Exhibit 2.2
Xxxxxxx'x Food Markets, Inc.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
As of April 1, 1997
RFM Acquisition LLC
x/x Xxxxxxxx Xxxxxx Xxxxxxx & Co. L.P.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Dear Sirs:
Reference is made to (i) the Subscription Agreement dated as of the
date hereof among RFM Acquisition LLC ("BUYER"), Xxxxxxx'x Food Markets, Inc.
("SELLER") and Xxxxxx X. Xxxxxxx (the "SUBSCRIPTION AGREEMENT"), (ii) the Credit
Agreement dated as of November 1, 1993, as amended, among Seller, certain
subsidiaries of Seller, the banks party thereto and Texas Commerce Bank National
Association, as agent (the "CREDIT AGREEMENT"), and (iii) the Note Purchase
Agreement dated as of November 1, 1993, as amended, among the Company, certain
subsidiaries of the Company and the insurance companies party thereto (such
agreement, together with the notes issued pursuant thereto, the "NOTE PURCHASE
AGREEMENT"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Subscription Agreement.
In addition to the indemnification obligations of Seller and Xxxxxx X.
Xxxxxxx under the Subscription Agreement, and without in any way limiting such
obligations, Seller hereby agrees to defend, indemnify and hold harmless Buyer
and its Affiliates (including KKR), each director, officer and employee of Buyer
and such Affiliates, and Buyer's representatives and advisors against any loss,
damage, claim, liability, judgment or settlement of any nature or kind,
including all costs and expenses relating thereto, including interest, penalties
and reasonable attorneys' fees, incurred after the date hereof (collectively
"DAMAGES"), arising out of, resulting from or relating to (i) any default or
event of default under the Credit Agreement or the Note Purchase Agreement, (ii)
any breach by Seller or any of its subsidiaries of any obligations under the
Credit Agreement or the Note Purchase Agreement and (iii) any waiver, amendment
or consent relating to the Credit Agreement or the Note Purchase Agreement,
PROVIDED, HOWEVER, that Seller shall not be obligated for any indemnification
pursuant to this Letter Agreement unless the aggregate Damages indemnifiable
under this Letter Agreement exceed $50,000, and if such Damages exceed $50,000,
then Seller shall be obligated for all such Damages. Without limiting the
generality of the foregoing, Damages shall include (a) any increase in the
amount of interest payable under
the Credit Agreement or the Note Purchase Agreement in connection with any of
the items described in clauses (i), (ii) or (iii) above, (b) any incremental
cost in connection with the prepayment of amounts owing under the Credit
Agreement or the Note Purchase Agreement or the shortening of the maturities of
the loans under the Credit Agreement or the notes issued pursuant to the Note
Purchase Agreement, in any case in connection with any of the items described in
clauses (i), (ii) or (iii) above, and (c) any fees or expenses incurred by the
banks, agent or insurance companies referenced above in connection with any of
the items described in clauses (i), (ii) or (iii) above which fees or expenses
are paid or payable by or on behalf of Seller or its subsidiaries.
To the extent any amount is payable by Seller pursuant to this Letter
Agreement, such obligation shall be satisfied by Seller's issuance of additional
shares ("ADDITIONAL SHARES") of Seller's common stock to Buyer or its designee
calculated as set forth below. Any issuance of Additional Shares pursuant to
this Letter Agreement shall be deemed to be an adjustment to the number of
shares of Common Stock purchased under the Subscription Agreement.
The number of Additional Shares to be issued pursuant to this Letter
Agreement from time to time shall equal (1) a fraction (A) the numerator of
which shall equal the number of shares of Common Stock outstanding as of the
date such Additional Shares are to be issued minus the number of shares of
Common Stock then held by Buyer and its Affiliates, and (B) the denominator of
which shall equal 1 minus a fraction, (i) the numerator of which shall equal the
number of shares of Common Stock then held by Buyer and its Affiliates
multiplied by the Fair Market Value of one share of Common Stock as of such
date, and (ii) the denominator of which shall equal (a) the number of shares of
Common Stock then outstanding multiplied by the Fair Market Value of one share
of Common Stock as of such date minus (b) the amount of Damages incurred by the
Indemnitee minus (2) the number of shares of Common Stock then outstanding.
Additional Shares shall be issued pursuant to this Letter Agreement at
the Closing and from time to time thereafter as Damages are incurred, provided
that (i) no Additional Shares shall be issued if the Closing shall not occur and
(ii) for purposes of the calculation contained in the preceding paragraph, any
Additional Shares issued at the Closing shall be deemed to be issued immediately
after the consummation of the Purchase pursuant to the Subscription Agreement
and after giving effect to consummation of the Tender Offer.
The term "Damages" as used in this Letter Agreement is not limited to
matters asserted by third parties against any party entitled to be indemnified
under this Letter Agreement, but includes Damages incurred or sustained by any
such party in the absence of third party claims.
The provisions of Article IX of the Subscription Agreement (other than
Section 9.01) are deemed to be incorporated in this Letter Agreement as if
explicitly stated herein.
If you are in agreement with the foregoing, please sign the enclosed
copy of this Letter Agreement and return it to the undersigned.
Very truly yours,
XXXXXXX'X FOOD MARKETS, INC.
/s/ R. XXXXXXX XXXXXXX, XX.
------------------------------------
Name: R. Xxxxxxx Xxxxxxx, Xx.
Title: Chief Executive Officer
AGREED:
RFM ACQUISITION LLC
/s/ XXXX X. XXXXXXX
------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
