company in substantially the form of Exhibit A-4, dated the Effective Date, payable to Bank of America in a principal amount equal to the amount of its Tranche C Term Loan and otherwise duly completed. (e) The date, amount, and interest rate of each Loan of each Class made by each Lender to the Company, and each payment made on account of the principal of each Loan, shall be recorded by such Lender on its books and, prior to any transfer of the Note evidencing the Loans of such Class held by it, endorsed by such Lender on the schedule attached to such Note or any continuation of such Note; provided that the failure of such Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under this Agreement or under such Note in respect of the Loans to be evidenced by such Note. (f) No Lender shall be entitled to have its Notes subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Lender's relevant Commitment, Loans and Notes pursuant to Section 11.06(b). (g) The Administrative Agent will maintain a separate account on its books in the Company's name in which the Company will be charged with Loans made to it under this Agreement, payments made by the Administrative Agent and the Lenders in respect of Letters of Credit issued for the account of the Company, and interest, fees, expenses and all other Obligations payable by the Company under the Basic Documents; the Company will be credited with all amounts received by the Administrative Agent, for its own account and for the accounts of the Lenders, from the Company or from others for the Company's account, such amounts to be applied to the payment of the Obligations as set forth in this Agreement and the other Basic Documents. The Company and each Lender agrees that the Administrative Agent's books and records showing the Obligations and the transactions pursuant to this Agreement and the other Basic Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute prima facie proof thereof, irrespective of whether any Obligation is also evidenced by a promissory note or other instrument. The Administrative Agent will provide to the Company and each Lender a monthly statement of the Loans, payments, issuances of and payments under Letters of Credit, and other transactions pursuant to this Agreement. Such statement shall be deemed correct, accurate, and binding on the Company, absent manifest error, and as an account stated (except for corrections of errors discovered by the Administrative Agent), unless the Company notifies the Administrative Agent in writing to the contrary within 30 days after such statement is delivered, sent or mailed to the Company. In the event a timely written notice of objections is given by the Company, only the items to which exception is expressly made will be considered to be disputed by the Company. 2.09 Optional Prepayments. Subject to Section 4.04, the Company shall have the right to prepay Loans, at any time or from time to time, provided that: (a) the Company shall give the Administrative Agent notice of each such prepayment as provided in Section 4.05 (and, upon the date specified in any such notice of prepayment, the amount to be prepaid shall become due and payable under this Agreement); (b) prepayments of the Tranche B Term Loan shall be applied to the installments of the Tranche B Term Loan in the direct order of their maturities; and (c) the Tranche C Term Loan may not be prepaid in whole or in part until all of the other Loans shall have been irrevocably repaid in full, there shall have been irrevocably deposited in the Collateral Account immediately available funds in an amount equal to the aggregate undrawn face amount of all Letters of Credit outstanding and the Commitments shall have been terminated. 2.10 Mandatory Prepayments and Reductions of Commitments. (a) Borrowing Base. Until the Termination Date, the Company shall from time to time prepay the Revolving Credit Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10) and the Tranche A Term Loan in such amounts as shall be necessary so that at all times the aggregate outstanding amount of the Revolving Credit Loans and the Tranche A Term Loan, together with the aggregate amount of Letter of Credit Liabilities outstanding, shall not exceed the Borrowing Base (calculated, solely for purposes of this Section 2.10(a), without deduction for any amount referred to in clause (c) of the definition of "Borrowing Base"), such amount to be applied: first, to the Revolving Credit Loans outstanding; second, to the Tranche A Term Loan outstanding; and, third, as cover for Letter of Credit Liabilities outstanding. (b) Casualty Events. Immediately upon the receipt by the Administrative Agent or the Company of the proceeds of insurance, condemnation award or other compensation in respect of any Casualty Event affecting any Property of the Company (or upon such earlier date as the Company shall have determined not to restore, repair or replace the Property affected by such Casualty Event), (i) to the extent such proceeds (A) relate to Inventory, (B) relate to collateral (other than Inventory) covered by the Loan Documents and are less than $100,000 or (C) are proceeds of business interruption insurance maintained by the Company, such proceeds shall be applied to the prepayment of the Revolving Credit Loans, then to the Tranche A Term Loan, then as cover for outstanding Letter of Credit Liabilities, then to the Tranche B Term Loan and then to the Tranche C Term Loan and (ii) in all other circumstances, such proceeds shall (x) if an Event of Default shall have occurred and be continuing at the time such proceeds are required to be paid to or applied by the Administrative Agent, be applied to the prepayment of the Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10), and the Commitments shall be subject to automatic reduction (whether or not such prepayment is actually made), in an aggregate amount, if any, equal to 100% of the Net Available Proceeds of such Casualty Event not previously applied to the restoration, repair or replacement of such Property, such prepayment and reduction to be effected in each case in the manner and to the extent specified in clause (g) of this Section 2.10 and (y) if no Event of Default shall have occurred and be continuing at the time such proceeds are required to be paid to or applied by the Administrative Agent, such proceeds shall be applied as provided in Section 2.11. Nothing in this clause (b) shall be deemed to limit any obligation of the Company pursuant to any of the Security Documents to remit to a collateral or similar account (including the Collateral Account) maintained by the Administrative Agent pursuant to any of the Security Documents the proceeds of insurance, condemnation award or other compensation received in respect of any Casualty Event. (c) New Debt. Promptly upon receipt of the proceeds of any Indebtedness permitted pursuant to Section 8.07 (other than Indebtedness permitted pursuant to clauses (a), (b), (c) or (d) of such Section), the Company shall prepay the Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10), and the Commitments shall be subject to automatic reduction (whether or not such prepayment is actually made), in an aggregate amount equal to 100% of the Net Available Proceeds of such Indebtedness, such prepayment and reduction to be effected in each case in the manner and to the extent specified in clause (g) of this Section 2.10. (d) Equity Issuance. Immediately upon receipt of the proceeds of any Equity Issuance, the Company shall prepay the Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10), and the Commitments shall be subject to automatic reduction (whether or not such prepayment is actually made), in an aggregate amount equal to 75% of the Net Available Proceeds of such Equity Issuance, such prepayment and reduction to be effected in each case in the manner and to the extent specified in clause (g) of this Section 2.10. (e) Excess Cash Flow. Not later than the date 90 days after the end of each fiscal year of the Company ending after the Effective Date, the Company shall prepay the Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10) in an aggregate amount equal to the excess of (A) 75% of Excess Cash Flow for such fiscal year (or, in the case of the fiscal year in which the Effective Date occurs, the period (the "First Period") from the Effective Date to the end of such fiscal year) over (B) the sum of (i) $2,000,000 (or $1,200,000 for the First Period) and (ii) the aggregate amount of prepayments of Term Loans made during such fiscal year or First Period, as the case may be, pursuant to Section 2.09 and, after the payment in full of the Term Loans, the aggregate amount of voluntary reductions of Revolving Credit Commitments made during such fiscal year or First Period, as the case may be, pursuant to Section 2.04(b), such prepayment to be effected in each case in the manner and to the extent specified in clause (g) of this Section 2.10. (f) Sale of Assets. Without limiting the obligation of the Company to obtain the consent of the Majority Lenders pursuant to Section 8.05 to any Disposition not otherwise permitted under the Basic Documents, no later than five Business Days prior to the occurrence of any such Disposition which (when taken together with all prior Dispositions during the then current fiscal year of the Company) would result in the receipt by the Company of Net Available Proceeds of at least $50,000, the Company will deliver to the Lenders a statement, certified by the chief financial or accounting officer of the Company, in form and detail reasonably satisfactory to the Administrative Agent, of the amount of the Net Available Proceeds of such Disposition and, to the extent such Net Available Proceeds (when taken together with the Net Available Proceeds of all prior Dispositions during the then current fiscal year of the Company as to which a prepayment has not yet been made under this Section 2.10(f)) shall exceed $500,000, the Company shall prepay the Loans (or provide cover for Letter of Credit Liabilities as specified in clause (h) below), and the Commitments shall be subject to automatic reduction (whether or not such prepayment is actually made), in an aggregate amount equal to the excess of (i) 100% of the Net Available Proceeds of such Disposition (together with 100% of the Net Available Proceeds of all prior Dispositions during the then current fiscal year as to which a prepayment has not yet been made under this Section 2.10(f)) over (ii) $500,000, such prepayment and reduction to be effected in each case in the manner and to the extent specified in clause (g) of this Section 2.10; provided that, if the Company shall have notified the Administrative Agent in writing prior to the date of such Disposition that the Company intends to replace the assets subject to such Disposition with similar assets for use in the Company's operations within twelve (12) months after the date of such Disposition, the required prepayment shall be applied first to the Revolving Credit Loans outstanding, second to the Tranche A Term Loan outstanding, and third as cover for Letter of Credit Liabilities outstanding; provided further, however, that if the assets subject to such Disposition are not so replaced within such twelve-month period, the required prepayment shall thereupon be applied and the Commitments shall be reduced as set forth in clause (g) of this Section 2.10 (and the Company agrees to make any prepayments necessary in connection with such application and reduction). (g) Application. Prepayments and reductions of Commitments described in this Section 2.10 (other than in clause (a) above and other than as set forth in clauses (b) and (f) above) shall be effected as follows: (i) first, the amount of the prepayment specified in such clauses shall be applied to the Tranche B Term Loan in the inverse order of the maturities of the installments of the Tranche B Term Loan then outstanding; (ii) second, any excess over the amount referred to in the foregoing clause (i) shall be applied pro rata in accordance with the respective amounts outstanding to: (A) the Revolving Credit Loans, Letter of Credit Liabilities and the Tranche A Term Loan then outstanding (with the amount of the prepayment applied to this clause (A) to be applied to such Loans and Letter of Credit Liabilities as the Company may direct in writing to the Administrative Agent and, in the absence of such direction, first to the Revolving Credit Loans outstanding, second to the Tranche A Term Loan outstanding and third to provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10); and (B) the Tranche C Term Loan then outstanding; and (iii) third, the Revolving Credit Commitments shall (other than in connection with prepayments of the Revolving Credit Loans pursuant to clause (e) above) be automatically reduced by an amount equal to the amount of the prepayment required to be applied to the Revolving Credit Loans and Letter of Credit Liabilities as set forth in clause (ii)(A) above (and to the extent that, after giving effect to such reduction, the aggregate principal amount of Revolving Credit Loans, together with the aggregate amount of all Letter of Credit Liabilities, would exceed the Revolving Credit Commitments, the Company shall, first, prepay Revolving Credit Loans and, second, provide cover for Letter of Credit Liabilities as specified in clause (h) of this Section 2.10, in an aggregate amount equal to such excess). (h) Cover for Letter of Credit Liabilities. In the event that the Company shall be required pursuant to this Section 2.10 to provide cover for Letter of Credit Liabilities, the Company shall effect the same by paying to the Administrative Agent immediately available funds in an amount equal to the required amount, which funds shall be retained by the Administrative Agent in the Collateral Account (as collateral security in the first instance for the Letter of Credit Liabilities as set forth in the Security Agreement) until such time as the Letters of Credit shall have been terminated and all of the Letter of Credit Liabilities paid in full. 2.11 Casualty Proceeds. (a) So long as no Event of Default shall have occurred and be continuing and the proceeds received by (or required to be delivered to) the Administrative Agent in respect of a Casualty Event (other than proceeds of business interruption insurance which shall be applied as set forth in Section 2.10(b)) affecting any Property of the Company (other than in respect of Inventory) shall exceed $100,000, the Company may elect (by delivering written notice to the Administrative Agent) to use such proceeds to replace, repair or restore such Property to substantially the equivalent condition prior to such Casualty Event. If the Company does not elect to use or is not entitled to use such proceeds as set forth above, then such proceeds shall be applied as provided in Section 2.10(b). (b) If the Company properly elects to use proceeds of a Casualty Event for the repair, replacement or restoration of Property as provided in subsection (a) above and so long as no Event of Default shall then exist and be continuing, (i) such proceeds shall be applied to the reduction of the Revolving Credit Loans, (ii) the Administrative Agent shall set up a reserve against availability under the Revolving Credit Commitment equal to such proceeds and (iii) subject to all of the terms and conditions set forth herein, including those set forth in this Section 2.11, the Company may request Revolving Credit Loans for the purpose of such repair, replacement or restoration. The reserve against availability shall be reduced dollar-for- dollar as Revolving Credit Loans are made therefor and, as a condition to the making of such Revolving Credit Loans, the Administrative Agent may require the delivery to it of executed purchase orders, delivery receipts or other evidence of such repair, replacement or restoration. Prior to the commencement of any such repair, replacement or restoration, the Company shall provide the Administrative Agent with a plan and total budget therefor which, in the case of real property repair or restoration, shall (unless otherwise agreed by the Administrative Agent) be certified by an experienced independent third party acceptable to the Administrative Agent (the cost of which shall be paid by the Company). If there are insufficient proceeds in respect of such Casualty Event to cover the cost of such repair, replacement or restoration, the Company shall be responsible for the amount of any such insufficiency (which can be, subject to the terms and conditions hereof, from proceeds from the Revolving Credit Loans). Section 3. Payments of Principal and Interest. 3.01 Repayment of Loans. (a) The Company hereby promises to pay to the Administrative Agent for the account of each Lender the entire outstanding principal amount of such Lender's Revolving Credit Loans, and each Revolving Credit Loan shall mature, on the Termination Date. (b) The Company hereby promises to pay to the Administrative Agent for the account of each Lender the entire outstanding principal amount of such Lender's Tranche A Term Loan, and such Lender's Tranche A Term Loan shall mature, on the Termination Date. (c) The Company hereby promises to pay to the Administrative Agent for the account of each Lender the principal of such Lender's Tranche B Term Loan in 12 consecutive quarterly installments payable on the Principal Payment Dates (other than the Termination Date) and on the Termination Date as follows: Principal Payment Date Amount of Installment ($) Each Principal Payment Date (other than the Termination Date) $ 1,750,000.00 Termination Date $13,048,871.42 (d) The Company hereby promises to pay to the Administrative Agent for the account of Bank of America the entire outstanding principal amount of its Tranche C Term Loan, and such Tranche C Term Loan shall mature, on the Termination Date. 3.02 Interest. The Company hereby promises to pay to the Administrative Agent for the account of the Lenders interest on the unpaid principal amount of Loans made by the Lenders for the period from and including the date of such Loans to but excluding the date such Loans shall be paid in full, at a rate per annum equal to the Base Rate (as in effect from time to time) plus the Applicable Margin. Notwithstanding the foregoing, the Company hereby promises to pay to the Administrative Agent for the account of the Lenders interest at the applicable Post-Default Rate on (a) any Obligations (including the principal of any Loan) held by the Lenders which shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise) for the period from and including the due date of any such Obligation to but excluding the date such Obligations are paid in full and (b) all of the Obligations outstanding upon the occurrence and during the continuance of an Event of Default. Accrued interest on each Loan shall be payable (i) monthly on the Monthly Dates, and (ii) upon the payment or prepayment of such Loan (but only on the principal amount so paid or prepaid), except that interest payable at the Post-Default Rate shall be payable from time to time on demand and otherwise on the Monthly Dates. Promptly after the determination of any interest rate provided for in this Agreement or any change in any such interest rate, the Administrative Agent shall give notice of the same to the Lenders to which such interest is payable and to the Company. Accrued interest shall be allocated to the Lenders as set forth in Section 4.02. Section 4. Payments; Pro Rata Treatment; Computations; Etc. 4.01 Payments. (a) Except to the extent otherwise provided in this Agreement, all payments of any Obligations, except to the extent otherwise provided in any other Basic Document, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Administrative Agent at account number 144054227 maintained by the Administrative Agent with Chemical Bank at the Principal Office (or such other account as the Administrative Agent shall have designated in writing to the Company), not later than 10:00 a.m. Los Angeles time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). (b) Except to the extent otherwise provided in clause (f) below, all moneys that the Administrative Agent receives from or on behalf of the Company (including moneys received by the Administrative Agent pursuant to the Blocked Account Agreement) shall be deemed to be payments by the Company under this Agreement. The Company shall, at the time of making each payment under this Agreement of any Obligation for the account of any Lender, specify to the Administrative Agent (which shall so notify each intended recipient) to which Obligation such payment is to be applied (and in the event that the Company fails to so specify, or if an Event of Default has occurred and is continuing, the Administrative Agent shall (subject to Section 2.02(d)) distribute such payment to the Lenders for application: (a) first, to the Revolving Credit Loans outstanding; second, to the Tranche A Term Loan outstanding; and third, as cover for Letter of Credit Liabilities; and (b) otherwise in such manner as it or the Majority Lenders, subject in each case to Section 4.02, may determine to be appropriate). (c) Each payment received by the Administrative Agent under this Agreement of any Obligation for the account of any Lender shall (subject to Section 2.02(d)) be paid by the Administrative Agent promptly to such Lender, in immediately available funds, for the account of such Lender's Applicable Lending Office for the Loan or other Obligation in respect of which such payment is made. (d) If the due date of any payment of any Obligation would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension. (e) The Company hereby authorizes the Administrative Agent to charge the Company's loan account referred to in Section 2.08(g) with the amount of all Obligations due hereunder as such payment becomes due. In furtherance of the foregoing, the Administrative Agent shall have the right (but not the obligation) to cause Revolving Credit Loans to be made at any time (subject only to availability of the Revolving Credit Commitments) to pay any such Obligations when due. (f) Moneys in the Blocked Account shall be transferred to the Administrative Agent to the account specified in paragraph 3 of the Blocked Account Agreement (the "Collection Account") in accordance with the terms of such Blocked Account Agreement. On each Business Day on which no Event of Default of which the Administrative Agent has actual knowledge shall have occurred and be continuing, moneys on deposit in the Collection Account shall be withdrawn by the Administrative Agent and (i) deposited to the Special Collateral Account referred to below in an amount which, when taken together with all other amounts on deposit therein after giving effect to any requested disbursements from such account on such day, does not exceed the lesser of $5,000,000 and the amount specified by the Company for the Special Collateral Account as of the end of such day, and (ii) to the extent that the amount available for deposit from the Collection Account to the Special Collateral Account on any day would cause the balance therein (after giving effect to any requested disbursements from such account on such day) to exceed such lesser amount, such excess shall be withdrawn by the Administrative Agent and deposited into the account referred to in clause (a) of this Section 4.01 and then applied to the Obligations as set forth in clause (b) of this Section 4.01. If an Event of Default of which the Administrative Agent has actual knowledge shall have occurred and be continuing on any day, no moneys shall be deposited to the Special Collateral Account on such day and any and all moneys received from the Blocked Account on such day, together with any and all moneys then on deposit in the Special Collateral Account, shall be withdrawn by the Administrative Agent and deposited into the account referred to in clause (a) of this Section 4.01 and then applied to the Obligations as set forth in clause (b) of this Section 4.01. The Administrative Agent shall establish an account (the "Special Collateral Account") by and in the name of the Administrative Agent with Chemical Bank at the Principal Office (or such other account as the Administrative Agent shall designate from time to time) for the sole purpose of holding certain cash proceeds of Collateral and earnings thereon in which a security interest has been created under the Security Documents, which Special Collateral Account shall be under the sole and absolute dominion and control of the Administrative Agent for the benefit of the Lenders, the Administrative Agent and the Co-Agent and shall be subject to no Liens other than the Lien of the Security Documents. Amounts on deposit in the Special Collateral Account on any day that are not subject to withdrawal and deposit into the account referred to in clause (a) of this Section 4.01 for application to the Obligations as set forth above shall be made available by the Administrative Agent to the Company upon its request therefor for the same purposes that, and on the same terms and subject to the same conditions on which, Revolving Credit Loans may be borrowed by the Company under this Agreement (including the giving and timing of notices requesting disbursements and satisfaction of the conditions precedent specified in Section 6.02), it being understood and agreed by the Company that amounts on deposit in the Special Collateral Account shall be disbursed only to the extent that the Company would, at the time of any such disbursement, be permitted to make a borrowing of Revolving Credit Loans in the amount of such disbursement. The Special Collateral Account shall be an interest bearing deposit account and amounts on deposit therein shall bear interest at market rates set from time to time by Chemical Bank (or such other financial institution at which the Special Collateral Account shall be held) for like accounts; except as set forth in this sentence, amounts on deposit in the Special Collateral Account shall not be invested. 4.02 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement: (a) the making of Loans of a particular Class shall be made pro rata among the relevant Lenders according to the amounts of their respective Commitments of such Class (subject to the right of the Administrative Agent to require the Revolving Credit Lenders to fund their interest in Revolving Credit Loans at a date later than the borrowing date of such Loans as provided in Section 2.02(d)); and (b) each payment on account of any Obligations to or for the account of one or more of the Lenders in respect of any Obligations due on a particular day (or, if such day is not a Business Day, the next succeeding Business Day) shall be entitled to priority over payments in respect of Obligations not then due and shall be allocated among the Lenders entitled to such payments (after appropriate adjustment by the Administrative Agent for Revolving Credit Loans funded by or repaid to the Lenders on a date later than the date such Loans were made available to or repaid by the Company) pro rata in accordance with the respective amounts due and payable to such Lenders on such day (or Business Day) and shall be distributed accordingly. For the purpose of allocating interest and fees among the Lenders under this Agreement, such interest and fees shall be deemed to accrue to each Lender on each day based upon Loans that have actually been funded by such Lender and are outstanding of such day. Nothing in this Section 4.02 shall be deemed to prevent, except in the case of shortfall, the differential indemnity and other amounts owing to or for the account of a particular Lender or Lenders pursuant to any provisions of any Basic Document which, by their terms, require differential payments. 4.03 Computations. Interest payable in respect of the Loans and all fees provided for in this Agreement shall be computed on the basis of a year of 360 days and the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which payable. 4.04 Minimum Amounts. Subject to the other terms and conditions of this Agreement, borrowings and prepayments are not required to be made in any minimum Dollar amounts. 4.05 Certain Notices. Notices by the Company to the Administrative Agent of terminations or reductions of the Commitments, of borrowings and optional prepayments of Loans and of Classes of Loans shall be irrevocable and shall be effective only if received by the Administrative Agent not later than 9:30 a.m. Los Angeles time on the same Business Day or the number of Business Days prior to the date of the relevant termination, reduction, borrowing or prepayment as specified below: Number of Business Notice Days Prior Termination or reduction of Commitments 3 Borrowing of Loans and same day optional prepayments of Revolving Credit Loans Optional Prepayment of Loans 3 (other than Revolving Credit Loans) Each such notice of termination or reduction shall specify the amount and the Class of the Commitments to be terminated or reduced. Each such notice of borrowing or optional prepayment shall specify the Class of Loans to be borrowed or prepaid and the amount (subject to Section 4.04) of each Loan to be borrowed or prepaid and the date of borrowing or optional prepayment (which shall be a Business Day). The Administrative Agent shall promptly notify the Lenders of the contents of any such notices received by it except that, at the Administrative Agent's option, notice of the borrowings and optional prepayments of Revolving Credit Loans may be summarized periodically (but no less frequently than weekly). 4.06 Non-Receipt of Funds by the Administrative Agent. Unless the Administrative Agent shall have been notified by a Lender or the Company (the "Payor") prior to the date on which the Payor is to make payment to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be made by such Lender, or a participation in a Letter of Credit drawing to be acquired by such Lender, under this Agreement or (in the case of the Company) a payment to the Administrative Agent for the account of one or more of the Lenders (the "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount of such payment available to the intended recipient on such date; and, if the Payor has not in fact made the Required Payment to the Administrative Agent, the recipient or recipients of such payment shall, on demand, repay to the Administrative Agent the amount so made available together with interest on such amount in respect of each day during the period commencing on the date (the "Advance Date") such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (x) if the recipient is the Company, the rate applicable to Revolving Loans on such day and (y) if the recipient is a Lender, the Federal Funds Rate for such day and, if such recipient or recipients shall fail within two Business Days to make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest on such amount for each day during the period commencing on the Advance Date until the date the Administrative Agent recovers such amount at a rate per annum equal to (i) if the Payor is the Company, the Post- Default Rate and (ii) if the Payor is a Lender, the Federal Funds Rate for such day plus 2%. 4.07 Sharing of Payments, Etc. (a) The Company agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim a Lender may otherwise have, each Lender shall be entitled, at its option but only with the prior consent of the Administrative Agent, to offset balances held by it for the account of the Company at any of its offices, in Dollars or in any other currency, against any Obligations of the Company to such Lender that are not paid when due (regardless of whether such balances are then due to the Company). Any Lender so entitled shall promptly notify the Company and the Administrative Agent of any offset effected by it, provided that such Lender's failure to give such notice shall not affect the validity of such offset. (b) If any Lender shall obtain from the Company payment of any Obligation through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise (other than from the Administrative Agent as provided in this Agreement), and, as a result of such payment, such Lender shall have received a greater amount of the Obligations than the amount allocable to such Lender under Section 4.02, it shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) such Obligations owing to such other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid Obligations owing to each of the Lenders, provided that if at the time of such payment the outstanding principal amount of the Loans of any Class shall not be held by the Lenders pro rata in accordance with their respective Commitments of such Class in effect at the time such Loans were made (by reason of a failure of a Lender to make a Loan under this Agreement in the circumstances described in the last paragraph of Section 11.04), then such purchases of participations or direct interests shall be made in such manner as will result, as nearly as is practicable, in the outstanding principal amount of the Loans being held by the Lenders pro rata according to the amounts of such Commitments. To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. (c) The Company agrees that any Lender so purchasing such a participation (or direct interest) may exercise all rights of set-off, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation. (d) Nothing contained in this Section 4.07 shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.07 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 4.07 to share in the benefits of any recovery on such secured claim. Section 5. Yield Protection, Etc. 5.01 Additional Costs. (a) The Company shall pay directly to each Lender from time to time on demand such amounts as such Lender may determine to be necessary to compensate such Lender (or, without duplication, the bank holding company of which such Lender is a subsidiary) for any costs that it determines are attributable to the maintenance by such Lender (or any Applicable Lending Office or such bank holding company), pursuant to any Governmental Rule (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or other requirement (whether or not having the force of law and whether or not the failure to comply would be unlawful) issued by any government or governmental or supervisory authority implementing at the national level the Basle Accord (including the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of its Commitments or Loans (such compensation to include an amount equal to any reduction of the rate of return on assets or equity of such Lender (or any Applicable Lending Office or such bank holding company) to a level below that which such Lender (or any Applicable Lending Office or such bank holding company) could have achieved but for such Governmental Rule. (b) Each Lender shall notify the Company of any event occurring after the date of this Agreement entitling such Lender to compensation under paragraph (a) of this Section 5.01 as promptly as practicable, but in any event within 180 days, after such Lender obtains actual knowledge of such event; provided that if any Lender fails to give such notice within 180 days after it obtains actual knowledge of such event, such Lender shall, with respect to compensation payable pursuant to this Section 5.01 in respect of any costs resulting from such event, only be entitled to payment under this Section 5.01 for costs incurred from and after the date 180 days prior to the date that such Lender does give such notice. Each Lender will furnish to the Company a certificate setting forth the basis and amount of each request by such Lender for compensation under paragraph (a) of this Section 5.01. Determinations and allocations by any Lender for purposes of this Section 5.01 of the effect of capital maintained pursuant to paragraph (a) of this Section 5.01, on its costs or rate of return of maintaining Loans or its obligation to make Loans, or on amounts receivable by it in respect of Loans, and of the amounts required to compensate such Lender under this Section 5.01, shall be conclusive absent manifest error, provided that such determinations and allocations are made on a reasonable basis. 5.02 Certain Protections in Respect of Letters of Credit. (a) Without limiting the obligations of the Company under Section 5.01 (but without duplication), if, as a result of any Regulatory Change or any risk-based capital guideline or other Governmental Rule implementing at the national level the Basle Accord, there shall be imposed, modified or deemed applicable any tax, reserve, special deposit, capital adequacy or similar requirement against or with respect to or measured by reference to Letters of Credit issued or to be issued under this Agreement and the result shall be to increase the cost to the Administrative Agent or any Lender or Lenders of issuing (or purchasing participations in) or maintaining its or their obligation to issue (or purchase participations in or, in the case of the Administrative Agent, becoming a guarantor of) any Letter of Credit or reduce any amount receivable by the Administrative Agent or any Lender in respect of any Letter of Credit (which increases in cost, or reductions in amount receivable, shall be the result of Administrative Agent's or such Lender's or Lenders' reasonable allocation of the aggregate of such increases or reductions resulting from such event), then, upon demand by the Administrative Agent or such Lender or Lenders (through the Administrative Agent), the Company shall pay immediately to the Administrative Agent for the account of the Administrative Agent or such Lender or Lenders, from time to time as specified by the Administrative Agent or such Lender or Lenders (through the Administrative Agent), such additional amounts as shall be sufficient to compensate the Administrative Agent or such Lender or Lenders (through the Administrative Agent) for such increased costs or reductions in amount. A statement as to such increased costs or reductions in amount incurred by the Administrative Agent or any such Lender or Lenders, submitted by such Lender or Lenders to the Company, shall be conclusive in the absence of manifest error as to such amount. (b) Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful or, by reason of any Regulatory Change, impossible for the Administrative Agent to guarantee or any Lender to issue (or to participate in) any Letter of Credit, then the Administrative Agent or such Lender shall promptly notify the Company of such event (with a copy to the Administrative Agent) and the Administrative Agent's obligation to assist in the issuance by way of guarantee or the Lenders' obligation to issue (or participate in) any Letter of Credit shall be suspended until such time as each Lender may again issue (or participate in) Letters of Credit. 5.03 Taxes. (a) The Company agrees to pay to each Lender such additional amounts as are necessary in order that the net payment of any Obligation due to such Lender after deduction for or withholding in respect of any Tax imposed with respect to such payment (or for payment of such Tax by such Lender), will not be less than the amount of the Obligation then due and payable, provided that the foregoing obligation to pay such additional amounts shall not apply: (i) to any payment to a Lender that is not a U.S. Person unless such Lender is, on the Effective Date (or on the date it becomes a Lender as provided in Section 11.06(b)) and on the date of any change in the Applicable Lending Office of such Lender, either entitled to submit a Form 1001 (relating to such Lender and entitling it to a complete exemption from withholding on all interest to be received by it under this Agreement and the Notes in respect of the Loans) or Form 4224 (relating to all interest to be received by such Lender under this Agreement in respect of the Loans) (and in that regard each such non-U.S. Person shall on such date deliver to the Administrative Agent and the Company duplicate such Forms 1001 or 4224, as appropriate), or (ii) to any Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such Tax. For the purposes of this Section 5.03(a), (w) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim of the kind to which such Form relates), (y) "U.S. Person" shall mean a citizen, national or resident of the United States of America, a corporation, partnership or other entity created or organized in or under any laws of the United States of America, or any estate or trust that is subject to Federal income taxation regardless of the source of its income and (z) "Taxes" shall mean any present or future tax (including any recurring or nonrecurring intangible personal property taxes that may be payable to the State of Florida), assessment or other charge or levy imposed by or on behalf of any Governmental Person (other than taxes imposed on or measured by the overall net income of any Lender or of its Applicable Lending Office by the jurisdiction in which such Lender has its principal office or any Applicable Lending Office). (b) Within 30 days after paying any amount to the Administrative Agent or any Lender from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the Company shall deliver to the Administrative Agent for delivery to such non-U.S. Person evidence satisfactory to such Person of such deduction, withholding or payment (as the case may be). Section 6. Conditions Precedent. 6.01 Initial Extension of Credit. The obligation of each Lender to make its initial extension of credit under this Agreement (whether by making a Loan or issuing a Letter of Credit) is subject to (i) the condition precedent that such extension of credit shall be made on or before December 31, 1994 and (ii) the receipt by the Administrative Agent (in sufficient copies for each Lender) of the following documents, each of which shall be satisfactory to the Administrative Agent and the Co- Agent (and to the extent specified below, to each Lender) in form and substance: (a) Corporate Documents. The following documents, each certified as indicated below: (i) a copy of the Company's charter, as amended and in effect, certified as of a recent date, subsequent to the date of the Confirmation Order, by the Secretary of State of its jurisdiction of incorporation, and such evidence from such Governmental Persons as to the good standing of and information regarding such charter filed by the Company as the Administrative Agent may reasonably request; (ii) a certificate of the Secretary or an Assistant Secretary of the Company, dated the Effective Date and certifying (A) that attached to such certificate is a true and complete copy of the by-laws of the Company as amended and in effect at all times from the date on which the resolutions referred to in clause (B) were adopted to and including the date of such certificate, (B) that attached to such certificate is a true and complete copy of resolutions duly adopted by the board of directors of the Company authorizing the execution, delivery and performance of such of the Basic Documents to which the Company is or is intended to be a party and the extensions of credit under this Agreement, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the charter of the Company has not been amended since the date of the certification furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer of the Company executing such of the Basic Documents to which the Company is or is intended to be a party and each other document to be delivered by the Company from time to time in connection with any Basic Document (and the Administrative Agent, the Co-Agent and each Lender may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Company ); and (iii) a certificate of another officer of the Company as to the incumbency and specimen signature of the Secretary or Assistant Secretary, as the case may be, of the Company. (b) Officer's Certificate. A certificate of a senior officer of the Company, dated the Effective Date, to the effect set forth in the first sentence of Section 6.02. (c) Borrowing Base Certificate. A Borrowing Base Certificate as of a date not more than 5 days prior to the Effective Date. (d) Opinions of Counsel to the Company. An opinion, dated the Effective Date, of (i) Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Company, in substantially the form of Exhibit E-1 and (ii) Barnett, Bolt, Kirkwood & Long, special Florida counsel to the Company, in substantially the form of Exhibit E-2; and, in each case, covering such other matters as the Administrative Agent, the Co-Agent or any Lender may reasonably request (and the Company hereby instructs such counsel to deliver such opinions to the Lenders, the Administrative Agent and the Co-Agent). (e) Opinion of Special Counsel to the Administrative Agent. An opinion, dated the Effective Date, of (i) Orrick, Herrington & Sutcliffe, special counsel to the Administrative Agent, in substantially the form of Exhibit F-1 and (ii) Coll Davidson Carter Smith Salter & Barkett, P.A., special Florida counsel to the Administrative Agent, in substantially the form of Exhibit F-2. (f) Notes. The Notes, duly completed and executed. (g) Security Agreements. The Security Agreement, the Blocked Account Agreement and the Patent and Trademark Assignments duly executed and delivered by the Company, the Administrative Agent (in the case of the Security Agreement and the Blocked Account Agreement) and Barnett Bank of Tampa (in the case of the Blocked Account Agreement). In addition, the Company shall have (i) taken such other action (including filing appropriately completed and duly executed copies of Uniform Commercial Code financing statements together with payment of all fees in connection therewith) as any such Security Document shall specify or as the Administrative Agent shall have requested in order to create, perfect and establish the priority (subject only to Liens permitted by Section 8.06) of the Liens granted by the Security Agreement (and the Company shall have delivered to the Administrative Agent Uniform Commercial Code searches certified by the appropriate filing officer evidencing the first priority Liens of the Administrative Agent in the Property in which the Administrative Agent has been granted a security interest under the Security Agreement), (ii) to the extent the Company has rights in patents and trademarks, filed the Patent and Trademark Assignments with any appropriate Governmental Person and paid all fees in connection therewith and (iii) delivered to the Administrative Agent (A) estoppel certificates from each landlord of any premises on which the Company conducts its business and that is held under ground lease by the Company and (B) acknowledgements from each public warehouse in which Inventory is stored consenting to the security interest of the Administrative Agent for the benefit of itself and the Lenders in such Inventory and any related original negotiable warehouseman's receipts duly endorsed by the Company to the order of the Administrative Agent. (h) Mortgage and Title Insurance. The Mortgage, duly executed and delivered (and, where appropriate, acknowledged) by the Company, together with: (A) evidence that the Mortgage has been duly recorded in the appropriate recorder's office in, respectively, each county in Florida in which the Company owns or leases real property, which Mortgage shall cover the Company's interest in each such property (excluding real properties that may not be encumbered without the express consent of prior mortgagees or landlords, except to the extent such consent has been obtained as of the Effective Date); (B) one or more ALTA extended coverage mortgagee policies of title insurance issued by one or more title companies satisfactory to each Lender (the "Title Companies"), insuring the validity and priority of the Liens created under the Mortgage in respect of all real properties owned by the Company in fee simple absolute or held by the Company under ground leases covered by the Mortgage for and in amounts satisfactory to each Lender, subject only to such exceptions as are satisfactory to each Lender and containing such endorsements and direct access reinsurance agreements as each Lender may request and, to the extent necessary under applicable law, evidence of the due filing in the appropriate county land offices of Uniform Commercial Code financing statements covering fixtures; (C) certified copies of permanent and unconditional certificates of occupancy (or, in the case of leased premises, occupational licenses) permitting the fully functioning operation and occupancy of each premises covered by the Mortgage and of such other permits necessary for the use and operation of each such premises issued by the respective Governmental Persons having jurisdiction over each such premises; and (D) consents from holders of Liens on the Properties covered by the Mortgage that are permitted pursuant to Section 8.06(b) acknowledging and consenting to the Liens of the Administrative Agent for the benefit of itself and the Lenders in respect of such Properties. In addition, the Company shall have paid to the Title Companies all expenses and premiums of the Title Companies in connection with the issuance of such policies and in addition shall have paid to the Title Companies an amount equal to the recording and stamp taxes payable in connection with recording the Mortgage in the appropriate county land offices. (i) Financial Statements. Copies of the financial statements of the Company referred to in Section 7.02. (j) Insurance. Certificates of insurance evidencing the existence of all insurance required to be maintained by the Company pursuant to Section 8.04 and the designation of the Administrative Agent as the loss payee under such policies to the extent required by Section 8.04 in respect of all insurance covering tangible Property, such certificates to be in such form as the Administrative Agent shall require. In addition, the Company shall have delivered (i) a certificate of the chief financial or accounting officer of the Company setting forth the insurance obtained by it in accordance with the requirements of Section 8.04 and stating that such insurance is in full force and effect and that all premiums then due and payable with respect to such insurance have been paid and (ii) a written report, dated reasonably near the Effective Date, of Alexander & Alexander, or any other firm of independent insurance brokers of nationally recognized standing, as to such insurance in form and substance satisfactory to the Administrative Agent and the Lenders. (k) Environmental Survey. An environmental survey and assessment prepared by Clayton Environmental Consultants, as engaged by the Administrative Agent and satisfactory to each Lender, which survey and assessment shall be in form and substance satisfactory to each Lender. (l) Additional Secured Obligations. The Agreement Regarding Additional Secured Obligations, in substantially the form attached as Annex 9 to the Security Agreement, duly executed and delivered by the Administrative Agent and Bank of America. (m) Appraisals. A written appraisal of one or more independent, impartial and qualified appraisers, engaged by the Administrative Agent and satisfactory to each Lender, setting forth, on a date reasonably near the Effective Date, (i) the market value of the Properties covered by the Mortgage and containing appropriate supporting market data, which appraisal shall reflect a market value (after payment of all Indebtedness, other than the Obligations, secured by Liens on such Properties) of not less than $27,000,000, and otherwise be in form and substance satisfactory to each Lender, and (ii) the orderly liquidation value of the Company's equipment and containing appropriate supporting market data, which appraisal shall reflect the orderly liquidation value (after payment of all Indebtedness, other than the Obligations, secured by Liens on such equipment) of not less than $20,000,000, and otherwise be in form and substance satisfactory to each Lender. (n) Senior Notes. Evidence that the Senior Note Documents shall have been duly authorized, executed and delivered, and that the Senior Notes shall have been duly issued at par in exchange for the Old Senior Floating Rate Notes and the Old Senior Fixed Rate Notes (as such terms are defined in the Disclosure Statement), which Senior Note Documents and Senior Notes contain economic terms as set forth in the Disclosure Statement as of the Effective Date and other terms in form and substance satisfactory to each Lender, and the Administrative Agent shall have received copies of each of the Senior Note Documents certified by a senior financial officer of the Company. In addition, the Administrative Agent shall have received a certificate of a senior financial officer of the Company to the effect that the obligations of the Company in respect of the Old Senior Floating Rate Notes, the Old Senior Fixed Rate Notes, and the Old Subordinated Debentures have been satisfied in full and all of such notes and debentures have been cancelled. (o) Securities Purchase Agreement. A copy of the Securities Purchase Agreement, certified by the chief financial officer or secretary of the Company, pursuant to which GEI shall purchase certain of the common stock of the Company for a net cash consideration (prior to the payment of any transaction expenses) of not less than $10,000,000. In addition, the Administrative Agent shall have received a certificate of a senior financial or accounting officer of the Company to the effect that the Company shall have received net cash proceeds (prior to the payment of any transaction expenses) from the issuance and sale of the common stock pursuant to the Securities Purchase Agreement in an aggregate amount at least equal to $10,000,000. (p) Repayment of Existing Indebtedness. Evidence that the principal of and interest on the Indebtedness, and all other amounts owing (including any contingent or other amounts payable in respect of letters of credit) indicated on Schedule I which is to be repaid upon the making of the initial extension of credit under this Agreement shall have been (or shall be simultaneously) repaid in full and that any Liens securing any such Indebtedness (including Liens securing the Company's obligations in respect of the Existing Letters of Credit) shall have been released (or arrangements for such release satisfactory to the Majority Lenders shall have been made), provided that the Existing Letters of Credit shall become Letters of Credit under this Agreement, as provided in Section 2.03(n); in addition, the Administrative Agent shall have received from any Person holding any Lien securing any such Indebtedness, such Uniform Commercial Code termination statements, reconveyances and other instruments, in each case in proper form for recording, as the Administrative Agent shall have requested to release and terminate of record the Liens securing such Indebtedness (or arrangements for such release and termination satisfactory to the Majority Lenders shall have been made). (q) Plan of Reorganization. A copy of (i) the Plan of Reorganization as confirmed pursuant to the Confirmation Order, (ii) the Disclosure Statement, (iii) the Confirmation Order and a judgment pursuant to Federal Rule of Bankruptcy Procedure 9021 with respect thereto and (iv) such other papers or pleadings filed with the Bankruptcy Court as the Administrative Agent or any Lender may request, all as certified by the Clerk of the Bankruptcy Court. (r) Financial Officer's Certificate. A certificate of the chief financial or accounting officer of the Company, dated the Effective Date, to the effect that (i) after giving effect to all extensions of credit under this Agreement on the Effective Date, the aggregate unused amount of the Revolving Credit Commitments (as well as availability under the Borrowing Base) is equal to or greater than an amount equal to the sum of (A) $5,000,000 plus (B) the aggregate amount of all trade payables and Indebtedness of the Company that is then past due (determined taking into account any relevant course of conduct between the Company and its trade creditors to the extent invoice terms differ from such course of conduct, but only to the extent any such trade creditors have not taken any action, or notified the Company that they intend to take any action, to enforce such invoice terms) and (ii) the aggregate amount of professional financial advisory fees incurred by or on behalf of the Company in connection with the transactions contemplated by the Plan do not exceed $2,250,000 on account of financial advisory services rendered to the Company or $1,000,000 on account of financial advisory services rendered to the bondholders' committee (plus, in each such case, the amount of legal and other reimbursable expenses incurred in respect of such financial advisory services). (s) Financial Projections. A cash forecast for the 12-month period commencing on January 2, 1995, which forecast shall be satisfactory to the Lenders, certified as a true and correct copy as of the Effective Date by the chief financial or accounting officer of the Company. (t) Payment and Disbursement Instructions. Payment and disbursement instructions with respect to the funding of Loans on the Effective Date and disbursement of the proceeds of such Loans, in form and substance satisfactory to the Administrative Agent and the Co-Agent. (u) Cash Management. A copy of the Company's cash management procedures and policies (which procedures and policies shall be in form and substance satisfactory to the Lenders), certified as a true and correct copy as of the Effective Date by the chief financial officer of the Company, and evidence that a cash management system incorporating such procedures and policies shall have been established by the Company with Barnett Bank of Tampa. (v) Plan of Reorganization Conditions. Evidence of the satisfaction or waiver of the conditions set forth in Article IX of the Plan of Reorganization. (w) Credit Card Receipts. Evidence that the Company shall have taken all action required to be taken by it as of the Effective Date in respect of credit card receipts as provided in Section 8.22(f) and copies of all agreements with credit card companies and merchant banks in respect thereof. (x) Existing Letters of Credit. Copies of the Existing Letters of Credit. (y) Other Documents. Such other documents as the Administrative Agent or any Lender or special counsel to the Administrative Agent may reasonably request. The obligation of any Lender to make its initial extension of credit under this Agreement is also subject to the payment or delivery by the Company of such fees and other consideration as the Company shall have agreed to pay or deliver to any Lender or an affiliate of such Lender, the Administrative Agent or the Co-Agent as of the Effective Date in connection with this Agreement. 6.02 Initial and Subsequent Extensions of Credit. The obligation of any Lender to make any Loan (including such Lender's initial Loan) or otherwise extend any credit to the Company upon the occasion of each borrowing or other extension of credit under this Agreement is subject to the further conditions precedent that, both immediately prior to the making of such Loan or other extension of credit and also after giving effect to, and to the intended use of, such Loan or other extension: (a) no Default shall have occurred and be continuing; (b) the representations and warranties made by the Company in Section 7, and by the Company in each of the other Basic Documents to which it is a party, shall be true and complete on and as of the date of the making of such Loan or other extension of credit with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (c) the aggregate principal amount of the Revolving Credit Loans (plus, with respect to borrowings on the Effective Date, the aggregate principal amount of the Tranche A Term Loan) borrowed on such occasion together with the aggregate face amount of all Letters of Credit issued on such occasion shall not (subject to the right of the Administrative Agent to make Discretionary Extensions pursuant to Section 2.02(c)) exceed the availability under the Borrowing Base as reflected in the most recent Borrowing Base Certificate delivered pursuant to Section 8.01(f). Each notice of borrowing or request for the issuance of a Letter of Credit by the Company shall constitute a certification by the Company to the effect set forth in the preceding sentence (both as of the date of such notice or request and, unless the Company otherwise notifies the Administrative Agent prior to the date of such borrowing or issuance, as of the date of such borrowing or issuance. Section 7. Representations and Warranties. The Company represents and warrants to the Lenders that: 7.01 Corporate Existence. The Company: (a) is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material Governmental Approvals necessary, to own its assets and to carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect. 7.02 Financial Condition. The Company has previously furnished to each of the Lenders balance sheets of the Company as at July 31, 1994 and the related statements of income, retained earnings and cash flow of the Company for the fiscal year ended on that date, with the opinion (in the case of those balance sheets and statements) of KPMG Peat Marwick, and the unaudited balance sheets of the Company as at October 30, 1994, and the related statements of income and cash flow of the Company for the 13-week period ended on such date. All such financial statements fairly present the financial condition of the Company as at those dates and the results of its operations for the fiscal year and 13-week period ended on those dates (subject, in the case of such financial statements as at October 30, 1994, to normal year-end audit adjustments), all in accordance with GAAP and practices applied on a consistent basis (except that, with respect to the unaudited financial statements as at October 30, 1994, the notes thereto have not been presented in accordance with GAAP). The Company does not have on the Effective Date any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the most recent balance sheet referred to above (or in the notes thereto). Since July 31, 1994, there has been no material adverse change in the financial condition, operations, business or prospects taken as a whole of the Company from that set forth in the financial statements as at July 31, 1994 for the period ending on that date. 7.03 Litigation. Except as disclosed to the Lenders in Schedule IV there are no legal or arbitral proceedings, or any proceedings by or before any Governmental Person now pending or (to the knowledge of the Company) threatened against the Company which, if adversely determined, could have a Material Adverse Effect. 7.04 No Breach. None of the execution and delivery of the Basic Documents, the consummation of the transactions contemplated in the Basic Documents or compliance with the terms and provisions of the Basic Documents will conflict with or result in a breach of, or require any consent under, the charter or by-laws of the Company, or any applicable Governmental Rule or any agreement or instrument to which the Company is a party or by which it or its Property is bound or to which it is subject, or constitute a default under, or result in the acceleration or mandatory prepayment of, any indebtedness evidenced by or termination of any such agreement or instrument, or (except for the Liens created pursuant to the Security Documents) result in the creation or imposition of any Lien upon any Property of the Company pursuant to the terms of any such agreement or instrument. 7.05 Action. The Company has all necessary corporate power and authority to execute, deliver and perform its obligations under each of the Basic Documents to which it is a party; the execution, delivery and performance by the Company of each of the Basic Documents to which it is a party have been duly authorized by all necessary corporate action on its part (including any required shareholder approvals); and this Agreement has been duly and validly executed and delivered by the Company and constitutes, and each of the Notes and the other Basic Documents to which it is a party when executed and delivered by the Company will constitute, its legal, valid and binding obligation, enforceable against the Company in accordance with its terms, (a) except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights and (b) except as such enforceability may be limited by the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 7.06 Approvals. No Governmental Approvals are necessary for the execution, delivery or performance by the Company of the Basic Documents to which it is a party or for the legality, validity or enforceability of any Basic Document, except for filings and recordings in respect of the Liens created pursuant to the Security Documents. 7.07 Use of Credit. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit under this Agreement will be used to buy or carry any Margin Stock. 7.08 ERISA. Each Plan, and, to the knowledge of the Company, each Multiemployer Plan, is in compliance with, and has been administered in compliance with, the applicable provisions of ERISA, the Code and any other Governmental Rule except to the extent non-compliance could not reasonably be expected to have a Material Adverse Effect, and no event or condition has occurred and is continuing as to which the Company would be under an obligation to furnish a report to the Lenders under Section 8.01(e). 7.09 Taxes. The Company has filed all Federal income tax returns and all other material tax returns that are required to be filed and has paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company and all other related penalties and charges, except for any such tax (excluding any Federal tax the nonpayment of which could result in the imposition of a Lien on any Property of the Company) the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP. As of the Effective Date, no such taxes are being contested by the Company. The charges, accruals and reserves on the books of the Company in respect of taxes and other governmental charges are, in the opinion of the Company, adequate. The Company has not given or been requested to give a waiver of the statute of limitations relating to the payment of Federal or other taxes. 7.10 Certain Regulations. The Company is not (a) an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940; (b) a "holding company," or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935; or (c) subject to any other Governmental Rule restricting its ability to incur debt or to grant Liens. 7.11 Material Agreements and Liens. (a) Part A of Schedule I is a complete and correct list, as of the Effective Date of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Company the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $50,000, and the aggregate principal or face amount outstanding or that may become outstanding under each such arrangement is correctly described in Part A of Schedule I. (b) Part B of Schedule I is a complete and correct list, as of the Effective Date, of each Lien securing Indebtedness of any Person the aggregate principal or face amount of which equals or exceeds (or may equal or exceed) $50,000 and covering any Property of the Company, and the aggregate Indebtedness secured (or which may be secured) by each such Lien and the Property covered by each such Lien is correctly described in Part B of Schedule I. Except for (i) Liens granted by the Security Agreement, (ii) in the case of Inventory, Liens arising by operation of law and (iii) in the case of Property of the Company other than Inventory and Receivables, Liens permitted pursuant to Section 8.06, there are no Liens on Inventory, Receivables or other Property of the Company. Except for Liens permitted pursuant to Section 8.06, the Liens of the Security Documents constitute first priority Liens on all or substantially all of the Properties of the Company. 7.12 Environmental Matters. The Company has obtained all Governmental Approvals required under all Environmental Laws to carry on its business as now being or as proposed to be conducted, except to the extent failure to have any such Governmental Approvals would not have a Material Adverse Effect. Each of such Governmental Approvals is in full force and effect and the Company is in compliance with the terms and conditions of such Governmental Approvals, and is also in compliance with all other provisions of any applicable Environmental Law or any Governmental Rule issued, entered, promulgated or approved under any Environmental Law, except to the extent failure to comply with such provisions would not have a Material Adverse Effect. In addition, except as set forth in Schedule II: (a) No notice, notification, demand, request for information, citation, summons or order has been issued and is pending, no complaint has been filed and is pending, no material penalty has been assessed and no investigation or review is pending or threatened by any Governmental Person with respect to any alleged failure by the Company to have any Governmental Approval required under any Environmental Law in connection with the conduct of the business of the Company or with respect to any generation, treatment, storage, recycling, transportation or Release of any Hazardous Materials generated by the Company. (b) The Company does not own, operate or lease a treatment, storage or disposal facility requiring a permit under the Resource Conservation and Recovery Act of 1976 or under any comparable state or local statute; and (i) no polychlorinated biphenyls (PCB's) are or have been present at any site, facility or vessel now or previously owned, operated or leased by the Company that could reasonably be expected to have a Material Adverse Effect; (ii) no friable asbestos or materials containing friable asbestos are or have been present at any site or facility now or previously owned, operated or leased by the Company that could reasonably be expected to have a Material Adverse Effect; (iii) there are no underground storage tanks or surface impoundments for Hazardous Materials, active or abandoned, at any site or facility now or previously owned, operated or leased by the Company; (iv) no Hazardous Materials have been Released at, on or under any site or facility now or previously owned, operated or leased by the Company in a quantity established as reportable by statute, ordinance, rule, regulation or order; and (v) no Hazardous Materials have been otherwise Released at, on or under any site or facility now or previously owned, operated or leased by the Company that could reasonably be expected to have a Material Adverse Effect. (c) The Company has not transported or arranged for the transportation of any Hazardous Material to any location that is listed on the National Priorities List ("NPL") under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), listed for possible inclusion on the NPL by the Environmental Protection Agency in the Comprehensive Environmental Response and Liability Information System, as provided for by 40 C.F.R. 300.5 ("CERCLIS"), or on any similar state or local list or that is the subject of Federal, state or local enforcement actions or other investigations that may lead to Environmental Claims against the Company. (d) No Hazardous Material generated by the Company has been recycled, treated, stored, disposed of or Released by the Company at any location other than those listed in Schedule II. (e) No oral or written notification of a Release of a Hazardous Material has been filed by or on behalf of the Company and no site or facility now or previously owned, operated or leased by the Company is listed or proposed for listing on the NPL, CERCLIS or any similar state list of sites requiring investigation or clean-up. (f) No Liens have arisen under or pursuant to any Environmental Laws on any site or facility owned, operated or leased by the Company, and no action has been taken or is in process by any Governmental Person that could subject any such site or facility to such Liens and the Company would not be required to place any notice or restriction relating to the presence of Hazardous Materials at any site or facility owned by it or in any instrument of transfer affecting such site or facility. (g) There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or that are in the possession of the Company in relation to any site or facility now or previously owned, operated or leased by the Company which have not been made available to the Lenders. 7.13 Capitalization. The authorized capital stock of the Company consists, on the Effective Date, of an aggregate of 6,500,000 shares consisting of (i) 5,500,000 shares of common stock, par value $0.01 per share, of which, after giving effect to the transactions contemplated on the Effective Date, 3,100,000 shares will be duly and validly issued and outstanding, each of which shares is fully paid and nonassessable and (ii) 1,000,000 shares of preferred stock, par value $0.01 per share which may be issued in such series and with such preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and other provisions as may be fixed from time to time by the Board of Directors of the Company (but only to the extent permitted by this Agreement and the other Basic Documents), of which no shares will be issued and outstanding as of the Effective Date. As of the Effective Date, fifteen percent (15%) of the issued and outstanding shares of capital stock of the Company will be held beneficially or of record by GEI and 85% of such common stock will be held beneficially or of record by the holders of the Old Subordinated Debentures. As of the Effective Date there are no outstanding Equity Rights with respect to the Company and there are no outstanding obligations of the Company to repurchase, redeem, or otherwise acquire any shares of capital stock of the Company nor are there any outstanding obligations of the Company to make payments to any Person, such as "phantom stock" payments, where the amount of the payment is calculated with reference to the fair market value or equity value of the Company. 7.14 Subsidiaries. The Company has no Subsidiaries. 7.15 Title to Assets. The Company owns and has good and marketable title (subject only to Liens permitted by Section 8.06) to the Properties shown to be owned by it in the most recent financial statements referred to in Section 7.02 (other than Properties disposed of in the ordinary course of business or otherwise permitted to be disposed of pursuant to Section 8.05). The Company owns and has good and marketable title to, and enjoys peaceful and undisturbed possession of, all Properties (subject only to Liens permitted by Section 8.06) that are necessary for the operation and conduct of its businesses. 7.16 True and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Company to the Administrative Agent, the Co-Agent or any Lender in connection with the negotiation, preparation or delivery of the Basic Documents or included in or delivered pursuant to any Basic Document, when taken as a whole (together with the Disclosure Statement), do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements in the Basic Documents and the Disclosure Statement, in light of the circumstances under which they were made, not misleading. All written information furnished after the Effective Date by the Company to the Administrative Agent, the Co-Agent or the Lenders in connection with the Basic Documents and the transactions contemplated by the Basic Documents will be true, complete and accurate in all material respects, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to the Company that could have a Material Adverse Effect that has not been disclosed in the Basic Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Lenders for use in connection with the transactions contemplated by the Basic Documents. Section 8. Covenants of the Company. The Company covenants and agrees with the Lenders, the Administrative Agent and the Co-Agent that, so long as any Commitment, Loan or Letter of Credit Liability is outstanding and until payment in full of all Obligations: 8.01 Financial Statements, Etc. The Company shall deliver to the Administrative Agent (with sufficient copies for the Co-Agent and each of the Lenders) for delivery to the Lenders: (a) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, statements of income and cash flow of the Company for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related balance sheets of the Company as at the end of such period, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state such financial statements fairly present the financial condition and results of operations of the Company in accordance with GAAP, consistently applied (except (i) for the application of fresh start accounting, SOP No. 90-7 and (ii) that the notes to such financial statements shall not be required to be presented in accordance with GAAP), as at the end of, and for, such period (subject to normal year-end audit adjustments); (b) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, statements of income, retained earnings and cash flow of the Company for such fiscal year and the related balance sheets of the Company as at the end of such fiscal year, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied (i) by an unqualified opinion of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements fairly present the financial condition and results of operations of the Company as at the end of, and for, such fiscal year in accordance with GAAP, consistently applied (except for application of fresh start accounting, SOP No. 90-7), and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Default, and (ii) by a certificate of a senior financial officer of the Company, which certificate shall state that such financial statements fairly present the financial condition and results of operations of the Company in accordance with GAAP, consistently applied (except for application of fresh start accounting, SOP No. 90-7), as at the end of, and for, such fiscal year; (c) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company shall have filed with the Securities and Exchange Commission or any national securities exchange; (d) promptly upon their being mailed or provided to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed or provided; (e) as soon as possible, and in any event within ten days after the Company knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial officer of the Company setting forth details respecting such event or condition and the action, if any, that the Company or its ERISA Affiliate proposes to take with respect to such event or condition (and a copy of any report or notice required to be filed with or given to PBGC by the Company or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued under that Section, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, including the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); and any request for a waiver under Section 412(d) of the Code for any Plan; (ii) the distribution under Section 4041(a) of ERISA of a notice of intent to terminate any Plan or any action taken by the Company or an ERISA Affiliate to terminate any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal from a Multiemployer Plan by the Company or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by the Company or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Company or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and (vi) the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Company or an ERISA Affiliate fails to timely provide security to the Plan in accordance with the provisions of those Sections; (f) as soon as available and in any event by Tuesday of each week, (i) a Borrowing Base Certificate for the weekly accounting period ending on Sunday of the second preceding week (9 days before), (ii) a statement of earnings of the Company for the week ended Wednesday of the immediately preceding week (6 days before), which statement shall include a summary of accounts payable of the Company, and (iii) a sales report of the Company for the week ended Wednesday of the immediately preceding week, in each case in form and substance satisfactory to the Administrative Agent; (g) periodically at the request of the Administrative Agent, the Co-Agent or the Majority Lenders (but not more often than once during each fiscal quarter of the Company so long as no Default has occurred and is continuing), a report of an independent collateral auditor (which may be, or be affiliated with, the Administrative Agent or one of the Lenders) with respect to the Receivables and Inventory components included in the Borrowing Base as at the end of any weekly, monthly or quarterly accounting period selected by the Administrative Agent, the Co-Agent or the Majority Lenders, which report shall indicate that, based upon a review by such auditors of the Receivables (including verification with respect to the amount, aging, identity and credit of the respective account debtors and the billing practices of the Company) and Inventory (including verification as to the value, location and respective types), the information set forth in the Borrowing Base Certificate delivered by the Company as at the end of such accounting period is accurate and complete in all material respects and (if so requested by the Administrative Agent, the Co-Agent or the Majority Lenders) in addition, as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a like report of KPMG Peat Marwick or other independent public accountants with respect to the Receivables and Inventory components included in the Borrowing Base as at the end of such fiscal year; (h) as soon as available and in any event within 30 days after the end of each month, an aging report, in form and substance satisfactory to the Administrative Agent and the Co- Agent, as to the Receivables of the Company showing all customer balances during such month; (i) promptly upon request of any Lender, copies of any documents relating to the verification of Receivables and Inventory by the independent certified public accountants referred to in clause (g) above; (j) (i) not later than 10 days after the end of each fiscal year of the Company, a copy of the final budget of the Company for the next succeeding fiscal year (broken down by quarter), in form and substance satisfactory to the Majority Lenders, and (ii) not later than 10 days after the end of each fiscal year of the Company, a quarterly business plan of the Company covering the next succeeding fiscal year, in form and substance satisfactory to the Majority Lenders (and, if requested by the Majority Lenders prior to the end of any such fiscal year, an annual business plan for the succeeding 3 fiscal years); (k) within 30 days after the end of each annual anniversary of the Effective Date, reports of the independent appraisers updating each of the appraisals delivered pursuant to Section 6.01(m), which reports shall reflect the then market value of Properties covered by the Mortgage and the then orderly liquidation value of the Company's equipment and contain such other information relating to such Properties and such equipment as shall be requested by the Administrative Agent or the Co- Agent; (l) promptly after an officer of the Company knows or has reason to believe that any Default has occurred, a notice of such Default describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Company has taken or proposes to take with respect to such Default; (m) not later than 60 days after the Effective Date, a management succession plan setting forth the Company's plans for the retention and employment of key operation and financial executives of the Company; (n) promptly after the amendment of the charter of the Company or the amendment of the Senior Notes or the Senior Note Documents, copies of such amendments; and (o) from time to time such other information regarding the financial condition, operations, business or prospects of the Company (including any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Lender, the Administrative Agent or the Co-Agent may reasonably request. The Company will furnish to the Administrative Agent (with sufficient copies for the Co-Agent and each Lender) for delivery to the Lenders, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Company (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Company has taken or proposes to take with respect to such Default) and (ii) setting forth in reasonable detail the computations necessary to determine Excess Cash Flow and whether the Company is in compliance with Sections 8.07, 8.09, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15 and 8.16 as of the end of the respective quarterly fiscal period or fiscal year (together with, to the extent such financial statements have been prepared on a basis different than the financial statements delivered pursuant to Section 7.02 as a result of changes in GAAP, an explanation of such changes in order that such determinations may be verified). 8.02 Litigation. The Company will promptly give to each Lender notice of all legal, arbitral or investigatory proceedings, and of all proceedings by or before any Governmental Person, and any material development in respect of any such proceedings, affecting the Company, except proceedings which, if adversely determined, could not have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company will give to each Lender notice of the assertion of any Environmental Claim by any Person against, or with respect to the activities of, the Company and notice of any alleged violation of or non-compliance with any Environmental Laws or any Governmental Approvals under Environmental Laws other than any Environmental Claim or alleged violation which, if adversely determined, could not have a Material Adverse Effect. 8.03 Existence, Etc. The Company will: (a) preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises (provided that nothing in this Section 8.03 shall prohibit any transaction expressly permitted under Section 8.05); (b) comply with the requirements of all applicable Governmental Rules, if failure to comply with such requirements could have a Material Adverse Effect; (c) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Properties prior to the date on which penalties attach except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; (d) maintain all of its Properties used or useful in its business in good working order and condition, ordinary wear and tear excepted; (e) keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied; and (f) permit representatives of any Lender, the Administrative Agent or the Co-Agent, during normal business hours and upon at least one Business Days' prior notice to the Company so long as no Default has occurred and is continuing, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender, the Administrative Agent or the Co-Agent (as the case may be); and, without limitation of the foregoing, the Company will pay the expenses of the Administrative Agent, Co- Agent and one representative of each Lender to attend periodic meetings of the Administrative Agent, the Co-Agent, the Lenders and the Company, provided that, so long as no Default has occurred and is continuing, the Company shall not be required to pay such expenses for more than one such meeting per calendar quarter. 8.04 Insurance. The Company will keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations or as otherwise may be requested by the Administrative Agent or the Majority Lenders, provided that in any event, except as provided in the certificates received and approved by the Lenders pursuant to Section 6.01(j), the Company will maintain: (1) Casualty Insurance -- insurance against loss or damage covering all of the tangible real and personal Property and improvements of the Company by reason of any Peril (as defined below) in such amounts and subject to such deductibles as shall be satisfactory to the Administrative Agent or the Majority Lenders and sufficient to avoid the named insured from becoming a co-insurer of any loss under such policy but in any event in an amount (i) in the case of fixed assets and equipment (including vehicles), at least equal to 100% of the actual replacement cost of such assets (including foundation, footings and excavation costs), subject to deductibles and (ii) in the case of Inventory, not less than the fair market value of such Inventory, subject to deductibles. (2) Automobile Liability Insurance for Bodily Injury and Property Damage -- insurance against liability for bodily injury and property damage in respect of all vehicles (whether owned, hired or rented by the Company) at any time located at, or used in connection with, its Properties or operations in such amounts as are then customary for vehicles used in connection with similar Properties and businesses, but in any event to the extent required by applicable law. (3) Comprehensive General Liability Insurance -- insurance against claims for bodily injury, death or Property damage occurring on, in or about the Properties (and adjoining streets, sidewalks and waterways) of the Company, in such amounts as are then customary for Property similar in use in the jurisdictions where such Properties are located. (4) Workers' Compensation Insurance -- workers' compensation insurance (including Employers' Liability Insurance) to the extent required by applicable law. (5) Product Liability Insurance -- insurance against claims for bodily injury, death or Property damage resulting from the use of products sold by the Company in such amounts as are then customarily maintained by responsible persons engaged in businesses similar to that of the Company. (6) Business Interruption Insurance -- insurance against loss of operating income (up to an aggregate amount equal to $70,000,000) by reason of any Peril. (7) Other Insurance -- such other insurance, in each case as generally carried by owners of similar Properties in the jurisdictions where such Properties are located, in such amounts and against such risks as are then customary for Property similar in use. Such insurance shall be written by financially responsible companies selected by the Company and having an A. M. Best rating of "B+" or better (or "A-" or better in the case of any change in the Company's insurers after the Effective Date) and being in a financial size category of XI or larger, or by other companies acceptable to the Majority Lenders, and (other than workers' compensation) shall name the Administrative Agent as additional insured, or loss payee, as its interests may appear. Each policy referred to in this Section 8.04 shall provide that it will not be canceled or reduced, or allowed to lapse without renewal, except after not less than 30 days' notice to the Administrative Agent and shall also provide that the interests of the Administrative Agent and the Lenders shall not be invalidated by any act or negligence of the Company or any Person having an interest in any Property covered by the Mortgage nor by occupancy or use of any such Property for purposes more hazardous than permitted by such policy nor by any foreclosure or other proceedings relating to such Property. The Company will advise the Administrative Agent promptly of any policy cancellation, reduction or amendment. On the Effective Date, the Company will deliver to the Administrative Agent certificates of insurance satisfactory to the Administrative Agent evidencing the existence of all insurance required to be maintained by the Company under this Section 8.04 (or as otherwise approved by Administrative Agent and the Lenders pursuant to Section 6.01(j)) setting forth the respective coverages, limits of liability, carrier, policy number and period of coverage and showing that such insurance will remain in effect through October 31, 1995, subject only to the payment of premiums as they become due (or December 15 in the case of insurance required by subsection (1) above). Thereafter, on each September 30 (or November 15 in the case of insurance required by subsection (1) above) in each year (commencing with 1995), the Company will deliver to the Administrative Agent certificates of insurance evidencing that all insurance required to be maintained by the Company under this Section 8.04 will be in effect through the October 31 (or December 15 in the case of insurance required by subsection (1) above) of the calendar year following the calendar year of the current September 30, subject only to the payment of premiums as they become due. In addition, the Company will not modify any of the provisions of any policy with respect to casualty insurance without delivering the original copy of the endorsement reflecting such modification to the Administrative Agent accompanied by a written report of Alexander & Alexander, or any other firm of independent insurance brokers of nationally recognized standing, stating that, in their opinion, such policy (as so modified) adequately protects the interests of the Lenders and the Administrative Agent, is in compliance with the provisions of this Section 8.04, and is comparable in all respects with insurance carried by responsible owners and operators of Properties similar to those covered by the Mortgage. The Company will not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required by this Section 8.04 unless such insurance names the Administrative Agent as additional insured or loss payee as provided in this Section 8.04. The Company will immediately notify the Administrative Agent whenever any such separate insurance is obtained and shall deliver to the Administrative Agent the certificates evidencing the same. Without limiting the obligations of the Company under the foregoing provisions of this Section 8.04, in the event the Company shall fail to maintain in full force and effect insurance as required by the foregoing provisions of this Section 8.04, then the Administrative Agent may, but shall have no obligation to, procure insurance covering the interests of the Lenders and the Administrative Agent in such amounts and against such risks as the Administrative Agent (or the Majority Lenders) shall deem appropriate, and the Company shall reimburse the Administrative Agent in respect of any premiums paid by the Administrative Agent in respect of such insurance. For purposes of this Section 8.04, the term "Peril" shall mean, collectively, fire, lightning, flood (but, unless otherwise required by the Administrative Agent or the Majority Lenders, only to the maximum amount available under federal programs), windstorm, hail, earthquake, explosion, riot and civil commotion, vandalism and malicious mischief, damage from aircraft, vehicles and smoke and all other perils covered by the "all-risk" endorsement then in use in the jurisdictions where the Properties of the Company are located. 8.05 Prohibition of Fundamental Changes. The Company will not enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution). The Company will not issue any shares of preferred stock or make any Equity Issuance as to which the Company is or may become obligated to repurchase, redeem or otherwise acquire such shares or Equity Rights at the election of the holder or otherwise on any date prior to February 1, 2003. The Company will not acquire any business or Property from, or capital stock of, or be a party to any acquisition of, any Person except for purchases of inventory and other Property to be sold or used in the ordinary course of business, Investments permitted under Section 8.08 and Capital Expenditures permitted under Section 8.14. The Company will not convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its business or Property, whether now owned or hereafter acquired (including receivables and leasehold interests, but excluding (i) obsolete or worn-out Property, tools or equipment no longer used or useful in its business so long as the amount so sold in any single fiscal year by the Company shall not have a fair market value in excess of $250,000; (ii) any inventory sold or disposed of in the ordinary course of business and on ordinary business terms; (iii) assets with a fair value of not more than $500,000 relating to the Company's management information system operations in connection with the outsourcing of such operations to a third party (provided that (A) the Company shall have (1) notified the Administrative Agent in writing of the terms of such Disposition not later than 30 days prior to the date on which such Disposition is proposed to be made and (2) provided copies of all agreements relating to such Disposition to the Administrative Agent, (B) the arrangements relating to such Disposition shall in all respects be satisfactory to the Administrative Agent and (C) such Disposition shall be subject to such conditions as the Administrative Agent may reasonably request (including the execution and delivery of consents to assignment in form and substance satisfactory to the Administrative Agent)); and (iv) other Property of the Company so long as the amount so sold in any single fiscal year shall not have a fair market value in excess of $250,000). 8.06 Limitation on Liens. The Company will not create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except: (a) Liens created pursuant to the Security Documents; (b) Liens in existence on the Effective Date and listed in Part B of Schedule I or Liens securing Indebtedness referred to in Section 8.07(c) (excluding, however, (i) following the making of the initial Loans, Liens securing Indebtedness to be repaid with the proceeds of such Loans, as indicated on Schedule I and (ii) Liens on Inventory and Receivables of the Company other than those arising by operation of law); (c) Liens (other than Federal tax Liens and Liens imposed under ERISA) imposed by any Governmental Person for taxes, assessments or charges not yet due or which are being contested in good faith and by proper proceedings if adequate reserves with respect to such Liens are being maintained in accordance with GAAP, but only to the extent such Governmental Person shall not have filed a notice of Lien in the public records; (d) carriers', mechanics', warehousemen's, artisans', service, suppliers', depositaries', or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days; (e) pledges or deposits in respect of workers' compensation, unemployment insurance and other social security legislation; (f) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of the Company's business; (g) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of the Company's business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title which, in the aggregate, are not material in amount, and which do not in any case materially detract from the value of the Property subject to such Lien or interfere with the ordinary conduct of the business of the Company; (h) Liens upon real or tangible personal Property (excluding Liens on Inventory and Receivables) acquired after the Effective Date (by purchase, construction or otherwise) by the Company, each of which Liens either (A) existed on such Property before the time of its acquisition and was not created in anticipation of such event, or (B) was created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such Property; provided that no such Lien shall extend to or cover any Property of the Company other than the Property so acquired and improvements on such Property; and provided, further, that the principal amount of Indebtedness secured by any such Lien shall at no time exceed 80% of the fair market value (as determined in good faith by a senior financial officer of the Company) of such Property (or 100% in the case of equipment) at the time it was acquired (by purchase, construction or otherwise); and (i) any extension, renewal or replacement of the foregoing, provided, however, that the Liens permitted under this clause (i) shall not be spread to cover any additional Indebtedness or Property (other than a substitution of like Property). 8.07 Indebtedness. The Company will not create, incur or suffer to exist any Indebtedness except: (a) Indebtedness under the Basic Documents; (b) Indebtedness outstanding on the Effective Date and listed in Part A of Schedule I (excluding, however, (i) Indebtedness referred to in subsection (d) below and (ii) following the making of the initial Loans, the Indebtedness to be repaid with the proceeds of such Loans, as indicated on Schedule I); (c) additional Indebtedness outstanding on the Effective Date and not listed in Part A of Schedule I pursuant to Section 7.11(a) provided that the aggregate amount thereof shall not exceed $150,000; (d) Indebtedness of the Company under the Indentures listed in numbered paragraphs 6 and 7 in Part A of Schedule I either (i) as of the Effective Date or (ii) after the Effective Date as payments in kind permitted pursuant to the terms of the Senior Note Documents as in effect on the Effective Date (for clarification purposes only, fees and expenses under, and indemnities payable pursuant to Sections 408 and 607(3) of, the Senior Note Documents as in effect on the Effective Date are not Indebtedness under this Agreement); (e) Indebtedness consisting of Capital Lease Obligations of the Company relating to Capital Expenditures permitted by Section 8.14; and (f) additional Indebtedness of the Company up to but not exceeding $10,000,000 at any one time outstanding. 8.08 Investments. The Company will not make or permit to remain outstanding any Investments except: (a) operating deposit accounts with banks; (b) Permitted Investments; (c) the Existing Interest Rate Protection Agreement (but only to the extent of any transactions entered into as of the Effective Date); (d) other Interest Rate Protection Agreements so long as (i) the aggregate notional principal amount under all such Interest Rate Protection Agreements calculated at the time any such Interest Rate Protection Agreement is entered into does not exceed the aggregate amount of floating rate Indebtedness of the Company and the aggregate amount of unfunded commitments to lend floating rate Indebtedness to the Company, and (ii) the obligations of the Company under such Interest Rate Protection Agreements are not secured by any Property of the Company; (e) repurchase obligations of the Company permitted pursuant to Section 8.09; and (f) additional Investments up to but not exceeding $50,000 in the aggregate. 8.09 Dividend Payments. The Company will not declare or make any Dividend Payment at any time (other than Dividend Payments in respect of the Company's obligations to repurchase capital stock or Equity Rights of the Company of retired, terminated or deceased directors, officers or employees of the Company, provided that (a) the aggregate amount of such payments in any fiscal year of the Company shall not exceed the sum of (i) $500,000 plus (ii) for each fiscal year of the Company beginning after the Effective Date, an amount equal to the excess (if any) of $500,000 over the amount of such payments made by the Company in its immediately preceding fiscal year and (b) no such Dividend Payments may be made after the occurrence and during the continuance of any Default). 8.10 Leverage Ratio. The Company will not permit the Leverage Ratio (determined as of each Quarterly Date) to exceed the following respective amounts at any time during the following respective periods: Period Ratio From the Effective Date through October 29, 1995 8.0 to 1 From October 30, 1995 through February 2, 1997 7.0 to 1 From February 3, 1997 and at all times thereafter 6.0 to 1 8.11 Net Worth. The Company will not permit its Net Worth (determined as of each Quarterly Date) to be less than the following respective amounts at any time during the following respective periods: Period Amount From the Effective Date through October 29, 1995 $40,000,000 From October 30, 1995 through February 2, 1997 $42,500,000 From February 3, 1997 and at all times thereafter $50,000,000 8.12 Working Capital. The Company will not permit Working Capital (determined as of each Quarterly Date) to be less than the following respective amounts at any time during the following respective periods: Period Amount From the Effective Date through January 29, 1995 $14,500,000 From January 30, 1995 through April 30, 1995 $11,500,000 From May 1, 1995 through July 30, 1995 $ 9,750,000 From July 31, 1995 through April 28, 1996 $19,250,000 From April 29, 1996 through July 28, 1996 $12,500,000 From July 29, 1996 through February 2, 1997 $20,750,000 From February 3, 1997 through May 4, 1997 $20,250,000 From May 5, 1997 through August 3, 1997 $13,750,000 From August 4, 1997 through November 2, 1997 $21,750,000 From November 3, 1997 and thereafter $20,500,000 8.13 Fixed Charges Ratio. The Company will not permit the Fixed Charges Ratio (determined as of each Quarterly Date occurring at the end of each period specified below) to be less than the following respective amounts at any time during the following respective periods: Period Ratio From January 30, 1995 through April 30, 1995 0.850 to 1 From January 30, 1995 through July 30, 1995 0.850 to 1 From January 30, 1995 through October 29, 1995 0.800 to 1 From January 30, 1995 through January 28, 1996 0.750 to 1 From May 1, 1995 through April 28, 1996 0.700 to 1 From July 31, 1995 through July 28, 1996 0.700 to 1 From October 30, 1995 through November 3, 1996 0.700 to 1 From January 29, 1996 through February 2, 1997 0.725 to 1 From April 29, 1996 through May 4, 1997 0.750 to 1 From July 29, 1996 through August 3, 1997 0.775 to 1 From November 4, 1996 through November 2, 1997 0.775 to 1 8.14 Capital Expenditures. The Company will not permit the aggregate amount of Capital Expenditures by the Company to exceed the following respective amounts for the following respective periods (provided that the following limitations shall not apply to (a) Capital Expenditures made for the purpose of restoring, repairing or replacing assets subject to a Casualty Event to the extent permitted by this Agreement and provided such expenditures are made within twelve (12) months of the occurrence of such Casualty Event or (b) Capital Expenditures made for the purpose of replacing assets subject to a Disposition to the extent not exceeding an aggregate amount equal to $500,000 in any fiscal year of the Company): Period Amount For the seven fiscal month period from the Effective Date through July 30, 1995 $6,000,000 For each period of two fiscal quarters of the Company from and after July 31, 1995 $15,000,000 For each fiscal year of the Company from and after July 31, 1995 $22,000,000 8.15 Funded Debt to Operating Cash Flow Ratio. The Company will not permit the Funded Debt to Operating Cash Flow Ratio (determined as of each Quarterly Date occurring at the end of each period specified below) to be more than the following respective amounts at any time during the following respective periods: Period Ratio From January 30, 1995 through April 30, 1995 20.00 to 1 From January 30, 1995 through July 30, 1995 12.00 to 1 From January 30, 1995 through October 29, 1995 8.00 to 1 From January 30, 1995 through January 28, 1996 5.75 to 1 From May 1, 1995 through April 28, 1996 5.25 to 1 From July 31, 1995 through July 28, 1996 5.00 to 1 From October 30, 1995 through November 3, 1996 4.75 to 1 From January 29, 1996 through February 2, 1997 4.75 to 1 From April 29, 1996 through May 4, 1997 4.50 to 1 From July 29, 1996 through August 3, 1997 4.25 to 1 From November 4, 1996 through November 2, 1997 4.25 to 1 8.16 Lease Obligations. The aggregate obligations of the Company for the payment of rent for any Property under operating leases or agreements to lease shall not exceed $25,000,000 during any fiscal year of the Company. 8.17 Lines of Business. The Company shall not engage to any substantial extent in any line or lines of business activity other than the business of distributing merchandise to and operating retail food and liquor stores in the State of Florida which offer for sale groceries, meats, fresh produce, dairy products, delicatessen and bakery products, health and beauty aids, pharmacies, wine, beer, liquor and selected general merchandise. 8.18 Transactions with Affiliates. Except as expressly permitted by this Agreement, the Company will not, directly or indirectly: (a) make any Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any Property to an Affiliate; (c) merge into or consolidate with or purchase or acquire Property from an Affiliate; or (d) enter into any other transaction directly or indirectly with or for the benefit of an Affiliate (including guarantees and assumptions of obligations of an Affiliate); provided that (x) any Affiliate who is an individual may serve as a director, officer or employee of the Company and receive reasonable compensation for his or her services in such capacity and (y) the Company may enter into transactions (other than extensions of credit by the Company to an Affiliate) (i) in the ordinary course of business if the monetary or business consideration arising from such activity would be substantially as advantageous to the Company as the monetary or business consideration which would obtain in a comparable transaction with a Person not an Affiliate and (ii) in which an Affiliate participates as a holder of stock of the Company which is also held by Persons not Affiliates of the Company on terms no more favorable than terms on which such other Persons may participate. 8.19 Use of Proceeds. The Company will use the proceeds of the (a) Revolving Credit Loans and the Tranche A Term Loan for general corporate purposes (provided that the proceeds of such Loans shall not be used to make any payments in respect of the Senior Notes if (i) the Company shall have the option under the Senior Notes to make payments in kind and the average, for the 60 days immediately preceding the date on which such payment is proposed to be made, of the excess of (A) the Borrowing Base (calculated, solely for purposes of this Section 8.19, without deduction for any amount referred to in clause (c) of the definition of "Borrowing Base") over (B) the aggregate principal amount of Revolving Credit Loans and Tranche A Term Loan outstanding, together with the aggregate amount of Letter of Credit Liabilities outstanding, shall be less than $15,000,000, or (ii) either before or after giving effect to such payment, a Default shall have occurred and be continuing), (b) the Tranche B Term Loan solely to repay in full the Indebtedness of the Company identified in numbered paragraph 1 of Part A of Schedule I and (c) the Tranche C Term Loan solely to repay a portion of the Additional Term Loan made by Bank of America under the Existing Senior Credit Agreement (in each case in compliance with all applicable Governmental Rules); provided that none of the Administrative Agent nor the Co-Agent nor any Lender shall have any responsibility as to the use of any of such proceeds. 8.20 Modifications of Certain Documents. The Company will not amend its charter in a manner which could be adverse to the Lenders or the Administrative Agent nor consent to any modification, supplement or waiver of any of the provisions of the Senior Notes or the Senior Note Documents the effect of which would change the terms thereof in any manner which could be adverse to the Company, the Lenders, the Administrative Agent or the Co-Agent, in either case without the prior consent of the Administrative Agent (with the approval of the Majority Lenders). 8.21 After Acquired Real Property. If the Company acquires or leases any real property after the Effective Date (or if, at any time after the Effective Date, the Company shall not be prohibited from encumbering any real property interest of the Company which was not encumbered by the Mortgage as of the Effective Date), the Company shall (a) promptly notify the Administrative Agent in writing of such acquisition or ability to encumber, as the case may be, and (b) promptly execute a mortgage (substantially in the form of the Mortgage) or an amendment to the Mortgage (as the Administrative Agent or the Co-Agent may reasonably require) covering such property in favor of the Administrative Agent for the benefit of the Administrative Agent, the Co-Agent and the Lenders, together with such surveys, title insurance policies and endorsements, certificates of occupancy and such other agreements, estoppels and consents (including agreements with lessors) as the Administrative Agent or the Co- Agent may reasonably require. The Company shall use its reasonable best efforts to obtain, within 60 days after the Effective Date, the consent (which shall be reasonably satisfactory to the Majority Lenders) of Sun Life Insurance Company of America on the Company's warehouse facility in Hillsborough County, Florida (commonly known as 6422 Harney Road, Tampa, Florida), and shall promptly cause such facility to be encumbered by the Mortgage (and covered by title insurance) as set forth above in this Section 8.21. 8.22 Inventory and Receivables. The Company agrees that: (a) all sales of Inventory shall be bona fide sales in the ordinary course of the Company's business; (b) all invoices representing Receivables shall be in the name of the Company; (c) all credit memoranda shall be issued promptly; (d) it will, consistent with its existing business practices, promptly enforce, collect and receive all amounts owing in respect of the Receivables; (e) except for Retained Cash in an amount not to exceed $6,000,000 at any time, all cash and checks received by the Company in respect of the sale of Inventory or services rendered by the Company shall be deposited promptly to the Blocked Account; (f) all amounts owing to the Company in respect of credit card sales shall be paid directly by the relevant credit card companies (or, if applicable, the bank or banks at which the Company has merchant agreements with respect to such credit cards) directly to the Blocked Account (and the Company shall, on or before the Effective Date, direct the credit card companies or such banks to make such payments directly to the Blocked Account); and (g) it will otherwise comply in all material respects with its cash management procedures and policies in effect as of the Effective Date (as the same may be amended from time to time with the consent of the Majority Lenders). 8.23 Subsidiaries. The Company will not directly or indirectly organize or acquire any Subsidiary. 8.24 Statutory Notice. The Company will not file or record any instrument of record pursuant to Section 697.04(1)(b) of the Florida Statutes that would limit the maximum amount that may be secured by any of the Security Documents. 8.25 Intangible Personal Property Taxes. Within 30 days after the Effective Date, the Company will file an application (which application shall be reasonably acceptable to the Administrative Agent) for a ruling from the Department of Revenue of the State of Florida to the effect that the Company is not liable to the State of Florida for the payment of nonrecurring intangible personal property taxes pursuant to Chapter 199 of the Florida Statutes in connection with the transactions contemplated by the Basic Documents. Within 180 days after the Effective Date, the Company will either (a) obtain and deliver to the Administrative Agent the formal ruling referred to in the immediately preceding sentence (which ruling shall be in all respects satisfactory to the Majority Lenders) or (b) if such ruling has not been so obtained and delivered to the Administrative Agent within such period or if the Department of Revenue has issued a ruling at any time within such period to the effect that the Company is required to pay such taxes, the Company will (subject to its right to contest such taxes pursuant to Section 8.03(c) and to pursue all rights to seek review of any such unfavorable ruling) as promptly as possible thereafter pay such taxes to the extent required to be paid by it (or, in the case of an unfavorable ruling, to the extent required by such ruling) to the State of Florida. In addition, after the occurrence and during the continuance of an Event of Default, the Company agrees that it will (unless the Department of Revenue has issued a ruling as set forth above to the effect that no such nonrecurring intangible personal property taxes are due), upon the written request of the Majority Lenders, promptly pay all such nonrecurring intangible personal property taxes (whether or not being contested) and, if not so paid, the Majority Lenders shall have the right (but not the obligation) to cause Revolving Credit Loans to be made for the purpose of paying such taxes. Section 9. Events of Default. If one or more of the following events ("Events of Default") shall occur and be continuing: (a) The Company shall: (i) default in the payment of any principal of any Loan or any Reimbursement Obligation when due (whether at stated maturity or at mandatory or optional prepayment); or (ii) default in the payment of any interest on any Loan or any other Obligation when due and such default shall have continued unremedied for 2 or more days; or (b) The Company shall default (after the passage of any applicable grace period, without giving effect to any extensions thereof after default) in the payment when due of any principal of or interest on any of its other Indebtedness the aggregate outstanding principal amount of which exceeds $250,000, or in the payment when due of any amount under any Interest Rate Protection Agreement for an amount exceeding $250,000; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness or any event specified in any Interest Rate Protection Agreement shall occur if the effect of such event is to cause, or (with or without the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (other than, in the case of a Capitalized Lease Obligation, as a result of a default occurring on the Effective Date in respect of such Capitalized Lease Obligation caused solely by the creation of the Liens intended to be created by the Security Documents on the Property to which such Capitalized Lease Obligation relates), such Indebtedness to become due, or to be prepaid in full or to be purchased by the Company or one of its Affiliates (whether by redemption, purchase, repurchase, offer to purchase or repurchase, exercise of a put or call option or otherwise), prior to its stated maturity or to have the interest rate on such Indebtedness reset to a level so that securities evidencing such Indebtedness trade at a level specified in relation to its par value or, in the case of an Interest Rate Protection Agreement, to permit the payments owing under such Interest Rate Protection Agreement to be liquidated; or the holder of any Lien on any Property of the Company having a fair market value in excess of $250,000 shall have commenced foreclosure of such Lien; or (c) Any representation, warranty or certification made or deemed made by the Company in any Basic Document or any certificate furnished to any Lender, the Administrative Agent or the Co-Agent pursuant to the provisions of any Basic Document shall prove to have been false or misleading as of the time made or furnished or deemed made or furnished in any material respect; or (d) The Company shall default in the performance of any of its obligations under any of Section 8.01(l), 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, 8.13, 8.14, 8.15, 8.16, 8.18, 8.24 or 8.25, or Section 5 of the Security Agreement or any provisions of the Mortgage; or the Company shall default in the performance of any of its obligations under Section 8.01(f) and such default shall continue unremedied for a period of 1 Business Day after notice of such default shall have been given to the Company by the Administrative Agent or any Lender (through the Administrative Agent); or the Company shall default in the performance of any of its other obligations in this Agreement or any other Basic Document and such default shall continue unremedied for a period of 30 days after notice of such default shall have been given to the Company by the Administrative Agent or any Lender (through the Administrative Agent); or (e) The Company shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (f) The Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (g) A proceeding or case shall be commenced, without the application or consent of the Company in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the Company or of all or any substantial part of its Property, or (iii) similar relief in respect of the Company under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Company shall be entered in an involuntary case under the Bankruptcy Code; or (h) A final judgment or judgments (including any arbitration award) for the payment of money in excess of $100,000 in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted in writing liability in respect of such judgment) or in excess of $250,000 in the aggregate (regardless of insurance coverage) shall be rendered by a one or more Governmental Persons (or, in the case of an arbitration award, one or more arbitrators) having jurisdiction against the Company and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution of the relevant judgment shall not be procured, within 60 days from the date of entry of such judgment and the Company shall not, within that sixty-day period, or such longer period during which execution of the same shall have been stayed, appeal from and cause the execution of such judgment to be stayed during such appeal; or (i) An event or condition specified in Section 8.01(e) shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Company or any ERISA Affiliate shall incur or shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which would constitute a Material Adverse Effect; or (j) A reasonable basis shall exist for the assertion against the Company of (or there shall have been asserted against the Company) claims or liabilities, whether accrued, absolute or contingent, based on or arising from the generation, storage, transport, handling or Release of Hazardous Materials by the Company or Affiliates, or any predecessor in interest of the Company or Affiliates, or relating to any site, facility or vessel owned, operated or leased by the Company or Affiliates, which claims or liabilities (insofar as they are payable by the Company but after deducting any portion which is reasonably expected to be paid by other creditworthy Persons jointly and severally liable for such portion), in the judgment of the Majority Lenders are reasonably likely to be determined adversely to the Company, and the amount of such claims or liabilities is, singly or in the aggregate, reasonably likely to have a Material Adverse Effect; or (k) Any person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect on the date of this Agreement), other than GEI (or one or more of its affiliates) or members of the bondholders committee in the Chapter 11 Case (or a group which includes any one or more of the foregoing), shall acquire beneficially more than 35% (by number of votes) of the voting stock of the Company; or any Person or group (other than GEI (or its affiliates) or any member of the bondholders committee in the Chapter 11 case (or a group which includes any one or more of the foregoing)) shall succeed in having a sufficient number of its nominees elected to the Board of Directors of the Company to constitute a majority of the Board of Directors of the Company; or (l) Except for expiration in accordance with its terms, any of the Security Documents shall be terminated or shall cease to be in full force and effect, or any Lien intended to be created by the Security Documents shall at any time be invalidated, subordinated or otherwise cease to be in full force and effect, for whatever reason; or (m) The Company shall make any payment or prepayment (whether in cash or other Property) of the principal of or interest on, or any other amount owing in respect of the principal of or interest on, the Senior Notes (including any redemption, retirement, purchase or defeasance of, or sinking fund or similar payment with respect to, the Senior Notes), except for regularly scheduled payments of interest in respect of such Senior Notes required pursuant to the Senior Notes and Senior Note Documents; THEREUPON: (1) in the case of an Event of Default other than one referred to in clause (f) or (g) of this Section 9, (A) the Administrative Agent may and, upon the request of the Majority Lenders, shall, by notice to the Company, terminate the Commitments and they shall thereupon terminate and (B) the Administrative Agent may and, upon the request of the Majority Lenders, shall, by notice to the Company, declare the principal amount then outstanding of, and the accrued interest on, the Loans, the Reimbursement Obligations and all other Obligations to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company; and (2) in the case of the occurrence of an Event of Default referred to in clause (f) or (g) of this Section 9, the Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Loans, the Reimbursement Obligations and all other Obligations shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. The Majority Lenders shall have the right (in their sole and absolute discretion) to rescind any declaration of termination or acceleration made by the Administrative Agent under this Section 9. Nothing in this Section 9 shall affect the rights of the Administrative Agent to make Discretionary Extensions in accordance with Section 2.02(c) (or the obligations of the Company and the Lenders with respect thereto) prior to any termination of the Commitments or acceleration of the Obligations as set forth above. In addition, upon the occurrence and during the continuance of any Event of Default (if the Administrative Agent has declared the principal amount then outstanding of, and accrued interest on, the Revolving Credit Loans and all other Obligations to be due and payable), the Company agrees that it shall, if requested by the Administrative Agent or the Majority Lenders through the Administrative Agent (and, in the case of any Event of Default referred to in clause (f) or (g) of this Section 9, forthwith, without any demand or the taking of any other action by the Administrative Agent or such Lenders) provide cover for the Letter of Credit Liabilities by paying to the Administrative Agent immediately available funds in an amount equal to the then aggregate undrawn face amount of all Letters of Credit, which funds shall be held by the Administrative Agent in the Collateral Account as collateral security in the first instance for the Letter of Credit Liabilities and be subject to withdrawal only as provided in the Security Documents with respect to the Collateral Account. Section 10. The Administrative Agent. 10.01 Appointment, Powers and Immunities. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to act as its agent under this Agreement and the other Basic Documents with such powers as are specifically delegated to the Administrative Agent by the terms of the Basic Documents, together with such other powers as are reasonably incidental to such powers. The Administrative Agent (which term as used in this sentence and in Section 11.05 and the first sentence of Section 11.06 shall include reference to its affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in the Basic Documents, and shall not by reason of any Basic Document be a trustee or fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recitals, statements, representations or warranties contained in any Basic Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Basic Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any other Basic Document or any other document referred to or provided for in any Basic Document or for any failure by the Company or any other Person to perform any of its obligations under any Basic Document; (c) shall not be required to initiate or conduct any litigation or collection proceedings under any Basic Document; (d) shall not be responsible for any action taken or omitted to be taken by it under any Basic Document or under any other document or instrument referred to or provided for in any Basic Document or in connection with any Basic Document, except for its own gross negligence or willful misconduct. The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. The Administrative Agent may deem and treat the payee of any Note as the holder of such Note for all purposes of the Basic Documents unless and until a notice of the assignment or transfer of such Note shall have been filed with the Administrative Agent, together with the consent of the Company to such assignment or transfer (to the extent provided in Section 11.06(b)). 10.02 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including any made by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. As to any matters not expressly provided for by any Basic Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under any Basic Document in accordance with instructions given by the Majority Lenders or, if provided in this Agreement, in accordance with the instructions given by all of the Lenders as is required in such circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant to such instructions shall be binding on all of the Lenders. 10.03 Defaults. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default (other than the nonpayment of principal of or interest on Loans or Reimbursement Obligations or of commitment fees) unless the Administrative Agent has received notice from a Lender or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that the Administrative Agent receives such a notice of the occurrence of a Default, the Administrative Agent shall give prompt notice of such receipt to the Lenders (and shall give each Lender prompt notice of each such nonpayment). The Administrative Agent shall (subject to Section 11.07) take such action with respect to such Default as shall be directed by the Majority Lenders, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Lenders (including the making of discretionary Revolving Credit Loans pursuant to Section 2.02) except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Majority Lenders, or all of the Lenders. 10.04 Rights as a Lender. With respect to its Commitments and the Loans made by it, CITBC (and any successor acting as Administrative Agent) in its capacity as a Lender under the Basic Documents shall have the same rights, privileges and powers under the Basic Documents as any other Lender and may exercise the same as though it were not acting as the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. CITBC (and any successor acting as Administrative Agent) and its affiliates may (without having to account for the same to any Lender) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Company (and any of its Affiliates) as if it were not acting as the Administrative Agent, and CITBC and its affiliates may accept fees and other consideration from the Company for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. 10.05 Indemnification. The Lenders agree to indemnify each of the Administrative Agent and the Co-Agent (in their respective capacities as administrative agent and co-agent for the Lenders under the Basic Documents) and their respective affiliates, directors, officers, employees, attorneys and agents (to the extent not reimbursed under Section 11.03, but without limiting the obligations of the Company under Section 11.03) ratably in accordance with their respective Commitments or, if the Commitments shall have terminated, in accordance with the principal outstanding amount of the Loans held by the Lenders, for any and all losses, liabilities, damages or expenses (a) incurred by any of them in connection with or by reason of any actual or threatened investigation, litigation or other proceedings (including any such investigation, litigation or other proceedings between the Administrative Agent, the Co-Agent and any Lender) relating to the extensions of credit under, and the transactions contemplated by, the Basic Documents or any actual or proposed use by the Company of the proceeds of any such extensions of credit (or arising under any Environmental Law as provided in the last sentence of Section 11.03), including the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceedings and (b) payable or reimbursable to the Administrative Agent or the Co-Agent pursuant to clause (a), (b) or (c) of Section 11.03 but not paid or reimbursed by or on behalf of the Company when due (but excluding in any such case any such losses, liabilities, damages or expenses to the extent, but only to the extent, incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). 10.06 Nonreliance on Administrative Agent, Co-Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Administrative Agent, the Co-Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and decision to enter into this Agreement and that it will, independently and without reliance upon the Administrative Agent, the Co-Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. Neither the Administrative Agent nor the Co-Agent shall be required to keep itself informed as to the performance or observance by the Company of any Basic Document or any other document referred to or provided for in any Basic Document or to inspect the Properties or books of the Company. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent under this Agreement, neither the Administrative Agent nor the Co-Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Company (or any of its Affiliates) that may come into the possession of the Administrative Agent, the Co-Agent or any of their respective affiliates. 10.07 Failure to Act. Except for action expressly required of the Administrative Agent under the Basic Documents, the Administrative Agent shall in all cases be fully justified in failing or refusing to act under any Basic Document unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Section 11.05 against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. 10.08 Resignation or Removal of Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by notice to the Lenders and the Company, and the Administrative Agent may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, that shall be a financial institution which has an office in New York City, New York or Los Angeles, California. Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, duties and obligations of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations, under the Basic Documents. After any retiring Administrative Agent's resignation or removal as Administrative Agent, the provisions of this Section 10 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent. 10.09 Agency Fees. So long as the Commitments are in effect and until payment in full of the principal of and interest on the Loans and all other Obligations, the Company will pay to (a) the Administrative Agent agency fees of (i) $600,000 on the Effective Date and (ii) $100,000 on each anniversary of the Effective Date (excluding the Termination Date) and (b) the Co- Agent a co-agency fee of $25,000 per annum, payable annually in advance commencing on the Effective Date and on each anniversary of the Effective Date (excluding the Termination Date). Such fees, once paid, shall be non-refundable. 10.10 Authorization of the Co-Agent. Each of the Lenders hereby irrevocably appoints and authorizes Bank of America to act as the Co-Agent under this Agreement. Except as expressly set forth in this Agreement and as otherwise may be agreed by the Administrative Agent and the Majority Lenders, Bank of America shall have no duties as Co-Agent under this Agreement. 10.11 Collateral Sub-Agent. Each Lender by its execution and delivery of this Agreement agrees, as contemplated by Section 3.03 of the Security Agreement, that, in the event it shall hold any Permitted Investments referred to in that Section 3.03, such Permitted Investments shall be held in the name and under the control of such Lender, and such Lender shall hold such Permitted Investments as a collateral sub-agent for the Administrative Agent under the Security Agreement. In addition, a Lender in possession of any property subject to the Lien of the Security Documents shall hold the same as a collateral sub-agent for the Administrative Agent for the benefit of the Lenders, the Administrative Agent and the Co-Agent as provided for in the Security Documents. Any such property held or recovered at any time by any Lender or any realization on account of any such property shall inure to the ratable benefit of the Lenders, the Administrative Agent and the Co-Agent as provided in the Security Agreement. The Company by its execution and delivery of this Agreement hereby consents to the foregoing. Section 11. Miscellaneous. 11.01 Waiver. No failure on the part of the Administrative Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Agreement or any Note shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any Note preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement and the Notes are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.02 Notices. All notices, requests and other communications provided for in this Agreement and under the Basic Documents making reference to this Section 11.02 (including any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing, delivered to the intended recipient at the "Address for Notices" specified below its name on Annex 1 or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in any Basic Document, all such communications shall be deemed to have been duly given when transmitted by telex or telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as set forth above (provided that, if the day on which any such communication shall be deemed to have been duly given as set forth above is not a Business Day, such communication shall be deemed to have been duly given on the next succeeding Business Day). 11.03 Expenses, Etc. The Company agrees to pay or reimburse each of the Lenders, the Administrative Agent and the Co-Agent, as the case may be, for paying: (a) all reasonable out-of-pocket costs and expenses of the Administrative Agent and the Co-Agent (including, upon delivery of statements therefor, the reasonable fees and expenses of Orrick, Herrington & Sutcliffe, special counsel to the Administrative Agent, and of Sidley & Austin, special counsel to the Co-Agent), in connection with (i) the negotiation, preparation, execution, delivery and administration of the Basic Documents and the extension of credit under this Agreement and (ii) any modification, supplement or waiver of any of the terms of any Basic Document; (b) all reasonable costs and expenses of the Lenders, the Administrative Agent and the Co-Agent (including, upon delivery of statements therefor, reasonable counsels' fees and expenses) in connection with (i) any Default and any enforcement or collection proceedings (including any bankruptcy, reorganization, workout or other similar proceeding) resulting from such Default or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated) of the obligations of the Company under the Basic Documents and (ii) the enforcement of this Section 11.03; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges (including intangible personal property taxes) levied by any governmental or revenue authority in respect of any Basic Document or any other document referred to in any Basic Document and all costs, expenses, taxes, assessments and other charges (including intangible personal property taxes) incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Basic Document or any other document referred to in any Basic Document (including recurring and nonrecurring intangible personal property taxes payable under Chapters 199 and 201 of the Florida Statutes). The Company hereby agrees (i) to indemnify the Administrative Agent, the Co-Agent and each Lender and their respective affiliates, directors, officers, employees, attorneys, agents, accountants and consultants from, and hold each of them harmless against, any and all losses, liabilities, damages or expenses incurred by any of them in connection with or by reason of any actual or threatened investigation, litigation or other proceedings (including, in respect of the Administrative Agent, any such investigation, litigation or other proceedings between the Administrative Agent and any Lender or the Co-Agent) relating to the extensions of credit under, and the transactions contemplated by, the Basic Documents or any actual or proposed use by the Company of the proceeds of any such extensions of credit, including, upon delivery of statements therefor, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceedings (but excluding any such losses, liabilities, damages or expenses to the extent, but only to the extent, incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified) and (ii) not to assert any claim against the Administrative Agent, the Co-Agent any Lender or any of their respective affiliates, directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to any of the transactions contemplated in any Basic Document. It shall not be a condition to any such indemnification that the Administrative Agent, the Co-Agent or any Lender be a party to any such investigation, litigation or other proceeding. Without limiting the generality of the foregoing, the Company will indemnify the Administrative Agent, the Co-Agent and each Lender and their respective affiliates, directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any losses, liabilities, damages or expenses described in the preceding provisions (but excluding, as provided in the preceding provisions, any loss, liability, damage or expense incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified) arising under any Environmental Law as a result of the past, present or future operations of the Company (or any predecessor in interest to the Company), or the past, present or future condition of any site, facility or vessel owned, operated or leased by the Company (or any such predecessor in interest), or any Release or threatened Release of any Hazardous Materials from any such site or facility, including any such Release or threatened Release which shall occur during any period when the Administrative Agent, the Co-Agent or any Lender shall be in possession of any such site, facility or vessel following the exercise by the Administrative Agent, the Co-Agent or any Lender of any of its rights and remedies under any Basic Document. 11.04 Amendments, Etc. Except as otherwise expressly provided in this Agreement, any provision of this Agreement and the other Basic Documents may be modified or supplemented only by an instrument in writing signed by the Company, the Administrative Agent and the Majority Lenders, or by the Company and the Administrative Agent acting with the written consent of the Majority Lenders, and any provision of this Agreement and the other Basic Documents may be waived by the Majority Lenders or by the Administrative Agent acting with the written consent of the Majority Lenders; provided that: (a) no modification, supplement or waiver shall, unless by an instrument signed by all of the Lenders that will be adversely affected thereby or by the Administrative Agent acting with the written consent of such Lenders: (i) increase, or extend the term of, any of the Commitments, or extend the time or waive any requirement for the reduction or termination of any of the Commitments, (ii) extend the date fixed for the payment of any principal, interest or fees under this Agreement or the Notes, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest or any fee is payable under this Agreement or alter the basis for calculating any other Obligation (provided that the Majority Lenders shall have the right to waive compliance with the requirement in Section 3.02 that the Obligations shall bear interest at the Post-Default Rate upon the occurrence and during the continuance of an Event of Default, other than under the circumstances in which an Event of Default specified in Section 9(a) shall have occurred and is continuing), (v) alter the terms of this Section 11.04, (vi) modify the definition of the term "Majority Lenders," or modify in any other manner the number or percentage of the Lenders required to make any determinations or to waive any rights under, or to modify any provision of, this Agreement, (vii) modify the definition of the term "Borrowing Base" or (viii) release any collateral or otherwise terminate any Lien under any Basic Document providing for collateral security or agree to additional obligations (other than the Obligations) being secured by such collateral security (except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering Property (A) which is the subject of a permitted Disposition under this Agreement, (B) leased by the Company to the extent (1) the creation of such Lien violates the terms of any applicable lease in effect as of the Effective Date and (2) the lessor under such lease has notified the Company that it intends to terminate such lease unless such Lien is released, or (C) which is the subject of a Disposition as to which (1) Net Available Proceeds in respect of such Disposition of such Property in an amount equal to the greater of the fair market value of such Property at the Effective Date and the date of such Disposition shall have been received by the Company and applied to the prepayment of the Loans as set forth in Section 2.10(f) and (2) the Majority Lenders shall have given their prior written consent (and, upon the written request of the Company, the Administrative Agent shall execute such reconveyances and other instruments as shall be reasonably necessary to evidence any such release); and (b) any modification, supplement or waiver of Section 10 (or any increase in the duties of the Administrative Agent or the Co-Agent) shall require the consent of the Administrative Agent and (if affected thereby) the Co-Agent. Any modification, supplement or waiver shall be for such period and subject to such conditions as shall be specified in the instrument effecting the same and shall be binding upon the Administrative Agent, the Co-Agent, the Lenders and the Company, and any such waiver shall be effective only in the specific instance and for the purpose for which given. A copy of each such amendment shall be delivered to the Co-Agent. Notwithstanding any other provision of this Agreement, if: (a) any Lender shall fail to fulfill its obligations to make a Loan as set forth in this Agreement, or (b) any Revolving Credit Lender shall fail to pay to the Administrative Agent the amount of such Lender's Revolving Credit Commitment Percentage of any payment under a Letter of Credit pursuant to Section 2.03, then, for so long as such failure shall continue, such Lender shall (unless the Majority Lenders, determined as if such Lender were not a "Lender" under the Basic Documents, shall otherwise consent in writing) be deemed for all purposes relating to amendments, modifications, waivers or consents under any of the Basic Documents (including under this Section 11.04) to have no Loans, Letter of Credit Liabilities or Commitments. 11.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of its parties and their respective successors and permitted assigns. 11.06 Assignments and Participations. (a) The Company may not assign any of its rights or obligations under this Agreement or under the Notes without the prior consent of all of the Lenders, the Administrative Agent and the Co-Agent. Any attempted or purported assignment in contravention of the preceding sentence shall be null and void. (b) Each Lender may assign all or any part of its Loans, its Notes, its Commitments (except that Bank of America may not assign the Tranche C Term Loan, related Note and Tranche C Term Loan Commitment other than in connection with an assignment of all of Bank of America's rights and obligations as a Lender hereunder) and its Letter of Credit Interest (but only with the consent of the Administrative Agent and, in the case of an outstanding Commitment, the Company (provided that the Company's consent shall not be required at any time during which a Default shall have occurred and be continuing), which consents shall not be unreasonably withheld or delayed), together with, in any such case, its related rights, remedies, powers and privileges under the Basic Documents; provided that (i) no such consent by the Company or the Administrative Agent shall be required in the case of any assignment to another Lender or (in the case of consent by the Company) to an affiliate of a Lender; (ii) any such partial assignment shall be in an amount at least equal to $5,000,000 and the assigning Lender (other than CITBC) shall have a retained interest at least equal to $5,000,000 after giving effect to such partial assignment; (iii) CITBC shall not make any assignment unless, after giving effect to such assignment, it shall have a retained interest at least equal to twenty percent (20%) of the outstanding Obligations (or, if no such Obligations are outstanding, of the Commitments) at such time; (iv) each such assignment by a Lender of its Loans, Notes, Commitments and Letter of Credit Interest shall be made in such manner so that the same portion of its Loans, Notes, Commitments and Letter of Credit Interest is assigned to the respective assignee; and (v) the assigning Lender or the respective assignee shall have paid to the Administrative Agent an assignment fee of $5,000. Upon execution and delivery by the assignee to the Company and the Administrative Agent of an instrument in writing (a copy of which shall be delivered to the Co-Agent) pursuant to which such assignee agrees to become a "Lender" under this Agreement (if not already a Lender) having the Commitment or Commitments, Loans, and Letter of Credit Interest specified in such instrument, and upon the consent of the Company and the Administrative Agent, to the extent required above, the assignee shall have, to the extent of such assignment (unless otherwise provided in such assignment with the consent of the Company and the Administrative Agent), the obligations, rights and benefits of a Lender under the Basic Documents holding the Commitment or Commitments, Loans and Letter of Credit Interest assigned to it (in addition to the Commitment or Commitments, Loans and Letter of Credit Interest, if any, theretofore held by such assignee) and the assigning Lender shall, to the extent of such assignment, be released from the Commitment or Commitments so assigned. (c) A Lender may sell or agree to sell to one or more other Persons a participation in all or any part of its Loans, its Notes, its Commitments, its Letter of Credit Interest and its related rights, remedies, powers and privileges under the Basic Documents, in which event each purchaser of a participation (a "Participant") shall be entitled to the rights and benefits of the provisions of Section 8.01(o) with respect to such participation as if (and the Company shall be directly obligated to such Participant under such provisions as if) such Participant were a "Lender" for purposes of Section 8.01(o), but, except as otherwise provided in Section 4.07(c), shall not have any other rights, remedies, powers or privileges under any Basic Document (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreements executed by such Lender in favor of the Participant). All amounts payable by the Company to any Lender under Section 5 in respect of such Lender's Loans, Notes, Letter of Credit Interest, and Commitments shall be determined as if such Lender had not sold or agreed to sell any participations in such Loans, Letter of Credit Interest and Commitments, and as if such Lender were funding each of such Loans, Notes, Letter of Credit Interest and Commitments in the same way that it is funding the portion of such Loans, Notes, Letter of Credit Interest and Commitments in which no participations have been sold. In no event shall a Lender that sells a participation agree with the Participant to take or to refrain from taking any action under any Basic Document except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase or extend the term, or extend the time or waive any requirement for the reduction or termination, of such Lender's related Commitment, (ii) extend the date fixed for the payment of principal of or interest on the related Loan or Loans, Reimbursement Obligations or any portion of any fee under this Agreement payable to the Participant, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest or any fee under this Agreement in which such Lender has sold an interest is payable to the Participant, to a level below the rate at which the Participant is entitled to receive such interest or fee under its agreements with such Lender, (v) alter the rights or obligations of the Company to prepay the related Loans or (vi) consent to any modification, supplement or waiver of any Basic Document to the extent that the same, under Section 11.04, requires the consent of each Lender. (d) In addition to the assignments and participations permitted under the foregoing provisions of this Section 11.06, any Lender may assign and pledge all or any portion of its Loans and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations under the Basic Documents. (e) A Lender may furnish any information concerning the Company in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of Section 11.12. (f) Notwithstanding anything in this Section 11.06 to the contrary, no Lender may assign or participate any interest in any Obligation or Commitment (or any related rights, remedies, powers or privileges) to the Company or any of its Affiliates without the prior written consent of each Lender. 11.07 Survival. The obligations of the Company under Sections 2.03(l), 2.03(o), 5.01, 5.02, 5.03 and 11.03 and the obligations of the Lenders under Section 10.05 shall survive the repayment of the Obligations and the termination of the Commitments. In addition, each representation and warranty made, or deemed to be made by a notice of any extension of credit (whether by means of a Loan or a Letter of Credit), in or pursuant to any Basic Document to which the Company is a party shall survive the making or deemed making of such representation and warranty, and no Lender shall be deemed to have waived, by reason of making any extension of credit (whether by means of a Loan or a Letter of Credit), any Default which may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Lender, the Administrative Agent or the Co-Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such extension of credit was made. 11.08 Agreements Superseded. This Agreement supersedes all prior agreements and understandings (including the Disclosure Statement and any and all commitment letters and term sheets), written or oral, among the parties with respect to the subject matter of this Agreement. 11.09 Severability. Any provision of this Agreement or the Notes that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or the Notes, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.10 Captions. The table of contents and captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 11.11 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties to this Agreement may execute this Agreement by signing any such counterpart. 11.12 Treatment of Certain Information; Confidentiality. Each of the Lenders, the Administrative Agent and the Co-Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, any nonpublic information supplied to it by the Company pursuant to this Agreement which is identified by the Company as being confidential at the time the same is delivered to the Lenders, the Administrative Agent or the Co-Agent, provided that nothing in this Agreement shall limit the disclosure of any such information (i) to the extent required by Governmental Rule, (ii) to counsel for any of the Lenders, the Administrative Agent or the Co-Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Administrative Agent, the Co-Agent or any other Lender or their affiliates, directors, officers, employees, accountants, consultants and representatives, (v) in connection with any litigation to which any one or more of the Lenders, the Administrative Agent or the Co-Agent is a party, (vi) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to the respective Lender a Confidentiality Agreement substantially in the form of Exhibit G. 11.13 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 11.14 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT, THE CO-AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. KASH N' KARRY FOOD STORES, INC. By: /s/ R.P. Springer Title: LENDERS THE CIT GROUP/BUSINESS CREDIT, INC. By: /s/ Judd S. Fischer Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ H.G. Wheelock Title: V.P. WELLS FARGO BANK, N.A. By: /s/ Jeffrey P. Rose Title: Vice President BARNETT BANK OF TAMPA, BY BARNETT BANKS, INC., as Attorney-in-Fact for Barnett Bank of Tampa By: /s/ Julie M. Smith Title: Julie M. Smith, Workout Officer NATIONSBANK OF FLORIDA, N.A. By: /s/ Samuel P. McNeil Title: V.P. ADMINISTRATIVE AGENT THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent By: /s/ Judd S. Fischer Title: Vice President CO-AGENT BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent By: /s/ Laura Knight Title: Laura Knight Vice President Annex 1 Addresses for Notices and Commitments of the Lenders THE COMPANY KASH N' KARRY FOOD STORES, INC. 6422 Harney Road Tampa, Florida 33610 Attention: Executive Vice President, Administration Telephone No.: (813) 621-0200 Telecopier No.: (813) 626-9550 THE LENDERS (Lending Offices and Addresses for Notices) THE CIT GROUP/BUSINESS CREDIT, INC. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attention: Regional Credit Manager Telephone No.: (213) 613-2575 Telecopier No.: (213) 613-2588 Revolving Credit Commitment $29,744,599.28 Tranche A Term Loan Commitment 0 Tranche B Term Loan Commitment $20,255,400.72 Tranche C Term Loan Commitment 0 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION 1850 Gateway Blvd. Concord, California 94520 Attention: Pat Simmons Global Payments Service Account Administration Telephone No.: (510) 675-7760 Telecopier No.: (510) 675-7531 Revolving Credit Commitment $7,150,048.14 Tranche A Term Loan Commitment 0 Tranche B Term Loan Commitment $4,869,021.40 Tranche C Term Loan Commitment $951,128.58 WELLS FARGO BANK, N.A. Suite #940 333 South Grand Avenue Los Angeles, California 90071-1504 Attention: Lorna Dauglash Telephone No.: (213) 253-3547 Telecopier No.: (213) 627-2442 Revolving Credit Commitment $6,905,250.24 Tranche A Term Loan Commitment 0 Tranche B Term Loan Commitment $4,702,319.56 Tranche C Term Loan Commitment 0 BARNETT BANK OF TAMPA Commercial Loan Accounting 900 Southside Blvd., Building 600 Jacksonville, Florida 32256 Attention: Stacy Flye Telephone No.: (904) 464-5050 Telecopier No.: (904) 464-5552 Revolving Credit Commitment $4,570,321.58 Tranche A Term Loan Commitment 0 Tranche B Term Loan Commitment $3,112,285.83 Tranche C Term Loan Commitment 0 NATIONSBANK OF FLORIDA, N.A. T18-7 1 NationsBank Plaza Charlotte, North Carolina 28255 Attention: Patricia Turner Telephone No.: (704) 386-9875 Telecopier No.: (704) 386-8694 Revolving Credit Commitment $1,629,780.76 Tranche A Term Loan Commitment 0 Tranche B Term Loan Commitment $1,109,843.91 Tranche C Term Loan Commitment 0 THE ADMINISTRATIVE AGENT THE CIT GROUP/BUSINESS CREDIT, INC. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attention: Regional Credit Manager Telephone No.: (213) 613-2575 Telecopier No.: (213) 613-2588 THE CO-AGENT BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION Agency Management Services Department 5596 1455 Market St., 12th Fl. San Francisco, California 94103 Attention: Laura J. Knight Telephone No.: (415) 622-4935 Telecopier No.: (415) 622-4894 SCHEDULE I Material Agreements and Liens PART A 1. Credit Agreement, dated as of October 12, 1988, and amended and restated as of September 14, 1989, as amended, among the Company, the Senior Lenders referred to therein and Bank of America National Trust and Savings Association* (Note: This Agreement is secured by substantially all of the Company's assets and is incorporated in Part B hereof.) 2. Loan and Security Agreement, dated as of November 9, 1994, among the Company, the Lenders referred to therein, Wells Fargo Bank, N.A., as Co-Agent, and Bank America Business Credit, Inc., as Agent** 3. Indenture dated as of January 29, 1992 between the Company and Ameritrust Texas N.A., as Trustee, relating to Senior Notes due 1999* 4. Indenture dated as of September 14, 1989 between the Company and NCNB National Bank of Florida, as Trustee (NationsBank of Florida, National Association, successor Trustee), relating to Senior Floating Rate Notes due 1996* 5. Indenture dated as of February 8, 1989 between the Company and First Florida Bank N.A., as Trustee (the Bank of New York, successor Trustee), relating to 14% Subordinated Debentures due 2001* 6. Indenture dated as of December 28, 1994 between the Company and Shawmut Bank Connecticut, N.A., as Trustee, relating to 11.5% Senior Floating Rate Notes due 2003 7. Indenture dated as of December 28, 1994 between the Company and IBJ Schroder Bank & Trust Company, as Trustee, relating to Senior Floating Rate Notes due 2003 8. See Schedule I, Part B. ___________________________ *To be terminated upon the Effective Date. **Note: This is debtor in possession financing secured by substantially all of the Company's assets and is incorporated in Part B hereof. PART B Schedule I Kash n' Karry Food Stores, Inc. Debts over $50,000 subject to liens Ending October 30, 1995 Obligation Property DescriptionLocation Balance Holder Store Fixtures & Equipment#207 Charlotte Harbor$ 247,882GE Capital Store Fixtures & Equipment#209 Bonita Springs$ 386,383GE Capital Store Fixtures & Equipment#214 Sarasota $ 979,815GE Capital Store Fixtures & Equipment#703 Temple Terrace$ 215,839GE Capital Store Fixtures & Equipment#711 Orange City$ 239,539GE Capital Store Fixtures & Equipment#716 Spring Hill$ 609,131GE Capital Store Fixtures & Equipment#854 Palmetto $ 443,869GE Capital Building Capital Lease#128 Zephryhills $ 73,222Grand Central Building Capital Lease#129 Lakeland $ 82,918Grand Central Building Capital Lease#130 Ocala $ 80,258Grand Central Building Capital Lease#134 Holiday $ 69,251Grand Central Building Capital Lease#140 Seminole $ 94,450Grand Central Building Capital Lease#144 Tampa $ 115,257Grand Central Building Capital Lease#203 St. Petersburg$ 594,963Grand Central Building Capital Lease#826 Plant City $ 137,027Grand Central Building Capital Lease#827 Tampa $ 167,527Grand Central Building Capital Lease#842 Winter Haven $ 85,681Grand Central Building Capital Lease#848 Ruskin $ 176,206Grand Central Building Capital Lease#851 Inverness $ 160,357Grand Central Building Capital Lease#852 St. Petersburg$ 140,075Grand Central 4683 Front End Equip.23 locations $ 305,997IBMCC Store Fixtures & Equipment#715 Bradenton$ 445,490MDFC Store Fixtures & Equipment#717 New Port Richey$ 471,545MDFC Building Capital Lease#216 Sarasota $ 631,049Palm Plaza Assoc. Building Capital Lease#892 Tampa $ 953,608Prime Plus Realty Store Fixtures & Equipment#215 Sarasota $ 1,008,728Sanwa GEL Store Fixtures & Equipment#723 Plant City$ 813,839Sanwa GEL EAS Camera System #401 & #403 $ 87,782Sensormatic Store Fixture & Equipment#719 Sarasota $ 363,704US Leasing IBM Front End FinancingVarious $ 780,969IBMCC Building & Equipment#651 Ocala $ 1,883,700Goodings Save n' Pack Building#401 Tampa $ 2,017,536Supervalu, Inc. Save n' Pack Equipment#401 & #403 $ 1,399,744Supervalu, Inc. NCR Scanner Scales Various $ 522,659AT&T (NCC Leasing) EAS Systems Various $ 558,218Sensormatic Tractor Trailer LeaseWarehouse $ 78,378GE Capital Store Fixtures & Equipment#718 Tampa $ 376,111CIT Equip Financing Store Fixtures & Equipment#712 Tampa $ 343,438CIT Equip Financing Sakurai Color Press Admin $ 265,370CIT Equip Financing Unix Hardware/SoftwareAdmin $ 688,219Sanwa GEL Trucks & Trailers Warehouse $ 455,283Sanwa GEL Store Fixtures & Equipment#722, #725 & #728$ 671,809Heller Financial Building Lease 6401 Harney Road $ 415,054Ferris Funk Meat Scales Unix HardwareAdmin/Various Stores$ 395,973Sun Financial Mortgage Store #722 $ 3,500,000H P Financial (T.G. Lee) Mortgage #726 Beverly Hills $ 387,500Kellner Construction Mortgage #702 Crystal River $ 1,902,346Aegon USA Mortgage Mortgage #709 Port Charlotte $ 2,033,041Aegon USA Mortgage Mortgage #717 New Port Richey$ 1,524,781Aegon USA Mortgage Mortgage #878 Tampa $ 1,706,302Aegon USA Mortgage Mortgage #886 Spring Hill $ 2,033,041Aegon USA Mortgage Mortgage #887 Tampa $ 1,561,085Aegon USA Mortgage Mortgage #891 Seebring $ 1,977,375Aegon USA Mortgage Mortgage #896 Belleview $ 1,996,737Aegon USA Mortgage Mortgage Warehouse 6422 Harney Road$15,292,389Sunlife Mortgage Mortgage #875 Palm Harbor $ 1,470,971CALPERS (Pers ABKB) Mortgage #876 Gainesville $ 740,453CALPERS (Pers ABKB) Mortgage #878 Seffner $ 724,287CALPERS (Pers ABKB) Mortgage #880 Sarasota $ 807,173CALPERS (Pers ABKB) Store Fixtures & Equipment#720 GainesvilleOperating LeaseDana Commercial Credit Hazardous Materials [Section 7.12] GASOLINE SERVICE STATIONS At the time of the Lucky acquisition, Kash n' Karry acquired 12 sites containing operating gasoline service stations ("sublet locations") operated by third parties under sublease agreements and sites which contained closed gasoline service stations ("former locations"). As part of the acquisition agreement, as amended by that certain Agreement Respecting Service Stations and Former Service Stations dated November 14, 1989 (the "Agreement"), Lucky was obligated to perform tests for the presence of underground tank hazardous materials at the former locations and to use its best efforts to perform tests at the sublet locations. In the event the tests revealed the presence of hazardous materials, Lucky agreed to take all actions reasonably necessary to eliminate such hazardous materials from the former locations and to use its best efforts to cause such action to be taken with respect to the sublet locations. All costs and expenses incurred by Lucky were to be borne solely by Lucky. Subsequent to the acquisition date, subleases with Devco Petroleum on 8 of the 12 sublet locations were terminated ("Devco sites"). Consequently, the Devco sites were treated as former locations and all underground tanks and other service station improvements were removed and disposed of by Lucky on the 8 former locations and the 8 Devco sites. Of the 20 sites, 3 sites have been approved by the Florida DER for no further action and Kash n' Karry has released Lucky from any further obligations. The 4 sublet locations have been certified as eligible for the state Early Detection Incentive ("EDI") program and the sublessee is waiting for state clean-up. The remaining 13 sites are the responsibility of Lucky. They have chosen to do site rehabilitation on certain sites and wait for state clean-up under the EDI program on others. If they choose to perform the work themselves, they can apply to the state for reimbursement. If the state does not commence clean-up within 8 years of the Agreement or has not completed the clean-up within 11 years of the Agreement, Lucky must complete the work. The attached summarizes the work at each site as of June 15, 1992. [The following table was intentionally omitted for purposes of this electronic filing. The Company will provide a paper copy upon request.] STORE #722 The site is approximately four acres in area and supports the Kash n' Karry retail food store, 722, which is approximately 47,000 square feet in area. The remainder of the site is dominantly covered by asphalt and concrete parking area. On July 31, 1992, during demolition of a former fabric store building located on the subject property, an underground concrete tank and rusted drum in the tank were encountered and crushed by a backhoe. An unidentified blue liquid residue present in the drum subsequently spilled onto portions of the concrete tank walls and soil in the vicinity of the former tank location. The area around the tank location was then over-excavated and the excavated soil, concrete debris and drum were stockpiled on site and covered with plastic, pending soil debris waste characterization and removal. In August and September 1992, Law, authorized by Kash n' Karry, conducted a preliminary assessment of ground-water and soil quality in the area where the tank was previously located. A Preliminary Contamination Assessment Report (PCAR) which summarized the assessment activities and results was submitted to the Florida Department of Environmental Protection (FDEP) by Kash n' Karry in October 1992 (Law, 1992). According to the report, soil and ground water assessed did not appear to have been adversely impacted by the constituents of interest (volatile and semi-volatile organic compounds and eight RCRA metals). In September 1992, soil samples were collected from the soil pile for analyses for disposal method determination. Analytical results on samples indicated that concentrations of seven metals were detected in the samples above method detection limits: arsenic, barium, cadmium, chromium, lead, selenium and silver. The concentration of only one of the metals, lead, exceeded the maximum concentration standard established for a waste. The soil debris was subsequently removed and transported to the Chemical Waste Management, Inc. facility in Emelle, Alabama for disposal and the clean concrete debris was sent to a Woodruff & Sons, Inc. facility for disposal. Based on their review of the PCAR, the FDEP requested by letter (October and December 1993) that assessment of ground water and soil quality be conducted in the area of the former soil pile location. In March 1994, the FDEP approved a supplemental preliminary contamination assessment plan. In April 1994, Law, on behalf of Kash n' Karry, implemented the plan which included collection and analysis of soil and ground-water samples for the constituents of interest: volatile organic compounds and semi- volatile organic compounds, excluding pesticides and PCBs, and eight RCRA metals. Data obtained as part of the supplemental preliminary contamination assessment indicated the following: 1. Ground-water flow direction in the southwestern portion of the site is toward the northeast; 2. Concentrations of five metals, arsenic, barium, chromium, lead and mercury, detected in soil samples were below the toxicity characteristic leachate standards established in Chapter 40 of the Code of Federal Regulation Part 261.24, Table 1, for these metals in a waste and there were no toxicity standards established for the constituents acetone and di-n- butylphthalate which were also detected in these samples; 3. Concentrations of total chromium and barium detected in ground-water samples did not exceed the maximum contaminant levels established in Florida Administrative Code 17-550.310 for these metals in drinking water. These data indicate that there does not appear to be a concern with regard to soil and ground-water quality related to the volatile and semi-volatile compounds and the metals for which these matrices were analyzed. No further assessment of soil and ground water in the areas of interest is recommended. Chemical Waste Management, Inc. Emelle Facility PO Box 55 Emelle, Alabama 35459-0055 205/652-9721 FEDERAL EPA ID NUMBER: ALD000622464 MANIFEST DOCUMENT NUMBER: 33553 KASH N' KARRY FOOD STORES P O BOX 11675 TAMPA, FL 33680 CERTIFICATE OF DISPOSAL Chemical Waste Management, Inc. has received waste material from KASH N' KARRY FOOD STORES, described on Alabama Hazardous Waste Manifest number CWMA 684030. Chemical Waste Management, Inc., hereby certifies waste material received on the 4th day of December, 1992 was disposed of in compliance with State and Federal Regulations. ____________________________________________________ Carol Weldon, Recordkeeping & Reporting Supervisor Date 11/08/93 PROFILE QUANT. DESCRIPTION - - - - - - - - - - - - - - K01169 1 Dump UNDERGROUND STORAGE TANKS Location: Warehouse and Distribution Center 6422 Harney Road, Tampa 4 12,000 gallon fiber glass-coated diesel tanks 1 2,000 gallon steel waste oil tank 1 550 gallon fiber glass-coated diesel tank SCHEDULE III Existing Letters of Credit KASH N' KARRY FOOD STORES, INC. LETTER OF CREDIT BALANCES: BANK OF AMERICA AND (TO THE EXTENT NOTED BELOW) BARNETT BANK DATE OF LC# BENEFICIARY EXPIRY AMOUNT 133426 AEGON USA REALTY 12-01-95 $320,000.00 133418 CIT EQUIPMENT GROUP FINANCING 12-14-95 $260,254.04 139019 CIT EQUIPMENT GROUP FINANCING 10-15-95 $125,000.00 133414 G.E. (CHRYSLER) CAPITAL CORPORATION 11-23-98 $691,104.00 133409 G.E. (CHRYSLER) CAPITAL CORPORATION 09-24-95 $453,900.00 133422 DANA COMMERCIAL CREDIT CORPORATION 06-24-95 $487,600.00 133424 FIDELITY & DEPOSIT COMPANY OF MD 10-13-95 $722,183.00 133395 FLORIDA POWER CORPORATION 03-22-95 $880,400.00 133399 FLORIDA POWER & LIGHT (ALL) 11-09-95 $430,320.00 133397 GAINESVILLE REGIONAL UTILITIES 11-01-95 $86,600.00 133428 HOME INSURANCE COMPANY 10-31-95 $10,633,000.00 133389 KISSIMMEE UTILITY 11-01-95 $30,200.00 133391 LAKELAND ELECTRIC 11-01-95 $40,000.00 133434 NCC LEASING, INC. 12-31-94 $356,073.08 133420 PEOPLES GAS COMPANY 01-08-95 $19,050.00 133432 SUN LIFE INSURANCE CO. OF AMERICA 11-30-99 $450,000.00 133407 TAMPA ELECTRIC COMPANY 11-01-95 $1,006,645.00 133393 WITHLACOOCHEE RIVER ELECTRIC 11-09-95 $160,000.00 4554 GE CAPITAL (LC ISSUED BY BARNETT) 02-03-95 $361,588.00 ______________ $17,513,908.12 SCHEDULE IV Litigation [See Section 7.03] SCHEDULE 8.13 LITIGATION The Borrower's former chief executive officer has notified the Borrower that he believes he has certain monetary entitlements in connection with his severance from the Borrower. Through counsel, this former officer has indicated that he has contractual claims alleged to aggregate less than $2,000,000. Through counsel, the Borrower has notified this former officer's counsel that the Borrower disagrees with the entitlements asserted. EXHIBIT A-1 [Form of Revolving Credit Note] PROMISSORY NOTE $[_______________] December __, 1994 FOR VALUE RECEIVED, KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"), hereby promises to pay to [__________________] (the "Lender"), for the account of its Applicable Lending Office provided for by the Credit Agreement referred to below, at the principal office of Chemical Bank, 270 Park Avenue, New York, New York 10017, the principal sum of [_______________] Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Revolving Credit Loans made by the Lender to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Credit Loan, at such office, in like money and funds, for the period commencing on the date of such Revolving Credit Loan until such Revolving Credit Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date and amount of each Revolving Credit Loan made by the Lender to the Company, and each payment made on account of the principal of such Loan, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached to this Note or any continuation of such schedule, provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or under this Note in respect of the Revolving Credit Loans made by the Lender. This Note is one of the Revolving Credit Notes referred to in the Credit Agreement dated as of December 29, 1994 (as modified and supplemented and in effect from time to time, the "Credit Agreement") among the Company, the Lenders (including the Lender), The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent, and evidences Revolving Credit Loans made by the Lender under the Credit Agreement. Capitalized terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified in the Credit Agreement. This Note is secured by and entitled to the benefits of the Security Documents. Except as permitted by Section 11.06(b) of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. KASH N' KARRY FOOD STORES, INC. By: _______________________ Title: SCHEDULE OF REVOLVING CREDIT LOANS This Note evidences Revolving Credit Loans made under the Credit Agreement to the Company, on the dates and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Date Amount Paid Unpaid of of or Principal Notation Loan Loan Prepaid Amount Made by EXHIBIT A-2 [Form of Tranche A Term Loan Note] PROMISSORY NOTE $[_______________] December ____, 1994 FOR VALUE RECEIVED, KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"), hereby promises to pay to [__________________] (the "Lender"), for the account of its Applicable Lending Office provided for by the Credit Agreement referred to below, at the principal office of Chemical Bank, 270 Park Avenue, New York, New York 10017, the principal sum of [_______________] Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Tranche A Term Loan made by the Lender to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of the Tranche A Term Loan, at such office, in like money and funds, for the period commencing on the date of the Tranche A Term Loan until the Tranche A Term Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date and amount of the Tranche A Term Loan made by the Lender to the Company, and each payment made on account of the principal of such Loan, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached to this Note or any continuation of such schedule, provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or under this Note in respect of the Tranche A Term Loan made by the Lender. This Note is one of the Term Loan Notes referred to in the Credit Agreement dated as of December 29, 1994 (as modified and supplemented and in effect from time to time, the "Credit Agreement") among the Company, the Lenders (including the Lender), The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent, and evidences the Tranche A Term Loan made by the Lender under the Credit Agreement. Capitalized terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Tranche A Term Loan upon the terms and conditions specified in the Credit Agreement. This Note is secured by and entitled to the benefits of the Security Documents. Except as permitted by Section 11.06(b) of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. KASH N' KARRY FOOD STORES, INC. By: _______________________ Title: SCHEDULE OF TRANCHE A TERM LOAN This Note evidences the Tranche A Term Loan made under the Credit Agreement to the Company, on the dates and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Date Amount Paid Unpaid of of or Principal Notation Loan Loan Prepaid Amount Made by EXHIBIT A-3 [Form of Tranche B Term Loan Note] PROMISSORY NOTE $[_______________] December ____, 1994 FOR VALUE RECEIVED, KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"), hereby promises to pay to [__________________] (the "Lender"), for the account of its Applicable Lending Office provided for by the Credit Agreement referred to below, at the principal office of Chemical Bank, 270 Park Avenue, New York, New York 10017, the principal sum of [_______________] Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Tranche B Term Loan made by the Lender to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of the Tranche B Term Loan, at such office, in like money and funds, for the period commencing on the date of the Tranche B Term Loan until the Tranche B Term Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date and amount of the Tranche B Term Loan made by the Lender to the Company, and each payment made on account of the principal of such Loan, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached to this Note or any continuation of such schedule, provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or under this Note in respect of the Tranche B Term Loan made by the Lender. This Note is one of the Term Loan Notes referred to in the Credit Agreement dated as of December 29, 1994 (as modified and supplemented and in effect from time to time, the "Credit Agreement") among the Company, the Lenders (including the Lender), The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent, and evidences the Tranche B Term Loan made by the Lender under the Credit Agreement. Capitalized terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Tranche B Term Loan upon the terms and conditions specified in the Credit Agreement. This Note is secured by and entitled to the benefits of the Security Documents. Except as permitted by Section 11.06(b) of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. KASH N' KARRY FOOD STORES, INC. By: _______________________ Title: SCHEDULE OF TRANCHE B TERM LOAN This Note evidences the Tranche B Term Loan made under the Credit Agreement to the Company, on the dates and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Date Amount Paid Unpaid of of or Principal Notation Loan Loan Prepaid Amount Made by EXHIBIT A-4 [Form of Tranche C Term Loan Note] PROMISSORY NOTE $[_______________] December ____, 1994 FOR VALUE RECEIVED, KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"), hereby promises to pay to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Lender"), for the account of its Applicable Lending Office provided for by the Credit Agreement referred to below, at the principal office of Chemical Bank, 270 Park Avenue, New York, New York 10017, the principal sum of [_______________] Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Tranche C Term Loan made by the Lender to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of the Tranche C Term Loan, at such office, in like money and funds, for the period commencing on the date of the Tranche C Term Loan until the Tranche C Term Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date and amount of the Tranche C Term Loan made by the Lender to the Company, and each payment made on account of the principal of such Loan, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached to this Note or any continuation of such schedule, provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or under this Note in respect of the Tranche C Term Loan made by the Lender. This Note is one of the Term Loan Notes referred to in the Credit Agreement dated as of December 29, 1994 (as modified and supplemented and in effect from time to time, the "Credit Agreement") among the Company, the Lenders (including the Lender), The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent, and evidences the Tranche C Term Loan made by the Lender under the Credit Agreement. Capitalized terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Tranche C Term Loan upon the terms and conditions specified in the Credit Agreement. This Note is secured by and entitled to the benefits of the Security Documents. Except as permitted by Section 11.06(b) of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. KASH N' KARRY FOOD STORES, INC. By: _______________________ Title: SCHEDULE OF TRANCHE C TERM LOAN This Note evidences the Tranche C Term Loan made under the Credit Agreement to the Company, on the dates and in the principal amounts set forth below, subject to the payments and prepayments of principal set forth below: Principal Amount Date Amount Paid Unpaid of of or Principal Notation Loan Loan Prepaid Amount Made by EXHIBIT B [Form of Borrowing Base Certificate] BORROWING BASE CERTIFICATE Weekly accounting period ended [__________ _____, ____] Reference is made to the Credit Agreement dated as of December 29, 1994 (as modified and supplemented and in effect from time to time, the "Credit Agreement"), among Kash n' Karry Food Stores, Inc. (the "Company"), the Lenders, The CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent. Capitalized terms used in this Certificate have the respective meanings assigned to them in the Credit Agreement. Pursuant to Section 8.01(f) of the Credit Agreement, the undersigned, the Chief [Financial/Accounting] Officer of the Company, hereby certifies that, to the best of [his][her] knowledge, attached as Annex 1 is a true and accurate calculation of the Borrowing Base as at the end of the weekly accounting period ended [__________ _____, ____] determined in accordance with the requirements of the Credit Agreement. All Inventory covered by this Certificate has been produced in compliance with all applicable laws, including (to the extent applicable) the minimum wage and overtime requirements of the Fair Labor Standards Act of 1938. IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly executed as of the [__________] day of [____________, ____]. [____________________________] Title: Chief [Financial/ Accounting] Officer Annex 1 KASH N' KARRY FOOD STORES, INC. Borrowing Base Certificate (000's omitted) ************************************************************ Receivables (determined net of credits) -- beginning balance period ended [_________ _____, _____] ______ Plus: total sales for period ______ Less: total cash receipts for period ______ total other adjustments for period (+/-) (details attached) including rebates, offsets and commissions ______ Receivables (determined net of credits) -- ending balance period ended [__________ ____, _____] ______ Less: ineligible Receivables at period end (determined without duplication): Receivables not payable in Dollars or convertible currency ______ Receivables over 60 days original terms ______ Receivables due from Affiliates ______ Export Receivables ______ Receivables from creditors with unsatisfactory credit standing (as determined by the Administrative Agent) ______ Receivables over 90 days past due ______ Receivables with excess of 25% of balances past 30 days past due ______ Receivables exceeding concentration of 15% of aggregate Receivables ______ Receivables subject to dispute ______ Contras ______ Receivables arising out of sale or return transactions ______ Receivables otherwise determined by Administrative Agent to be ineligible ______ Total ineligible Receivables ______ Total Eligible Receivables ______ ************************************************************ Inventory at average cost covered by appropriate filings with first lien priority: Beginning period Inventory balance [____________ ____, ____] ______ Ending period Inventory balance [____________ ____, ____] ______ Less: ineligible Inventory at period end (determined without duplication) Perishable Inventory ______ Inventory exceeding shelf life ______ Inventory held more than 300 days ______ Inventory to be returned to suppliers ______ Inventory in transit to or from third ______ parties Supplies ______ Shrinkage ______ Total ineligible Inventory ______ Less: Required Reserves ______ Total Eligible Inventory ______ ************************************************************ Borrowing Base: 85% of Eligible Receivables ______ Plus: 80% of Eligible Inventory ______ Subtotal ______ Less 105% of Other Pari Passu Obligations (______) Less Reserves for Intangible Personal Property Taxes that may become payable as contemplated in Section 8.25 of Credit Agreement (______) Less Reserves for Liens or trusts created in favor of suppliers and other statutory Liens (______) Plus Cover for Letter of Credit Liabilities (______) Plus Amount on Deposit in Special Collateral Account (______) Borrowing Base (before deduction of outstandings): ______ ************************************************************ Less: Revolving Credit and Tranche A Term Loan Balance Period beginning [____________ ____, _____] ______ advances for period ______ reductions for period ______ other adjustments (+/-) ______ Revolving Credit and Tranche A Term Loan Balance Period ending [___________, ____, _____] ______ Letter of Credit Liabilities ______ Total outstandings ______ ************************************************************ Borrowing Base Availability (overadvance) ______ ************************************************************ EXHIBIT C FORM OF SECURITY AGREEMENT SECURITY AGREEMENT Dated as of December 28, 1994 between KASH N' KARRY FOOD STORES, INC. and THE CIT GROUP/BUSINESS CREDIT, INC., as the Administrative Agent TABLE OF CONTENTS Page Section 1. Definitions and Interpretation . . . . . . . . . . 1 1.01 Certain Defined Terms . . . . . . . . . . . . . . . 1 1.02 Interpretation. . . . . . . . . . . . . . . . . . . 4 Section 2. Collateral . . . . . . . . . . . . . . . . . . . . 5 2.01 Grant . . . . . . . . . . . . . . . . . . . . . . . 5 2.02 Intellectual Property . . . . . . . . . . . . . . . 6 2.03 Perfection. . . . . . . . . . . . . . . . . . . . . 6 2.04 Preservation and Protection of Security Interests. . . . . . . . . . . . . . . . . . . . . . 7 2.05 Attorney-in-Fact. . . . . . . . . . . . . . . . . . 8 2.06 Use of Intellectual Property. . . . . . . . . . . . 9 2.07 Instruments . . . . . . . . . . . . . . . . . . . . 10 2.08 Use or Sale of Collateral . . . . . . . . . . . . . 10 2.09 Rights and Obligations. . . . . . . . . . . . . . . 10 2.10 Release of Motor Vehicles . . . . . . . . . . . . . 11 2.11 Termination . . . . . . . . . . . . . . . . . . . . 11 Section 3. Cash Proceeds of Collateral. . . . . . . . . . . . 12 3.01 Collateral Account. . . . . . . . . . . . . . . . . 12 3.02 Certain Proceeds. . . . . . . . . . . . . . . . . . 12 3.03 Investment of Balance in Collateral Account . . . . 13 3.04 Cover for Letter of Credit Liabilities. . . . . . . 13 Section 4. Representations and Warranties . . . . . . . . . . 13 4.01 Title . . . . . . . . . . . . . . . . . . . . . . . 14 4.02 Intellectual Property . . . . . . . . . . . . . . . 14 Section 5. Covenants. . . . . . . . . . . . . . . . . . . . . 15 5.01 Books and Records . . . . . . . . . . . . . . . . . 15 5.02 Removals, Etc.. . . . . . . . . . . . . . . . . . . 15 5.03 Sales and Other Liens . . . . . . . . . . . . . . . 15 5.04 Intellectual Property . . . . . . . . . . . . . . . 16 5.05 Further Assurances. . . . . . . . . . . . . . . . . 17 Section 6. Remedies . . . . . . . . . . . . . . . . . . . . . 17 6.01 Events of Default, Etc. . . . . . . . . . . . . . . 17 6.02 Deficiency. . . . . . . . . . . . . . . . . . . . . 18 6.03 Manner of Disposition . . . . . . . . . . . . . . . 18 6.04 Application of Proceeds . . . . . . . . . . . . . . 19 Section 7. Miscellaneous. . . . . . . . . . . . . . . . . . . 20 7.01 The Administrative Agent. . . . . . . . . . . . . . 20 7.02 Waiver. . . . . . . . . . . . . . . . . . . . . . . 20 7.03 Notices . . . . . . . . . . . . . . . . . . . . . . 20 7.04 Expenses, Etc.. . . . . . . . . . . . . . . . . . . 21 7.05 Amendments, Etc.. . . . . . . . . . . . . . . . . . 21 7.06 Successors and Assigns. . . . . . . . . . . . . . . 22 7.07 Survival. . . . . . . . . . . . . . . . . . . . . . 22 7.08 Agreements Superseded . . . . . . . . . . . . . . . 22 7.09 Severability. . . . . . . . . . . . . . . . . . . . 22 7.10 Captions. . . . . . . . . . . . . . . . . . . . . . 22 7.11 Counterparts. . . . . . . . . . . . . . . . . . . . 22 7.12 GOVERNING LAW; SUBMISSION TO JURISDICTION . . . . . 22 7.13 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . 23 ANNEX 1 LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND APPLICATIONS FOR COPYRIGHT REGISTRATIONS ANNEX 2 LIST OF PATENTS AND PATENT APPLICATIONS ANNEX 3 LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS, TRADEMARK AND SERVICE MARK REGISTRATIONS AND APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS ANNEX 4 LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS ANNEX 5 LIST OF LOCATIONS ANNEX 6 ASSIGNMENT FOR SECURITY (PATENTS) ANNEX 7 ASSIGNMENT FOR SECURITY (TRADEMARKS) ANNEX 8 FORM OF BLOCKED ACCOUNT AGREEMENT ANNEX 9 AGREEMENT REGARDING ADDITIONAL SECURED OBLIGATIONS SECURITY AGREEMENT This SECURITY AGREEMENT (this "Agreement") dated as of December 28, 1994 is made between KASH N' KARRY FOOD STORES, INC. (the "Company") and THE CIT GROUP/BUSINESS CREDIT, INC., as the administrative agent (in such capacity, the "Administrative Agent") for the holders, from time to time, of the Secured Obligations (as defined below). The Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among KASH N' KARRY FOOD STORES, INC., the lenders identified in the Credit Agreement (the "Lenders"), the Administrative Agent and Bank of America National Trust and Savings Association, as Co-Agent, provides, subject to its terms and conditions, for certain extensions of credit to the Company. It is a condition to the obligations of the Administrative Agent and the Lenders under the Credit Agreement that the Company shall have executed and delivered, and granted the Liens provided for in, this Agreement. To induce the Administrative Agent and the Lenders to enter into, and to extend credit under, the Credit Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company has agreed to pledge and grant a security interest in the Collateral as security for the Secured Obligations. Accordingly, the Company agrees with the Administrative Agent as follows: Section 1. Definitions and Interpretation. 1.01 Certain Defined Terms. Unless otherwise defined, all capitalized terms used in this Agreement that are defined in the Credit Agreement (including those terms incorporated by reference) shall have the respective meanings assigned to them in the Credit Agreement. In addition, the following terms shall have the following meanings under this Agreement: "Account" shall have the meaning assigned to that term in Section 9-106 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments . "Chattel Paper" shall have the meaning assigned to that term in Section 9-105 of the Uniform Commercial Code, as in effect on the date of this Agreement, without regard to any subsequent amendments. "Collateral" shall have the meaning assigned to that term in Section 2.01. "Collateral Account" shall have the meaning assigned to that term in Section 3.01. "Copyright Collateral" shall mean all Copyrights, whether now owned or hereafter acquired by the Company, including each Copyright identified in Annex 1. "Copyrights" shall mean, collectively, (a) all copyrights, copyright registrations and applications for copyright registrations, (b) all renewals and extensions of all copyrights, copyright registrations and applications for copyright registration and (c) all rights, now existing or hereafter coming into existence, (i) to all income, royalties, damages and other payments (including in respect of all past, present or future infringements) now or hereafter due or payable under or with respect to any of the foregoing, (ii) to sue for all past, present and future infringements with respect to any of the foregoing and (iii) otherwise accruing under or pertaining to any of the foregoing throughout the world. "Deposit Account" shall have the meaning assigned to that term in Section 9-105 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "Document" shall have the meaning assigned to that term in Section 9-105 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "Equipment" shall have the meaning assigned to that term in Section 9-109 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "General Intangibles" shall have the meaning assigned to that term in Section 9-106 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "Instrument" shall have the meaning assigned to that term in Section 9-105 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "Intellectual Property" shall mean all Copyright Collateral, all Patent Collateral and all Trademark Collateral, together with (a) all inventions, processes, production methods, proprietary information, know-how and trade secrets; (b) all licenses or user or other agreements granted to the Company with respect to any of the foregoing, in each case whether now or hereafter owned or used, including the licenses or other agreements with respect to the Copyright Collateral, the Patent Collateral or the Trademark Collateral listed in Annex 4; (c) all information, customer lists, identification of suppliers, data, plans, blueprints, specifications, designs, drawings, recorded knowledge, surveys, engineering reports, test reports, manuals, materials standards, processing standards, performance standards, catalogs, computer and automatic machinery software and programs; (d) all accounting information and all media in which or on which any information or knowledge or data or records may be recorded or stored and all computer programs used for the compilation or printout of such information, knowledge, records or data; (e) all Governmental Approvals now held or hereafter obtained by the Company in respect of any of the foregoing; and (f) all causes of action, claims and warranties now owned or hereafter acquired by the Company in respect of any of the foregoing. It is understood that Intellectual Property shall include all of the foregoing owned or acquired by the Company on a worldwide basis. "Inventory" shall have the meaning assigned to that term in Section 9-109 of the Uniform Commercial Code as in effect on the date of this Agreement, without regard to any subsequent amendments. "Motor Vehicles" shall mean motor vehicles, tractors, trailers and other like property, whether or not the title to any such property is governed by a certificate of title or ownership. "Patent Collateral" shall mean all Patents, whether now owned or hereafter acquired by the Company, including each Patent identified in Annex 2. "Patents" shall mean, collectively, (a) all patents and patent applications, (b) all reissues, divisions, continuations, renewals, extensions and continuations-in-part of all patents or patent applications and (c) all rights, now existing or hereafter coming into existence, (i) to all income, royalties, damages, and other payments (including in respect of all past, present and future infringements) now or hereafter due or payable under or with respect to any of the foregoing, (ii) to sue for all past, present and future infringements with respect to any of the foregoing and (iii) otherwise accruing under or pertaining to any of the foregoing throughout the world, including all inventions and improvements described or discussed in all such patents and patent applications. "Proceeds" shall have the meaning assigned to that term in Section 9-306 of the Uniform Commercial. "Secured Obligations" shall mean (a) any and all Obligations, (b) any and all other obligations of the Company for the performance of its agreements, covenants and undertakings under or in respect of the Basic Documents, and (c) if Bank of America National Trust and Savings Association and the Administrative Agent enter into an agreement in the form of Annex 9, the obligations of the Company to the Swap Counterparty under the Existing Interest Rate Protection Agreement. "Swap Counterparty" shall mean Bank of America in its capacity as a party to the Existing Interest Rate Protection Agreement. "Trademark Collateral" shall mean all Trademarks, whether now owned or hereafter acquired by the Company, including each Trademark identified in Annex 3. Notwithstanding the foregoing, the Trademark Collateral shall not include any Trademark which would be rendered invalid, abandoned, void or unenforceable by reason of its being included as part of the Trademark Collateral. "Trademarks" shall mean, collectively, (a) all trade names, trademarks and service marks, logos, trademark and service mark registrations and applications for trademark and service mark registrations, (b) all renewals and extensions of any of the foregoing and (c) all rights, now existing or hereafter coming into existence, (i) to all income, royalties, damages and other payments (including in respect of all past, present and future infringements) now or hereafter due or payable under or with respect to any of the foregoing, (ii) to sue for all past, present and future infringements with respect to any of the foregoing and (iii) otherwise accruing under or pertaining to any of the foregoing throughout the world, together, in each case, with the product lines and goodwill of the business connected with the use of, or otherwise symbolized by, each such trade name, trademark and service mark. "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in the State of New York. Section 1.02 Interpretation. In this Agreement, unless otherwise indicated: the singular includes the plural and plural the singular; words importing either gender include the other gender; references to statutes or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending or replacing the statute or regulation referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words "including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to articles, sections (or subdivisions of sections), exhibits, annexes or schedules are to this Agreement; references to agreements and other contractual instruments shall be deemed to include all subsequent amendments, extensions and other modifications to such instruments (without, however, limiting any prohibition on any such amendments, extensions and other modifications by the terms of any Basic Document); and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. Section 2. Collateral. 2.01 Grant. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and performance of the Secured Obligations, the Company hereby pledges and grants to the Administrative Agent, for the benefit of the Administrative Agent, the Lenders, and, if an agreement in the form of Annex 9 is fully executed, the Swap Counterparty, a security interest in all of the Company's right, title and interest in and to the following property, whether now owned or hereafter acquired by the Company and whether now existing or hereafter coming into existence (collectively, the "Collateral"): (a) all Accounts and General Intangibles, including all rights to the payment of money, whether or not earned by performance, including all moneys due and to become due to the Company in repayment of any loans or advances, in payment for goods (including Inventory and Equipment) sold or leased or for services rendered, in payment of tax refunds and in payment of any guarantee of any of the foregoing; (b) all Documents, Instruments, and Chattel Paper and, without limiting the generality of the foregoing, letters of credit, including any such writing evidencing, representing, arising from or existing in respect of, relating to, covering, evidencing, securing or supporting the payment of, any of the Accounts, General Intangibles, Inventory or Equipment; all Inventory, including all goods of the Company that are held by the Company for sale, lease or furnishing under a contract of service that are so leased or furnished, and including all spare parts and related supplies, all goods obtained by the Company in exchange for any such goods, all products made or processed from any such goods and all substances, if any, commingled with or added to any such goods; (d) all Equipment, including all goods (including Motor Vehicles) of the Company that are used or bought for use primarily in its business, including all spare parts and related supplies, all goods obtained by the Company in exchange for any such goods, all substances, if any, commingled with or added to such goods and all upgrades and other improvements to such goods; (e) all Deposit Accounts and the balances thereof from time to time, including the Collateral Account, the Special Collateral Account and the balance thereof from time to time; (f) without limiting the generality of the foregoing, all Intellectual Property; (g) without limiting the generality of the foregoing, all contracts and other agreements relating to the sale or other disposition of all or any part of the Collateral and all rights, warranties, claims and benefits against any Person arising out of, relating to or in connection with all or any part of the Collateral, including any such rights, warranties, claims or benefits against any Person storing or transporting any Inventory or Equipment or issuing any Documents or other writings; (h) without limiting the generality of the foregoing, to the extent related to all or any part of the other Collateral, all books, correspondence, credit files, records, invoices, tapes, cards, computer runs and other papers and documents in the possession or under the control of the Company or any computer bureau or service company from time to time acting for the Company; (i) without limiting the generality of the foregoing, all liquor licenses; (j) without limiting the generality of the foregoing, all property that is or may become fixtures under applicable law; (k) all other tangible and intangible property of the Company; and (l) all Proceeds and products in whatever form of all or any part of the other Collateral including all insurance payments in respect of the Collateral and all condemnation awards and all other compensation for any Casualty Event with respect to all or any part of the other Collateral, together with all rights to recover and proceed with respect to the same, and all accessions to, substitutions for and replacements of all or any part of the Collateral. 2.02 Intellectual Property. For the purpose of enabling the Administrative Agent to exercise its rights, remedies, powers and privileges under Section 6 at such time or times as the Administrative Agent shall be lawfully entitled to exercise such rights, remedies, powers and privileges, and for no other purpose, the Company hereby grants to the Administrative Agent, to the extent assignable, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Company) to use, assign, license or sublicense any of the Intellectual Property, together with reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout of such items. 2.03 Perfection. Concurrently with the execution and delivery of this Agreement, the Company shall (i) execute such financing statements and other documents as the Administrative Agent may request with respect to the Liens granted hereby, (ii) deliver and pledge to the Administrative Agent any and all Instruments, endorsed or accompanied by such instruments of assignment and transfer in such form and substance as the Administrative Agent may request, (iii) cause the Administrative Agent (to the extent requested by the Administrative Agent) to be listed as the lienholder on all certificates of title or ownership relating to Motor Vehicles owned by the Company and deliver to the Administrative Agent originals of all such certificates of title or ownership for the Motor Vehicles together with the odometer statements for each respective Motor Vehicle, (iv) deliver to the Administrative Agent and file with each relevant Governmental Person, each of the assignments in the form of Annex 6 (in the case of any Patent Collateral) and Annex 7 (in the case of any Trademark Collateral), (v) give appropriate notice to the relevant depository institution or financial intermediary with respect to all Deposit Accounts or uncertificated Securities, and (vi) take all such other actions as the Administrative Agent may request to perfect or establish the priority of the Liens granted by this Agreement. 2.04 Preservation and Protection of Security Interests. The Company shall: (a) upon the acquisition after the Effective Date, by the Company of any Instrument (so long as no Default shall have occurred and be continuing, excluding any checks received by the Company for the payment of goods or services in the ordinary course of business), promptly deliver and pledge to the Administrative Agent all such Instruments, endorsed or accompanied by such instruments of assignment and transfer in such form and substance as the Administrative Agent may request; (b) upon the acquisition after the Effective Date by the Company of any Motor Vehicle, promptly deliver to the Administrative Agent originals of the certificates of title or ownership for such Motor Vehicles with the Administrative Agent listed as lienholder, together with the manufacturer's statement of origin and odometer statements; provided, however, if the Motor Vehicle to be acquired is subject to a purchase money security interest permitted by the Credit Agreement, the Administrative Agent shall be listed as a junior lienholder to the Person holding such purchase money security interest; (c) without limiting the obligations of the Company under Section 2.04(b), upon the acquisition after the Effective Date by the Company of any Equipment covered by a certificate of title or ownership, promptly cause the Administrative Agent to be listed as the lienholder on such certificate of title and within 120 days of the acquisition of such Equipment deliver evidence of the same to the Administrative Agent; (d) upon the Company's acquiring, or otherwise becoming entitled to the benefits of, any Copyright (or copyrightable material), Patent (or patentable invention), Trademark (or associated goodwill) or other Intellectual Property or upon or prior to the Company's filing, either directly or through any agent, licensee or other designee, of any application with any Governmental Person for any Copyright, Patent, Trademark, or other Intellectual Property, in each case after the Effective Date, execute and deliver such contracts, agreements and other instruments (including assignments in the form of Annexes 6 and 7, as applicable) as the Administrative Agent may request to evidence, validate, perfect and establish the priority (subject only to Liens permitted under the Credit Agreement) of the Liens granted by this Agreement in such and any related Intellectual Property and, if requested by the Administrative Agent, amend Annex 1, 2 or 3 (as the case may be) to reflect the inclusion of any such Intellectual Property as part of the Collateral (it being understood that the failure to amend any such Annex shall not affect the Liens granted by this Agreement on any such Intellectual Property); and (e) give, execute, deliver, file or record any and all financing statements, notices, contracts, agreements or other instruments, obtain any and all Governmental Approvals and take any and all steps that may be necessary or as the Administrative Agent may request to create, perfect, establish the priority of, or to preserve the validity, perfection or priority of, the Liens granted by this Agreement or to enable the Administrative Agent to exercise and enforce its rights, remedies, powers and privileges under this Agreement with respect to such Liens, provided that notices to account debtors in respect of any Accounts or Instruments shall be subject to the provisions of Section 3.02(b). 2.05 Attorney-in-Fact. (a) Subject to the rights of the Company under Sections 2.06, 2.07, 2.08 and 2.09, the Administrative Agent is hereby appointed the attorney-in-fact of the Company for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Agreement, to preserve the validity, perfection or priority of the Liens granted by this Agreement, including the execution and filing of financing statements, continuation statements and the like, and to exercise its rights, remedies, powers and privileges under this Agreement. This appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Administrative Agent shall be entitled under this Agreement upon the occurrence and during the continuance of any Event of Default or, in respect of Section 3.02(b), any Default, (i) to ask, demand, collect, sue for, recover, receive and give receipt and discharge for amounts due and to become due under and in respect of all or any part of the Collateral; (ii) to receive, endorse and collect any Instruments or other drafts, instruments, documents and chattel paper in connection with clause (i) above (including any draft or check representing the proceeds of insurance or the return of unearned premiums); (iii) to file any claims or take any action or proceeding that the Administrative Agent may deem necessary or advisable for the collection of all or any part of the Collateral, including the collection of any compensation due and to become due under any contract or agreement with respect to all or any part of the Collateral; and (iv) to execute, in connection with any sale or disposition of the Collateral under Section 6, any endorsements, assignments, bills of sale or other instruments of conveyance or transfer with respect to all or any part of the Collateral. (b) Without limiting the rights and powers of the Administrative Agent under Section 2.05(a), the Company hereby appoints the Administrative Agent as its attorney-in-fact, effective the Effective Date and terminating upon the termination of this Agreement and upon satisfaction in full of the Secured Obligations, for the purpose of (i) executing on behalf of the Company title or ownership applications for filing with appropriate state agencies to enable Motor Vehicles now owned or hereafter acquired by the Company to be retitled and the Administrative Agent to be listed as lienholder as to such Motor Vehicles, (ii) filing such applications with such state agencies and (iii) executing such other documents and instruments on behalf of, and taking such other action in the name of, the Company as the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Agreement (including the purpose of creating in favor of the Administrative Agent a perfected lien on the Motor Vehicles and exercising the rights and remedies of the Administrative Agent under Section 6). This appointment as attorney-in-fact is irrevocable and coupled with an interest. (c) Without limiting the rights and powers of the Administrative Agent under Section 2.05(a), the Company hereby appoints the Administrative Agent as its attorney-in-fact, effective the Effective Date and terminating upon the termination of this Agreement and upon satisfaction in full of the Secured Obligations, for the purpose of executing and filing all such contracts, agreements and other documents as are contemplated by Section 2.04(d). This appointment as attorney-in-fact is irrevocable and coupled with an interest. 2.06 Use of Intellectual Property. Subject to such action not otherwise constituting a Default and so long as no Event of Default shall have occurred and be continuing, the Company will be permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of the business of the Company. In furtherance of the foregoing, so long as no Event of Default shall have occurred and be continuing, the Administrative Agent shall from time to time, upon the request of the Company, execute and deliver any instruments, certificates or other documents, in the form so requested, which the Company shall have certified are appropriate (in its judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to Section 2.02 as to any specific Intellectual Property). The exercise of rights, remedies, powers and privileges under Section 6 by the Administrative Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Company in accordance with the first sentence of this Section 2.06. 2.07 Instruments. So long as no Default shall have occurred and be continuing, the Company may retain for collection in the ordinary course of business any checks received by the Company for the payment of goods and services in the ordinary course of business, and the Administrative Agent shall, promptly upon the request, and at the expense, of the Company, make appropriate arrangements for making any other Instruments pledged by the Company available to the Company for purposes of presentation, collection or renewal. Any such arrangement shall be effected, to the extent deemed appropriate by the Administrative Agent, against trust receipt or like document. 2.08 Use or Sale of Collateral. So long as no Event of Default shall have occurred and be continuing, the Company shall, in addition to its rights under Sections 2.06 and 2.07 in respect of the Collateral contemplated in those sections, be entitled to use and possess the other Collateral and to exercise its rights, title and interest in all contracts, agreements, licenses and Governmental Approvals, subject to the rights, remedies, powers and privileges of the Administrative Agent under Sections 3 and 6 and to such use, possession or exercise not otherwise constituting a Default. With respect to any of the Collateral that the Company has the right to sell under Section 8.05 of the Credit Agreement, such sale shall be deemed to be an authorized disposition of such Collateral for purposes of Section 9-306(2) of the Uniform Commercial Code and the security interest granted by this Agreement in such Collateral shall be deemed released so long as the cash Proceeds of such sale are applied in accordance with the Credit Agreement and the other Basic Documents. 2.09 Rights and Obligations. (a) The Company shall remain liable to perform its duties and obligations under the contracts and agreements included in the Collateral in accordance with their respective terms to the same extent as if this Agreement had not been executed and delivered. The exercise by the Administrative Agent or any Lender of any right, remedy, power or privilege in respect of this Agreement shall not release the Company from any of its duties and obligations under such contracts and agreements. Neither the Administrative Agent nor any Lender shall have any duty, obligation or liability under such contracts and agreements or in respect to any Governmental Approval included in the Collateral by reason of this Agreement or any other Basic Document, nor shall the Administrative Agent or any Lender be obligated to perform any of the duties or obligations of the Company under any such contract or agreement or any such Governmental Approval or to take any action to collect or enforce any claim (for payment) under any such contract or agreement or Governmental Approval. (b) No Lien granted by this Agreement in the Company's right, title and interest in any contract, agreement or Governmental Approval shall be deemed to be a consent by the Administrative Agent or any Lender to any such contract, agreement or Governmental Approval. (c) No reference in this Agreement to Proceeds or to the sale or other disposition of Collateral shall authorize the Company to sell or otherwise dispose of any Collateral except to the extent otherwise expressly permitted by the terms of any Basic Document. (d) Neither the Administrative Agent nor any Lender shall be required to take steps necessary to preserve any rights against prior parties to any part of the Collateral. 2.10 Release of Motor Vehicles. So long as no Default shall have occurred and be continuing, upon the request of, and as the expense of, the Company, the Administrative Agent shall execute and deliver to the Company such instruments as the Company shall reasonably request to remove the notation of the Administrative Agent as lienholder on any certificate of title for any Motor Vehicle; provided that any such instruments shall be delivered, and the release shall be effective, only upon receipt by the Administrative Agent of a certificate from the Company stating that the Motor Vehicle the Lien on which is to be released is to be sold or has suffered a casualty loss (with title passing to the appropriate casualty insurance company in settlement of the claim for such loss). 2.11 Termination. When all Secured Obligations shall have been fully paid or otherwise fully performed and the Commitments and all Letter of Credit Liabilities shall have expired or been terminated, this Agreement shall terminate, and the Administrative Agent shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever, any remaining Collateral and money received in respect of the Collateral, to or on the order of the Company and to be released, canceled and granted back all licenses and rights referred to in Section 2.02. The Administrative Agent shall also execute and deliver to the Company upon such termination such Uniform Commercial Code termination statements, certificates for terminating the Liens on the Motor Vehicles and such other documentation as shall be reasonably requested by the Company to effect the termination and release of the Liens granted by this Agreement on the Collateral. Section 3. Cash Proceeds of Collateral. 3.01 Collateral Account. The Administrative Agent shall establish with Chemical Bank at the Principal Office a cash collateral account (the "Collateral Account") in the name and under the control of the Administrative Agent into which there shall be deposited from time to time (i) the cash Proceeds of any of the Collateral required to be deposited in the Collateral Account pursuant to the Credit Agreement, (ii) prior to their disbursement, cash Proceeds required to be disbursed by the Administrative Agent pursuant to Section 6.04, and (iii) any additional amounts which the Company wishes (subject to Section 4.01(b) of the Credit Agreement) to pledge as additional collateral security under this Agreement or which, as provided in the Credit Agreement, are required to be pledged as additional collateral security under this Agreement. The balance from time to time in the Collateral Account shall constitute part of the Collateral and shall not constitute payment of the Secured Obligations until applied as provided in this Agreement. Except as expressly provided in the next sentence, the Administrative Agent shall remit the collected balance outstanding to the credit of the Collateral Account to or upon the order of the Company as the Company shall from time to time instruct. However, if any Event of Default shall have occurred and be continuing, the Administrative Agent may (and, if instructed by the Lenders as specified in Section 9 of the Credit Agreement, shall) in its (or their) discretion apply or cause to be applied (subject to collection) the balance from time to time outstanding to the credit of the Collateral Account to the payment of the Secured Obligations in the manner specified in Section 6. The balance from time to time in the Collateral Account shall be subject to withdrawal only as provided in this Agreement. 3.02 Certain Proceeds. (a) If any Event of Default shall have occurred and be continuing, Company shall, upon request of the Administrative Agent, instruct all account debtors and other Persons obligated in respect of all Accounts and General Intangibles to make all payments in respect of the Accounts and General Intangibles directly to Barnett Bank of Tampa (by instructing that such payments shall be made to such bank for deposit into the Blocked Account) under and pursuant to a blocked account agreement, in substantially the form of Annex 8, or to such other Persons or under other arrangements in form and substance satisfactory to the Administrative Agent. (b) If any Event of Default shall have occurred and be continuing, the Company shall, upon request of the Administrative Agent, promptly notify (and the Company hereby authorizes the Administrative Agent so to notify) each account debtor in respect of any Instruments that such Collateral has been assigned to the Administrative Agent under this Agreement and that any payments due or to become due in respect of such Collateral are to be made directly to the Administrative Agent. All such payments made to the Administrative Agent shall be immediately deposited in the Collateral Account. (c) The Company agrees that if the Proceeds of any Collateral required to be deposited in the Collateral Account shall be received by the Company, the Company shall as promptly as possible deposit such Proceeds into the Collateral Account or, if the Proceeds are of a type that cannot be so deposited, deliver such Proceeds to the Administrative Agent in kind. Until so deposited or delivered, all such Proceeds shall be held in trust by the Company for the Administrative Agent and shall not be commingled with any other funds or property of the Company. 3.03 Investment of Balance in Collateral Account. Amounts on deposit in the Collateral Account shall be invested from time to time in such Permitted Investments as the Company (or, if any Default shall have occurred and be continuing, the Administrative Agent) shall determine. All such Permitted Investments shall be held in the name and be under the control of the Administrative Agent, provided that, if requested by the Company, such Permitted Investments may be held in the name and under the control of one or more of the Lenders (and in that connection each Lender, pursuant to Section 10.11 of the Credit Agreement, has agreed that such Permitted Investments shall be held by such Lender as a collateral subagent for the Administrative Agent under this Agreement). At any time after the occurrence and during the continuance of an Event of Default, the Administrative Agent may (and, if instructed by the Lenders as specified in Section 9 of the Credit Agreement, shall) in its (or their) discretion at any time and from time to time elect to liquidate, or direct any such Lender acting as a collateral subagent to liquidate, any such Permitted Investments and to apply or cause to be applied the proceeds of such action to the payment of the Secured Obligations in the manner specified in Section 6. 3.04 Cover for Letter of Credit Liabilities. Amounts deposited into the Collateral Account as cover for Letter of Credit Liabilities pursuant to Sections 2.10(h) or 9 of the Credit Agreement shall be held by the Administrative Agent in a separate sub-account (designated "Letter of Credit Liabilities Sub-Account") of the Collateral Account, and all amounts held in such sub-account shall constitute collateral security first for the Letter of Credit Liabilities outstanding from time to time and second as collateral security for the other Secured Obligations. Section 4. Representations and Warranties. As of the Effective Date and as of the date of each extension of credit by the Lenders, the Company represents and warrants to the Lenders and the Administrative Agent as follows: 4.01 Title. The Company is the sole beneficial owner of the Collateral in which it purports to grant a Lien pursuant to this Agreement, and such Collateral is free and clear of all Liens, except for Liens permitted under Section 8.06 of the Credit Agreement. The Liens granted by this Agreement in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders have attached and constitute a perfected security interest in all of such Collateral (other than Intellectual Property registered or otherwise located outside of the United States of America) prior to all other Liens (except such permitted Liens). Notwithstanding the foregoing, nothing contained in this Section 4.01 shall derogate the grant of a security interest under Section 2.01 with respect to any property not owned by the Company but with respect to which the Company has sufficient rights to confer a security interest. 4.02 Intellectual Property. (a) Annexes 1, 2 and 3 set forth completely and correctly all Copyrights, Patents and Trademarks owned by the Company on the Effective Date; except pursuant to licenses and other user agreements entered into by the Company in the ordinary course of business and listed in Annex 4, the Company owns and possesses the right to use, and has done nothing to authorize or enable any other Person to use, any Copyright, Patent or Trademark listed in Annex 1, 2 or 3; all registrations listed in Annexes 1, 2 and 3 are valid and in full force and effect; and, except as may be set forth in Annex 4, the Company owns and possesses the right to use all Copyrights, Patents and Trademarks listed in Annexes 1, 2 and 3. (b) Annex 4 sets forth completely and correctly all licenses and other user agreements included in the Intellectual Property on the Effective Date. (c) To the Company's knowledge, (i) except as set forth in Annex 4, there is no violation by others of any right of the Company with respect to any Copyright, Patent or Trademark listed in Annex 1, 2 or 3 and (ii) the Company is not infringing in any respect upon any Copyright, Patent or Trademark of any other Person; and no proceedings have been instituted, are pending against the Company or, to the Company's knowledge, have been threatened against, and no claim has been received by, the Company, alleging any such violation, except as may be set forth in Annex 4. (d) The Company does not own any Trademarks registered in the United States of America to which the last sentence of the definition of Trademark Collateral applies. Section 5. Covenants. 5.01 Books and Records. The Company shall: (a) keep full and accurate books and records relating to the Collateral and stamp or otherwise mark such books and records in such manner as the Administrative Agent may reasonably require in order to reflect the Liens granted by this Agreement; (b) furnish to the Administrative Agent on the last business day of the months of March, June, September and December (or at such other times as the Administrative Agent may designate) statements and schedules further identifying and describing the Copyright Collateral, the Patent Collateral and the Trademark Collateral and such other reports in connection with the Copyright Collateral, the Patent Collateral and the Trademark Collateral, as the Administrative Agent may reasonably request, all in reasonable detail; (c) prior to filing, either directly or through an agent, licensee or other designee, any application for any Copyright, Patent or Trademark, furnish to the Administrative Agent prompt notice of such proposed filing; and (d) permit representatives of the Administrative Agent, upon reasonable notice, at any time during normal business hours, to inspect and make abstracts from its books and records pertaining to the Collateral, permit representatives of the Administrative Agent to be present at the Company's place of business to receive copies of all communications and remittances relating to the Collateral and forward copies of any notices or communications received by the Company with respect to the Collateral, all in such manner as the Administrative Agent may reasonably request. 5.02 Removals, Etc. Without at least 30 days' prior written notice to the Administrative Agent, the Company shall not (i) maintain any of its books and records with respect to the Collateral at any office or maintain its principal place of business at any place, or permit any Inventory or Equipment to be located anywhere, other than at the address initially indicated for notices to it under Section 7 or at one of the locations identified in Annex 5 or in transit from one of such locations to another or (ii) change its corporate name, or the name under which it does business, from the name shown on the signature pages to this Agreement. 5.03 Sales and Other Liens. Except as otherwise permitted under Section 8 of the Credit Agreement, without the prior written consent of the Administrative Agent (granted with the authorization of the Lenders as specified in Section 11.04 of the Credit Agreement), the Company shall not dispose of any Collateral, create, incur, assume or suffer to exist any Lien upon any Collateral or file or suffer to be on file or authorize to be filed, in any jurisdiction, any financing statement or like instrument with respect to all or any part of the Collateral in which the Administrative Agent is not named as the sole secured party for the benefit of the Lenders and, if an agreement in the form of Annex 9 has been fully executed, the Swap Counterparty. 5.04 Intellectual Property. (a) The Company (either itself or through licensees) will, for each Trademark, (i) to the extent consistent with past practice and good business judgment, continue to use such Trademark on each and every trademark class of goods in order to maintain such Trademark in full force and effect free from any claim of abandonment for nonuse, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) employ such Trademark with the appropriate notice of registration and (iv) not (and not permit any licensee or sublicensee to) do any act or knowingly omit to do any act whereby any Trademark material to the conduct of its business may become invalidated. (b) The Company (either itself or through licensees) will not do any act or knowingly omit to do any act whereby any Patent material to the conduct of its business may become abandoned or dedicated. (c) The Company shall notify the Administrative Agent immediately if it knows or has reason to know that any Intellectual Property material to the conduct of its business may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding before any Governmental Person) regarding the Company's ownership of any Intellectual Property material to its business, its right to copyright, patent or register the same (as the case may be), or its right to keep, use and maintain the same. (d) The Company will take all necessary steps that are consistent with good business practices in any proceeding before any appropriate Governmental Person to maintain and pursue each application relating to any Intellectual Property (and to obtain the relevant registrations) and to maintain each registration material to the conduct of its business, including payment of maintenance fees, filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings. (e) In the event that any Intellectual Property material to the conduct of its business is infringed, misappropriated or diluted by a third party, the Company shall notify the Administrative Agent within (10) days after it learns of such event and shall, if consistent with good business practice, promptly sue for infringement, misappropriation or dilution, seek temporary restraints and preliminary injunctive relief to the extent practicable, seek to recover any and all damages for such infringement, misappropriation or dilution and take such other actions as are appropriate under the circumstances to protect such Collateral. (f) The Company shall, through counsel acceptable to the Administrative Agent, prosecute diligently any application for any Intellectual Property pending as of the date of this Agreement or thereafter made until the termination of this Agreement, make application on uncopyrighted but copyrightable material, unpatented but patentable inventions and unregistered but registerable Trademarks and preserve and maintain all rights in applications for any Intellectual Property; provided, however, that the Company shall have no obligation to make any such application if making such application would be unnecessary or imprudent in the good faith business judgment of the Company. Any expenses incurred in connection with such an application shall be borne by the Company. The Company shall not abandon any right to file an application for any Intellectual Property or any pending such application in the United States without the consent of the Administrative Agent, which consent shall not be unreasonably withheld. (g) The Administrative Agent shall have the right but shall in no way be obligated to bring suit in its own name to enforce the Copyrights, Patents and Trademarks and any license under such Intellectual Property, in which event the Company shall, at the request of the Administrative Agent, do any and all lawful acts and execute and deliver any and all proper documents required by the Administrative Agent in aid of such enforcement action. 5.05 Further Assurances. The Company agrees that, from time to time upon the request of the Administrative Agent, the Company will execute and deliver such further writings and do such other acts and things as the Administrative Agent may reasonably request in order fully to effect the purposes of this Agreement. Section 6. Remedies. 6.01 Events of Default, Etc. If any Event of Default shall have occurred and be continuing: (a) The Administrative Agent in its discretion may require the Company to, and the Company shall, assemble the Collateral owned by it at such place or places, reasonably convenient to both the Administrative Agent and the Company, designated in the Administrative Agent's request. (b) The Administrative Agent in its discretion may make any reasonable compromise or settlement it deems desirable with respect to any of the Collateral and may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, all or any part of the Collateral. (c) The Administrative Agent in its discretion may, in its name or in the name of the Company or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for all or any part of the Collateral, but shall be under no obligation to do so. (d) In the event of any sale, license or other disposition of any of the Trademark Collateral, the goodwill connected with and symbolized by the Trademark Collateral subject to such disposition shall be included, and the Company shall supply to the Administrative Agent or its designee, for inclusion in such sale, assignment or other disposition, all Intellectual Property relating to such Trademark Collateral. (e) In addition to any rights conferred by this Agreement, the Administrative Agent shall have, and in its discretion may exercise, all of the rights, remedies, powers and privileges with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not a version of the Official Text of the Uniform Commercial Code is in effect in the jurisdiction where such rights, remedies, powers and privileges are asserted) and such additional rights, remedies, powers and privileges to which a secured party is entitled under the laws in effect in any jurisdiction where any rights, remedies, powers and privileges in respect of this Agreement or the Collateral may be asserted, including the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Administrative Agent were the sole and absolute owner of the Collateral (and the Company agrees to take all such action as may be appropriate to give effect to such right). The Proceeds of, and other realization upon, the Collateral by virtue of the exercise of remedies under this Section 6.01 and of the exercise of the license granted to the Administrative Agent in Section 2.02 shall be applied in accordance with Section 6.04. 6.02 Deficiency. If the Proceeds of, or other realization upon, the Collateral by virtue of the exercise of remedies under Section 6.01 and of the exercise of the license granted by the Administrative Agent in Section 2.02 are insufficient to cover the costs and expenses of such exercise and the payment in full of the other Secured Obligations, the Company shall remain liable for any deficiency. 6.03 Manner of Disposition. (a) The Administrative Agent and the Lenders shall incur no liability as a result of the sale, lease or other disposition of all or any part of the Collateral conducted in any commercially reasonable manner. The Company hereby waives any claims against the Administrative Agent or any Lender arising by reason of the fact that the price at which the Collateral may have been sold, leased, or otherwise disposed of was less than the price which might have been obtained by some other manner of sale, lease or other disposition or was less than the aggregate amount of the Secured Obligations, even if, in connection with a private sale or other non-public disposition, the Administrative Agent accepts the first offer received and does not offer the Collateral to more than one offeree. (b) With respect to any Collateral that may from time to time be pledged to secure the Secured Obligations the disposition of which is subject to certain prohibitions contained in the Securities Act of 1933 and applicable state securities laws, the Company recognizes that the Administrative Agent may be compelled, with respect to any sale of all or any part of such Collateral, to limit purchasers to those who will agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to distribution or resale. The Company acknowledges that any such private sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agree that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Administrative Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Collateral for the period of time necessary to permit the respective issuer of such Collateral to register it for public sale. 6.04 Application of Proceeds. Except as otherwise expressly provided in this Agreement and except as provided below in this Section 6.04, the proceeds of, or other realization upon, all or any part of the Collateral by virtue of the exercise of remedies under Section 6.01 or of the exercise of the license granted in Section 2.02, and any other cash at the time held by the Administrative Agent under Section 3 or this Section 6, shall be applied by the Administrative Agent: First, to the reasonable expenses of retaking, holding, preparing for sale or lease, selling, or leasing or other disposition of the Collateral, including reasonable out-of-pocket costs and expenses of the Administrative Agent, and the reasonable fees and expenses of its agents, as well as reasonable attorneys' fees and legal expenses incurred by the Administrative Agent in that connection; Next, to satisfaction of the Secured Obligations equally and ratably in accordance with their respective amounts then due and owing or as the Lenders may otherwise agree; Next, to any Persons entitled to such amounts pursuant to Section 9-504(1)(c) of the Uniform Commercial Code; and Finally, to the Company, or its respective successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining. Notwithstanding the foregoing, the proceeds of any cash or other amounts held in the Letter of Credit Liabilities Sub-Account of the Collateral Account pursuant to Section 3.04 shall be applied first to the Letter of Credit Liabilities outstanding from time to time and second to the other Secured Obligations in the manner provided above in this Section 6.04. Section 7. Miscellaneous. 7.01 The Administrative Agent. As provided in Section 10.01 of the Credit Agreement, each of the Lenders and, if it executes an agreement in the form of Annex 9, the Swap Counterparty has appointed The CIT Group/Business Credit, Inc. as its Administrative Agent for purposes of this Agreement. In such capacity, The CIT Group/Business Credit, Inc. shall be entitled to all of the rights and benefits accorded the Administrative Agent by Section 10 of the Credit Agreement. Following the payment in full of all Secured Obligations and the termination or expiration of the Commitments of the Lenders and Letter of Credit Liabilities, the provisions of Section 11.03 of the Credit Agreement shall be deemed to continue in full force and effect for the benefit of the Administrative Agent under this Agreement. 7.02 Waiver. No failure on the part of the Administrative Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Agreement shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 7.03 Notices. All notices and communications to be given under this Agreement shall be given or made in writing to the intended recipient at the address specified below or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telex or telecopier, or personally delivered or, in the case of a mailed notice, upon receipt, in each case, given or addressed as provided in this Section 7.03: To the Company: Kash n' Karry Food Stores, Inc. 6422 Harney Road Tampa, Florida 33610 Attention: Executive Vice President, Administration Telecopier No.: (813) 626-9550 To the Administrative Agent: The CIT Group/Business Credit, Inc. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attention: Regional Credit Manager Telecopier No.: (213) 613-2588 Notwithstanding the foregoing, if a notice is transmitted by telex, telecopier or personal delivery or, in the case of a mailed notice, is received on a day that is not a Business Day, then such notice shall be deemed to have been duly given on the first Business Day after such transmission or, in the case of a mailed notice, receipt. 7.04 Expenses, Etc. The Company agrees to pay or to reimburse the Administrative Agent and the Lenders for all costs and expenses (including reasonable attorney's fees and expenses) that may be incurred by the Administrative Agent or the Lenders in any effort to enforce any of the provisions of Section 6 or any of the obligations of the Company in respect of the Collateral or in connection with (a) the preservation of the Lien of, or the rights of, the Administrative Agent and the Lenders under this Agreement, (b) any actual or attempted sale, lease, disposition, exchange, collection, compromise, settlement or other realization in respect of, or care of, the Collateral, or (c) all such costs and expenses and any other costs and expenses, including reasonable attorney's fees and expenses incurred in any bankruptcy, reorganization, workout or other similar proceeding, including costs, expenses and reasonable attorneys' fees and expenses relating to any proceeding concerning relief from stay, cash collateral, appointment of a trustee, disclosure statement approval, or plan confirmation. 7.05 Amendments, Etc. Any provision of this Agreement may be modified, supplemented or waived only by an instrument in writing duly executed by the Company and the Administrative Agent (with the consent of the Lenders as specified in Section 11.04 of the Credit Agreement). Any such modification, supplement or waiver shall be for such period and subject to such conditions as shall be specified in the instrument effecting the same and shall be binding upon the Administrative Agent and each Lender, each holder of any of the Secured Obligations and the Company, and any such waiver shall be effective only in the specific instance and for the purposes for which given. 7.06 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, the Administrative Agent, the Lenders and each holder of any of the Secured Obligations and their respective successors and permitted assigns. The Company shall not assign or transfer its rights under this Agreement without the prior written consent of the Administrative Agent (with the further consent of the Lenders as specified in Section 10.10 of the Credit Agreement). 7.07 Survival. All representations and warranties made in this Agreement or in any certificate or other document delivered pursuant to or in connection with this Agreement shall survive the execution and delivery of this Agreement or such certificate or other document (as the case may be) or any deemed repetition of any such representation or warranty. 7.08 Agreements Superseded. This Agreement supersedes all prior agreements and understandings (including the Disclosure Statement and any and all commitment letters and term sheets), written or oral, between or among the parties with respect to the subject matter of this Agreement. 7.09 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.10 Captions. The table of contents and captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 7.11 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties to this Agreement may execute this Agreement by signing any such counterpart. 7.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, COUNTY OF NEW YORK, NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 7.13 WAIVER OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. KASH N' KARRY FOOD STORES, INC. By:________________________________ Title: THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent By:________________________________ Title: ANNEX 1 LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND APPLICATIONS FOR COPYRIGHT REGISTRATIONS KASH N' KARRY FOOD STORES, INC. Title Date Filed Registration No. Effective Date -None- ANNEX 2 LIST OF PATENTS AND PATENT APPLICATIONS KASH N' KARRY FOOD STORES, INC. File Patent Country Registration No. Date -None- ANNEX 3 LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS, TRADEMARK AND SERVICE MARK REGISTRATIONS AND APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS U.S. Trademarks KASH N' KARRY FOOD STORES, INC. I. Federal Registrations No. Reg. No. Serial No.Reg. Date Mark 1. 1,830,625 74-352,02101/25/93 Pro's Choice 2. 1,804,488 74-281,86511/16/93 Nature Friendly and design 3. 1,534,618 73-721,53404/11/89 Round Up 4. 1,533,699 73-639,90204/04/89 Florida Choice 5. 1,500,764 73-672,96608/16/88 EZ Checkout and design 6. 1,351,939 73-515,16307/30/85 Five Star Meats and design 7. 1,297,925 73-447,90009/25/84 Hi-Class 8. 1,279,112 73-407,48705/22/84 Harvest Day block letters 9. 1,214,443 73-321,44510/26/82 Key Buy 10. 1,169,786 73-157,48509/22/81 Lady Lee 11. 1,000,911 73-004,69201/07/75 Medi-Guard and design 12. 965,934 72-428,45608/14/73 Medi-Guard and design 13. 875,507 72-298,94508/26/69 Medi-Guard and design 14. 839,887 72-255,52212/05/67 Medi-Guard and design II. Federal Registrations - pending status No. Reg. No. Serial No.Reg. Date Mark 15. 74-457,11511/12/93 Fresh American Royal Ban anddesign 16. 74-281,86406/05/92 Nature Friendly (Published for Opp Request for Extension File Opposition) ANNEX 3 LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS, TRADEMARK AND SERVICE MARK REGISTRATIONS AND APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS U.S. Trademarks KASH N' KARRY FOOD STORES, INC. III. Florida Registrations No. Reg. No. Reg. Date Mark 17. T9400000010001/20/94Florida Preferred and design 18. T16172 07/22/92 Kash $aver 19. T15518 02/10/92 Kash $aver 20. T15161 10/29/91 Kash $aver 21. T14932 08/28/91 $ave and Pack and design 22. T14214 03/08/91 Pro's Choice and design 23. T14071 01/28/91 $mart Buy and design 24. T13496 09/19/90 Nature Friendly and design 25. T13370 08/27/90 Kash n' Karry Food Stores and design 26. T13369 08/27/90 So Much More to Pay Less for! 27. T13368 08/27/91 Kash n' Karry and design 28. T12501 02/21/90 The Pharmacy With TLC (Touch Link Computers) 29. T09931 11/29/88 Kash n' Karry Hollywood at Home 30. T02593 12/31/84 Five Star Meats and design 31. T08543 10/20/83 Kash N Karry (for carts) 32. 925816 12/31/81 Kash n' Karry Discount Centers 33. 925815 12/31/81 Kash n' Karry Discount Supermarkets 34. 923973 02/19/81 We Make Savings Simple 35. 922717 07/24/80 Tell a Friend 36. 922401 05/19/80 Kash n' Karry K 37. 922400 05/19/80 Kash n' Karry k 38. 922399 05/19/80 K Kash n' Karry 39. 922398 05/19/80 K Kash n' Karry ANNEX 3 LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS, TRADEMARK AND SERVICE MARK REGISTRATIONS AND APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS U.S. Trademarks KASH N' KARRY FOOD STORES, INC. IV. Registered Fictitious Names No. Reg. No. File Date Name 40. G92323900024 11/18/92 Save 'n Pack V. Unregistered Trade Marks The Bakery The Corner Deli Farm Fresh Produce Fresh n' Easy Salads Kash n' Karry Kash n' Karry Food Centers K Kash n' Karry Food Centers and design Silken Care Smart Lane So Much More to Pay Less For Captain's Choice and design Smart Buy Foreign Trademarks KASH N' KARRY FOOD STORES, INC. Application (A) Registration or Mark Registration (R) Country Filing Date (F) -None- ANNEX 4 LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS KASH N' KARRY FOOD STORES, INC. -None- ANNEX 5 LIST OF LOCATIONS KASH N' KARRY FOOD STORES, INC. NOTES OPEN-1 STORE# ADDRESS CITY COUNTY 2 LIQUOR 584 2002 SW 34th St. (Liquor)GainesvilleAlachua 1 1 720 N.W. 13th Street & 23rd Blvd.GainesvilleAlachua 3 1 876 4120 NW 16th Blvd. GainesvilleAlachua 2 1 884 2002 SW 36th St. GainesvilleAlachua 2 1 207 4200 S. Tamiami TrailPt. CharlotteCharlotte 1 1 709 Forrest Nelson Blvd & U.S. 41Pt. CharlotteCharlotte 1 1 702 1651 SE Hwy. 19 Crystal RiverCitrus 4 LAND 726 Beverly Hills Beverly HillsCitrus 2 1 851 W. Main Street & MontgomeryInvernessCitrus 2 1 871 4500 S. Suncoast Blvd (US 19)HomosassaCitrus 2 1 880 1133 U.S. Hwy. 17 S.Wauchula Hardee 2 1 716 Spring Hill Dr. & Mariner Bd.Spring HillHernando 2 1 868 Hwy 41 & S.R. 577 BrooksvilleHernando 1 1 886 2384 Commercial Way Spring HillHernando 1 1 891 3250 U.S. 27 S. Sebring Highlands 2 ASSIGNED 106 305 W. Hillsborough Ave.Tampa Hillsborough 2 1 113 Kennedy & Westshore Blvd.TampaHillsborough 2 CLOSED 144 7325 W. Hillsborough Ave.TampaHillsborough 1 1 146 Florida & Ida Tampa Hillsborough 3 1 401 2525 N. Dale Mabry Tampa Hillsborough 2 1 403 11612-B N. Nebraska Tampa Hillsborough 2 LIQUOR 587 Fowler & 30th St. (Liquor)TampaHillsborough 2 LIQUOR 592 West Village Dr. (Liquor)TampaHillsborough 2 1 617 Northdale & Dale MabryTampa Hillsborough 2 1 619 Florida & Fletcher Tampa Hillsborough 2 1 621 Hillsborough & ArmeniaTampa Hillsborough 2 1 623 Gandy Blvd. & ManhattanTampa Hillsborough 2 1 703 David Blvd. &TempleTerr.HwyTempleTerraceHillsborough 2 1 718 Waters Avenue & Hanley Rd.TampaHillsborough 3 1 722 2100 W. Swann Tampa Hillsborough 2 1 723 205 W. Alexander St.Plant CityHillsborough 1 LAND 734 Dale Mabry & LambrightTampa Hillsborough 1 LAND 736 Martin Luther King and NebraskaTampaHillsborough 2 1 743 Busch Blvd & 56th Temple TerraceHillsborough 2 1 824 50th St. & 10th Ave Tampa Hillsborough 2 1 826 507 Wheeler St. Plant CityHillsborough 2 1 827 Florida Ave. & WatersTampa Hillsborough 2 1 848 1023 N. Tamiami TrailRuskin Hillsborough 2 1 855 U.S. 301 & Hannaway Dr.RiverviewHillsborough 2 1 858 Armenia & Tampa Bay Tampa Hillsborough 2 ASSIGNED 866 Dale Mabry & EhrlichTampa Hillsborough 2 1 869 Lithia Rd & Lumsden Dr.BrandonHillsborough 2 1 870 Hillsborough & MemorialTampa Hillsborough ANNEX 5 LIST OF LOCATIONS KASH N' KARRY FOOD STORES, INC. NOTES OPEN-1 STOREADDRESS CITY COUNTY # 3 1 877 Parsons Ave. & BuffaloSeffner Hillsborough 1 1 878 Gunn Hwy. & Casey Rd.Tampa Hillsborough 1 1 887 Fowler & 30th St. Tampa Hillsborough 2 1 892 West Village Dr. & EhrlichTampaHillsborough 2 SUBLEASE 206 1801 N. Tamiami TrailFt. MyersLee 2 1 209 8951 Bonita Bch. Rd.Bonita SpringsLee 2 CLOSED 217 6257 McGregor Blvd. Ft. Myers Lee 2 1 309 College Pkwy. & WinderFt. MyersLee 2 1 311 McGregor Blvd. Ft. Myers Lee 2 1 313 Bayshore Rd. & Post N. Ft. MyersLee 2 1 315 1530 Del Prado Blvd.Cape CoralLee 2 1 629 U.S. 41 & Hancock Pkwy.Cape CoralLee 2 1 882 4820 Leonard St. Cape CoralLee 1 LAND 882 Cape Coral Cape CoralLee 2 1 211 Manatee Ave. & 58th St.BradentonManatee 2 1 627 Cortez & 22nd St. Bradenton Manatee 2 1 715 5201 33rd Street Bradenton Manatee 2 1 854 7th Street & 5th Ave.Palmetto Manatee 2 1 867 U.S. 41 & 58th Ave. Bradenton Manatee 2 CLOSED 130 2957 NW Pine Avenue Ocala Marion 2 1 301 SR 200 & NW 27th Ave.Ocala Marion 2 CLOSED 601 NE 38th Ave. & Hwy 40Ocala Marion 2 1 651 2720 E. Silver Springs Blvd.OcalaMarion 1 1 725 U.S. 441 & C.R. 326 Ocala Marion 2 1 894 833 U.S. 41 N. Dunnellon Marion 1 1 896 11310 S.E. U.S. 301 Belleview Marion 2 CLOSED 898 3233 S.E. Maricamp Rd.Ocala Marion 2 1 701 3183 W. Vine Street Kissimmee Osceola 2 CLOSED 128 U.S. 301 & 1st St. ZephyrhillsPasco 2 CLOSED 134 2607 U.S. 19 Holiday Pasco 2 CLOSED 141 U.S. 92 Bypass Dade City Pasco 2 1 204 U.S. 19 N. & Moog Rd.New Port RicheyPasco 2 SUBLEASE 205 U.S. 19 & Embassy Blvd.Port RicheyPasco 2 1 603 Fivey & Hwy. 52 Hudson Pasco 2 1 605 Seven Springs & Hwy. 54Seven SpringsPasco 2 1 704 C.R. 584 & 586 Land O'LakesPasco 1 1 717 Congress & MassachusettsNew Port RicheyPasco 2 1 728 U.S. 301 North ZephyrhillsPasco 2 1 874 S.R. 585 & Trouble CreekNew Port RicheyPasco 2 1 885 Little Rd. & EmbassyNew Port RicheyPasco 2 1 897 U.S. 301 S. & Morningside Dr.Dade CityPasco 2 1 133 Blind Pass Rd. & 76thSt. Pete BeachPinellas ANNEX 5 LIST OF LOCATIONS KASH N' KARRY FOOD STORES, INC. NOTES OPEN-1 STORE ADDRESS CITY COUNTY 2 CLOSED 140 10884 74th Ave. N. Seminole Pinellas 2 CLOSED 201 Gandy Blvd. & 9th St. N.St. PetersburgPinellas 2 SUBLEASE 202 Park Blvd. & Starkey Rd.Largo Pinellas 2 SUBLEASE 203 34th St. & 30th Ave. St. PetersburgPinellas 2 ASSIGNED 405 3533 U.S. Hwy 19 Palm HarborPinellas 2 SUBLEASE 607 2465 U.S. 19 ClearwaterPinellas 2 1 609 Ulmerton & Ridge Rd.Largo Pinellas 2 1 611 66th St. & 46th Ave. N.Kenneth CityPinellas 2 1 613 34th St. & 22nd Ave. N.St. PetersburgPinellas 2 1 615 Gulfport & Pasadena Gulfport Pinellas 2 1 705 3110 S.R. 584 West Oldsmar Pinellas 2 1 707 C. R. 1 & 584 Palm HarborPinellas 2 1 710 Indian Rocks & WalsinghamLargoPinellas 1 1 765 3327 9th Street NorthSt. PetersburgPinellas 2 1 831 9th Ave. & 60th St. N.St. PetersburgPinellas 2 1 849 U.S. 19 N. & Drew ClearwaterPinellas 2 1 852 4th St. & 74th Ave. N.St. PetersburgPinellas 2 CLOSED 853 34th St. & 39th Ave. S.St. PetersburgPinellas 2 1 857 9th St. & 62nd Ave. S.St. PetersburgPinellas 2 1 864 Main Street & King ArthurDunedinPinellas 2 1 873 McMullen Booth & C.R. 102ClearwaterPinellas 3 1 875 U.S. 19 & Alderman Rd.Palm HarborPinellas 1 1 879 Ulmerton & 66th St. Largo Pinellas 2 1 881 Keene & East Bay Largo Pinellas 2 1 883 Highland & Sunset PointClearwaterPinellas 2 CLOSED 888 1068 Ulmerton Rd. Largo Pinellas 2 1 129 Bartow Rd. & New JerseyLakelandPolk 1 1 733 Havendale Blvd AuburndalePolk 2 1 842 3rd St. & Ave. O. S.W.Winter HavenPolk 2 1 889 S.R. 60 & S.R. 17A Lake WalesPolk 2 1 893 Florida & Highland Lakeland Polk 2 1 895 1176 U.S. 27 N. Haines CityPolk 2 1 899 Hwy. 98 & Daughtery Rd.LakelandPolk 2 1 139 U.S. 41 & Albee Farm Rd.VeniceSarasota 2 SUBLEASE 212 8199 S. Tamiami TrailSarasota Sarasota 2 1 214 Fruitville & Beneva Rd.SarasotaSarasota 2 1 215 Tamiami Trail & Prospect St.SarasotaSarasota 2 1 216 Bee Ridge & McintoshSarasota Sarasota 2 CLOSED 305 Hwy. 41 & Alligator Dr.Venice Sarasota 2 CLOSED 319 15 Beneva Rd. Sarasota Sarasota 2 1 712 1254 Jacaranda Blvd.Venice Sarasota 2 1 719 University & Lockwood RidgeSarasotaSarasota 3 1 880 Cattlemen & Bee Ridge Rd.SarasotaSarasota 2 1 711 858 Saxon Orange CityVolusia NOTES: 1 Fee Properties 2 Leased Properties 3 Ground Leased/Improvements Owned 4 Balloon Payment due 1/14/95 ANNEX 6 ASSIGNMENT FOR SECURITY (PATENTS) WHEREAS, Kash n' Karry Food Stores, Inc., a Delaware corporation (herein referred to as "Assignor"), owns the letters patent, and/or applications for letters patent, of the United States, more particularly described on Schedule 1 annexed hereto as part hereof (the "Patents"); WHEREAS, Assignor has executed and delivered to The CIT Group/Business Credit, Inc., a New York corporation, as administrative agent (herein referred to as "Assignee") for the ratable benefit of Assignee and the lenders (the "Lenders") under the Credit Agreement dated as of December 29, 1994 (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), a Security Agreement of even date herewith (the "Agreement", terms defined therein and not otherwise defined herein being used herein as therein defined) in favor of Assignee; and WHEREAS, pursuant to the Agreement, Assignor has assigned to Assignee, and granted to Assignee a security interest in, and mortgage on, all right, title and interest of Assignor in and to the Patents, together with any reissue, continuation, continuation- in-part or extension thereof, and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof for the full term of the Patents (the "Intellectual Property Collateral"), to secure the prompt payment, performance and observance of the Secured Obligations; NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Assignor does hereby further assign unto Assignee and grant to Assignee a security interest in, and mortgage on, the Intellectual Property Collateral to secure the prompt payment, performance and observance of the Secured Obligations. Assignor does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment of, security interest in and mortgage on the Intellectual Property Collateral made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein. Assignee's address is 300 South Grand Avenue, 3rd Floor, Los Angeles, California 90071. IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of the th day of December, 1994. KASH N' KARRY FOOD STORES, INC. By: _______________________________ Name: _________________________ Title: ________________________ SCHEDULE 1 TO ASSIGNMENT FOR SECURITY PATENTS Title Date Issued Patent No. -None- ANNEX 7 ASSIGNMENT FOR SECURITY (TRADEMARKS) WHEREAS, Kash n' Karry Food Stores, Inc., a Delaware corporation (herein referred to as "Assignor"), has adopted, used and is using the trademarks listed on the annexed Schedule 1, which trademarks are registered in the United States Patent and Trademark Office (the "Trademarks"); WHEREAS, Assignor has executed and delivered to The CIT Group/Business Credit, Inc., a New York corporation, as agent (herein referred to as "Assignee") for the ratable benefit of Assignee and the lenders (the "Lenders") under the Credit Agreement dated as of December 29, 1994 (as amended, supplemented, restated or otherwise modified from time to time, the "Credit Agreement"), a Security Agreement of even date herewith (the "Agreement", terms defined therein and not otherwise defined herein being used herein as therein defined) in favor of Assignee; and WHEREAS, pursuant to the Agreement, Assignor has assigned to Assignee and granted to Assignee a security interest in, and mortgage on, all right, title and interest of Assignor in and to the Trademarks, together with the goodwill of the business symbolized by the Trademarks and the applications and registrations thereof, and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof (the "Intellectual Property Collateral"), to secure the payment, performance and observance of the Secured Obligations; NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Assignor does hereby further assign unto Assignee and grant to Assignee a security interest in, and mortgage on, the Intellectual Property Collateral to secure the prompt payment, performance and observance of the Secured Obligations. Assignor does hereby further acknowledge and affirm that the rights and remedies of Assignee with respect to the assignment of, security interest in and mortgage on the Intellectual Property Collateral made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein. Assignee's address is 300 South Grand Avenue, 3rd Floor, Los Angeles, California 90071. IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of the day of December, 1994. KASH N' KARRY FOOD STORES, INC. By: _______________________________ Name: _________________________ Title: ________________________ SCHEDULE 1 TO ASSIGNMENT FOR SECURITY TRADEMARKS I. Federal Registrations Reg. No. Serial No.Reg. Date Mark 1,830,625 74-352,02101/25/93 Pro's Choice 1,804,488 74-281,86511/16/93 Nature Friendly and design 1,534,618 73-721,53404/11/89 Round Up 1,533,699 73-639,90204/04/89 Florida Choice 1,500,764 73-672,96608/16/88 EZ Checkout and design 1,351,939 73-515,16307/30/85 Five Star Meats and design 1,297,925 73-447,90009/25/84 Hi-Class 1,279,112 73-407,48705/22/84 Harvest Day block letters 1,214,443 73-321,44510/26/82 Key Buy 1,169,786 73-157,48509/22/81 Lady Lee 1,000,911 73-004,69201/07/75 Medi-Guard and design 965,934 72-428,45608/14/73 Medi-Guard and design 875,507 72-298,94508/26/69 Medi-Guard and design 839,887 72-255,52212/05/67 Medi-Guard and design II. Federal Registrations - pending status Reg. No. Serial No.Reg. Date Mark 74-457,11511/12/93 Fresh American Royal Ban and design 74-281,86406/05/92 Nature Friendly (Published for Opp Request for Extension File Opposition) ANNEX 8 FORM OF BLOCKED ACCOUNT AGREEMENT BLOCKED ACCOUNT AGREEMENT Dated as of December 28, 1994 among KASH N' KARRY FOOD STORES, INC., BARNETT BANK OF TAMPA, and THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent BLOCKED ACCOUNT AGREEMENT This BLOCKED ACCOUNT AGREEMENT (this "Agreement") dated as of December 28, 1994 is made among KASH N' KARRY FOOD STORES, INC. (the "Company"), BARNETT BANK OF TAMPA (the "Bank"), and THE CIT GROUP/BUSINESS CREDIT, INC., as the administrative agent (in such capacity, the "Administrative Agent") for the Lenders referred to below. The Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among KASH N' KARRY FOOD STORES, INC., the lenders identified in the Credit Agreement (the "Lenders"), the Administrative Agent and Bank of America National Trust and Savings Association, as Co-Agent (the "Co-Agent"), provides, subject to its terms and conditions, for certain extensions of credit to the Company. It is a condition to the obligations of the Administrative Agent, the Co-Agent and the Lenders under the Credit Agreement that the Company shall have executed and delivered this Agreement. Accordingly, the parties hereto agree as follows: 1. The parties acknowledge that the Company and the Administrative Agent for the benefit of the Lenders have entered into a Security Agreement dated as of the date hereof (the "Security Agreement") under which the Administrative Agent for the benefit of the Lenders and the Administrative Agent has been granted a security interest in, among other things, all of the Company's right, title and interest in Account Number 1407708881 of the Company with the Bank (the "Blocked Account") and all monies on deposit in the Blocked Account from time to time. 2. The Company and the Bank agree that (a) the Company shall not be entitled to withdraw monies from the Blocked Account and (b) all monies from time to time on deposit in the Blocked Account shall be paid on each day on which the Bank is open for business to the Administrative Agent as set forth in Section 3 below, subject to court resolution of any third party claims and/or legal rights of the Company in the event of the filing of a petition in bankruptcy, whether voluntary or involuntary. The Company agrees not to permit the Blocked Account to become subject to any other pledge, assignment, lien, charge or encumbrance of any kind, nature or description. The Bank agrees that the maintaining by the Bank of the Blocked Account and the Bank's holding any checks, drafts, notes, acceptances, cash and other evidences of indebtedness ("Remittances") included therein shall be solely on behalf of the Administrative Agent for the benefit of the Lenders and the Administrative Agent. 3. The Bank shall transfer the sum of the previous day's collected balance in the Blocked Account by Federal Funds Wire as follows: Chemical Bank 270 Park Avenue New York, New York 10017 ABA No: 021000128 for the account of The CIT Group/Business Credit, Inc., as Administrative Agent Account No. 323094929 Refer to: Kash n' Karry Food Stores, Inc. 4. The Bank may charge the Company's Operating Account Number 1407288441 with the Bank (the "Operating Account") for all service charges, returned items and any other charges to which it may be entitled for maintaining the Blocked Account. In the event there are insufficient funds in the Operating Account for such purpose, the Bank may then charge the Blocked Account for such service charges and returned items. 5. The Bank will provide a copy of the Company's monthly bank statements relating to the Blocked Account and the Operating Account at the time such statements are provided to the Company (and, upon the written request of the Administrative Agent, statements relating to other accounts of the Company with the Bank) to the Administrative Agent addressed as follows: The CIT Group/Business Credit, Inc. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attention: Regional Credit Manager 6. As collateral security for the payment of all of the Secured Obligations (as defined in the Security Agreement), howsoever evidenced or acquired, whether now existing or hereafter arising, whether direct or indirect, absolute or contingent, the Company confirms that it has assigned, pledged and transferred, and does hereby assign, pledge and transfer, to the Administrative Agent for the benefit of the holders of the Secured Obligations all of the Company's rights, title and interest in and to the Blocked Account, including all sums now or hereafter deposited in or payable to or withdrawable from said Blocked Account and any interest accrued or payable thereon and in and to the Remittances. The Administrative Agent shall have the full and irrevocable right, power and authority, to demand, collect, withdraw, receipt for or sue for all amounts due or to become due and payable pursuant to the Blocked Account and the Remittances and at the Administrative Agent's discretion take any other action, including the transfer of the Blocked Account to the Administrative Agent's own name, which the Administrative Agent deems necessary or appropriate to preserve or protect the Administrative Agent's security interests in the Blocked Account and the Remittances. 7. The Bank shall be fully protected in acting on any order or direction by the Administrative Agent respecting the Blocked Account and disposition of Remittances without making any inquiry whatsoever as to the Administrative Agent's right or authority to give such order or direction or as to the application or any payment made pursuant thereto. 8. Except as set forth in Section 4 above, the Bank agrees that it shall not effect any right of offset (statutory or otherwise) that it may otherwise have, or make any deduction or claim, against the Blocked Account or the Remittances unless and until the Administrative Agent shall have notified the Bank in writing that all of the Secured Obligations have been paid in full, and all such rights of offset and deduction are hereby waived by the Bank until such time. 9. Nothing herein constitutes a waiver of, and the Bank reserves all of, its present and future rights with respect to checks and other items deposited to the Blocked Account and returned for insufficient funds or for any other reason. 10. The Bank will not close the Blocked Account without giving the Administrative Agent and the Company at least ten (10) days' prior written notice thereof. 11. No amendments or modifications made to this Agreement shall be effective without the written consent of the Bank, the Company and the Administrative Agent. 12. The Company will indemnify the Bank and hold the Bank harmless from and against all losses, liability, damages, costs and expenses, including reasonable attorneys' fees at trial and on appeal, arising from or in connection with the Bank's liability to collect any endorsed Remittances. The Company further agrees that the Bank shall not be liable for any action or inaction taken by the Bank or the Bank's employees in accordance with the provisions of this Agreement, nor for the loss of any instruments, documents or other property of any nature whatsoever received by the Bank in connection with this Agreement, other than cash and Remittances lost through the gross negligence or willful misconduct of the Bank or its employees. 13. Except as expressly provided in this Agreement, the Bank makes no representations or warranties arising by law or otherwise, including but not limited to, implied warranties of merchantability or fitness of a particular purpose, relating to the performance of any lockbox process system. The Bank makes no warranty concerning the accuracy of any report or other form furnished to the Company or on the Company's behalf. 14. Except for damages resulting from, related to or caused by the Bank's gross negligence, willful misconduct or fraud, the Bank shall not be liable for any loss, destruction, mutilation, damage or theft of any documents or items and the Bank shall not be liable to the Company for failure to follow any of the operating procedures or failure to perform any service within the time period stated, if failure to perform is due to the occurrence of any of the following events: any act or failure to act by the Company; mechanical failures of the Bank's equipment or power failures; strikes or lockout; fire or other casualty; riot or civil commotion, wind storms, earthquakes; floods or other acts of God; delay in transportation; government regulations or interferences; or any other event beyond the control of the Bank. 15. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York. 16. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. KASH N' KARRY FOOD STORES, INC. By:________________________________ Title: BARNETT BANK OF TAMPA, BY BARNETT BANKS, INC., as Attorney-in Fact for Barnett Bank of Tampa By:________________________________ Title: THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent By:________________________________ Title: ANNEX 9 AGREEMENT REGARDING ADDITIONAL SECURED OBLIGATIONS This Agreement Regarding Additional Secured Obligations (this "Agreement"), dated as of December 29, 1994, is made by and between (A) The CIT Group/Business Credit, Inc. ("CITBC"), in its capacities (i) as the Administrative Agent under that certain Credit Agreement, dated as of December 29, 1994 (the "Credit Agreement"), among Kash n' Karry Food Stores, Inc. (the "Company"), CITBC, Bank of America National Trust and Savings Association ("B of A"), and various lenders (the "Lenders") named therein , (ii) as the Administrative Agent under that certain Security Agreement, dated as of December 28, 1994 (the "Security Agreement"), between the Company and CITBC and (iii) as the Administrative Agent under that certain Mortgage, Assignment of Rents and Fixture Filing, dated as of December 29, 1994 (the "Mortgage"), executed by the Company for the benefit of CITBC as Administrative Agent (in such capacities, the "Administrative Agent"), and (B) B of A, in its capacity as a party to that certain Interest Rate Swap Agreement, dated as of January 27, 1989 (as amended as of March 8, 1989, November 3, 1994 and December 29, 1994) between B of A and the Company (the "Swap Agreement") (in such capacity, the "Swap Counterparty"). Capitalized terms not specifically defined herein shall have the meaning ascribed to them in the Credit Agreement. Recitals Whereas, the Company has granted a security interest in all of its personal property pursuant to the Security Agreement to secure the Company's obligations under the Credit Agreement and the Basic Documents, and Whereas, the Company has granted a lien on certain real property pursuant to the Mortgage to secure the Company's obligations under the Basic Documents, and Whereas, the Company has agreed in the Security Agreement and in the Mortgage that its obligations to the Swap Counterparty under the Swap Agreement (the "Swap Obligations") will be secured under the Security Agreement and the Mortgage if the Swap Counterparty enters into this Agreement with the Administrative Agent, and Whereas, the Swap Counterparty desires to enter into this Agreement in order to satisfy the condition to the granting of security with respect to the Swap Obligations, and Whereas, the Administrative Agent is willing to enter into this Agreement, Agreement Now, therefore, the Administrative Agent and the Swap Counterparty agree: 1. Secured Obligations. The obligations of the Company to the Administrative Agent, to B of A as co-agent and to the Lenders under the Basic Documents (collectively, the "Basic Obligations") are secured pursuant to the Security Agreement and the Mortgage. Upon execution of this Agreement by the Swap Counterparty and the Administrative Agent, the Swap Obligations will also be secured pursuant to the Security Agreement and the Mortgage. 2. Sharing. The Basic Obligations and the Swap Obligations shall be secured equally and ratably in accordance with the amounts then due and owing with respect to each as of each date on which any application of the proceeds of collateral is made; provided, however, that, solely for the purpose of such application, the amount due and owing with respect to the Swap Obligations shall be deemed to be zero unless and until any transaction under the Swap Agreement is terminated; and provided, further, that the rights of the Swap Counterparty are expressly made subject to all the provisions of the Security Agreement, including Sections 3.04 and 6.01. 3. Appointment of Administrative Agent. The Swap Counterparty hereby irrevocably appoints and authorizes the Administrative Agent to act as secured party and, in such capacity, as agent for the Swap Counterparty under and in connection with the Security Agreement and the Mortgage; provided, however, that the Administrative Agent shall have no greater duty to B of A in its capacity as the Swap Counterparty than it has to B of A in its capacity as co-agent or as one of the Lenders under the Basic Documents. 4. No Rights or Remedies. Notwithstanding any other provision of this Agreement, the Swap Counterparty shall have no right to (i) effect any modification, amendment, waiver or extension of, to or under the Basic Documents (and no such modification, amendment, waiver or extension shall affect the enforceability of this Agreement or constitute a modification, amendment, waiver or extension of, to or under this Agreement), (ii) take any action with respect to the collateral encumbered pursuant to the Security Agreement or the Mortgage (other than the right to apply proceeds of such collateral when and if distributed by the Administrative Agent), (iii) direct or participate in any decision concerning action or the refraining from action by the Administrative Agent with respect to such collateral or with respect to any of the Basic Obligations, (iv) take any action in any legal proceeding (including any bankruptcy case concerning the Company) that interferes with or impairs the rights or remedies of the Administrative Agent, B of A as co-agent or the Lenders under the Basic Documents, or (v) share in any payments or recoveries on account of the Basic Obligations (except pursuant to Section 6.04 of the Security Agreement or as a result of an enforcement of the Mortgage); provided, however, that nothing herein shall prohibit the Swap Counterparty from terminating the Swap Agreement or exercising its rights and remedies under the Swap Agreement; and provided, however, that nothing herein shall impair the rights of B of A as co-agent or as one of the Lenders under the Basic Documents. 5. Indemnification. The Swap Counterparty shall indemnify and hold harmless the Administrative Agent and the Lenders and their respective affiliates, officers, directors, employees, attorneys, accountants, consultants and agents (collectively, the "Indemnified Parties") from any and all losses, liabilities, damages or expenses that any of the Indemnified Parties may suffer or incur (i) as a consequence of the Swap Counterparty's sharing in the collateral under the Security Agreement and the Mortgage and that the Indemnified Parties would not have suffered or incurred had the Swap Counterparty not been permitted to share in the collateral under the Security Agreement and the Mortgage or (ii) as a consequence of any action the Swap Counterparty may take to enforce its rights or remedies under the Swap Agreement (collectively, the "Indemnified Claims"). The Indemnified Claims shall include expenses of any actual or threatened investigation, litigation or other proceedings, including reasonable fees and expenses of attorneys, accountants or other consultants employed in connection with any such investigation, litigation or proceeding. Nothing herein shall affect the obligations of B of A as a party to the Basic Documents. 6. Miscellaneous. 6.01 Interpretation. In this Agreement, unless otherwise indicated, the singular includes the plural and plural the singular; references to statutes or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending or replacing the statute or regulation referred to; references to "writing" include printing, typing, lithography and other means of reproducing words in a tangible visible form; the words "including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to sections (or subdivisions of sections) are to this Agreement; references and agreements and other contractual instruments shall be deemed to include all subsequent amendments, extensions and other modifications to such instruments (without, however, limiting any prohibition on any such amendments, extensions and other modifications by the terms of this Agreement); and references to Persons include their respective permitted successors and assigns and, in the case of Governmental Persons, Persons succeeding to their respective functions and capacities. 6.02 Waiver. No failure on the part of the Administrative Agent or the Swap Counterparty to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Agreement shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 6.03 Notices. All notices and communications to be given under this Agreement shall be given or made in writing to the intended recipient at the address specified below or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telex or telecopier, or personally delivered or, in the case of a mailed notice, upon receipt, in each case, given or addressed as provided in this Section 6.03: To the Administrative Agent: The CIT Group/Business Credit, Inc. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attention: Regional Credit Manager To the Swap Counterparty: Bank of America National Trust and Savings Association Unit #3078 335 Madison Avenue New York, New York 10017 Notwithstanding the foregoing, if a notice is transmitted by telex, telecopier or personal delivery or, in the case of a mailed notice, is received on a day that is not a Business Day, then such notice shall be deemed to have been duly given on the first Business Day after such transmission or, in the case of a mailed notice, receipt. 6.04 Amendments, Etc. Any provision of this Agreement may be modified, supplemented or waived only by an instrument in writing duly executed by the Swap Counterparty and the Administrative Agent. Any such modification, supplement or waiver shall be for such period and subject to such conditions as shall be specified in the instrument effecting the same, and any such waiver shall be effective only in the specific instance and for the purposes for which given. 6.05 Successors and Assigns; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the Swap Counterparty, the Administrative Agent and their respective successors and permitted assigns. This Agreement is not intended and shall not inure to the benefit of any other Persons. 6.06 Agreements Superseded. This Agreement supersedes all prior agreements and understandings, written or oral, between or among the parties with respect to the subject matter of this Agreement. 6.07 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.08 Captions. The table of contents and captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 6.09 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties to this Agreement may execute this Agreement by signing any such counterpart. 6.10 Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written. THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent By:________________________________ Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Swap Counterparty By:________________________________ Title: Acknowledged: KASH N' KARRY FOOD STORES, INC. By:_____________________________ Title: Date:__________________________ EXHIBIT D [Form of Mortgage] This document was prepared by and after recording should be returned to: Sherry A. Stanley Coll Davidson Carter Smith Salter & Barkett, P.A. 201 South Biscayne Blvd. Suite 3200 Miami, Florida 33131 THIS MORTGAGE IS MADE PURSUANT TO A PLAN OF REORGANIZATION CONFIRMED BY THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE. AS A RESULT, PURSUANT TO 11 U.S.C. 1146(c), NO DOCUMENTARY STAMP TAXES, INTANGIBLE TAXES OR SIMILAR TAXES ARE DUE AND OWING ON THIS INSTRUMENT. MORTGAGE, ASSIGNMENT OF RENTS AND FIXTURE FILING THIS MORTGAGE (this "Mortgage") dated as of the day of , 1994, made by KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Mortgagor"), having its chief executive office at 6422 Harney Road, Tampa, Florida 33610 in favor of THE CIT GROUP/BUSINESS CREDIT, INC., with an office at 300 South Grand Avenue, Third Floor, Los Angeles, California 90071, in its capacity as Administrative Agent for itself and each of the other "Lenders" as such term is defined in the Credit Agreement, as hereinafter defined, and in its capacity as Administrative Agent for Bank of America National Trust and Savings Association under that certain Swap Security Agreement, as hereinafter defined (the "Mortgagee"). W I T N E S S E T H: WHEREAS, the Mortgagor and the Lenders have entered, or will enter, into a certain Credit Agreement of even date herewith (together with any amendments thereof, the "Credit Agreement"), pursuant to which the Mortgagor has executed or will execute (a) those certain Term Loan Notes (together with any amendments, substitutions or replacements thereof, the "Term Notes"), in the aggregate principal amount not to exceed Thirty Five Million Dollars ($35,000,000), each of which is or shall be payable to the order of a Lender in the amount of such Lender's Term Loans (as defined in the Credit Agreement), and (b) those certain Revolving Credit Notes (together with any amendments, substitutions or replacements thereof, the "Revolving Credit Notes") in the aggregate principal amount not to exceed Fifty Million Dollars ($50,000,000), each of which is or shall be payable to the order of a Lender in the amount of such Lender's respective Revolving Credit Loans (as defined in the Credit Agreement); and WHEREAS, the Term Notes and Revolving Credit Notes shall bear interest at the rates specified in the Credit Agreement and the principal and interest under the Term Notes and Revolving Credit Notes shall be due and payable as provided in the Credit Agreement; and WHEREAS, the Revolving Credit Notes evidence revolving credit loans under which the Mortgagor is entitled to borrow, repay and reborrow principal sums from time to time in accordance with the terms of the Credit Agreement; and WHEREAS, Security Pacific National Bank, as predecessor to Bank of America National Trust and Savings Association ("B of A"), and the Mortgagor have executed that certain Interest Rate Swap Agreement dated January 27, 1989, as amended by amendments dated March 8, 1989 and November 3, 1994 (as so amended, and as the same may be amended from time to time hereafter with the prior written consent of Mortgagee, the "Swap Agreement"), creating certain obligations and liabilities of the Mortgagor to B of A (B of A, in its capacity as a party to the Swap Agreement, is hereinafter called the "Swap Counterparty"); and WHEREAS, pursuant to that certain Agreement Regarding Additional Secured Obligations of even date herewith between Mortgagee and B of A, as acknowledged by Mortgagor (together with any amendments thereof, the "Swap Security Agreement"), The CIT Group/Business Credit, Inc. was appointed as administrative agent for the Swap Counterparty in connection with this Mortgage; and WHEREAS, as a condition to the Lenders' extension of certain financial accommodations to the Mortgagor (including, without limitation, the extensions of credit evidenced by the Term Notes and the Revolving Credit Notes under and pursuant to the Credit Agreement), the Lenders have required that the Mortgagor execute and deliver this Mortgage and grant to the Mortgagee (for the ratable benefit of the Lenders and the Swap Counterparty) the liens and security interests referred to herein to secure (i) payment of the principal amount evidenced by the Term Notes together with interest thereon, (ii) payment of the principal amount evidenced by the Revolving Credit Notes, including readvances of principal thereunder, together with interest on such Revolving Credit Notes, (iii) all of the Obligations (as defined in the Credit Agreement) of the Mortgagor, (iv) the obligations of the Mortgagor to the Swap Counterparty under the Swap Agreement; (v) all other amounts and payment and performance obligations under the Credit Agreement, the documents executed in connection therewith, and this Mortgage (including without limitation, all Claims payable under Section 4 hereof), and (vi) all additional sums advanced to Mortgagor pursuant to Section 21 of this Mortgage and all payment and performance obligations of the Mortgagor under any additional documents executed in connection with such advances (the aforesaid obligations of the Mortgagor to the Mortgagee, the Lenders and the Swap Counterparty identified in clauses (i) through (vi) above are hereinafter collectively referred to collectively as the "Obligations"). NOW, THEREFORE, in consideration of the premises contained herein and to secure payment of the Obligations and in consideration of One Dollar ($1.00) in hand paid, receipt whereof is hereby acknowledged, the Mortgagor does hereby grant, remise, release, alien, convey, mortgage and warrant to the Mortgagee, its successors and assigns, and hereby grants a security interest to Mortgagee and its successors and assigns in and to the fee simple interest of the Mortgagor in the real estate and the leasehold interests of the Mortgagor in real estate as more particularly set forth on Exhibit "A" attached hereto and by this reference made a part hereof (each lease more particularly described on Exhibit "B" attached hereto and made a part hereof is severally referred to herein as a "Lease" and collectively as the "Leases") together with any interest which the Mortgagor may hereafter acquire in and to any property formerly subject to a Lease and together with any interest which the Mortgagor may hereafter acquire in any property ("Additional Property") intended under the Credit Agreement to be secured by this Mortgage with respect to which the Mortgagor agrees to execute and deliver to Mortgagee a modification of this Mortgage adding such Additional Property as additional Mortgaged Property hereunder (the real estate described in Exhibit "A" under the heading "Real Property Owned by the Mortgagor in Fee Simple" or hereafter acquired by the Mortgagor in fee simple is herein referred to as the "Land" and all of the foregoing property, including the Land, Leases and Additional Property is herein called the "Premises"); TOGETHER WITH all right, title and interest, if any, including any after-acquired right, title and interest, and including any right of use or occupancy, which the Mortgagor may now have or hereafter acquire in and to (a) all easements, rights of way, gores of land or any lands occupied by streets, ways, alleys, passages, sewer rights, water courses, water rights and powers, and public places adjoining said Premises, and any other interests in property constituting appurtenances to the Premises, or which hereafter shall in any way belong, relate or be appurtenant thereto and, (b) all hereditaments, gas, oil, minerals, and easements, of every nature whatsoever, located in or on the Premises and all other rights and privileges thereunto belonging or appertaining and all extensions, additions, improvements, betterments, renewals, substitutions and replacements to, or of any of the rights and interests described in subparagraphs (a) and (b) above (The rights and interests described in this paragraph are hereinafter called the "Property Rights"); TOGETHER WITH all of the Mortgagor's right, title and interest in and to (a) all buildings and improvements now or hereafter located on the real estate described in Exhibit "A"; (b) all fixtures and appurtenances of every nature whatsoever now or hereafter located in, on or attached to, and used or intended to be used in connection with, or with the operation of, the Premises, including but not limited to all apparatus, machinery and equipment of the Mortgagor, and all extensions, additions, improvements, betterments, renewals, substitutions, and replacements to or of any of the foregoing (the "Fixtures"); and (c) all personal property, goods and equipment of every nature whatsoever now or hereafter located in or on the Premises, including but not limited to (i) all screens, window shades, blinds, wainscoting, storm doors and windows, floor coverings and awnings of the Mortgagor; (ii) all apparatus, machinery, equipment, appliances and goods of the Mortgagor not included as Fixtures; (iii) all items of furniture, furnishings and personal property of the Mortgagor; and (iv) all extensions, additions, improvements, betterments, renewals, substitutions, and replacements to or of any of the foregoing (the "Personal Property"). It is mutually agreed, intended and declared, that the Premises and all of the Property Rights and Fixtures owned by the Mortgagor (referred to collectively herein as the "Real Property") shall, so far as permitted by law, be deemed to form a part and parcel of the Land and for the purpose of this Mortgage to be real estate and covered by this Mortgage. It is also agreed that if any of the property herein mortgaged is of a nature so that a security interest therein can be perfected under the Florida Uniform Commercial Code, this instrument shall constitute a security agreement, fixture filing and financing statement, and the Mortgagor agrees to execute, deliver and file or refile any financing statement, continuation statement, or other instruments the Mortgagee may reasonably require from time to time to perfect or renew such security interest under the Florida Uniform Commercial Code. To the extent permitted by law, (i) all of the fixtures are or are to become fixtures on the Premises and (ii) this instrument is to be filed of record in the real estate records of the counties set forth in Exhibit "A" hereto, and shall constitute a "fixture-filing" within the meaning of Sections 679.313 and 679.402 of the Florida Uniform Commercial Code. The remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall be as prescribed herein or by general law, or, as to that part of the security in which a security interest may be perfected under the Florida Uniform Commercial Code, by the specific statutory consequences now or hereafter enacted and specified in the Florida Uniform Commercial Code, all at the Mortgagee's sole election; TOGETHER WITH all the estate, right, title and interest of the Mortgagor, in and to (a) all judgments, insurance proceeds, awards of damages and settlements resulting from condemnation proceedings or the taking of the Real Property, or any part thereof, under the power of eminent domain or for any damage (whether caused by such taking or otherwise) to the Real Property, or any part thereof, or to any rights appurtenant thereto, and all proceeds of any sales or other dispositions of the Real Property or any part thereof, and (except as otherwise provided herein or in the Credit Agreement) the Mortgagee is hereby authorized to collect and receive said awards and proceeds and to give proper receipts and acquittances therefor, and to apply the same as provided in the Credit Agreement; (b) any and all deposits of cash, securities, credits or other property which may be held at any time by any lessor to secure the performance of the covenants, conditions and agreements contained in any Lease; and (c) all contract rights, general intangibles, actions and rights in action, relating to or arising in connection with the Mortgaged Property (as hereinafter defined) including, without limitation, all rights to insurance proceeds and unearned premiums arising from or relating to damage to the Real Property and any rights of the Mortgagor to agree to or acquiesce in any rejection or termination of any Lease; and (d) all proceeds, products, replacements, additions, substitutions, renewals and accessions of and to the Real Property. (The rights and interests described in this paragraph shall hereinafter be called the "Intangibles."); TOGETHER WITH any and all other, further or additional title, estates, interests, privileges, liberties, tenements, hereditaments and appurtenances whatsoever, in any way now or hereafter belonging, relating or appertaining to the Premises, Property Rights, Fixtures, Personal Property, and Intangibles, whether now owned or hereafter acquired by the Mortgagor, and any proceeds and products of the property, interests and rights encumbered by this Mortgage. As additional security for the Obligations secured hereby, the Mortgagor does hereby assign and transfer to the Mortgagee from and after the date hereof (including any period of redemption), primarily and on a parity with said real estate, and not secondarily, all the rents, issues and profits of the Real Property and all rents, issues, profits, revenues, royalties, bonuses, rights and benefits due, payable or accruing (including all deposits of money as advance rent, for security or as earnest money or as down-payment for the purchase of all or any part of the Real Property) (the "Rents") under any and all present and future leases and subleases, contracts or all or any portion of the Real Property and, except to the extent such a transfer or assignment is not permitted by the terms thereof, does hereby transfer and assign to the Mortgagee all such leases and subleases and agreements (including all of the Mortgagor's rights under any contracts for the sale of any portion of the Mortgaged Property and all revenues and royalties under any oil, gas and mineral leases relating to the Real Property) (collectively called the "Tenant Leases"). The Mortgagee hereby grants to the Mortgagor the right to collect and use the Rents as they become due and payable under the Tenant Leases but not more than two (2) months in advance thereof until an Event of Default (as defined in the Credit Agreement) has occurred, or a Mortgage Default (as hereinafter defined) has occurred, provided, that the existence of such right shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part, by the Mortgagor, and any such subsequent assignment shall be subject to the rights of the Mortgagee under this Mortgage. The Mortgagor further agrees to execute and deliver such assignments of Tenant Leases or assignments of land sale contracts as the Mortgagee may from time to time request. A "Mortgage Default" shall mean any failure by the Mortgagor to duly and punctually perform any agreement, covenant or obligation arising under this Mortgage which failure shall continue unremedied for twenty (20) days after the Mortgagor is given notice thereof. Any Event of Default under the Credit Agreement and any Mortgage Default shall constitute a "Default" under this Mortgage. In the event of the occurrence of a Default (1) the Mortgagor agrees, upon demand, to deliver to the Mortgagee all of the Tenant Leases with such additional assignments thereof as the Mortgagee may request and agrees that the Mortgagee may assume the management of the Mortgaged Property, and collect the Rents, applying the same upon the Obligations in the manner provided in the Security Agreement (as defined in the Credit Agreement) and (2) the Mortgagor hereby authorizes and directs all tenants, purchasers or other persons occupying or otherwise acquiring any interest in any part of the Mortgaged Property to pay the Rents due under the Tenant Leases to the Mortgagee upon request of the Mortgagee. The Mortgagor hereby appoints the Mortgagee as its true and lawful attorney-in- fact to manage said property and collect the Rents, with full power to bring suit for collection of the Rents and possession of the Real Property, giving and granting unto said Mortgagee and unto its agent or attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in the protection of the security hereby conveyed; provided, however, that (i) this power of attorney and assignment of Rents shall not be construed as an obligation upon the Mortgagee to make or cause to be made any repairs that may be needful or necessary and (ii) the Mortgagee agrees that until the occurrence of such Default, the Mortgagee shall permit the Mortgagor to perform the aforementioned management responsibilities. Upon the Mortgagee's receipt of the Rents, the Mortgagee shall first pay any rent obligations of the Mortgagor under any Lease senior to the Tenant Lease which has generated the Rents and, at the Mortgagee's option, it may pay: (1) reasonable charges for collection hereunder, costs of necessary repairs and other costs requisite and necessary during the continuance of this power of attorney and assignment of Rents, (2) general and special taxes, and insurance premiums, and (3) the balance of the Rents to be applied to the Obligations hereunder pursuant to the provisions of the Credit Agreement. This power of attorney and assignment of Rents is coupled with an interest and shall be irrevocable until this Mortgage shall have been satisfied and released of record and the releasing of this Mortgage shall act as a revocation of this power of attorney and assignment of Rents. The Mortgagee shall have and hereby expressly reserves the right and privilege (but assumes no obligation) to demand, collect, sue for, receive and recover the Rents, or any part thereof, now existing or hereafter made and apply the same in accordance with the provisions of the Credit Agreement. All of the property described above including, but not limited to, the Premises, the Property Rights, the Fixtures, the Real Property, the Personal Property, the Intangibles, the Rents, the Leases and the Tenant Leases are herein referred to collectively as the "Mortgaged Property." Nothing herein contained shall be construed as constituting the Mortgagee a mortgagee-in-possession in the absence of the taking of actual possession of the Mortgaged Property by the Mortgagee. Nothing contained in this Mortgage shall be construed as imposing on the Mortgagee any of the obligations of the lessor under any Tenant Leases of the Mortgaged Property, or as lessee under any Lease in the absence of an explicit assumption thereof by the Mortgagee. In the exercise of the powers herein granted the Mortgagee, no liability shall be asserted or enforced against the Mortgagee, all such liability being expressly waived and released by the Mortgagor. TO HAVE AND TO HOLD the Mortgaged Property, properties, rights and privileges hereby conveyed, mortgaged and assigned, or intended so to be, unto the Mortgagee, its beneficiaries, successors and assigns, forever for the uses and purposes herein set forth. The Mortgagor hereby releases and waives all rights under and by virtue of the Homestead Exemption Laws, if any, of the State of Florida (the "State"). The following provisions shall also constitute an integral part of this Mortgage: 1. Payment of Taxes on the Mortgage. Without limiting any of the provisions of the Credit Agreement, the Mortgagor agrees that if the United States of America or any department, agency or bureau thereof or the State or any of its counties or subdivisions having jurisdiction shall at any time require or impose documentary stamp taxes or intangible personal property taxes (whether recurring or nonrecurring) to be paid with respect to this Mortgage or the credit, indebtedness or Obligations secured hereby or shall levy, assess, or charge any other tax, assessment or imposition upon this Mortgage or the credit, indebtedness or Obligations secured hereby or upon the interest of one or more of the Lenders or the Swap Counterparty (or any assignee thereof) or the Mortgagee in the Mortgaged Property or any part thereof or upon one or more of the Lenders or the Swap Counterparty (or any assignee thereof) or the Mortgagee by reason of or as holder of any of the foregoing (other than Florida Corporate Franchise Taxes imposed solely on the income of any of the Lenders or the Swap Counterparty, or any assignee thereof) then, the Mortgagor shall pay such documentary stamp taxes, intangible personal property taxes or other taxes in the required amount or, in the event one or more Lenders or the Swap Counterparty (or any assignee thereof) has previously paid such taxes, reimburse such Lenders or the Swap Counterparty (and each assignee thereof) for such taxes, assessments or impositions previously so paid by such Lenders or the Swap Counterparty (or any assignee thereof) (together with interest thereon as provided in the Credit Agreement). Unless the Credit Agreement permits the Mortgagor to contest, by appropriate proceedings, the amount, validity, enforceability or application of any tax and Mortgagor is diligently and in good faith prosecuting such contest and is otherwise in full compliance with the terms of the Credit Agreement, failure to pay all such documentary stamp taxes, intangible personal property taxes or other taxes, assessments and impositions when and as they become due and payable, shall at the option of the Mortgagee constitute a Default hereunder (after giving effect to any applicable grace period provided for herein). The Mortgagor agrees to exhibit to the Mortgagee, at least annually and at any time upon request, official receipts showing payment of all taxes, assessments and charges which the Mortgagor is required or elects to pay hereunder. The Mortgagor agrees to indemnify the Mortgagee against liability on account of such documentary stamp taxes, intangible personal property taxes, or other taxes, assessments or impositions (other than Florida Corporate Franchise Taxes imposed solely on the income of any Lender, or any assignee thereof) and all penalties and interest that may be due in connection therewith, whether such liability arises before or after repayment of the Obligations and regardless of whether this Mortgage shall have been released or satisfied, the Mortgagor agreeing that such indemnity shall survive such release or satisfaction. Leases Affecting the Premises. The Mortgagor agrees faithfully to perform all of its obligations under the Leases, and under all present and future Tenant Leases or other agreements relative to the occupancy of the Premises and at any time assigned to the Mortgagee as additional security, and except as expressly permitted pursuant to the terms of the Credit Agreement, to refrain from any action or inaction which would result in the termination of the Leases, any such Tenant Leases (except with respect to any Tenant Leases, as may be necessary or appropriate in the ordinary course of business) or any such other agreements or in the diminution of the value of the Leases, the Tenant Leases or such other agreements or of the Rents due thereunder. The Mortgagor shall cause all future lessees or sublessees under any Tenant Leases of the Premises or any part thereof, made after the date of recording of this Mortgage to agree that, at the Mortgagee's option and without any further documentation, each such lessee or sublessee shall attorn to the Mortgagee, as lessor or sublessor if for any reason the Mortgagee becomes lessor or sublessor thereunder and, upon demand, shall pay Rent to the Mortgagee and the Mortgagee shall not be responsible under the Tenant Leases for matters arising prior to the Mortgagee becoming lessor or sublessor thereunder. 3. Use of the Mortgaged Property. The Mortgagor agrees that it shall not permit the public to use the Mortgaged Property in any manner that is reasonably likely to impair the Mortgagor's title to such Mortgaged Property or any portion thereof, or reasonably likely to make possible any claim or claims of easement by prescription or of implied dedication to public use. 4. Indemnification. The Mortgagor shall not use or permit the use of any part of the Mortgaged Property for an illegal purpose, including, without limitation, the violation of any environmental laws, statutes, codes, regulations or practices. Without limiting any indemnification the Mortgagor has granted in the Credit Agreement, the Mortgagor agrees to indemnify and hold harmless the Mortgagee from and against any and all losses, suits, actions, obligations, fines, damages, judgment, penalties, claims, charges, costs and expenses (including reasonable, documented attorneys' and paralegals' fees, court costs and disbursements) (collectively "Claims") which may be imposed on, incurred or paid by or asserted against the Mortgaged Property by reason or on account of, or in connection with (i) the construction, reconstruction or alteration of the Mortgaged Property, (ii) any negligence or misconduct of the Mortgagor, any lessee or sublessee of the Mortgaged Property, or any of their respective agents, contractors, subcontractors, servants, employees, licensees or invitees, (iii) any accident, injury, death or damage to any person or property occurring in, on or about the Mortgaged Property or any street, drive, sidewalk, curb or passageway adjacent thereto, or (iv) any other transaction arising out of or in any way connected with the Mortgaged Property. All amounts indemnified against by the Mortgagor under this Section 4 shall become additional Obligations secured hereby when paid or incurred by the Mortgagee and if paid by the Mortgagee, shall be payable on demand and shall bear interest from the date of payment until paid by the Mortgagor to the Mortgagee at a rate per annum equal to the Post-Default Rate under the Credit Agreement. 5. Insurance. The Mortgagor shall, at its sole expense, obtain for, deliver to, assign and maintain for the benefit of the Mortgagee, until the Obligations are paid in full, insurance policies as specified in the Credit Agreement. In the event of a casualty loss, the net insurance proceeds from such insurance policies shall be paid and applied as specified in Sections 2.10(b) and 2.11 of the Credit Agreement and Section 6.04 of the Security Agreement. 6. Condemnation Awards. The Mortgagor hereby assigns to the Mortgagee, as additional security, all awards of damage resulting from condemnation proceedings or the taking of or injury to the Mortgaged Property for public use, and the Mortgagor agrees that the proceeds of all such awards shall be paid and applied as specified in Sections 2.10(b) and 2.11 of the Credit Agreement and Section 6.04 of the Security Agreement. 7. Mortgagee as Agent; Enforcement, Etc. In the event of a Default, the Mortgagee as holder of this Mortgage and the lien thereof as agent for, and for the benefit of, the Lenders and the Swap Counterparty as holders of the Obligations, may as sole party plaintiff, exercise all rights and remedies of the Mortgagee hereunder and of the Lenders and Swap Counterparty under the aggregate indebtedness outstanding under the Term Notes, Revolving Credit Notes and other Obligations, may foreclose this Mortgage as agent for the Lenders and the Swap Counterparty for the aggregate amount of the Obligations then due and payable, may bid as agent for the Lenders and the Swap Counterparty at foreclosure sale of this Mortgage, and may apply as credit on such bid so much of such Obligations as is necessary to satisfy such bid. All modifications, amendments, releases, satisfactions and other documents pertaining to this Mortgage may be executed solely by Mortgagee as agent for the Lenders and the Swap Counterparty, and the Lenders and the Swap Counterparty need not join in the execution of any such documents. 8. Remedies of Mortgagee. Subject to the provisions of the Credit Agreement, upon the occurrence of a Default and in addition to any rights and remedies provided for in the Credit Agreement or otherwise available at law or in equity, and to the extent permitted by applicable law, the following provisions shall apply: (a) Mortgagee's Power of Enforcement. It shall be lawful for the Mortgagee to (i) immediately sell the Mortgaged Property either in whole or in separate parcels, as prescribed by the State law, under power of sale, which power is hereby granted to the Mortgagee to the full extent permitted by the State law, and thereupon, to make and execute to any purchaser or purchasers thereof deeds of conveyance pursuant to applicable law or (ii) immediately foreclose this Mortgage by judicial action. Upon or at any time after the filing of a suit to foreclose this Mortgage, the court in which such suit is filed shall have full power to enter an order placing the Mortgagee in possession of the Mortgaged Property with the same power granted to a receiver pursuant to this subparagraph and with all other rights and privileges of a mortgagee-in-possession under applicable law. In addition to all of the other rights and remedies of the Mortgagee hereunder and not to the exclusion thereof, the Mortgagee may, from time to time, at its option, institute partial foreclosure proceedings of this Mortgage for the purpose of collecting due but unpaid installments of the Obligations. Such proceedings shall not affect the existence, lien, operation and effect of this Mortgage and any judgment of foreclosure and sale shall so provide and any purchaser at such foreclosure sale shall acquire title to the property foreclosed upon subject to the lien of this Mortgage. (b) Appointment of a Receiver. Upon the occurrence of a Default, the Mortgagee shall be entitled, at once or at any time thereafter, either before or after sale, without notice and without requiring bond, and without regard to the solvency or insolvency of any person liable for payment of the Obligations secured hereby, and without regard to the then value of the Mortgaged Property or the occupancy thereof as a homestead, to the appointment of a receiver (the provisions for the appointment of a receiver and assignment of Rents being an express condition upon which the Term Loans and Revolving Credit Loans hereby secured are made) for the benefit of the Mortgagee, with power to collect the Rents, whether then due or thereafter to become due. The Mortgagor hereby specifically waives the right to object to the appointment of a receiver and hereby expressly agrees that such appointment shall be made as an admitted equity and as a matter of absolute right to Mortgagee. The receiver, out of the Rents when collected, may pay costs incurred in the management and operation of the Mortgaged Property, prior and subordinate liens, if any, and taxes, assessments, water and other utilities and insurance, then due or thereafter accruing, and may make and pay for any necessary repairs to the Mortgaged Property, and may pay all or any part of the Obligations or other sums secured hereby or any deficiency decree entered in such foreclosure proceedings. (c) Mortgagee's Right to Enter and Take Possession, Operate and Apply Rents. The Mortgagee shall, at its option, have the right, acting through its agents or attorneys, either with or without process of law, to enter upon and take possession of the Mortgaged Property, expel and remove any persons, goods, or chattels occupying or upon the same, to collect or receive all the Rents, and to manage and control the same, and to lease the same or any part thereof, from time to time, and, after deducting all reasonable, documented attorneys' fees and expenses, and all reasonable expenses incurred in the protection, care, maintenance, management and operation of the Mortgaged Property, distribute and apply the remaining net income to payment of the Obligations in the order and manner set forth in Section 6.04 of the Security Agreement or upon any deficiency decree entered in any foreclosure proceedings. (d) Mortgagee's Right to Rents under Florida Statute 697.07. The Mortgagee may apply for a court order requiring the Mortgagor to deposit all Rents in the court registry pursuant to Florida Statute 697.07, as amended. The Mortgagor hereby consents to entry of such order upon the sworn ex parte motion of the Mortgagee that a Default has occurred. (e) Enforcement of the Mortgage. The Mortgaged Property encumbered by this Mortgage is situated in sixteen (16) counties in the State of Florida and the Mortgagor agrees that the Mortgagee may institute proceedings for the enforcement of this Mortgage in any one or more of such counties as selected by the Mortgagee in its sole discretion. All of the counterparts of this Mortgage shall together constitute one Mortgage. Mortgagor agrees that each parcel of property secures all of the Obligations and there shall be no (and Mortgagor waives any right to a) proration of the lien of this Mortgage with respect to any portion or all of the Obligations. Mortgagor agrees that it may foreclose this Mortgage (i) in any one county in accordance with Section 702.04, Florida Statutes, (ii) simultaneously in all counties, or (iii) in successive actions against all or any part of the property encumbered hereby in one or more counties as Mortgagee may deem advisable in its sole and absolute discretion. Any portion of the Obligations which is not used by Mortgagee as a successful bid in any foreclosure sale shall remain outstanding and continue to be secured this Mortgage and shall be available for use by Mortgagee in any subsequent foreclosure sale. When any judgment of foreclosure is entered in connection with this Mortgage, Mortgagor agrees that (i) such judgment of foreclosure shall have no effect on the outstanding and unpaid Obligations or the promissory notes and other documents evidencing such Obligations, (ii) the lien of this Mortgage on all other property encumbered hereby will continue to secure the Obligations as provided herein notwithstanding such judgment, (iii) the promissory notes and other documents evidencing the Obligations filed as evidence in such foreclosure may be withdrawn by Mortgagee immediately following the entry of the judgment of foreclosure for use by Mortgagee as evidence of the unpaid Obligations in the foreclosure of this Mortgage on any other property, (iv) such judgment will not affect, impair or merge the lien of the Mortgage with respect to any other property encumbered by this Mortgage, which shall continue in full force and effect, and (v) such judgment will not affect, impair or merge the lien of the Mortgage with respect to the property actually foreclosed against if the foreclosure proceedings relate to only a portion of the Obligations, and Mortgagor hereby consents that its agreements in this paragraph may be incorporated in any final judgment of foreclosure in any county. (f) Mixed Collateral Remedies. In case of a sale under this Mortgage, the Mortgaged Property, real, personal and mixed, may be sold in one parcel or piecemeal in such order as Mortgagee may elect in its sole and absolute discretion and with the Mortgagee having all of the rights and powers of a secured party as provided in Chapter 679 of the Florida Uniform Commercial Code. (g) Discontinuance of Proceedings and Restoration of Status of the Parties. In case the Mortgagee shall have proceeded to enforce any right or remedy under this Mortgage by receiver, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee, then and in every such case the Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of the Mortgagee shall continue as if no such proceeding had been taken. The foregoing, however, shall not in any way affect the obligation of the parties hereto to fully comply with all orders or judgments entered in connection with any such proceedings. 9. Application of the Rents or Proceeds from Foreclosure or Sale. In any foreclosure of this Mortgage by judicial action or any sale of the Mortgaged Property by advertisement, in addition to any of the terms and provisions of the Credit Agreement and the Security Agreement, the Mortgagor agrees that there shall be allowed (and included in the decree for sale in the event of a foreclosure by judicial action) to be paid out of the Rents or the proceeds of such foreclosure proceeding and/or sale: (a) Obligations. All of the Obligations and other sums secured hereby which then remain unpaid; and (b) Other Advances. All other items advanced or paid by the Mortgagee pursuant to this Mortgage; and (c) Costs, Fees and Other Expenses. All court costs, reasonable, documented attorneys' and paralegals' fees and expenses, appraiser's fees, advertising costs, notice expenses, expenditures for documentary and expert evidence, stenographer's charges, publication costs, and costs (which may be estimated as to items to be expended after entry of the decree) of procuring all abstracts of title, title searches and examinations, title guarantees, title insurance policies, Torrens certificates and similar data with respect to title which the Mortgagee in the reasonable exercise of its judgment may deem necessary. The Mortgagor agrees to pay all such expenses and such expenses shall become additional Obligations secured hereby when paid or incurred by the Mortgagee in connection with any proceedings, including but not limited to probate and bankruptcy proceedings, to which the Mortgagee shall be a party, either as plaintiff, claimant or defendant, by reason of this Mortgage or any indebtedness hereby secured or in connection with the preparations for the commencement of any suit for the foreclosure, whether or not actually commenced, or sale by advertisement. The proceeds of any sale (whether through a foreclosure proceeding or the Mortgagee's exercise of the power of sale) shall be distributed and applied to payment of the Obligations in the order and manner set forth in Section 6.04 of the Security Agreement. 10. Cumulative Remedies; Delay or Omission Not a Waiver. Each remedy or right of the Mortgagee shall not be exclusive of but shall be in addition to every other remedy or right now or hereafter existing at law or in equity. No delay in the exercise or omission to exercise any remedy or right accruing on the occurrence or existence of any Default shall impair any such remedy or right or be construed to be a waiver of any such Default or acquiescence therein, nor shall it affect any subsequent Default of the same or different nature. Every such remedy or right may be exercised concurrently or independently and when and as often as may be deemed expedient by the Mortgagee. 11. Mortgagee's Remedies against Multiple Parcels. If more than one property, lot or parcel is covered by this Mortgage, and if this Mortgage is foreclosed upon, or judgment is entered upon any Obligations secured hereby, or if the Mortgagee exercises its power of sale, execution may be made upon or the Mortgagee may exercise its power of sale against any one or more of the properties, lots or parcels and not upon the others, or upon all of such properties or parcels, either together or separately, and at different times or at the same time, and execution sales or sales by advertisement may likewise be conducted separately or concurrently, in each case at the Mortgagee's election. The Mortgagor, for itself and all who may claim through or under the Mortgagor, irrevocably waives any and all right to have the property, interests and estates comprising the Mortgaged Property marshalled upon any foreclosure of the lien hereof or upon the exercise of any other remedies (whether under the Uniform Commercial Code or otherwise). 12. No Merger. In the event of a foreclosure of this Mortgage or any other mortgage or deed of trust securing the Obligations, the Obligations then due the Mortgagee shall not be merged into any decree of foreclosure entered by the court, and the Mortgagee may concurrently or subsequently seek to foreclose one or more mortgages or deeds of trust which also secure said Obligations. 13. Notices. Except as otherwise provided herein, any notices, demands, consents, requests, approvals, undertakings or other instruments required or permitted to be given in connection with this Mortgage (and all copies of such notices or other instruments as set forth below) shall be in writing, and shall be deemed to have been properly given if hand-delivered or if mailed (effective three (3) Business Days (as defined in the Credit Agreement) following deposit thereof at any main or branch United States Post Office) by United States registered or certified mail, postage prepaid, return receipt requested, or if sent by a nationally recognized overnight delivery service, postage prepaid, (effective one (1) Business Day following deposit with such delivery service) addressed to the party so notified as follows: if to the Mortgagor: Kash n' Karry Food Stores, Inc. 6422 Harney Road Tampa, Florida 33610 Attn: Executive Vice President, Administration Telecopy: (813) 626-9550 with copies to: Barnett, Bolt, Kirkwood & Long 601 Bayshore Boulevard Tampa, Florida 33606 Attn: Robert S. Bolt, Esq. Telecopy: (813) 251-6711 and Kramer, Levin, Naftalis, Nessen, Kamin & Frankel 919 Third Avenue New York, New York 10022 Attn: Michael S. Nelson, Esq. Telecopy: (212) 688-2119 if to the Mortgagee: The CIT Group/Business Credit, Inc. 300 South Grand Avenue Third Floor Los Angeles, California 90071 Attn: Regional Credit Manager Telecopy: (213) 613-2588 with a copy to: Orrick Herrington & Sutcliffe 777 South Figueroa Street Suite 3200 Los Angeles, California 90017 Attn: Bradley S. White, Esq. Telecopy: (213) 612-2499 The Mortgagor or the Mortgagee shall, from time to time, have the right to specify as the proper addressee and/or address for the purposes of this Mortgage any other party or address in the United States upon giving five (5) days' prior written notice thereof. 14. Extension of Payments; Release of Collateral. The Mortgagor agrees that, without affecting the liability of any person for payment of the Obligations secured hereby or affecting the lien of this Mortgage upon the Mortgaged Property or any part thereof (other than persons or property explicitly released as a result of the exercise by the Mortgagee of its rights and privileges hereunder), the Mortgagee may at any time and from time to time, on request of the Mortgagor, without notice to any person liable for payment of any Obligations secured hereby, but otherwise subject to the provisions of the Credit Agreement, extend the time, or agree to alter or amend the terms of payment of such Obligations. The Mortgagor further agrees that any part of the security herein described may be released with or without consideration without affecting the remainder of the Obligations or the remainder of the security. 15. Governing Law. The Mortgagor agrees that this Mortgage is to be construed, governed and enforced in accordance with the laws of the State of New York except that the laws of the State of Florida shall govern the creation, perfection, enforceability and priority of the liens and security interests created by this Mortgage and the enforcement of the rights and remedies (including the remedy of foreclosure) under this Mortgage. Wherever possible, each provision of this Mortgage shall be interpreted in such manner as to be effective and valid under applicable law, but if any of the covenants, agreements, terms or provisions contained in this Mortgage shall be invalid, illegal or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained herein shall not be in any way affected, prejudiced or disturbed thereby. In the event that the application of any of the covenants, agreements, terms or provisions of this Mortgage is held to be invalid, illegal or unenforceable, those covenants, agreements, terms and provisions shall not be in any way affected, prejudiced or disturbed when otherwise applied. 16. Satisfaction of Mortgage. Upon full payment of all the Obligations at the time and in the manner provided in the Credit Agreement and the other Basic Documents (as defined in the Credit Agreement), the termination of all obligations of the Lenders to make any additional loans to Mortgagor, the satisfaction of all obligations of Mortgagor under the Swap Agreement, and the repayment in full of all other amounts secured hereby and termination of all further obligations of the Mortgagee, the Lenders and the Swap Counterparty to make any further advances or financial obligations to Mortgagor in connection with the Obligations, this conveyance or lien shall be null and void and, upon demand therefor following such payment, a satisfaction of mortgage or reconveyance of the Mortgaged Property shall promptly be provided by the Mortgagee to the Mortgagor. 17. Successors and Assigns Included in Parties. This Mortgage shall be binding upon the Mortgagor and upon the successors, assigns and vendees of the Mortgagor and shall inure to the benefit of the Mortgagee's successors and assigns; all references herein to the Mortgagor and to the Mortgagee shall be deemed to include their successors and assigns. The Mortgagor's successors and assigns shall include, without limitation, a receiver, trustee or debtor in possession of or for the Mortgagor. Wherever used, the singular number shall include the plural, the plural shall include the singular, and the use of any gender shall be applicable to all genders. 18. Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws. The Mortgagor agrees, to the full extent permitted by law, that at all times following the occurrence of a Default, neither the Mortgagor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, or extension laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or the final and absolute putting into possession thereof, immediately after such sale, of the purchaser thereat, and the Mortgagor, for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may lawfully so do, the benefit of all such laws, and any and all right to have the assets comprising the Mortgaged Property marshalled upon any foreclosure of the lien hereof and agrees that the Mortgagee or any court having jurisdiction to foreclose such lien may sell the Mortgaged Property in part or as an entirety. To the full extent permitted by law, the Mortgagor hereby waives any and all statutory or other rights of redemption from sale under any order or decree of foreclosure of this Mortgage, on its own behalf and on behalf of each and every person, acquiring any interest in or title to the Mortgaged Property subsequent to the date hereof. 19. Interpretation with Other Documents. Notwithstanding anything in this Mortgage to the contrary, in the event of a conflict or inconsistency between the Mortgage and the Credit Agreement, the provisions of the Credit Agreement shall govern. 20. Revolving Credit Obligations. The Revolving Credit Notes are executed in connection with the Revolving Credit Loans in the aggregate amount of $50,000,000 to be made by the Lenders pursuant to, and subject to the terms and conditions of, the Credit Agreement. This Mortgage secures, among the other Obligations, the revolving credit facility established pursuant to the Credit Agreement and the amount of the principal indebtedness outstanding under the Revolving Credit Notes will increase and decrease from time to time as a result of advances and repayments made pursuant to the Credit Agreement, but the principal amount of the Revolving Credit Notes will not exceed $50,000,000. This Mortgage shall secure all principal sums from time to time advanced under the Revolving Credit Notes, whether made on the date of this Mortgage or hereafter. 21. Additional Provisions Regarding Future Advances. This Mortgage is given to secure not only existing indebtedness, but also such future advances as may hereafter be made by any Lender or the Mortgagee, whether such advances are obligatory or are to be made at the option of any Lender or the Mortgagee, or otherwise, within twenty years from the date hereof, to the same extent as if such future advances were made on the date of the execution of this Mortgage. The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at one time shall not exceed $150,000,000, plus interest thereon, and any disbursements made for the payment of taxes, levies, and insurance on the Mortgaged Property, interest on such disbursements, and any costs, fees, expenses and indemnities payable hereunder. The provisions of this paragraph apply regardless of whether any such advances are characterized as obligatory or optional; but nothing contained in this paragraph by itself obligates the Mortgagee or any Lender to make any additional loans or advances hereunder. 22. Future Advances Limitations. If the Mortgagor files or causes or consents to be filed of record in any county in which any of the Mortgaged Property is situated, an instrument limiting the maximum amount which may be secured by this Mortgage under Section 697.04(1)(b) Florida Statutes, such filing shall immediately constitute a Default (without any notice from Mortgagee or the passage of any cure period). 23. Changes. Neither this Mortgage nor any term hereof may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. To the extent permitted by law, any agreement hereafter made by the Mortgagor and the Mortgagee relating to this Mortgage shall be superior to the rights of the holder of any intervening lien or encumbrance. 24. Acquisition of Fee Interest. If the Mortgagor acquires the fee simple interest in any real property subject to a Lease, the lien of this Mortgage shall automatically encumber such fee simple interest as part of the Mortgaged Property. 25. Further Leasehold Provisions. The Mortgagor hereby agrees as follows: (a) The Mortgagor shall promptly pay all rent, additional rent, taxes and all other sums and charges when due and payable under the terms of the Leases, shall fully and promptly perform and observe all of the agreements, terms, covenants and conditions required to be performed and observed by the Mortgagor under the Leases within the grace period provided therein for the Mortgagor's performance (in contrast to any additional grace periods provided in the Leases for curative action by the Mortgagee), and shall do all things necessary to preserve and keep unimpaired the Mortgagor's rights under the Leases and to prevent any default thereunder or any modification, termination, surrender, cancellation, forfeiture or impairment thereof except as otherwise expressly provided in the Credit Agreement. (b) If any Lease is lawfully terminated before the natural expiration of its term for any reason whatsoever and if the Mortgagee or its designee shall acquire from any Lessor a new lease of the Mortgaged Property or any portion thereof (whether pursuant to any provision of any Lease or otherwise), then the Mortgagor shall have no right, title or interest whatsoever in or to such new lease or the leasehold estate created thereby. (c) The Mortgagor shall promptly notify the Mortgagee in writing of any request for arbitration or appraisal proceedings made by any party to any Lease, as well as provide notice to the Mortgagee of the institution of such arbitration or appraisal proceedings and the progress thereof and any determination made by the arbitrators thereunder. The Mortgagee shall have the right to participate in any such arbitration or appraisal proceedings in association with the Mortgagor or on the Mortgagee's own behalf as an interested party. (d) In the event of non-payment or non-performance by the Mortgagor under any Lease or any Tenant Lease, the Mortgagee shall, upon prior notice to the Mortgagor, have the right, but not the duty, to perform the obligations of the Mortgagor under the Leases or any Tenant Lease for the purpose of protecting or preserving the lien of this Mortgage and any sums so expended by the Mortgagee shall be an Obligation secured by the lien of this Mortgage and shall bear interest at a rate per annum equal to the Post-Default Rate under the Credit Agreement from the date of payment by the Mortgagee until repaid, all of which shall be due and payable on demand by the Mortgagee. (e) Except as otherwise provided in the Credit Agreement, Mortgagor will enforce the obligations of the lessor under each Lease to the end that Mortgagor may enjoy all of the rights granted to it under the Lease, and will promptly notify Mortgagee in writing of any default by the lessor or by Mortgagor in the performance or observance of any of the terms, covenants and conditions on the part of the lessor or Mortgagor, as the case may be, to be performed or observed under any Lease and Mortgagor will promptly advise Mortgagee in writing of the occurrences of any default under any Lease and of the giving of any notice of default by the lessor to Mortgagor. If any notice of default has been given to Mortgagor by any lessor, such notice shall constitute full authority and protection to Mortgagee for any action taken or omitted to be taken by Mortgagee in good faith in reliance thereon. (f) If any action or proceeding shall be instituted to terminate any Lease or to evict Mortgagor or to recover possession of any premises demised by any Lease or for any other purpose affecting any Lease or this Mortgage, Mortgagor will, immediately upon service thereof on or to Mortgagor, deliver to Mortgagee a true copy of each petition, summons, complaint, notice of motion, order to show cause and of all other pleadings, and papers, however designated, served in any such action or proceeding. (g) Notwithstanding any future acquisition by Mortgagor of fee title to any of the property demised by any Lease, the leasehold estate created by the Lease shall not merge with the fee title and such estates shall always remain separate and distinct unless otherwise agreed to in writing by Mortgagee. If Mortgagor acquires the fee title or any other estate, title or interest in any property demised by any Lease, this Mortgage shall attach to and cover and be a lien upon the fee title or such other estate so acquired, and such fee title or other estate shall, without further assignment, mortgage or conveyance, become and be subject to the lien of and covered by this Mortgage. (h) The generality of the provisions of this section or any other provision contained in this Mortgage relating to any Lease shall not be limited by other more particular provisions of this Mortgage or any other document executed by Mortgagor setting forth obligations of the Mortgagor which are also required of the Mortgagor as the lessee under any Lease. 26. Warranty of Title. The Mortgagor hereby represents, warrants and covenants to and with the Mortgagee that the Mortgagor has full power and lawful authority to sell, convey, transfer and mortgage the Mortgaged Property pursuant to this Mortgage; that the Mortgaged Property is free and discharged from all liens and encumbrances of any person or entity other than the liens in existence on the date hereof and disclosed in Part B of Schedule I of the Credit Agreement; and that the Mortgagor hereby fully warrants unto the Mortgagee the title to the Mortgaged Property subject to the permitted liens identified above and will defend the same against the lawful claims and demands of all persons whomsoever. 27. Counterparts for Convenience of Recording. This Mortgage is being executed in sixteen (16) counterparts for the purpose of facilitating simultaneous recording in the counties in which the property encumbered hereby is located and such Mortgages shall together constitute one Mortgage. 28. Fixture Filing. Pursuant to the Florida Uniform Commercial Code the following information is set forth as a financing statement to be filed as a fixture filing: A. Debtor: Kash n' Karry Food Stores, Inc. a Delaware corporation Address of Debtor: 6422 Harney Road Tampa, Florida 33610 B. Secured Party: The CIT Group/Business Credit, Inc., as Administrative Agent for the Lenders under the Credit Agreement and as Administrative Agent for the Swap Counterparty under the Swap Security Agreement Address of Secured Party: The CIT Group/Business Credit, Inc 300 South Grand Avenue Third Floor Los Angeles, California 90071 C. This financing statement covers the property described in the definition of "Mortgaged Property" as provided on pages 3 - 7 above. D. The collateral covered by this financing statement includes goods and property which are or are to be come fixtures on the real property described in Exhibit "A". E. This financing statement is to be filed for record in the real estate records in the counties listed in Exhibit "A" hereto. F. For any parcel of real estate described in Exhibit "A" hereto in which the Mortgagor does not have an interest of record, the name of a record owner is shown on Exhibit "A". G. Proceeds of the collateral are also covered by this financing statement. 29. Further Assurances; After-Acquired Property. At any time, and from time to time, upon request by the Mortgagee, the Mortgagor will make, execute and deliver or cause to be made, executed and delivered, to the Mortgagee and, where appropriate, cause to be recorded and/or filed, and from time to time thereafter to be recorded and/or refiled, at such time and in such offices and places as shall be deemed desirable by the Mortgagee, any and all such other and further mortgages, security agreements, financing statements, continuation statements, instruments of further assurance, certificates and other documents as may, in the opinion of the Mortgagee, be necessary or desirable in order to effectuate, complete or perfect, or to continue and preserve (i) the obligation of the Mortgagor under the Term Notes, the Revolving Credit Notes and under this Mortgage and (ii) the security interest created by this Mortgage as a first and prior lien upon or security interest in and to all of the Mortgaged Property, subject only to Liens (as defined in the Credit Agreement) permitted under Section 8.06 of the Credit Agreement. Upon any failure by the Mortgagor so to do, the Mortgagee may make, execute, record, file, re-record and/or refile any and all such mortgages, deeds to secure debt, security agreements, financing statements, continuation statements, instruments, certificates and other documents for and in the name of the Mortgagor, and the Mortgagor hereby irrevocably appoints the Mortgagee its agent and attorney-in-fact so to do. The lien hereof will automatically attach, without further act, to all after-acquired property attached to and/or used in connection with or in the operation of the Mortgaged Property or any part thereof. 30. Subrogation. The Mortgagee shall be subrogated to the claims and liens of all parties whose claims or liens are discharged or paid with the proceeds of the indebtedness secured hereby. 31. Headings. The headings of the sections, paragraphs and subdivisions of this Mortgage are for the convenience of reference only, are not to be considered a part hereof, and shall not limit or otherwise affect any of the terms hereof. 32. Time is of the Essence. It is specifically agreed that time is of the essence of the performance by Mortgagor of the obligations of the Mortgagor under this Mortgage. 33. Waiver of Jury Trial. THE MORTGAGEE AND THE MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE EXECUTION OF THE CREDIT AGREEMENT BY THE LENDERS AND THE MORTGAGEE, THE MAKING THE TERM LOANS AND REVOLVING CREDIT LOANS TO THE MORTGAGOR, AND THE ACCEPTANCE OF THIS MORTGAGE BY MORTGAGEE. IN WITNESS WHEREOF, this instrument is executed as of the day and year first above written by Richard D. Coleman, as Vice President on behalf of the Mortgagor (and he hereby represents that he possesses full power and authority to execute and deliver this instrument). THE MORTGAGOR HEREBY DECLARES AND ACKNOWLEDGES THAT THE MORTGAGOR HAS RECEIVED, WITHOUT CHARGE, A TRUE COPY OF THIS MORTGAGE. Signed, sealed and delivered MORTGAGOR: in the presence of: KASH N' KARRY FOOD STORES, INC. _____________________________ By:____________________________ First Witness Name: Richard D. Coleman Title: Vice President _____________________________ Printed Name of First Witness Address: Kash n' Karry Food Stores, Inc. 6422 Harney Road _____________________________ Tampa, FL 33610 Second Witness _____________________________ Printed Name of Second Witness STATE OF FLORIDA ) )SS COUNTY OF HILLSBOROUGH ) The foregoing instrument was acknowledged before me this _____ day of December, 1994 by Richard D. Coleman, as Vice President of KASH N' KARRY FOOD STORES, INC., a Delaware corporation, on behalf of the corporation. He is _____ personally known to me, or _____ produced _____________________ as identification, and did not take an oath. Given under my hand and official seal this _____ day of December, 1994. __________________________________ Notary Public Printed Name of Notary: __________________________________ My Commission expires: 77090 EXHIBIT E-1 [Form of Opinion of Counsel to the Company] December 29, 1994 To the Lenders party to the Credit Agreement referred to below and The CIT Group/Business Credit, Inc. as the Administrative Agent Ladies and Gentlemen: We have acted as counsel to Kash n' Karry Food Stores, Inc. (the "Company") in connection with the financing transactions contemplated by the Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among the Company, the lenders identified in the Credit Agreement (the "Lenders") and The CIT Group/Business Credit, Inc., in its capacity as the Administrative Agent, and Bank of America National Trust and Savings Association, in its capacity as Co-Agent. All capitalized terms defined in the Credit Agreement are used with the same meanings, unless otherwise defined, in this opinion letter. In rendering the opinions expressed below, we have examined (a) (i) the Credit Agreement and the Notes, (ii) the Security Agreement (the "Security Agreement") and (iii) the Mortgage and the Blocked Account Agreement (together with the Security Agreement, the "Security Documents" and, together with the Credit Agreement, the Security Agreement and the Notes, the "Loan Documents"), and (b) such corporate records of the Company and such other documents as we have deemed necessary as a basis for the opinions expressed below. In our examination, we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. When relevant facts were not independently established, we have relied upon statements of governmental officials and upon representations made in or pursuant to the Loan Documents and certificates of appropriate representatives of the Company. In rendering the opinions expressed below, we have assumed (except, as to the Company) that all of the documents referred to in this opinion have been duly authorized by, have been executed and delivered by, and constitute legal, valid, binding and enforceable obligations of, all of the parties to such documents, that all signatories to such documents have been duly authorized and that all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform such documents. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that: (i) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to execute and deliver, and to borrow and perform its obligations under, the Loan Documents. (ii) The execution, delivery and performance by the Company of the Loan Documents, and borrowing by the Company under the Loan Documents, have been duly authorized by all necessary corporate action on the part of the Company. (iii) The Loan Documents have been duly executed and delivered by the Company. (iv) The Loan Documents (other than the Mortgage, as to which we are not opining in this paragraph (iv)) constitute the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, in each case except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws and court decisions relating to or affecting the rights of creditors generally and except as the enforceability of such Loan Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing. (v) No authorization, consent or other approval of, or registration, declaration or other filing with, any governmental authority of the United States of America or the State of New York is required on the part of the Company for the execution and delivery by it of, for the borrowing by the Company under, or for the performance by the Company of its agreements under, the Loan Documents. (vi) The execution and delivery by the Company of, the borrowing by the Company under, and the performance by the Company of its obligations under, the Loan Documents do not (a) violate any law, rule or regulation of the United States of America or the State of New York applicable to the Company; (b) violate any provision of the Certificate of Incorporation or bylaws of the Company; or (c) result in a breach of, constitute a default under, require consent under, (except pursuant to the Loan Documents) result in or require the creation of any Lien on any Property of the Company or result in the acceleration or required prepayment of any indebtedness pursuant to the terms of, any agreement, instrument or order (including any arbitral award) to which the Company or any of its assets is subject and of which we have knowledge. For purposes of clause (c) above, we have reviewed those agreements, instruments and orders that have been identified to us, after due inquiry, by the Company as its material agreements, instruments and orders. (vii) To the extent that a security interest may be created in such property under Article 9 of the Uniform Commercial Code of New York (the "Code"), the Security Agreement is effective to create in favor of the Administrative Agent for the benefit of the Holders, from time to time, of the Secured Obligations (as defined in the Security Agreement) a valid security interest under the Code in the rights of the Company in the personal property purported to be subject to the Lien of such Security Agreement (the "Collateral") as collateral security for the Secured Obligations specified in such Security Agreement except that the security interest in any Collateral in which the Company acquires rights after the commencement of a case against it under the Bankruptcy Code will be limited by Section 552 of the Bankruptcy Code. (viii) The Confirmation Order has been entered by the Clerk of the Bankruptcy Court; the effectiveness of the Confirmation Order is not stayed by reason of the operation of the Federal Rules of Bankruptcy Procedure, any local bankruptcy rule or order of any Governmental Person or otherwise; and the Confirmation Order has become final and is non-appealable. We are not aware of any grounds for revocation of the Confirmation Order. (ix) The Company is not required to pay documentary stamp taxes pursuant to section 201.08 of the Florida Statutes (1993) in respect of the making or delivery of the Loan Documents or the borrowing thereunder on the Effective Date by virtue of section 1146(c) of the Bankruptcy Code and the paragraph 26 of the Confirmation Order. While we are aware of no binding precedent directly on point, it is also our opinion that the Company is not required to pay intangible taxes pursuant to section 199.133 of the Florida Statutes (1993) in respect of the making or delivery of the Loan Documents or the borrowing thereunder on the Effective Date by virtue of section 1146(c) of the Bankruptcy Code and the paragraph 26 of the Confirmation Order. We advise you that, except for the matters set forth on Schedule IV to the Credit Agreement, to our current actual knowledge, there are no pending or threatened actions, suits, proceedings or investigations against the Company in any court or by or before any arbitrator or governmental authority, which, if adversely determined, could have a Material Adverse Affect. For purposes of the preceding sentence, the phrase "to our current actual knowledge" is intended to indicate that, during the course of our representation of the Company, no information that would give us current actual knowledge of the inaccuracy of the statements made in such sentence has come to the attention of those attorneys in this firm who have rendered legal services on behalf of the Company and that we have discussed with appropriate representatives of the Company the contents of and relied, as stated above, upon representations of the Company made in the Loan Documents with respect to pending or threatened actions, suits, proceedings and investigations. The foregoing opinions are also subject to the following comments and qualifications: (a) Certain remedial or procedural provisions contained in the Security Documents may be limited or rendered unenforceable by applicable law, but such limitations do not, in our opinion, make the remedies and procedures that are available to the Administrative Agent and the Lenders inadequate for the practical realization of the principal benefits purported to be provided to them by the Security Documents. (b) The enforceability of certain provisions of the Loan Documents may be limited under certain circumstances to the extent that such provisions impose late payment charges or an increase in interest rates upon delinquency in payment or the occurrence of a default. (c) The enforceability of provisions in the Loan Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances. (d) The enforceability of certain provisions of the Loan Documents obligating the Borrower to indemnify the Lenders, the Administrative Agent, the Co-Agent and/or others in connection with such indemnified Person's own wrongful or negligent acts or omissions may be limited by public policy or otherwise. (e) We express no opinion as to the ownership of or title to any of the Collateral or (except as set forth in paragraph (vii) above) as to the creation, perfection of any Liens (including the Liens of the Loan Documents). The foregoing opinions are limited to matters involving the Federal laws of the United States and the laws of the State of New York and the General Corporation Law of the State of Delaware, and we do not express any opinion as to the laws of any other jurisdiction. This opinion letter is provided to you by us as counsel to the Company pursuant to Section 6.01(d) of the Credit Agreement and may not be relied upon by any other person (other than your permitted assignees) or for any purpose other than in connection with the transactions contemplated by the Loan Documents without our prior written consent in each instance. Very truly yours, EXHIBIT E-2 [Form of Opinion of Florida Counsel to the Company] December 29, 1994 To the Lenders party to the Credit Agreement referred to below and The CIT Group/Business Credit, Inc. as the Administrative Agent Ladies and Gentlemen: We have acted as special Florida counsel to Kash n' Karry Food Stores, Inc., a Delaware corporation (the "Company"), in connection with the financing transactions contemplated by the Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among the Company, the lenders identified in the Credit Agreement (the "Lenders") and The CIT Group/Business Credit, Inc., in its capacity as the Administrative Agent (the "Administrative Agent"), and Bank of America National Trust and Savings Association, in its capacity as Co-Agent. All capitalized terms defined in the Credit Agreement are used with the same meanings, unless otherwise defined, in this opinion letter. This opinion has been prepared and is to be construed in accordance with the Report on Standards For Florida Opinions dated April 8, 1991 issued by the Business Law Section of The Florida Bar (the "Report"), as published in 46 The Business Lawyer 1407 (August 1991). The Report is incorporated by reference into this opinion. In rendering the opinions expressed below, we have relied, with your approval, as to factual matters (but not legal conclusions) that affect our opinions, solely on our examination of the following documents and, except as to the opinions in numbered paragraphs (i), (ii), (iv), (v), (viii), as to which our opinions are based on our knowledge, have made no independent verification of the facts asserted to be true and correct in those documents, including the factual representations and warranties contained in the Agreement: (a) (i) the Credit Agreement and the Notes, (ii) the Security Agreement (the "Security Agreement"), (iii) the Blocked Account Agreement and (iv) each counterpart of the Mortgage (collectively, the "Mortgage," and together with the Security Agreement and the Blocked Account Agreement, the "Security Documents" and, together with the Credit Agreement, the Security Agreement, the Blocked Account Agreement and the Notes, the "Loan Documents"), (b) the financing statement on Form UCC-1 naming the Company as debtor and the Administrative Agent (as Agent) as secured party, bearing File No. 940000252635, as filed with the Secretary of State of the State of Florida on December 19, 1994, and the financing statement on Form UCC-1 naming Save 'n Pack as debtor and the Administrative Agent (as Agent) as secured party, to be filed with the Secretary of State of the State of Florida (the "State Financing Statements"), (c) the financing statements on Form UCC- 1 naming the Company as debtor and the Administrative Agent (as Agent) as secured party, to be filed with the Clerk of Circuit Court in each county in Florida in which goods of the Company which are or are to become fixtures are located (the "Fixture Financing Statements," and together with the State Financing Statements, the "Financing Statements"), (d) the notice of liquor license lien on Form 739L naming the Company as debtor and the Administrative Agent (as Agent) as secured party to be recorded with the Division of Alcoholic Beverages and Tobacco of the State of Florida pursuant to Section 561.65(4) of the Florida Statutes, and the notices of lien naming the Company as debtor and the Administrative Agent (as Agent) as lienholder to be filed with the Division of Motor Vehicles of the State of Florida (collectively, the "Notices of Lien"), (e) a Certificate of the Company's Authority to Transact Business in Florida issued by the Florida Department of State on December 12, 1994, and (f) the opinion letter dated as of December 29, 1994, delivered to you by Kramer, Levin, Nessen, Kamin & Frankel pursuant to Section 6.01(d) of the Credit Agreement (the "Kramer Levin Opinion"). In our examination, we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. In rendering the opinions expressed below, in addition to the assumptions contained in the Report, we have assumed (except, to the extent set forth below, as to the Company) that (a) the Confirmation Order has been entered by the Clerk of the Bankruptcy Court; the effectiveness of the Bankruptcy Order is not stayed by reason of the operation of the Federal Rules of Bankruptcy Procedure, any local bankruptcy rule or order of any Governmental Person or otherwise; the Confirmation Order has become final and is non-appealable; and no grounds exist for revocation of the Confirmation Order; and (b) all of the documents referred to in this opinion have been duly authorized by, have been or (in the case of the Notes) will be executed and delivered by, and (other than with respect to the Mortgage, to the extent governed by Florida law) constitute legal, valid, binding and enforceable obligations of, all of the parties to such documents, that (except with respect to the Company) all signatories to such documents have been duly authorized and that all such parties are duly organized and validly existing and have the power and authority (corporate or other) to execute, deliver and perform such documents. With your permission, we have also relied upon the Kramer Levin Opinion to the effect that the execution and delivery of the Mortgage and the Notes and the recordation of the Mortgage are exempt from Florida documentary stamp and nonrecurring intangible taxes pursuant to Section 1146(c) of the U.S. Bankruptcy Code and paragraph 26 of the Confirmation Order. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that: (i) The Company has been duly authorized to transact business as a foreign corporation under the laws of, and its status is active in, the State of Florida. (ii) Subject to the limitations contained in the next paragraph and in numbered paragraph (iii) hereof, the Mortgage constitutes the legal, valid and binding obligation of the Company, enforceable against it under the law of Florida. Our opinion concerning the validity, binding effect and enforceability of the Mortgage means that (a) the Mortgage constitutes an effective contract under applicable law, (b) the Mortgage is not invalid in its entirety because of a specific statutory prohibition or public policy and is not subject in its entirety to a contractual defense, and (c) subject to the last sentence of this paragraph, remedies generally available to mortgage lenders in the State of Florida are available to the Administrative Agent under the Mortgage if the Company is in material default under the Mortgage. This opinion does not mean that (a) any particular remedy is available upon a material default, or (b) every provision of the Mortgage will be upheld or enforced in any or each circumstance by a court. Furthermore, the validity, binding effect and enforceability of the Mortgage may be limited or otherwise affected by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar statutes, rules, regulations or other laws affecting the enforcement of creditors' rights and remedies generally and (b) the unavailability of, or limitation on the availability of, a particular right or remedy (whether in a proceeding in equity or at law) because of an equitable principle or a requirement as to commercial reasonableness, conscionability or good faith. (iii) If the execution, delivery and recordation of the Mortgage and the execution and delivery of the Notes are not exempt from all Florida nonrecurring intangible taxes pursuant to Section 1146(c) of the U.S. Bankruptcy Code, then, until the payment of all nonrecurring intangible taxes due upon execution and delivery of the Mortgage, the Administrative Agent will be unable to avail itself of remedies under the Mortgage in a Florida court. Section 199.282(5) of the Florida Statutes (1993) provides: No mortgage, deed of trust, or other lien upon real property situated in this state shall be enforceable in any Florida court, nor shall any written evidence of such mortgage, deed of trust, or other lien be recorded in any public record of the state, until the nonrecurring intangible tax imposed by this chapter, including any taxes due on future advances, has been paid and the clerk of circuit court collecting the tax has noted its payment on the instrument or given other receipt for it. However, failure to pay the correct amount of tax or failure of the clerk to note payment of the tax on the instrument shall not affect the constructive notice given by recording of the instrument. Although Section 199.282(5) provides that a mortgage shall not be "enforceable" until the nonrecurring intangible taxes are paid, no Florida court has held that nonpayment of such taxes delays the attachment of a mortgage lien or otherwise affects the validity of the mortgage as between the mortgagor and the mortgagee. While the matter is not free from doubt, it is our opinion that, if the matter were properly presented to a court having jurisdiction, and assuming interpretation of the relevant law on a basis consistent with existing authority, the court should hold that nonpayment of nonrecurring intangible taxes has no effect on a recorded mortgage except as stated in the first sentence of this paragraph. In this regard, we note (but offer no opinion with respect to the same) that pursuant to Section 6.01(h)(B) of the Credit Agreement, the Administrative Agent (as Agent) is obtaining a Loan Policy of Title Insurance to be issued by Commonwealth Land Title Insurance Company ("Commonwealth") insuring, among other things, the creation, validity, enforceability and priority of the Lien created by the Mortgage on the property more completely described on Commonwealth Commitment Nos. 864-054411 through 864-054432, 864-230164 and 864-320165, and such Loan Policy of Title Insurance is issued on the ALTA Loan Policy form dated 1970 (Rev. 10/1/70 and 10/17/84), which form of policy does not contain exclusion number seven of the ALTA Loan Policy form dated (10-17-92) set forth on Composite Exhibit "A" attached hereto. (iv) No authorization, consent or other approval of, or registration, declaration or other filing with, any governmental authority of the State of Florida is required on the part of the Company for the execution and delivery by it of, for borrowing by the Company under, or for the performance by the Company of its agreements under, the Loan Documents, which, if not obtained, could have a materially adverse impact on the transaction contemplated by the Loan Documents, except, with respect to the performance of the Company's agreements under the Loan Documents to perfect the Liens granted in the Security Documents, for steps required to be taken to perfect the Liens granted to the Administrative Agent (as Agent) under the Security Documents. (v) The execution and delivery by the Company of, the borrowing by the Company under, and the performance by the Company of its obligations under, the Loan Documents do not and will not violate any law, rule or regulation of the State of Florida, or any of its county, municipal and political subdivisions, applicable to the Company and in effect as of the date hereof. (vi) Assuming that, notwithstanding the New York choice of law set forth in the Security Agreement, Florida law governs the creation of the Lien thereunder, to the extent that a security interest may be created in such property under Article 9 of the Uniform Commercial Code of Florida (the "Code"), the Security Agreement is effective to create in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent a valid security interest under the Code in the rights of the Company in the personal property purported to be subject to the Lien of such Security Agreement (the "Collateral") as collateral security for the Secured Obligations specified in such Security Agreement except that the security interest in any Collateral in which the Company acquires rights after the commencement of a case against it under the Bankruptcy Code will be limited by Section 552 of the Bankruptcy Code. (vii) The Mortgage is in proper form for the creation of the mortgage lien contemplated thereby in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent in the right, title and interest of the Company in the real property purported to be subject to the Lien of such Mortgage (the "Mortgage Collateral") as collateral security for the Obligations specified in such Mortgage except that the lien in any Mortgage Collateral in which the Company acquires rights after the commencement of a case against it under the Bankruptcy Code will be limited by Section 552 of the Bankruptcy Code. (viii) The execution, delivery and recordation by the Company of the Mortgage will not constitute a breach of or a default under any Lease (as defined in the Mortgage), except as to the Leases (more completely described on Exhibit B of the Mortgage) relating to the store sites set forth on Part A of Schedule I attached hereto. The Leases (more completely described on Exhibit B of the Mortgage) demising the store sites (identified on Part B of Schedule I hereto) prohibit assignments by the Company without the prior consent of a third party. Section 697.02 of the Florida Statutes provides: "A mortgage shall be held to be a specific lien on the property therein described and not a conveyance of the legal title or the right of possession." Applying that statute, several Florida district courts of appeal have held that the assignment of a mortgage upon a leasehold interest in real property is not an assignment of an interest in the leasehold. While the matter is not free from doubt, it is our opinion that, if the matter were properly presented to a court having jurisdiction, and assuming interpretation of the relevant law on a basis consistent with existing authority, the court should hold that the execution, delivery and recordation by the Company of the Mortgage will not constitute a breach of or a default under any Lease identified on Part B of Schedule I, subject to the following proviso. Provided, however, the analysis applied in the foregoing cases does not necessarily extend to the enforcement by the mortgagee of its rights under the leasehold mortgage, such as by foreclosure, and to our knowledge no Florida court has addressed that issue. Accordingly, we render no opinion as to whether the enforcement by the Administrative Agent of its rights under the Mortgage would constitute a breach of or default under the Leases identified on Part B of Schedule I. (ix) The Trademarks (as defined in the Security Agreement) constitute general intangibles within the meaning of Section 679.106 of the Code. Except as set forth in Section 679.302 of the Code, general intangibles of the Company may be perfected by filing a financing statement with the Secretary of State of Florida. The security interest granted by the Security Agreement will have been perfected with respect to that portion of the Collateral as to which a security interest can be perfected under the Code by the filing of the State Financing Statements with the Florida Secretary of State in accordance with the Code, except that we call your attention to the fact that the Lien on certain of the Collateral may not be perfected by filing a financing statement under the Code. The Lien granted by the Mortgage and the security interest granted by the Security Agreement will have been perfected with respect to that portion of the Mortgage Collateral and the Collateral consisting of goods that are or are to become fixtures on the Premises (as defined in the Mortgage) when the Mortgage and the Fixture Financing Statements have been duly recorded with the Clerk of Circuit Court in the various counties in which the Premises are located in accordance with the Code. (x) The Mortgage and the Fixture Financing Statements are in proper form for recording with the Clerk of the Circuit Court of the various counties in Florida in which the Mortgage Collateral is located, and such recordation is the only recording or filing necessary in Florida to give to third parties constructive notice of the Lien of the Administrative Agent for the benefit of the Lenders and the Administrative Agent on any real property interest of the Company included in the Mortgage Collateral. (xi) A court in Florida would give effect to the New York choice of law set forth in each of the Loan Documents stated to be governed by New York law, so long as a normal and reasonable relationship exists between New York and the transaction represented by the Loan Documents. In this regard, we understand and assume that the Administrative Agent is a New York corporation, that it maintains its principal place of business in New York, that the Notes were executed in Ohio and delivered in New York, that the Loan Documents (other than the Notes and certain Security Documents) will be executed and delivered in New York, and that the disbursements and payments to be made under the Loan Documents will take place in New York. Given these understandings and assumptions, we are of the opinion that a Florida court would honor the parties' choice of New York law as the law applicable to such of the Loan Documents stated to be governed by New York law, subject to the qualification that we are unable to opine that a Florida court would apply the laws of New York respecting (a) remedies available in Florida upon a breach by the Company of any Loan Document; (b) the procedural rules governing or affecting any action in Florida to enforce any Loan Document; or (c) any law that is determined to be against an overriding public policy of the State of Florida. To the extent that the Loan Documents are governed by and enforceable under the laws of the State of New York, we have assumed, for purposes of this opinion letter, that the laws of the State of New York governing the matters addressed by such opinions do not differ from the laws of the State of Florida. (xii) Neither the Administrative Agent nor any of the Lenders will, solely by reason of the making by any Lender of any Loan or solely by reason of, or as a condition to, the obtaining by the Administrative Agent (on behalf of the Lenders) of the Liens of the Security Documents or the enforcement by the Administrative Agent or any Lender of its rights, remedies, powers and privileges under the Loan Documents, be required to qualify to do business in the State of Florida or to make any registration, declaration or filing (other than the State Financing Statements stated to be filed, and the Notices of Lien, Fixture Financing Statements and Mortgages stated to be recorded, in the State of Florida) with any Governmental Person of the State of Florida. We advise you that, to our knowledge after limited investigation, there are no pending or threatened actions, suits, proceedings or investigations against the Company in any court or by or before any arbitrator or governmental authority in Florida, which will or might reasonably be expected to have a material adverse effect upon the business or financial condition of the Company, upon the ability of the Company to repay the Loans, or upon the benefits provided to the Administrative Agent or the Lenders under the Security Documents, except for the matters set forth on Schedule IV of the Credit Agreement. The foregoing opinions are also subject to the following comments and qualifications: (a) We express no opinion as to the ownership of or title to any of the Collateral or the Mortgage Collateral, as to the priority of any Liens (including the Liens of the Loan Documents, or (except as set forth in paragraphs (vi), (vii), (ix) and (x) above) as to the creation or perfection of any Liens (including the Liens of the Loan Documents). Further, we advise you that we have, for the purposes of this opinion, assumed that: (i) the chief executive office of the Company is located in Florida; and (ii) the Collateral does not include property of the types described in Sections 679.104 and 679.401(1)(a) or (except as to goods which are or are to become fixtures) 679.401(1)(b) of the Code. (b) In connection with our opinions in paragraphs (vi) and (ix) above, we wish to call your attention to the provisions of (1) Sections 679.306 through 679.310, and Section 679.312 of the Code as to limitations on the effect of perfection and (2) Sections 679.103, 679.402 and 679.403 of the Code as to actions (including the filing of continuation statements) that may be necessary in the future to continue perfection as a result of the lapse of time or a change in circumstances. The foregoing opinions are limited to matters involving the laws of the State of Florida and we do not express any opinion as to the laws of any other jurisdiction. Without limitation of the foregoing, we do not express any opinion as to any Federal or Florida securities laws, tax laws, bank regulatory laws, environmental laws, land use and zoning laws, or as to any matters of law or fact not expressly opined upon herein. This opinion letter is provided to you by us as counsel to the Company pursuant to Section 6.01(d) of the Credit Agreement and is rendered solely in connection with the transactions contemplated by the Loan Documents. This opinion may be relied upon by you (and your successors and assigns) only in connection with such transactions, and may not be relied upon by any other person or for any purpose without our prior written consent in each instance. Very truly yours, RWR/LWH SCHEDULE I PART A Store Nos. 879, 881, 882, 884 and 651 PART B Store Nos. 139, 201, 584, 701, 704, 705, 707, 710, 711, 715, 716, 719, 849, 857, 864, 867, 868, 869, 870, 871, 873, 874, 883, 892, 898, 904 (Returns Center: 1432 Tampa East Blvd., Tampa) EXHIBIT F-1 [Form of Opinion of Counsel to the Administrative Agent] December 29, 1994 The CIT Group/Business Credit, Inc. 300 South Grand Avenue Los Angeles, California 90017 Re: Credit Agreement dated as of December 29, 1994, among Kash n' Karry Food Stores, Inc., The CIT Group/Business Credit, Inc., as Administrative Agent, Bank of America National Trust and Savings Association, as Co-Agent, and the financial institutions party thereto Ladies and Gentlemen: Description of Representation We have acted as special counsel for you, as Administrative Agent (the "Administrative Agent"), in connection with the preparation, execution and delivery of, and the initial Loans made under, that certain Credit Agreement (the "Credit Agreement") dated as of December 29, 1994 among Kash n' Karry Food Stores, Inc., the Administrative Agent, Bank of America National Trust and Savings Association, as Co-Agent, and the financial institutions party thereto (the "Lenders"). This opinion is being furnished to you pursuant to Section 6.01(e) of the Credit Agreement. Capitalized terms used herein are used with the meanings given to them in the Credit Agreement. Material Examined In this regard, we have examined executed originals or copies of the following, each of which, unless otherwise indicated, is dated the date (or as of the date) hereof: (a) Credit Agreement. (b) Notes being delivered on the date hereof (the "Notes"). (c) The Security Agreement (the "Security Agreement") between Kash n' Karry Food Stores, Inc. and the Administrative Agent, as agent for the holders, from time to time, of Secured Obligations (as defined in the Security Agreement). The Credit Agreement, the Notes and the Security Agreement are collectively referred to herein as the "Loan Documents." (d) Opinion of Kramer, Levin, Nessen, Kamin & Frankel, New York counsel for the Company. (e) Opinion of Barnett, Bolt, Kirkwood & Long, Florida counsel for the Company. (f) Other certificates and documents of the Company, governmental authorities or other parties delivered pursuant to the Credit Agreement on the Effective Date in satisfaction of the conditions specified in Section 6.01 and Section 6.02 of the Credit Agreement. Opinions Based upon such examination, and having regard for legal considerations we deem relevant, we are of the following opinion: (1) The Loan Documents, when duly executed and delivered by the respective parties thereto, constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms. (2) To the extent that a security interest may be created in such property under Article 9 of the Uniform Commercial Code of New York (the "Code"), the Security Agreement is effective to create in favor of the Administrative Agent for the benefit of the holders, from time to time, of Secured Obligations (as defined in the Security Agreement) a valid security interest under the Code in the rights of the Company in the personal property purported to be subject to the Lien of such Security Agreement (the "Collateral") as collateral security for the Secured Obligations specified in such Security Agreement except that the security interest in any Collateral in which the Company acquires rights after the commencement of a case against it under the Bankruptcy Code will be limited by Section 552 of the Bankruptcy Code. Certain Assumptions With your permission we have assumed the following: (a) the authenticity of original documents and the genuineness of all signatures on the documents we have reviewed; (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in the records, documents, instruments, and certificates we have reviewed; (d) the due power and authority of all parties to the Loan Documents; (e) the due authorization, execution and delivery of the Loan Documents by all parties thereto and, except with respect to the Company, the legal, valid and binding nature of the obligations of all such parties, and the enforceability against them in accordance with their respective terms; (f) the due organization and valid existence of all parties to the Loan Documents; and (g) the absence of any evidence extrinsic to the provisions of the written agreements between the parties that the parties intended a meaning contrary to those expressed by those provisions. We have assumed that the Confirmation Order has been entered by the Clerk of the Bankruptcy Court; the effectiveness of the Bankruptcy Order is not stayed by reason of the operation of the Federal Rules of Bankruptcy Procedure, any local bankruptcy rule or order of any Governmental Person or otherwise; the Confirmation Order has become final and is non-appealable; and no grounds exist for revocation of the Confirmation Order. We also assume that failure to pay any documentary stamp or intangible tax, if due, under Florida Law will not affect the enforceability of, or any right or remedy any Person has under, the Loan Documents. Certain Limitations and Qualifications We express no opinion as to: (i) matters of law in jurisdictions other than the State of New York and the United States; (ii) regulatory matters relating to each Lender and Co- Agent including, but not limited to, lending limits and affiliate transactions; and (iii) the enforceability of choice of law provisions in the Loan Documents. Our opinions set forth above are qualified as to: (a) limitations imposed by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium, or other laws relating to or affective the rights of creditors generally; (b) rights to indemnification and contribution which may be limited by applicable law and equitable principles; (c) the unenforceability under certain circumstances of provisions imposing penalties, forfeiture, late payment charges, or an increase in interest rate upon delinquency in payment or the occurrence of any event of default; (d) general principals of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing, and the possible unavailability of specific performance or injunctive relief, regardless of whether such enforceability is considered in a proceeding in equity or at law; (e) certain remedial or procedural provisions contained in the Loan Documents may be limited or rendered unenforceable by applicable law, but such limitations do not, in our opinion, make the remedies and procedures that are available to the Administrative Agent and the Lenders inadequate for the practical realization of the principal benefits purported to be provided to them by the Loan Documents; (f) the enforceability of provisions of the Loan Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances; and (g) we express no opinion as to the ownership of or title to any of the Collateral or (except as set forth in paragraph (2) above) as to the creation or perfection of any Liens (including the Liens of the Loan Documents). Use of Opinion This opinion is solely for your benefit and may not be relied upon or used by any other person without our prior written approval. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention after the date hereof. Very truly yours, Orrick, Herrington & Sutcliffe EXHIBIT F-2 [Form of Opinion of Special Florida Counsel to the Administrative Agent] December 29, 1994 To the Lenders party to the Credit Agreement referred to below and The CIT Group/Business Credit, Inc. as the Administrative Agent Ladies and Gentlemen: We have acted as special Florida counsel to The CIT Group/ Business Credit, Inc., in its capacity as the Administrative Agent (the "Administrative Agent") in connection with financing transactions contemplated by the Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among the Kash n' Karry Stores, Inc., a Delaware corporation (the "Company"), the lenders identified in the Credit Agreement (the "Lenders"), the Administrative Agent, and Bank of America National Trust and Savings Association, in its capacity as Co-Agent. All capitalized terms defined in the Credit Agreement are used with the same meanings in this opinion letter unless otherwise expressly defined herein. This opinion has been prepared and is to be construed in accordance with the Report on Standards For Florida Opinions dated April 8, 1991 issued by the Business Law Section of the Florida Bar (the "Report"), as published in 46 The Business Lawyer 1407 (August 1991). The Report is incorporated by reference into this opinion. In rendering the opinions expressed below, we have relied, with your approval, as to factual matters (but not legal conclusions) that affect our opinions, solely on our examination of the following documents and have made no independent verification of the facts asserted to be true and correct in those documents, including the factual representations and warranties contained therein: (a) (i) the Credit Agreement and the Notes, (ii) the Security Agreement (the "Security Agreement"), (iii) the notice of liquor license lien to be filed with the Division of Alcoholic Beverages and Tobacco of the State of Florida pursuant to Section 561.65 of the Florida Statutes and the notices of lien to be filed with the Division of Motor Vehicles of the State of Florida (collectively, the "Notices of Lien") and (iv) each counterpart of the Mortgage (collectively, the "Mortgage," and, together with the Security Agreement, the "Security Documents" and, together with the Credit Agreement, the Security Agreement and the Notes, the "Loan Documents"), (b) (i) the financing statement on Form UCC-1 naming the Company as debtor and the Administrative Agent (as Agent) as secured party, bearing File No. 940000252635, as filed with the Secretary of State of the State of Florida (the "State Financing Statement"), and (ii) the financing statement on Form UCC-1 naming the Company as debtor and the Administrative Agent (as Agent) as secured party to be filed with the Clerk of the Circuit Court of various counties in Florida (the "Fixture Financing Statement", and together with the State Financing Statement, the "Financing Statements"), and (c) a Certificate of the Company's Authority to Transact Business in Florida issued by the Florida Department of State on December 12, 1994. In our examination, we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. In rendering the opinions expressed below, in addition to the assumptions contained in the Report, we have assumed (a) the Confirmation Order has been entered by the Clerk of the Bankruptcy Court; the effectiveness of the Confirmation Order is not stayed by reason of the operation of the Federal Rules of Bankruptcy Procedure, any local bankruptcy rule or order of any Governmental Person or otherwise; the Confirmation Order has become final and is non-appealable; and no grounds exist for revocation of the Confirmation Order; (b) the execution and delivery of the Notes and Mortgages, the recording of the Mortgages, and the borrowing and reborrowing of sums under the Loan Documents are exempt from all Florida documentary stamp taxes under Section 1146(c) of the U.S. Bankruptcy Code or, alternatively, any such taxes that may be payable have been paid; and (c) all of the documents referred to in this opinion have been duly authorized by, have been duly executed and delivered, and (other than with respect to the Mortgage, to the extent governed by Florida law) constitute legal, valid, binding and enforceable obligations of, all of the parties to such documents, and that all signatories to such documents have been duly authorized and have the power and authority (corporate or other) to execute, deliver and perform such documents. Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that: (i) Neither the Administrative Agent nor any of the Lenders will, solely by reason of the making by any Lender of any Loan or solely by reason of, or a condition to, the obtaining by the Administrative Agent (on behalf of the Lenders) of the Liens of the Security Documents or the enforcement by the Administrative Agent or any Lender of its rights, remedies, powers and privileges under the Loan Documents, be required to qualify to do business in the State of Florida or to make any registration, declaration or filing (other than the filings of the Financing Statements, Mortgages, and the Notices of Liens) with any Governmental Person of the State of Florida (provided, however, that certain rights, remedies, powers and privileges under the Loan Documents are available only judicially and therefore the filing of a lawsuit may be required in connection with the enforcement thereof). (ii) Subject to the limitations contained in the next paragraph, the Mortgage constitutes the legal, valid and binding obligation of the Company, enforceable against it under the law of Florida. Our opinion concerning the validity, binding effect and enforceability of the Mortgage means that (a) the Mortgage constitutes an effective contract under applicable law, (b) the Mortgage is not invalid in its entirety because of a specific statutory prohibition or public policy and is not subject in its entirety to a contractual defense, and (c) subject to the last sentence of this paragraph, remedies generally available to mortgage lenders in the State of Florida are available to the Administrative Agent under the Mortgage if the Company is in material default under the Mortgage. This opinion does not mean that (a) any particular remedy is available upon a material default, or (b) every provision of the Mortgage will be upheld or enforced in any or each circumstance by a court. Furthermore, the validity, binding effect and enforceability of the Mortgage may be limited or otherwise affected by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar statutes, rules, regulations or other laws affecting the enforcement of creditors' rights and remedies generally and (b) the unavailability of, or limitation on the availability of, a particular right or remedy (whether in a proceeding in equity or at law) because of an equitable principle or a requirement as to commercial reasonableness, conscionability or good faith. (iii) The Mortgage is in proper form for recording in the public records of the various counties in which the real property described therein is located and such recordation is the only recording or filing necessary in Florida to give to third parties constructive notice of the Lien of the Mortgage. (iv) The State Financing Statement is in proper form for filing with the Secretary of State of the State of Florida, and the Fixture Financing Statement is in proper form for filing with the Clerk of the Circuit Court of the various counties in which the real property described therein is located. (v) To the extent that a security interest in the collateral described in the Security Agreement may be properly perfected by filing a financing statement under Chapter 679, Florida Statutes, the proper place to file the financing statement is (a) with respect to goods which are or are to become fixtures, with the Clerk of the Circuit Court of the county in which the relevant real estate is located, and (b) with respect to the other collateral, with the office of the Florida Department of State. The foregoing opinions are also subject to the following comments and qualifications: (a) We express no opinion as to the ownership of or title to any of the property purported to be encumbered by the Security Documents, as to the priority of any Liens (including the Liens of the Loan Documents), or (except as expressly set forth in paragraph (v) above) as to the creation or perfection of any Liens (including the Liens of the Loan Documents). Further, we advise you that we have, for the purposes of this opinion, assumed that: (i) the chief executive office of the Company is located in Florida, and (ii) the personal property purported to be subject to the Lien of the Security Agreement does not include property of the types described in Sections 679.104, 679.401(1)(a), or 679.401(1)(b) other than goods which are or are to become fixtures. (b) The foregoing opinions are limited to matters involving the laws of the State of Florida and we do not express any opinion as to the laws of any other jurisdiction. Without limitation of the foregoing, we do not express any opinion as to any Federal or Florida securities laws, tax laws, bank regulatory laws, environmental laws, land use and zoning laws, or as to any matters of law or fact not expressly opined upon herein. This opinion letter is provided to you by us as special counsel to the Administrative Agent pursuant to Section 6.01(e) of the Credit Agreement and is rendered solely in connection with the transactions contemplated by the Loan Documents. This opinion may be relied upon by you (and your successors and assigns) only in connection with such transaction, and may not be relied upon by any other person or for any purpose without our prior written consent in each instance. Very truly yours, COLL DAVIDSON CARTER SMITH SALTER & BARKETT, P.A. By_________________________ By_________________________ EXHIBIT G [Form of Confidentiality Agreement] CONFIDENTIALITY AGREEMENT [Date] [Insert Name and Address of Prospective Participant or Assignee] Re: Credit Agreement dated as of December 29, 1994 (the "Credit Agreement") among Kash n' Karry Food Stores, Inc., the Lenders identified in the Credit Agreement, the CIT Group/Business Credit, Inc., as Administrative Agent, and Bank of America National Trust and Savings Association, as Co-Agent. Ladies and Gentlemen: As a Lender party to the Credit Agreement, we have agreed with the Company pursuant to Section 11.12 of the Credit Agreement to use reasonable precautions to keep confidential, except as otherwise provided in the Credit Agreement, all nonpublic information identified by the Company as being confidential at the time the same is delivered to us pursuant to the Credit Agreement. As provided in that Section 11.12, we are permitted to provide you, (i) as a prospective [holder of a participation in the Loans (as defined in the Credit Agreement)] [assigned Lender], with certain of such nonpublic information subject to the execution and delivery by you, prior to receiving such nonpublic information, of a Confidentiality Agreement in this form. Such information will not be made available to you until your execution and return to us of this Confidentiality Agreement. Accordingly, in consideration of the foregoing, you agree (on behalf of yourself and each of your affiliates, directors, officers, employees and representatives) that (A) such information will not be used by you except in connection with the proposed [participation] [assignment] mentioned above and (B) you shall use reasonable precautions, in accordance with your customary procedures for handling confidential information and in accordance with safe and sound banking practices, to keep such information confidential, provided that nothing in this Confidentiality Agreement shall limit the disclosure of any such information (i) to the extent required by Governmental Rule, (ii) to your counsel or to counsel for any of the Lenders, the Administrative Agent or the Co-Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Administrative Agent, the Co-Agent or any other lender or their affiliates, directors, officers, employees, accountants, consultants and representatives, (v) in connection with any litigation to which you or any one or more of the Lenders, the Administrative Agent or the Co-Agent is a party, (vi) to a subsidiary or affiliate of yours or (vii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to you a Confidentiality Agreement substantially in this form and (y) that in no event shall you be obligated to return any materials furnished to you pursuant to this Confidentiality Agreement. Please indicate your agreement to the foregoing by signing as provided below the enclosed copy of this Confidentiality Agreement and returning the same to us. Very truly yours, [NAME OF LENDER] By: [_________________________] The foregoing is agreed to as of the date of this letter. [NAME OF PROSPECTIVE PARTICIPANT OR ASSIGNEE] EX-10 10 EXHIBIT 10.2 TO 1/29/95 10-Q MASTER THIRD AMENDMENT TO THE DEFERRED COMPENSATION AGREEMENTS This Master Third Amendment to the Deferred Compensation Agreements is entered into this 2nd day of September, 1994, by Kash n' Karry Food Stores, Inc. BACKGROUND In December of 1989, Kash n' Karry Food Stores, Inc., a Delaware corporation (the "Company"), entered into those certain Deferred Compensation Agreements with certain of its key employees (collectively referred to as "Key Employees" and singularly referred to as "Key Employee"), as subsequently amended by that certain Master First Amendment dated as of November 11, 1991, and that certain Master Second Amendment dated as of December 30, 1993 (as so amended, collectively referred to as the "Agreements" and singularly referred to as "Agreement"). Under subparagraph 7.2 of each Agreement the Company reserved the right to amend the Plan with or without consent of the Employee. The Company, in order to reward the past and future loyalty and valuable efforts of its Key Employees, and pursuant to such reserved amendment power, hereby further amends the Agreements as set forth below. TERMS 1. Subparagraph 1.6 is hereby amended by adding the following sentence immediately after clause (e) thereof: Notwithstanding any contrary provision herein, no Change in Control shall occur by reason of, or as a result of, the consummation of the capital restructuring plan as described in the Company's recent reports on Form 8-K dated May 12, 1994, and July 27, 1994, filed with the U.S. Securities and Exchange Commission, on the terms described therein or on such other terms and conditions as the Company may approve, including, without limitation, the consummation of an exchange offer between the Company and the holders of 14% Subordinated Debentures due February 1, 2001, pursuant to which such holders would receive common stock of the Company in exchange for outstanding debentures, the exercise of voting rights by the holders of common stock issued pursuant to such exchange offer as a result of which the persons who constitute the Incumbent Board as of the date hereof cease to constitute at least two-thirds of the Board of Directors, the filing by the Company of a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code, or the approval by the Company's shareholders or Board of Directors of any such transaction. 2. The last sentence of paragraph 16 is hereby revised and shall read in its entirety as follows: The Company shall pay the ninety percent amount (90%) of the Key Employee's Benefit, less all deductions required by law, to the Key Employee not later than sixty (60) days after the Withdrawal Election Date by either hand delivery to the Key Employee at the Company's office or delivery in accordance with paragraph 15.5 of the Agreement. 3. Unless otherwise provided under this Amendment, the capitalized terms used herein shall have the meanings ascribed to them under the Agreement. 4. Except as hereinabove amended, the Company does hereby republish and affirm all provisions of the Agreements. IN WITNESS WHEREOF, the Company has executed this Master Third Amendment on this 2nd day of September, 1994. ATTEST: KASH N' KARRY FOOD STORES, INC. /s/ Richard D. Coleman By: /s/ Raymond P. Springer Secretary Name: Raymond P. Springer Its: Executive Vice President EX-10 11 EXHIBIT 10.3 TO 1/29/95 10-Q MANAGEMENT SERVICES AGREEMENT This MANAGEMENT SERVICES AGREEMENT (this "Agreement"), dated as of December 29, 1994, is made by and between KASH N' KARRY FOOD STORES, INC., a Delaware corporation (the "Company"), and LEONARD GREEN & PARTNERS, L.P. ("LGP"). WHEREAS, the Company desires to obtain from LGP, and LGP desires to provide, certain management, consulting, financial planning and financial advisory services on an ongoing basis. NOW THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto hereby agree as follows: 1. Retention. Subject to the terms and conditions hereof, the Company hereby retains LGP, and LGP hereby agrees to be retained by the Company, to provide management, consulting, financial planning and financial advisory services to the Company on an ongoing basis in connection with the operation of the Company during the term of this Agreement and in connection with major financial transactions that may be undertaken from time to time during the term of this Agree- ment (collectively, the "Services"). 2. Compensation. In consideration of the Services, the Company shall pay LGP an annual fee of $200,000, payable in equal monthly installments, in advance, on the first day of each month commencing on the first such day following the effec- tive date hereof; provided, however, that the amount of such fee shall be prospectively reduced by an amount equal to two percent (2%) of the greater of (x) the cost to LGP and its affiliates of, or (y) the proceeds received by LGP and its affiliates with respect to, all or any part of their $10 million equity investment in the Company which is trans- ferred during the term of this Agreement to the Company or to any third party which is not an affiliate of LGP or a partner of Green Equity Investors, L.P. In the event the Company shall specifically request that LGP provide investment banking services to the Company in con- nection with a major financial transaction undertaken by the Company during the term of this Agreement, and LGP shall agree to do so, the Company shall pay LGP for such services reasonable and customary fees for services of like kind, taking into consideration all relevant factors, including but not limited to the complexity of the subject transac- tion, the time devoted to providing such services and the value of LGP's investment banking expertise and relations within the business and financial community. The amount of such fees shall be approved by a majority of the disinter- ested members of the Company's Board of Directors. The Company and LGP hereby terminate any prior written or oral understandings or agreements with respect to the provi- sion by LGP of management, consulting, financial planning or financial advisory services to the Company, and LGP hereby waives any fees and/or expenses that may have accrued or be payable to LGP by or on behalf of the Company in connection with or pursuant to any such prior understandings or agree- ments. 3. Term. This Agreement shall become effective (the "effective date") on the effective date of the Company's plan of reor- ganization described in the Company's Disclosure Statement dated September 2, 1994, and shall terminate on the earlier to occur of (i) the second anniversary of the effective date of this Agreement and (ii) the date on which the annual fee to which LGP is entitled hereunder is reduced to zero pursu- ant to the provisions of Section 2 hereof. Notwithstanding any other provision hereof, the Company's obligation, pursu- ant to Section 2 hereof and the provisions of Section 5 hereof, to pay amounts due with respect to periods prior to the termination hereof shall survive any termination of this Agreement. 4. Decisions; Authority of Management Advisor. 4.1 Company Decisions. The Company reserves the right to make all decisions with regard to any matter upon which LGP has rendered its advice and consultation, and there shall be no liability to LGP for any such advice ac- cepted by the Company pursuant to the provisions of this Agreement. 4.2 Independent Contractor. LGP shall act solely as an independent contractor and shall have complete charge of its personnel engaged in the performance of the Services. As an independent contractor, LGP shall have the authority only to act as an advisor to the Company and shall have no authority to enter into any agreement or to make any representations, commitment or warranty binding upon the Company or to obtain or incur any right, obligation or liability on behalf of the Compa- ny. 5. Indemnification. 5.1 Indemnification. The Company shall (i) indemnify LGP and GEI, their respective affiliates, and the partners, directors, officers, employees, agents and controlling persons of LGP and GEI and their respective affiliates (collectively, the "Indemnified Parties"), to the fullest extent permitted by law, from and against any and all losses, claims, damages and liabilities, joint or several, to which any Indemnified Party may become subject, caused by, related to or arising out of the Services or the engagement of LGP pursuant to, and the performance by LGP of the Services contemplated by, this Agreement, and (ii) promptly reimburse each Indem- nified Party for all costs and expenses (including reasonable attorneys' fees and expenses), as incurred, in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Company and whether or not resulting in any liability; provided, however, that the Company shall not be liable under the foregoing indemnification to the extent that such loss, claim, damage, liability, cost or expense is found in a final non-appealable judgment by a court to have resulted from such Indemnified Party's bad faith or gross negli- gence or from a material violation of this Agreement or from actions of such Indemnified Party outside the scope of and unauthorized by this Agreement; and pro- vided, further, that no Indemnified Party shall be reimbursed for costs and expenses unless the Company shall have received an undertaking by or on behalf of such Indemnified Party to repay such amounts if it shall be determined ultimately that such Indemnified Party is not entitled to be indemnified hereunder. 5.2 The Company agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company related to or arising out of the engagement of LGP pursuant to, or the per- formance by LGP of the Services contemplated by, this Agreement, except to the extent that such loss, claim, damage, liability, cost or expense is found in a final non-appealable judgment by a court to have resulted from LGP's bad faith or gross negligence or from a material violation of this Agreement or from actions of such Indemnified Party outside the scope of an unautho- rized by this Agreement. 5.3 The Company, upon receipt of notice from any Indemni- fied Party as to any such pending or threatened claim or any action or proceeding arising therefrom and at the Company's request, shall be permitted by such Indemnified Party to assume (at the Company's expense) the defense of such claim or any action or proceeding arising therefrom (including, but not limited to, the negotiation with the relevant third party of any set- tlement of such claim and the scope of any nonmonetary relief or action that may be required in response to such claim), provided that (i) the counsel for the Company who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to such Indemnified Party and (ii) such Indemnified Party may participate in (but not control) such defense at such Indemnified Party's expense. Except with the prior written consent of such Indemnified Party, such consent not to be unreasonably withheld, the Company, in the defense of any such claim or litigation, shall not consent to entry of any judgment or order, interim or otherwise, or enter into any settlement that provides for injunctive or other nonmonetary relief affecting such Indemnified Party. In each case, such Indemnified Party will cooperate with the Company, so long as the Company is conducting the defense of such claim, in the preparation for and the prosecution of the defense of such claim, including making available evidence within the control of such Indemnified Party and persons needed as witnesses who are employed by such Indemni- fied Party, as the case may be, in each case as reason- ably needed for such defense and at cost, which cost, to the extent reasonably incurred, shall be paid by the Company. 6. Miscellaneous. 6.1 Assignment. Neither of the parties hereto shall assign this Agreement or the rights and obligations hereunder, in whole or in part, without the prior written consent of the other party. Subject to the foregoing, this Agreement will be binding upon and inure solely for the benefit of the parties hereto and their respective successors and assigns, and no other person shall acquire or have any right hereunder or by virtue here- of. 6.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California as applied to contracts made and performed within the State of California without regard to prin- ciples of conflict of laws. 6.3 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substan- tially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may hereafter be declared invalid, illegal, void or unenforceable. 6.4 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter of this Agreement and memorializes and supersedes all written or oral representations, warran- ties, commitments and other understandings prior to the date of this Agreement relating to the subject matter of this Agreement. 6.5 Further Assurances. The parties agree to take such further action and to deliver or cause to be delivered such additional agreements or instruments as either of them may reasonably request for the purpose of carrying out this Agreement and the agreements and transactions contemplated hereby. 6.6 Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party, as determined by the court, shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. 6.7 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 6.8 Amendment and Waiver. This Agreement may be amended, modified or supplemented provided that the same are in writing and signed by each of the parties hereto. Waivers or consents to departures from the provisions hereof may be given provided that the same are in writing and signed by the party charged with giving the same. No waiver by either party of any provisions of this Agreement shall operate as a subsequent waiver of the same or any other provision of this Agreement. 6.9 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 agree- ment. IN WITNESS WHEREOF, the parties have executed this Manage- ment Services Agreement on the date first appearing above. KASH N' KARRY FOOD STORES, INC. By: /s/ R. S. Springer Name: R. S. Springer Title: Executive Vice President, Administration LEONARD GREEN & PARTNERS, L.P. By: /s/ Jennfier Holden Dunbar Name: Jennifer Holden Dunbar Title: President, Willow III, Inc. A General Partner of Leonard Green & Partners. -----END PRIVACY-ENHANCED MESSAGE-----