EXHIBIT 2
SUPPLEMENTAL WARRANT AGREEMENT
SUPPLEMENTAL WARRANT AGREEMENT (the "Agreement") dated as of September 9,
1997 among XXXX XXXXX, INC., a Delaware corporation formerly known as Xxxxx-
Xxxxx Holdco, Inc. (the "Company"), and THE YUCAIPA COMPANIES, a California
general partnership, or its registered permitted assigns (the "Consultant").
WHEREAS, Xxxxx'x Food & Drug Centers, Inc., a Delaware corporation
("Xxxxx'x"), has become a wholly-owned subsidiary of the Company as a result of
the transactions (collectively, the "Merger") contemplated in the Agreement and
Plan of Reorganization and Merger dated as of May 11, 1997 between Xxxxx'x and
FM Stores, Inc., a Delaware corporation and predecessor to the Company formerly
known as Xxxx Xxxxx, Inc. ("Xxxx Xxxxx Stores").
WHEREAS, prior to the effective date of the Merger, Xxxxx'x was a party to
a Warrant Agreement dated May 23, 1996 (the "Warrant Agreement") between
Xxxxx'x and the Consultant pursuant to which Xxxxx'x issued 1,842,555 warrants
to purchase an aggregate of 1,842,555 shares of Class C Common Stock, $.01 par
value per share, of Xxxxx'x. Defined terms used herein and not otherwise
defined herein have the meanings set forth in the Warrant Agreement.
WHEREAS, pursuant to the terms of the Merger Agreement and the Warrant
Agreement, the Company is required to enter into a supplemental warrant
agreement to provide for the issuance of Common Stock, $.01 par value ("Common
Stock"), of the Company upon exercise of the warrants subject to the Warrant
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, in the Warrant Agreement and in the Merger
Agreement, the parties hereto agree as follows:
SECTION 1. The Warrant Agreement is hereby amended such that, unless the
context requires otherwise, the following defined terms contained therein shall
have the meanings set forth below:
(a) "Class C Common Stock," "Class B Common Stock," or
"Common Stock" shall mean and refer to the Common Stock of the Company.
(b) "Company" shall mean and refer to Xxxx Xxxxx, Inc., a
Delaware corporation formerly known as Xxxxx-Xxxxx Holdco, Inc.
(c) "Holder(s)" shall mean and refer to the registered
holder(s) of the Warrant Certificates or the New Warrant Certificates, as
defined below.
(d) "Merger Agreement" shall mean and refer to the Merger
Agreement dated as of May 11, 1997 by and between Xxxxx'x and Xxxx Xxxxx
Stores.
(e) "Registration Rights Agreement" shall mean and refer
to the Registration Rights Agreement dated as of September 9, 1997 by and
among the Company, Consultant and certain stockholders of the Company
named therein.
(f) "Warrant Shares" shall mean and refer to the Common
Stock of the Company issuable upon exercise of the Warrants.
(g) "Warrants" shall mean and refer to the 1,934,683
warrants, as described herein and in the Warrant Agreement, to purchase an
aggregate of 1,934,683 shares (subject to adjustment) of Common Stock of
the Company, pursuant hereto and pursuant to the Merger Agreement.
SECTION 2. All references to the "Standstill Agreement" shall be deleted.
SECTION 3. Subject to the terms and conditions of the Warrant Agreement,
the Company shall issue shares of its Common Stock as set forth in Section 3
hereof to Holders of Warrants upon exercise of such Warrants.
SECTION 4. The Warrants shall be exercisable initially for an aggregate
of 1,934,683 Warrant Shares at an Exercise Price of $47.61904 per share,
subject in each case to the adjustment provisions contained in the Warrant
Agreement.
The following proviso shall be added to the end of the third paragraph under
Section 5 of the Warrant Agreement:
"PROVIDED FURTHER, that any period of consecutive
trading days during which the Market Price of the Xxxxx'x
Class B Common Stock equaled or exceeded the Exercise Price
of the Warrants prior to consummation of the Mergers (as
defined in the Merger Agreement) shall count toward such 60-
day period."
SECTION 5. The parties hereto acknowledge that on September 8, 1997, the
Market Price of Xxxxx'x Class B Common Stock had exceeded the Exercise Price
then in effect for at least 60 consecutive trading days and as a result thereof
and in accordance with the terms of the Warrant Agreement the Exercise Period
in the case of the Series A Warrants expires at 5:00 p.m., Los Angeles time, on
May 23, 2005 and, in the case of the Series B Warrants expires at 5:00 p.m.,
Los Angeles time on May 23, 2006.
SECTION 6. On September 5, 1997, the Company announced a two-for-one
stock split of its Common Stock (the "Split"). Upon consummation of the Split,
the Exercise Price and Warrant Number shall be adjusted pursuant to the
provisions of Section 9 of the Warrant Agreement.
SECTION 7. Upon tender and delivery to the Company by any Holder of
Series A Warrant Certificates or Series B Warrant Certificates (as defined in
the Warrant Agreement) or both and upon cancellation thereof, the Company shall
issue and deliver new Series A Warrant Certificates ("New Series A Warrant
Certificates") and new Series B Warrant Certificates ("New Series B Warrant
Certificates" and together with the New Series A Warrant Certificates, the "New
Warrant Certificates"), respectively, evidencing the Warrants of such tendering
Holders. The New Warrant Certificates shall reflect the amendments to the
Warrant Certificates shall continue to be valid evidence of the Warrants, and
shall continue to be exercisable for the Common Stock of the Company pursuant
to the terms hereof and in the Warrant Agreement. The New Warrant Certificates
shall comply with and be subject to all of the terms and conditions of the
Warrant Agreement applicable to the Warrant Certificates.
SECTION 8. Section 5 of the Warrant Agreement is hereby amended by
deleting the second paragraph thereof.
SECTION 9. Section 8 of the Warrant Agreement is hereby amended by
deleting the second sentence of the first paragraph.
SECTION 10. Section 12 of the Warrant Agreement is hereby amended so that
notices shall be made as set forth therein to the Company at 0000 XX 00xx
Xxxxxx, Xxxxxxxx, Xxxxxx 00000, Attention: President, with a copy to the
General Counsel.
SECTION 11. Section 13 of the Warrant Agreement is hereby deleted.
SECTION 12. The Company hereby assumes all obligations of Xxxxx'x under
the Warrant Agreement and agrees to be bound by all of the provisions thereof,
as amended by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
XXXX XXXXX, INC.
By: /S/ XXXXX X. XXXXX
Xxxxx X. Xxxxx
Senior Vice President
THE YUCAIPA COMPANIES
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: General Partner
