Exhibit 99.2
Eagle Food Centers, Inc.
Route 67 at Knoxville Xxxx
Xxxxx, Xxxxxxxx 00000
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
xxxxxx agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
Indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing X. Xxxxxx Xxxxxxx at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Xxxxxxxxxx & Xxxx ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Alliance Capital Management L.P.,
as investment advisor
---------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
$12,550,000
--------------------------------
Principal Amount of Old Notes
Held as Follows:
Amount Registered Holder Custodian
------ ----------------- ---------
$3,750,000 The Equitable Life Chase
$4,500,000 Assurance Society Chase
$_________ of the United States
$3,000,000 Alliance DHO, Limited Chase Bank of Texas
$1,300,000 Alliance Global Chase Bank of Texas
Diversified Holdings
Limited
Schedule A
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
__________________________________
By: ______________________________
Name:
Title:
$__________________________________
Principal Amount of Old Notes
Held as Follows:
Amount Registered Holder Custodian
------ ----------------- ---------
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
--------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
--------------------------------------------------------------------------------
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
--------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
--------------------------------------------------------------------------------
New Interest Rate 11% per annum.
--------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
--------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
--------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
--------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
--------------------------------------------------------------------------------
Consent Payment None.
--------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10% of
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
--------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Xxxxx'x Investor Service, Inc. and
Standard and Poors.
--------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
--------------------------------------------------------------------------------
2
Eagle Food Centers, Inc.
Route 67 at Knoxville Xxxx
Xxxxx, Xxxxxxxx 00000
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of the Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind with respect to the Old Notes
against the Company, its subsidiaries and/or its affiliates other than to
enforce this Agreement. Notwithstanding the foregoing, the Noteholder reserves
and retains, and does not waive, any rights or remedies it may have against the
Company under the Indenture, the Old Notes or otherwise except as such rights or
remedies may be modified in a confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
xxxxxx agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with or better than the terms set forth on Schedule A and being in form
and substance reasonably acceptable to the Noteholder, and the Noteholder's
claims being allowed in full. If the Company files the Plan and has complied
with this Agreement, Noteholder agrees not to object to, and to fully support,
the Plan, provided, however, that such agreement and all other obligations of
Noteholder under this Agreement shall terminate if (i) the Bankruptcy Case is
not commenced prior to March 8, 2000 or (ii) the Plan is not confirmed within 90
days after commencement of the Bankruptcy Case. Noteholder also agrees to
execute and deliver to the Company, within seven business days after
solicitation materials are delivered to the Noteholder and the solicitation is
commenced, a ballot in a form reasonably acceptable to the Noteholder indicating
Noteholder's acceptance of the Plan. Notwithstanding any other provision of this
Agreement, the Plan will provide that it shall be a condition to confirmation
that the order confirming the Plan be reasonably satisfactory to Noteholder and
that any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder.
(vi) Interest. All interest unpaid and accrued under the Old
indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
differing from those set forth herein in any manner adverse to the Noteholders,
(c) the Plan containing no material conditions adversely affecting the
Noteholders other than those described in this Agreement, (d) the Agreement not
having been terminated pursuant to Section (viii) hereof, and (e) the Plan being
consistent in all material respects with, or better than, the terms and
provisions of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto (including those parties indicated as
registered holders on the signature page hereto) and the Noteholders who have
entered into agreements with the Company substantially identical to this
Agreement and no other person or entity shall be a third-party beneficiary
hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing X. Xxxxxx Xxxxxxx at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Xxxxxxxxxx & Xxxx ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to subject to
initialization and agreement to all
handwritten changes:
Name of Noteholder:
Xxxxxx, Xxxxxxx, Xxxx Xxxxxx Advisers
-------------------------------------
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
$11,595,000
--------------------------------
Principal Amount of Old Notes
Held as Follows:
Amount Registered Holder Custodian
------ ----------------- ---------
$9,185,000 MSDW High Yield Securities Bank of New York
$ 500,000 MSDW High Income Advantage Trust Bank of New York
$ 650,000 MSDW High Income Advantage Trust II Bank of New York
$ 260,000 MSDW High Income Advantage Trust III Bank of New York
$1,000,000 MSDW Diversified Income Trust Bank of New York
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
--------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
--------------------------------------------------------------------------------
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
--------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
--------------------------------------------------------------------------------
New Interest Rate 11% per annum.
--------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
--------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
--------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
--------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
--------------------------------------------------------------------------------
Consent Payment None.
--------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10%
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
--------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Xxxxx'x Investor Service, Inc. and
Standard and Poors.
--------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
--------------------------------------------------------------------------------
2
Eagle Food Centers, Inc.
Route 67 at Knoxville Xxxx
Xxxxx, Xxxxxxxx 00000
February 29, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's jurisdiction of organization;
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name an the signature page hereof (the
"Noteholders Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duty authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
xxxxxx agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
Indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing X. Xxxxxx Xxxxxxx at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Xxxxxxxxxx & Xxxx ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Delaware Investment Advisers, on behalf of and for the benefit of Atlantic
Global Funding, Ltd.*
--------------------------------
By: /s/ Xxxx X. Xxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxx *Subject to the additional terms
Title: Vice President/Senior and conditions set forth on the
Portfolio Manager Addendum to Schedule A attached hereto
$ *3,000,000
--------------------------------
Principal Amount of Notes
Held as Follows:
Amount Registered Holder Custodian
------ ----------------- ---------
$3,000,000 XXXX & Co. (for Chase Bank
$_________ Atlantic Global of Texas, National
$_________ Funding CBO, Ltd. Association
$_________ _____________________ ______________________
$_________ _____________________ ______________________
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
--------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
--------------------------------------------------------------------------------
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
--------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
--------------------------------------------------------------------------------
New Interest Rate 11% per annum.
--------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
--------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
--------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
--------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
--------------------------------------------------------------------------------
Consent Payment None.
--------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10% of
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
--------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Xxxxx'x Investor Service, Inc. and
Standard and Poors.
--------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
--------------------------------------------------------------------------------
2
ADDENDUM TO SCHEDULE A
ON BEHALF OF ATLANTIC GLOBAL FUNDING CBO, LIMITED
EAGLE FOOD CENTERS, INC.
SUMMARY TERM SHEET
Delaware Investment Advisers, on behalf of and for the benefit of Atlantic
Global Funding CBO, Limited, has signed the letter agreement dated February 29,
2000 between Eagle Food Centers, Inc. and Delaware Investment Advisers (the
"Letter Agreement") subject to Delaware Investment Advisers' understanding that
the following terms and conditions will be included within the Note
Restructuring described in the Letter Agreement and Schedule A attached thereto,
as if such terms and conditions were included in and made a part of the Letter
Agreement and Schedule A:
1) The New Notes and the Equity will be fully registered and freely
tradeable.
2) The $15 million aggregate amount of principal reduction described in the
Term Sheet under the heading Principal Reduction, shall be accomplished by
means of a cash payment to the holders of the Old Notes upon the effective
date of the Plan.
3) The Company will, within 30 days of the Effective Date, use its best
efforts to cause the New Notes to be rated by Xxxxx'x Investor Service,
Inc.
Capitalized terms used in this Addendum to Schedule A shall have the same
meanings assigned to them in the Letter Agreement and/or Schedule A thereto.
B: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President/Senior
Portfolio Manager
Eagle Food Centers, Inc.
Route 67 at Knoxville Xxxx
Xxxxx, Xxxxxxxx 00000
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
xxxxxx agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid..
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing X. Xxxxxx Xxxxxxx at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Xxxxxxxxxx & Xxxx ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
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(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Summit Investment Partners
--------------------------------
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Partner
$2,000,000
--------------------------------
Principal Amount of Notes
Held as Follows:
Amount Registered Holder Custodian
------ ----------------- ---------
$2,000,000 Carillon Holding Ltd. Chase Texas - Xxx Xxxx
$_________ _____________________ ______________________
$_________ _____________________ ______________________
$_________ _____________________ ______________________
$_________ _____________________ ______________________
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
--------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
--------------------------------------------------------------------------------
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
--------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
--------------------------------------------------------------------------------
New Interest Rate 11% per annum.
--------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
--------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
--------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
--------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
--------------------------------------------------------------------------------
Consent Payment None.
--------------------------------------------------------------------------------
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Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10%
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
--------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Xxxxx'x Investor Service, Inc. and
Standard and Poors.
--------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
--------------------------------------------------------------------------------
2
