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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
(Fee Required) for the fiscal year ended December 28, 1996 or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(No Fee Required) for the transition period from __________
to __________
Commission File Number
1-6814
BIG V SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
New York 14-1459448
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
176 North Main Street
Florida, New York 10921
(914) 651-4411
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
---------
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Aggregate market value of voting stock held by non-affiliates
as of March 21, 1997: $0
Common stock outstanding as of March 21, 1997: 1,000 shares
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
This Annual Report on Form 10-K is being filed voluntarily and shall not be
deemed to be subject to Section 18 of the Securities Exchange Act of 1934.
A list of Exhibits to this Annual Report on Form 10-K is located on page II-1.
----------------------------
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BIG V SUPERMARKETS, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 28, 1996
INDEX
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Page
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PART I
ITEM 1. Business 1
ITEM 2. Properties 9
ITEM 3. Legal Proceedings 10
ITEM 4. Submission of Matters to a Vote of Security Holders 11
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 12
ITEM 6. Selected Consolidated Financial Information 13
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
ITEM 8. Financial Statements and Supplementary Data 22
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 22
PART III
ITEM 10. Directors and Executive Officers of the Registrant 23
ITEM 11. Executive Compensation 25
ITEM 12. Security Ownership of Certain Beneficial Owners and Management 31
ITEM 13. Certain Relationships and Related Transactions 34
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K. 36
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ITEM 1. Business
General
Big V Supermarkets, Inc. ("Big V" or the "Company") currently operates 31
supermarkets, principally under the ShopRite(R) name, in the Hudson River Valley
region of New York, northeastern Pennsylvania and northwestern New Jersey. Big
V's 29 New York supermarkets are located in the eight counties of Westchester,
Orange, Dutchess, Ulster, Columbia, Sullivan, Putnam and Greene. Big V has the
leading market share in its primary market, with an estimated market share of
32%, which is approximately double that of Big V's next largest competitor. The
Company's primary market consists of the seven counties north of Westchester
County, where 23 of its 29 New York stores are located. The Company's market
share in Westchester County is approximately 8%.
As the largest member of the Wakefern Food Corp., ("Wakefern") the largest
cooperative food wholesaler in the United States, the Company benefits from over
$4.0 billion in purchasing power, an industry leading private label program,
extensive advertising and promotion connected with the ShopRite(R) trademark and
one of the most popular and recognized supermarket names in the region. Big V
began operations in 1942 and had its stock listed on the American Stock Exchange
in 1971. The Company was taken private in a management-led buyout sponsored by
CS First Boston in 1987 and was acquired in December 1990 in a management-led
buyout sponsored by Thomas H. Lee Company ("THL").
Recapitalization
On December 17, 1993, Big V recapitalized its balance sheet (the
"Recapitalization") to enhance the Company's financial and operating flexibility
and to provide funds to implement its capital investment and expansion program.
The elements of the Recapitalization included (i) reducing the amount of near-
term principal amortization payments; (ii) extending the final maturity of long-
term indebtedness; (iii) increasing the availability under the Revolving Credit
Facility, as defined in Item 7; (iv) repaying existing debt containing covenants
which restricted the Company's ability to make certain capital expenditures; and
(v) providing funds for the Company's capital investment and expansion program.
On December 17, 1993, the Company completed the Recapitalization by
offering $80 million aggregate principal amount of 11% Senior Subordinated Notes
due 2004 (the "Initial Notes") under rule 144A of the Securities Act of 1933
(the "Act"). Proceeds from the Initial Notes, together with $40.0 million
borrowed pursuant to the B Term Loan (as defined in Item 7) have been used
(i) to repay $24.6 million under the Old Credit Agreement (as defined in Item
7); (ii) to retire $30 million principal amount of 12.35% Senior Secured Notes
due 1999 (the "Senior Notes"); (iii) to retire $30 million principal amount of
14.14% Subordinated Notes due 2001 (the "Subordinated Notes"), of which $50
million was outstanding; (iv) to purchase 270,000 shares of Holding's Class B
Common Stock (as defined herein) for $4.5 million, which shares were distributed
to
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Holding; (v) to finance capital expenditures in connection with the Company's
expansion program; (vi) to pay repayment premiums in connection with the Senior
Notes and the Subordinated Notes; (vii) to pay fees and expenses related to the
Recapitalization; and (viii) for other general corporate purposes.
Pursuant to a registration rights agreement entered into with the
purchasers of the Initial Notes (the "Registration Rights Agreement"), the
Company agreed to offer to exchange up to $80 million aggregate principal amount
of 11% Series B Senior Subordinated Notes due 2004 (the "Exchange Notes") for
$80 million principal amount of Initial Notes (the "Exchange Offer"). The terms
of the Exchange Notes are substantially identical in all respects (including
principal amount, interest rate and maturity) to the terms of the Initial Notes,
except that the Exchange Notes are freely transferable by holders thereof (with
certain exceptions) and are not subject to any covenant upon the Company
regarding registration under the Securities Act of 1933, as amended. The
Company completed the Exchange Offer on May 12, 1994.
Store Summary
Selected statistics on Big V's stores are presented below:
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Fiscal Year Ended
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December 28, December 30, December 31, December 25, December 25,
1996 1995 1994 1993 1992
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Average annual sales per store (in
millions) $23.7 $24.0 $25.0* $24.4 $25.9
Same store sales increase
(decrease) from prior year 0.11% (0.8)% (0.1)% (2.6)% 2.9%
Total store area in square feet (in
thousands) 1,358 1,439 1,436 1,220 1,126
Total store selling area in square feet
(in thousands) 999 1,054 1,052 891 824
Average total square feet per store
(in thousands) 43.8 45.0 44.9 42.1 41.7
Average square feet of selling area per
store (in thousands) 32.2 33.0 32.9 30.7 30.5
Annual sales per square foot of selling
area (in thousands) $737 $729 $760* $796 $848
Number of stores:
Stores remodeled (over $500,000) 4 5 -- 2 1
New stores opened 1 -- 4 2 1
Stores replaced/expanded -- -- 2 2 2
Stores closed/divested (2) -- (1) -- (1)
Number of stores by size
(total store area):
30,000 to 39,999 sq. ft. 13 12 12 13 15
40,000 to 49,999 sq. ft. 10 10 10 10 8
Greater than 50,000 sq. ft. 8 10 10 6 4
Total stores open at period end 31 32 32 29 27
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*Calculated on a 53 week basis. A like 52 week comparison would be $24.5 million
in average sales per store and $746 in annual sales per square foot of selling
area.
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By industry standards, Big V stores are large and productive, averaging
43,800 square feet in size and generating high average sales volume of $23.7
million per store ($737 per selling square foot) for the fifty-two weeks ended
December 28, 1996. Big V's average store square footage is 24% larger than the
industry average and its sales volume per store and per selling square foot is
larger than industry averages by 24% and 39%, respectively. Big V's 31 stores at
December 28, 1996 ranged from 30,000 to 60,000 total square feet in size and
included 18 supermarkets in excess of 40,000 total square feet.
Big V's supermarkets offer a broad selection of grocery, meat, poultry,
seafood, dairy, fresh fruits, vegetables and frozen food products, including an
extensive variety of ShopRite(R) private label products. The stores also offer
an extended line of non-food products, health and beauty care products,
housewares and general merchandise. All Big V stores offer service delicatessen
departments and most stores offer floral, bakery, prepared foods and service
fish departments.
On January 28, 1996, the Company sold the assets and assigned the leases
of its two Connecticut stores (West Haven and Milford) to Wakefern. This sale
approximated the Company's net book value of assets sold, including inventory,
and resulted in total proceeds of approximately $8.6 million, which were used
primarily to reduce long-term debt.
Wakefern Food Corp.
The Company is the largest member of Wakefern, with Big V owning
approximately 19% of Wakefern's outstanding stock. Wakefern is the nation's
largest cooperative food wholesaler. There are presently 37 individual member
companies and 187 supermarkets which comprise the Wakefern cooperative. Only
Wakefern and member companies are entitled to use the ShopRite(R) name and
trademark. Only member companies can purchase their product requirements from
Wakefern and participate in ShopRite(R) advertising and promotional programs and
its computerized purchasing, warehousing and distribution services. The
principal benefits to the Company from its relationship with Wakefern are the
use of the ShopRite(R) name and trademark, volume purchasing, ShopRite(R)
private label products, distribution and warehousing on a cooperative basis, and
ShopRite(R) advertising and promotional programs. The Company believes the
ShopRite(R) name is widely recognized by its customers and favorably influences
the customers' decision to shop in our stores. These benefits are important to
the Company's success.
Wakefern distributes as a patronage dividend to each of its stockholder
members a share of the earnings of each product department of Wakefern in
proportion to the dollar volume of business done by the stockholder with that
product department during each fiscal year. Big V's aggregate patronage dividend
was $7.9 million in fiscal 1996, $10.1 million in fiscal 1995 and $8.9 million
in fiscal 1994.
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Wakefern operates principally as a member cooperative. Senior executives
of the Company spend significant time working on various Wakefern committees
which oversee and direct Wakefern purchasing and other programs. Each member's
Wakefern stock (including the Company's) is pledged to Wakefern to secure all
the member's obligations to Wakefern. Wakefern does not own any securities of
the Company or its subsidiaries. Each Wakefern member is required to make
capital contributions to Wakefern based on the number of stores operated by that
member and sales volume generated by those stores. As additional stores are
opened or acquired by a member (including the Company), additional capital must
be contributed to Wakefern. On occasion, Wakefern has increased the per-store
capital contributions. Wakefern has in the past permitted the increased capital
to be paid in installments. At present, the maximum capital contribution per
store is $450,000, payable over seven years.
Purchasing and Distribution
As a Wakefern member, Big V benefits from economies of scale in purchasing
and distribution associated with chains of greater size and geographic reach.
The Company believes that the regional nature of its business has permitted Big
V to operate with greater flexibility and increased responsiveness to the
demographic characteristics of the communities served by its stores than these
larger chains. Under an agreement among Wakefern and all of its members, each
member, is obligated to purchase from Wakefern a minimum of 85% of the products
offered by Wakefern. While fulfilling this minimum purchase requirement, Big V
purchased approximately 80% of its total purchases during fiscal 1996 from
Wakefern. The remaining 20% of Big V's purchases were delivered directly by
vendors to Big V's stores. Wakefern operates five warehouse and distribution
facilities in Elizabeth, Dayton, Secaucus and South Brunswick, New Jersey and
Wallkill, New York. The proximity of these facilities to Big V's stores,
combined with Big V's efficient product acquisition system, shortens the lead
time between the placement of a merchandise order and receipt.
Business Strategy
Big V's management has identified a strategy designed to maximize
operating profitability, increase market share and pursue new store
opportunities in existing trade areas and in new markets. Two components of this
strategy are the Company's price and value leadership and its capital investment
program.
Price and Value Leadership
High Value Image: Big V consistently has been ranked as number one in
value among its competitors in independent consumer surveys. Management believes
this high value image results from Big V's low price reputation, the ShopRite(R)
private label program, superior service departments, quality perishables,
courteous and efficient customer service, wide product assortment
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and extensive advertising and promotional campaigns. The Company estimates it
typically promotes more than 2,000 sale priced items per week. The Company's
reputation for value enables it to increase market share and respond
aggressively to competitor expansion.
"One-Stop Shopping": Big V's stores, which appeal to a broad spectrum of
customers, offer one-stop shopping convenience with a variety of high quality
service departments such as meat, produce, seafood, deli, bakery and an
extensive line of general merchandise, health and beauty care products and
pharmacy departments in six stores. A typical Big V store offers 35,000 Stock
Keeping Units, approximately 18% above the industry average. To accommodate this
large variety of products, Big V's 31 stores average 43,800 total square feet,
which is 24% larger than the industry average. All of Big V's stores exceed
30,000 total square feet.
Quality Merchandising and Economies of Scale through Wakefern: Wakefern
is the nation's largest cooperative food wholesaler. Its members operate 187
stores in the Northeast, principally under the ShopRite(R) name, and generate
annual retail sales exceeding $4 billion. ShopRite(R) supermarkets, in
aggregate, have the leading market share in the New York metropolitan region and
one of the most widely recognized supermarket names in the region. Membership in
Wakefern provides the Company economies of scale in its merchandise purchasing,
computerized warehousing and distribution efficiencies and large scale
advertising presence. In addition, Wakefern provides its members with year-end
patronage dividends, financial incentives to open new stores and the ShopRite(R)
private label line. The ShopRite(R) private label affords customers quality
merchandise comparable to national brands at lower prices, while typically
generating margins exceeding nationally branded merchandise. The Company's
private label grocery sales represent 20% of total annual grocery sales, well
above the industry average of 15%.
Capital Investment and Expansion Program
Investment in Existing Stores: The Company believes aggressive capital
investment is a critical component of its operating strategy. The Company has
increased its total retail space approximately 51% from 900,000 square feet to
over 1.3 million square feet during the last five years. Big V expanded or
remodeled nearly all of its existing store base, replaced six stores with new
facilities, and opened nine new stores (offset by the sale of two Connecticut
stores) during this period. Although Big V typically remodels its stores every 7
to 10 years and replaces them every 15 to 20 years, the Company continually
renovates stores and equipment to maintain modern state-of-the-art facilities.
The time periods associated with these capital investments may vary depending
upon certain factors, including site availability and competitive conditions.
Management believes that the Company's level of investment in its existing store
base will preserve the competitive advantage provided by Big V's prime retail
locations and continue to expand the
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Company's market share. Although Wakefern does not prescribe geographical
franchise areas to its members, the specific locations at which the Company,
other members of Wakefern or Wakefern itself may open new stores under the
ShopRite(R) name are subject to the approval of Wakefern's Site Development
Committee. This committee is composed of persons who are not employees or
members of Wakefern and whose decision to deny a site application may be
appealed to the Wakefern Board of Directors. Wakefern assists its members in
their site selection by providing appropriate demographic data, volume
projections and projections of the developmental impact on existing member
supermarkets in the area.
New Store Openings: The Company anticipates opening, replacing or
expanding ten supermarkets, each averaging 55,000 total square feet, over the
next three years. All new stores will feature a state-of-the-art format,
including a wide array of specialty service departments. Management believes
this expansion will generate incremental store contribution within its existing
overhead and distribution cost structure, increase market share in its existing
trade area and exploit "under-stored" new markets. Management estimates that the
total costs of equipment, fixtures and leasehold improvements associated with
opening, replacing or expanding the planned ten supermarkets will be $3 million
per supermarket. Equipment financing is expected to provide $2 million and $1
million is expected to be provided by the Company's operating cash flow and its
Revolving Credit Facility. For a new store, the Company typically purchases
approximately $1 million of beginning inventory. The Company generally finances
its initial inventory requirements through accounts payable with terms which are
often longer than the Company's inventory turnover. The locations at which the
Company may open new supermarkets under the name ShopRite(R) are subject to the
approval of Wakefern's Site Development Committee, which could impact the
Company's expansion strategy.
Advertising and Promotion
Big V's advertising strategy emphasizes price, variety, high quality
perishables, broad selection of nationally advertised brand name products and
extensive selection of ShopRite(R) private label merchandise. The Company's
retail operations are advertised primarily through newspaper, radio, television
and direct mail. Most of the Company's advertising is developed and placed by
Wakefern and tailored to the Company's specific needs. The Company spent
approximately 1.6% of total sales for advertising, promotion and coupon expense
for the three year period ended December 28, 1996.
Technology
The Company considers automation and computerization important to its
operations and competitive position. The Company uses in-store minicomputers
linked to Wakefern's warehouse and distribution computer system. All Company
stores use
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scanning checkout systems to improve pricing accuracy, enhance productivity and
reduce checkout time for customers. Meat, seafood and delicatessen prices are
maintained on computers for automatic weighing and pricing. All Company stores
use computerized time and attendance and labor scheduling systems and most have
computerized energy management systems. Furthermore, all Company stores use
satellite communications, electronic payment systems, electronic marketing
systems and computer generated ordering systems. The Company also has a direct
store delivery system and a computerized pharmacy system.
Competition
The supermarket business is highly competitive. Industry profit margins
are narrow, consequently earnings are dependent on high sales volume and
operating efficiency. The Company is in direct competition with national,
regional and local chains as well as independent supermarkets and convenience
stores. The Company competes by using low pricing, courteous and efficient
customer service, quality products and consistent availability of a wide variety
of merchandise including an increasing variety of non-food items. The Company
believes its regional focus and the quality of its management team permit it to
offer products addressing the demographics of the communities it serves. The
Company's principal competitors are Grand Union and A&P. In certain markets, the
Company competes with Pathmark, Price Chopper, Edwards, Stop & Shop, Shop &
Save, Great American and various independent operators, convenience stores and
warehouse clubs.
Employees
As of March 7, 1997, approximately 91% of Big V's 4,500 employees were
covered by collective bargaining agreements negotiated with five unions. Three
represent approximately 3,400 retail clerks (Local 1262--1,800 employees; Local
1500--1,400 employees; and Local 72--200 employees). Two represent approximately
700 meat, seafood and service deli department employees (Local 464--650
employees; and Local 1--50 employees). The Local 1262 contract expires in April
1997. The Local 1500 and Local 464 contracts expire in September and December
1998, respectively, and the Local 72 contract expires March 1999. The Local 1
contract, set to expire May 1997, was successfully renegotiated and is now
effective through May 2002. As a result of the sale of the Company's two
Connecticut stores on January 28, 1996, the Company no longer maintains a
collective bargaining agreement with Local 371. The Company believes its labor
relations are good and does not anticipate any work stoppages related to
contract negotiations in 1997.
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Regulatory and Environmental Matters
The Company must secure a variety of local, state and federal health
and food distribution permits for the conduct of its business. Such regulation
does not have a material impact on its operations. The Company's six pharmacy
departments are subject to state and federal regulation, including licensed
pharmacists on duty at all times.
Soil and ground-water contamination was detected at the Baldwin Place
Shopping Center located in Somers, New York in the late 1980's. Baldwin Place
Shopping Center, a presently non-operating center, is owned by a wholly-owned
subsidiary of Big V. The New York State Department of Environmental Conservation
("DEC") placed the Baldwin Place Shopping Center on the DEC List of Inactive
Hazardous Waste Disposal Sites in 1989 because of the suspected release of
hazardous materials and petroleum products.
Certain on-site residential and public water supply wells in the vicinity
of the Baldwin Place Shopping Center were found to be contaminated with
trichloroethene and tetrachloroethene and the contamination appeared to
originate from a previous dry cleaning operation in the shopping center. The DEC
entered into an Order on Consent in July 1992, with Big V and its subsidiary,
Somers Development Corporation, for the development and implementation of a
Remedial Investigation/Feasibility Study and implementation of interim remedial
measures, if appropriate, of the Baldwin Place Shopping Center.
In addition to the contamination described above, petroleum product
contamination of the groundwater in excess of drinking water standards was
discovered at the Baldwin Place Shopping Center site and in a number of private
residential wells. Four service stations, one of which is within the Baldwin
Place Shopping Center, have performed subsurface investigations under the
direction of DEC. The results indicated the groundwater is contaminated beneath
3 of the 4 stations. DEC directed these stations to install ground water
remediation systems. The service station within the shopping center has had a
groundwater remediation system in operation for several years.
Although the Baldwin Place Shopping Center is not on any United States
Environmental Protection Agency list of sites requiring investigation or
remediation, there can be no assurance that it will not be so listed in the
future. Further, Somers Development Corporation and Big V have been named as
parties in lawsuits by area residents. Big V is vigorously defending these suits
and the Company has impleaded prior owners of the Baldwin Place Shopping Center
as third party defendants since the Company believes that potential
responsibility only arises from the actions of a former tenant in the shopping
center. In January 1994, the Company commenced an action against the prior
owners of the Baldwin Place Shopping Center seeking reimbursement under CERCLA
for costs and expenses incurred by the Company in connection with the
environmental remediation and testing of the Baldwin Place Shopping Center. The
Company has entered into a settlement agreement with the prior owners pursuant
to which the prior owners have
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reimbursed the Company for approximately $1.2 million of the costs and expenses
incurred by the Company in connection with the environmental remediation and
testing.
A Record of Decision defining the environmental status of the site and the
remedial actions was issued in December 1995 and allows the Company to proceed
with the site approval process. The costs of remediation as well as the area
resident lawsuits related to such property, are not likely to have a material
adverse effect on the Company's results of operation, financial condition or
liquidity. The cost incurred by the Company to obtain this Record of Decision,
plus the cost associated with the remaining studies and subsequent remediation,
will approximate $1.1 million. The Company will capitalize such costs and
recover them upon the sale or development of this property.
Subsequent to December 28, 1996 the Company settled lawsuits brought by
area residents. The Company's share of settlement approximates $175,000 and will
be capitalized and recovered upon the sale or development of this property.
Trade Names, Service Marks and Trademarks
Big V uses a variety of trade names, service marks and trademarks. Except
for ShopRite(R), which is owned by Wakefern and licensed to Big V and the other
Wakefern members, Big V does not believe that any such trade names, service
marks or trademarks are material to its business.
ITEM 2: Properties
The Company leases all of its supermarkets (containing approximately 1.4
million square feet of total space), with initial terms generally ranging from
10 to 25 years, with renewal options. Twenty-seven of these leased stores are
located in strip shopping centers and four are free-standing stores. The total
annual rent paid for all of the Company's leased facilities for fiscal 1996 was
$14.4 million, including payments under capitalized leases. Lease payments per
square foot during fiscal 1996 ranged from $3 to $14, averaging $9, which is 25%
lower than current rates in the Company's markets. The Company is obligated
to pay for utilities and liability insurance on all properties and real
estate, maintenance and insurance on certain properties.
A wholly-owned subsidiary of the Company also owns the Baldwin Place
Shopping Center located in Somers, New York, which property currently is being
held for sale. See Item 1--"Regulatory and Environmental Matters."
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ITEM 3: Legal Proceedings
The Company is a party to a number of legal proceedings in the ordinary
course of business. Management believes these proceedings will not, in the
aggregate, have a material adverse impact on the financial condition, results of
operations, liquidity or business of the Company. See Item 1--"Regulatory and
Environmental Matters."
ITEM 4: Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders through solicitation
of proxies or otherwise.
PART II
ITEM 5: Market for the Registrant's Common Equity and Related Stockholder
Matters
BV Holdings Corporation, a Delaware corporation ("BVH"), is the sole
stockholder of Big V. Big V Holding Corp., a Delaware corporation ("Holding"),
is the sole stockholder of BV Holdings Corporation. There is no established
trading market for the equity of Big V, BV Holdings Corporation or Big V Holding
Corp.
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ITEM 6: Selected Consolidated Financial Information
The selected consolidated financial information of the Company for the 52
weeks ended December 25, 1992, December 25, 1993, for the 53 weeks ended
December 31, 1994, for the 52 weeks ended December 30, 1995 and for the 52 weeks
ended December 28, 1996 presented below should be read in conjunction with the
historical consolidated financial statements of the Company, including the notes
thereto, included elsewhere herein.
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52 53 52
Weeks Weeks Weeks
Ended Ended Ended
----- ----- -----
Dec. 28, Dec. 30, Dec. 31, Dec. 25, Dec. 25,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(dollars in thousands)
Income Statement Data:
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Sales $735,976 $768,682 $754,401 $674,969 $699,308
Gross profit 190,125 200,383 193,536 169,787 170,542
Selling, general and administrative 151,825 161,746 160,068 139,637 134,436
Special charges (1) 3,004 -- -- -- --
Depreciation and amortization 17,381 18,548 17,778 16,488 16,215
Operating income 17,915 20,089 15,690 13,662 19,890
Interest expense, net 24,382 27,277 24,621 20,251 19,597
(Gain on sale of store)/loss on sale
leaseback transactions -- -- -- 3,704 (2,113)
(Loss) income before income taxes and
extraordinary item (6,467) (7,188) (8,931) (11,216) 2,406
Net (loss) income (2) (3,958) (5,078) (6,160) (18,961) 583
Dec. 28, Dec. 30, Dec. 31, Dec. 25, Dec. 25,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance Sheet Data (at end of period):
Working (deficiency) capital $(10,683) $(11,196) $ (6,639) $ 7,844 $(11,778)
Total assets 264,617 284,956 293,695 270,875 250,570
Total debt 213,611 226,952 231,166 211,385 160,363
Stockholder's (deficit) equity (24,310) (20,213) (14,943) (8,673) 15,771
</TABLE>
(1) See discussion of special charges contained within Management's Discussion
and Analysis of Financial Condition and Results of Operations.
(2) The net loss for the 52 weeks ended December 25, 1993 includes a $923 note
receivable write-down and an extraordinary loss of $11,485 (net of tax
benefit) due to the early extinguishment of debt in connection with the
Recapitalization.
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ITEM 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The following discussion of the Company's consolidated results of
operations and financial position should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in this Form 10K.
References in the following discussion are to the fiscal years ended
December 28, 1996 ("fiscal 1996"), December 30, 1995 ("fiscal 1995"), and
December 31, 1994 ("fiscal 1994").
The Company is the largest supermarket chain in the Hudson River Valley
Region of New York, its primary trading area. A combination of price and value
leadership, one-stop shopping convenience and a focused capital investment
program has enabled the Company to sustain its leading market share and improve
Earnings Before Interest Expense, Depreciation and Amortization, Income taxes
and LIFO provision (EBITDA) from $34 million in 1994 to $39.5 million in 1995 to
$36.4 million in 1996 after deducting $3.9 million of special charges and other
non-recurring expenses. Refer to the Special Charges paragraph within the 1996
Results of Operations section.
The Company operates 23 of its 31 stores in the Hudson River Valley of New
York and 6 stores in Westchester County, New York. The Hudson River Valley's
population grew 3.9% for the period 1990 through 1995 and compares very
favorably to New York State's .7% growth rate for the same period. This market
area has rebounded from the early 1990's IBM downsizing and there continues to
be growing migration of families from New York City. Westchester County growth,
while not as robust exceeds the statewide growth rate.
The Company opened five stores, expanded two store, completed nine
remodels and closed three stores (including the disposition of two stores opened
in 1994) during the three years ended December 28, 1996. Management believes
this capital investment lessened the impact of competitive openings and
contributed to the same store sales improvement of 1.2% beginning in the second
half of 1995 and continuing at .1% in 1996.
Basis of Presentation
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with the financial statements and
notes thereto included elsewhere in this Form 10-K.
-12-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------
December 28, December 30, December 31,
1996 1995 1994
---- ---- ----
(percentage of sales)
<S> <C> <C> <C>
Income Statement Data
Sales 100.0% 100.0% 100.0%
Gross profit 25.8 26.1 25.7
Selling, general and administrative 20.6 21.0 21.2
Special Charges 0.4 -- --
EBITDA (1) 4.9 5.1 4.5
Depreciation and amortization 2.4 2.4 2.4
Interest, net 3.3 3.6 3.3
Loss before income taxes (0.9) (0.9) (1.2)
Income tax benefit (0.3) (0.3) (0.4)
------ ------ ------
Net loss (0.5)% (0.6)% (0.8)%
====== ====== ======
Other Data (in millions):
EBITDA $ 36.4 $ 39.5 $ 34.0
====== ====== ======
Net cash provided by
operating activities $ 5.6 $ 11.4 $ 21.6
====== ====== ======
Net cash used in investing
activities $ (1.2) $(10.7) $(26.7)
====== ====== ======
Net cash (used in)
provided by financing
activities $ (5.5) $ (4.8) $ 0.4
====== ====== ======
</TABLE>
(1) EBITDA represents net earnings before interest expense, depreciation and
amortization, income taxes and LIFO provision. EBITDA is a widely accepted
financial indicator of a company's ability to service and/or incur debt,
and is also used for calculating compliance with the Company's debt
covenants. Minimum annual EBITDA levels for debt compliance covering the
years 1994 through 1996 ranged from $31.5 million to $39.0 million.
Noncompliance with this covenant would represent a default under the
Company's debt agreements which could subject the Company to debt
acceleration if not waived or amended. EBITDA should not be construed as
an alternative to, or a better indicator of, operating income (as
determined in accordance with generally accepted accounting principles) or
to cash flows from operating activities (as determined in accordance with
generally accepted accounting principles) and should not be construed as
an indication of the Company's operating performance or as a measure of
liquidity.
As of October 5, 1996 and December 28, 1996, the Company was not in compliance
with the EBITDA and maximum levels of capital expenditure covenants under the
Agreement. The Company obtained a waiver for such noncompliance through January
31, 1997 and amended the covenants in January 1997. At December 28, 1996 the
Company was in compliance with all remaining covenants. The Fourth Amendment and
Consent, dated January 27, 1997, establishes revised levels for fiscal 1997
EBITDA and capital expenditure requirements. The Company is confident that it
will meet all 1997 covenants.
-13-
<PAGE>
Results of Operations
Fiscal Year Ended December 28, 1996 Compared to Fiscal Year Ended December 30,
1995
Sales
Sales for 1996 were $736.0 million compared to $768.7 million in 1995. The
4.3% decrease in sales was primarily attributable to the sale of the Company's
two Connecticut stores on January 28, 1996 and the conversion of one ShopRite
store to a warehouse format in late 1995. Connecticut store sales were $4.1
million and $44.5 million for the 1996 and 1995 fiscal years, respectively. Same
store sales increased .1% in 1996 and decreased .8% in 1995. Same store sales
increased as a result of increases in the average ticket sales per customer and
was driven by strong first quarter same store sales performance. Management
estimates that inflation was generally flat for the year. The company opened one
new store, and remodeled four during the year. Total square footage decreased to
1.4 million square feet as the result of the sale of the two Connecticut stores.
Gross Margin
Gross Margin was 25.8% in 1996 versus 26.1% in 1995. The .3% decrease was
primarily attributable to the loss of Wakefern's incremental patronage dividend
for the two Connecticut stores sold on January 28, 1996. In addition, margin was
invested to drive sales and respond to competitive activity. Decreases in margin
were partially offset by continued improvements in the product mix, particularly
in the higher margin perishable departments and reduced levels of stock loss.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were 20.6% of sales in 1996
compared to 21.0% in 1995. In absolute terms, these expenses decreased 6.1% in
1996. These decreases were the results of on-going programs to improve labor
efficiency, reduce customer and employee accidents, improve front-end
efficiencies and contain store supply costs, repairs and maintenance and utility
expenses. The savings were partially offset by increases in marketing support,
store occupancy, previous year premium call and sales tax expense. General
liability expense increased $.5 million in the third quarter of 1996 for an
expected premium call on 1992-1993 policy year claims. Sales tax expense
increased $.4 million based on a New York State sales tax audit.
Special Charges
During 1996 the Company adjusted its reserves for certain items, explained
below, based on new facts and estimates. The special charges, approximately $3.0
million, consist of an increase in reserves for and/or settlement of future
lease obligations on store leases assigned in 1988 to another supermarket chain
which declared bankruptcy during 1995. Such charges also include costs
associated with the abandonment of potential new store sites and incurred
expenses from closed store sites.
-14-
<PAGE>
EBITDA
EBITDA decreased $3.1 million to $36.4 million in 1996. The EBITDA
decrease was the result of costs associated with increased competition in our
primary marketing area, special charges, general liability premium call and
the results of a New York State sales tax audit. The decreases discussed were
nearly mitigated by reduced selling, general and administrative expenses.
Depreciation and Amortization
Depreciation and amortization was 2.4% of sales in 1996 and 1995. The
depreciation from new capital investment was offset by the sale of the two
Connecticut stores on January 28, 1996.
Interest, net
Interest, net decreased from $27.3 million in 1995 to $24.4 million in
1996. The decrease was primarily a result of decreased variable interest rates
associated with the senior bank term loans, paydowns of the senior bank term
loans and lower average daily borrowings under the senior bank revolving loans.
Net Loss
Net loss was .5% of sales in 1996 compared to .6% in 1995. In absolute
terms, the net loss decreased by $1.1 million or 22% in 1996 with a reduced
sales and gross profit base. This improvement reflects reduced selling, general,
and administrative expenses and decreased interest expense.
Results of Operations
Fiscal Year Ended December 30, 1995 Compared to Fiscal Year Ended December 31,
1994
Sales
For the 52 week period ended December 30, 1995, total sales were $769
million and same store sales were $719 million, compared to $754 million and
$653 million, respectively, for the 53 week period ended December 31, 1994. This
represented an increase of 1.9% in total sales (3.6% when calculated on a like
52 week basis) and a decrease of .8% in same store sales when calculated on a
like 52 week basis. The increase in total sales was primarily attributable to
the opening of four new stores during the
-15-
<PAGE>
1994 fiscal year. The decrease in same store sales for the year was due to the
continuation of competitive activity in the Company's primary trading area,
which was generally lessening, as evidenced by a same store sales increase of
1.2% during the second half of 1995.
Gross Margin
The increase in gross profit of .4% of sales for the 52 week period ended
December 30, 1995 over the 53 week period of 1994 resulted from a change in
product mix to higher margin perishable products and the general lessening in
competitive pricing pressures.
Selling, General and Administrative Expenses
The decrease in selling, general and administrative expenses of .2% of
sales during the 52 week period ended December 30, 1995 when compared to the 53
week period of 1994 was primarily attributable to reductions in store payroll
and fringe benefit related costs.
EBITDA
EBITDA was $39.5 million for the 52 week period ended December 30, 1995
compared to $34.0 million in the 53 week period of 1994. This increase of
approximately 16% (18% on a like 52 week basis) was primarily attributable to
the 0.6% increase in EBITDA margin to sales, resulting from the aforementioned
increase in gross profit and decrease in selling, general and administrative
expenses.
Depreciation and Amortization
Depreciation and amortization, as a percentage of sales, was relatively
constant for the 52 week period ended December 30, 1995 and the 53 week period
ended December 31, 1994.
Interest, net
The increase in interest, net, of .3% of sales, $2.7 million, for the 52
week period ended December 30, 1995, over the 53 week period of 1994, was due
primarily to the increased variable interest rate associated with the senior
bank term loans, a greater average daily borrowing under the senior bank
revolving loans and the incremental interest costs associated with leases
capitalized in 1994.
Net Loss
Net loss was $5.1 million for the 52 week period ended December 30, 1995,
compared to a net loss of $6.2 million in the 53 week period ended December 31,
1994.
-16-
<PAGE>
This reduced net loss was attributable to the higher level of EBITDA reduced by
the higher levels of depreciation and amortization and interest, net.
Liquidity and Capital Resources
The Company's long-term debt (including current maturities and capital
lease obligations) as of December 28, 1996 was $213.6 million. All principal
payments required by the debt agreements were made during the year ended
December 28, 1996.
The Company had a working capital ratio of approximately .86:1 at
December 28, 1996 and December 30, 1995. The Company typically requires small
amounts of working capital since inventory is generally sold before payment to
Wakefern and other suppliers. Therefore, cash provided from operations
is frequently used for non-current purposes such as investing in property
equipment and financing activities.
Net cash provided by operating activities was $5.6 million in fiscal 1996
and $11.4 million in fiscal 1995. The reduction in net cash provided by
operating activities during fiscal 1996 was due principally to a lease
termination, increases in inventories and decreases in accounts payable and
accrued liabilities.
Net cash used in investing activities was $1.2 million for fiscal 1996
compared to $10.7 million for fiscal 1995. The reduction in net cash used in
investing activities in 1996 was due primarily to the sale of the two
Connecticut stores and reduced capital expenditures.
Net cash used in financing activities was $5.5 million in 1996 compared to
$4.8 million in 1995. The principal activities in both years consisted of
payments of long-term debt and the receipt of proceeds of long-term borrowings.
The increase in net cash used in financing activities in 1996 compared to 1995
resulted primarily from an increase in 1996 scheduled debt repayments.
The Company's major uses of cash for the year ended December 28, 1996 were
as follows: (i) cash interest payments (including capitalized leases) of $23.7
million; (ii) capital expenditures of $9.8 million; and scheduled debt payments
of $8.8 million. Management believes operating cash flow, together with
borrowings under the bank revolving credit facility and equipment financings,
will be sufficient to meet the Company's operating needs, scheduled capital
expenditures and will enable the Company to service its debt.
The Bank Credit Agreement provides for a $26.0 million revolving credit
facility. There was $8.9 million outstanding under the revolving credit facility
as of December 28, 1996, of which $6.4 million was used for letters of credit
and bonding purposes. The Bank Credit Agreement requires that the Company
maintain minimum levels of
-17-
<PAGE>
consolidated net worth, EBITDA and fixed charge coverages, and maximum levels of
capital expenditures (each as defined in the Bank Credit Agreement).
At October 5, 1996, the Company was not in compliance with the EBITDA and
maximum levels of capital expenditure covenants under the Amended and Restated
Credit Agreement dated December 17, 1993 among Big V Holding Corp., BV Holdings
Corporation, Big V Supermarkets, Inc. and Bankers Trust Company (agent). On
November 5, 1996, the Company obtained a waiver of these covenants through
January 31, 1997.
A Fourth Amendment and Consent dated as of January 22, 1997 among Big V
Holding Corp., BV Holdings Corporation, Big V Supermarkets, Inc., the financial
institutions party to the Bank Credit Agreement and Bankers Trust Company
(agent) amended the EBITDA and Maximum Level of Capital Expenditure Covenants
for 1997. The Bank Credit Agreement requires the Company to comply with the
following financial covenants (as amended and defined therein): (i) minimum
consolidated net worth of $78 million; (ii) maximum capital expenditures of
$12.9 million; (iii) minimum fixed charge coverage ratio of 1.4:1.0; and minimum
EBITDA of $41 million. Management believes the Company will comply with all
financial covenants, as amended, for fiscal 1997.
The Company believes 1997 cash flows from operations, Revolving Credit
Facility and equipment financings will be sufficient to fund the Company's
anticipated cash requirements, including substantially all of the capital
expenditure program. Major uses of the cash in fiscal 1997 will be as follows:
(i) interest payments (including capitalized leases) of $23.1 million; (ii)
capital expenditures of $12.9 million; and (iii) scheduled debt and capital
lease payments of $17 million (including the non-recourse demand note payable
solely from the sale proceeds of the Company's Baldwin Place Shopping Center
located in Somers, New York).
All of the Company's facilities are subject to long-term leases. The costs
to develop new stores consist of approximately $3 million for fixtures,
equipment and leasehold improvements and approximately $1 million for beginning
inventory. Fixtures, equipment and leasehold improvements are generally funded
using a combination of equipment financing (approximately $2 million) and
Operating Cash Flow/Revolver Availability ($1 million). Inventory requirements
are generally financed through accounts payable with terms that usually exceed
the Company's inventory turnover.
The Company received a Record of Decision (ROD) from the New York State
Department of Environmental Conservation (DEC) in December, 1995 with respect to
the environmental status of the Baldwin Place Shopping Center located in Somers,
New York. The ROD defined the environmental status of the site, outlined the
remedial actions to be performed and allows the Company to proceed with the site
approval process. The costs of remediation, as well as the related area
resident litigation, are not likely to have a material adverse effect or the
Company's results of operations, financial condition and liquidity.
-18-
<PAGE>
The costs incurred by the Company to obtain the ROD, plus the cost associated
with the remaining studies and subsequent remediation will be approximately $1.1
million. The Company will capitalize such costs and recover them upon the sale
or development of this property. The Company anticipates selling the property
when site plan approval is obtained at a price in excess of total capitalized
costs. Management further believes that costs capitalized in connection with the
Baldwin Place Shopping Center will be fully recoverable and the Company's $2.5
million note payable secured by this property will be repaid in full.
The recoverability of goodwill is assessed by comparing the Company's forecasts
of cash flow from future operating results, on an undiscounted basis, to the
unamortized balance of goodwill at each balance sheet date. The Company will
recognize a charge to operations at any time this comparison indicates that an
impairment may be likely. Management continues to believe that the carrying
value of goodwill and the estimated useful life is appropriate.
-19-
<PAGE>
ITEM 8: Financial Statements and Supplementary Data
Information called for by this item is set forth in the Company's financial
statements and supplementary data contained in this report. Specific financial
data can be found at the pages listed in the following index.
BIG V SUPERMARKETS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years 1994, 1995 and 1996
<TABLE>
<CAPTION>
<S> <C>
Independent Auditors' Report...................... F-2
Consolidated Statements of Loss................... F-3
Consolidated Balance Sheets....................... F-4
Consolidated Statements of Stockholder's Deficit.. F-5
Consolidated Statements of Cash Flows............. F-6 - F-7
Notes to Consolidated Financial Statements........ F-8 - F-22
</TABLE>
ITEM 9: Changes in and Disagreements with Accountant's on Accounting and
Financial Disclosure
Not Applicable.
-20-
<PAGE>
PART III
ITEM 10: Directors and Executive Officers of the Registrant
The names, ages and present principal occupations of the directors and
executive officers of each of Big V and Holding are set forth below.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
David G. Bronstein......... 67 Chairman of the Board of Directors
Joseph V. Fisher........... 54 Director, Chief Executive Officer and
President
James A. Toopes, Jr........ 49 Director, Executive Vice President-Finance,
Administration, Corporate Development and
Corporate Secretary
John W. Childs............. 55 Director
C. Hunter Boll............. 41 Director
Joseph S. Frelinghuysen, Jr 55 Director
Leo J. Kahn................ 80 Director
Steven G. Segal............ 36 Director
</TABLE>
Mr. Bronstein served as President of the Company from December 1986 to July
1993, as the Company's Chief Executive Officer from October 1987 to December
1995, as a Director since December 1986 and as Chairman of the Board since
December 1990. Mr. Bronstein joined the Company in 1985 as Executive Vice
President and Chief Operating Officer. From 1979 to 1985, he served as
Executive Vice President of Golub Corporation. From 1972 to 1979, Mr. Bronstein
worked for P&C Supermarkets, where he rose to the position of Senior Vice
President and General Manager. Mr. Bronstein serves on the Board of Directors
of the Food Marketing Institute.
Mr. Fisher served as Chief Executive Officer and President of the Company
since December 1995, as the Company's Executive Vice President-Marketing and
Operations and Chief Operating Officer of the Company from November 1994 to
December 1995 and as a Director since July 1993. From 1993 to 1994, Mr. Fisher
served as Senior Vice President--Marketing and Operations of the Company, and
from 1992 to 1993 he served as
-21-
<PAGE>
Vice President-Store Operations. Prior to joining Big V, Mr. Fisher worked for
Purity Supreme, Inc. from 1973 to 1991 in various management positions,
including Senior Vice President--Supermarkets from 1985 to 1991. Mr. Fisher
serves as an Officer and Director of Wakefern Food Corp. and ShopRite
Supermarkets, Inc. He also serves on the Board of Directors of the New York
State Food Merchants Association.
Mr. Toopes has served as Executive Vice President-Finance, Administration,
Corporate Development, Corporate Secretary and Director since April 1996. Prior
to joining Big V, Mr. Toopes worked for Bi-Lo, Inc., a subsidiary of Royal
Ahold, as Executive Vice President-Finance and Administration from 1989 to 1996.
Mr. Toopes worked for Lucky Stores, Inc. from 1976 to 1989, serving as Vice
President-Controller.
Mr. Childs has served as a Director of the Company since December 1990. He
is President of J.W. Childs Associates. Until June 1995, Mr. Childs was Senior
Managing Director of Thomas H. Lee Company where he was employed since 1987.
Prior to joining THL, Mr. Childs was with the Prudential Insurance Company of
America where he held various executive positions in the investment area,
ultimately serving as Senior Managing Director in charge of the Capital Markets
Group. In that position, from 1984 through 1987, Mr. Childs was responsible for
Prudential's approximately $77 billion fixed income portfolio, including the
Capital Market Group's investment in leveraged acquisitions. Mr. Childs also is
a director of Personal Care Group, Inc., Central Tractor Farm and Country, Inc.
Cinnabon, Select Beverage Corp., and the Edison Project. Mr. Childs is President
and a trustee of Thomas H. Lee Advisors I, the investment advisor to ML-Lee
Acquisition Fund, L.P., and President and a trustee of T.H. Lee Mezzanine II,
the administrative general partner of Thomas H. Lee Advisors II, L.P., the
investment advisor to ML-Lee Acquisition Fund II, L.P. and the ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P. Mr. Childs also is a trustee of
THL Equity Trust, the general partner of THL Equity Advisors Limited
Partnership, the general partner of Thomas H. Lee Equity Partners, L.P.
Mr. Boll has served as a Director of the Company since December 1990.
Mr. Boll is a Managing Director of THL and has been employed by THL since 1986.
Mr. Boll also is a Vice President of Thomas H. Lee Advisors I, the investment
advisor to ML-Lee Acquisition Fund, L.P., and a Vice President of T.H. Lee
Mezzanine II, the administrative general partner of Thomas H. Lee Advisors II,
L.P., the investment advisor to ML-Lee Acquisition Fund II, L.P. and the ML-Lee
Acquisition fund (Retirement Accounts) II, L.P. Mr. Boll also is a Vice
President of THL Equity Trust, the general partner of THL Equity Advisors
Limited Partnership, the general partner of Thomas H. Lee Equity Partners, L.P.
From 1984 to 1986, Mr. Boll worked as a consultant with The Boston Consulting
Group. From 1977 to 1982, Mr. Boll worked as a corporate lending officer in the
Energy & Minerals Group of Chemical Bank. Mr. Boll also serves as a Director of
Freedom Securities, Inc., Petco Animal Supplies, Inc., Stanley Furniture Company
Inc., and Select Beverages, Inc.
Mr. Frelinghuysen has served as a Director of the Company and Chairman of
its Audit and Compensation Committees since December, 1990. He is President of
J.S. Frelinghuysen & Co., Inc., an independent investment banking firm organized
in 1989. Mr. Frelinghuysen was previously a Managing Director of the First
Boston Corporation
-22-
<PAGE>
where he was employed as a member of the Investment Banking Department from
1969-1988. He also serves as a Director of W.P. Stewart Co., Inc., an investment
advisory firm, and is a Trustee of the Community Foundation of New Jersey.
Mr. Kahn has been a Director of the Company since December 1990. Mr. Kahn
founded Purity Supreme, Inc., an operator of supermarkets, warehouse food
stores, drug stores, convenience stores and warehouse drug stores, which was
sold to Supermarkets General Corporation in 1984. Following the sale of Purity
Supreme, Inc., Mr. Kahn has been involved with a number of other business
ventures, including Staples, Inc., a retail office supply chain, Health
Development Corporation, an exercise and fitness enterprise. He is C.E.O. of
Nature's Heartland, a health food supermarket.
Mr. Segal has served as a Director of the Company since December 1994. Mr.
Segal has served as a Managing Director of J.W. Childs Associates, L.P. since
July 1995 and was previously a Managing Director of THL, being employed by THL
from 1987 to 1995. Mr. Segal also is a Vice President of Thomas H. Lee Advisors
I, T.H. Lee Mezzanine II, and THL Equity Trust, the general partner of THL
Equity Advisors Limited Partnership, the general partner of Thomas H. Lee Equity
Partners, L.P. Mr. Segal also serves as a Director of Cinnabon, Inc., Fitz and
Floyd, Inc. and Central Tractor Farm & Country, Inc.
Mr. Childs is the sole Director of BVH. The Officers of BVH are the
following: (i) Mr. Fisher is President; (ii) Mr. Toopes is Treasurer and
Secretary.
Executive officers of each of Holding, BVH and Big V are appointed and serve
at the discretion of their respective Boards of Directors. Each director of
Holding, BVH and Big V is elected for a period of one year and serves until his
successor is duly elected and qualified.
ITEM 11: Executive Compensation
The following table sets forth the compensation paid or accrued by Big V to
each of the Chief Executive Officer of the Company during the year ended
December 28, 1996 and the most highly-compensated executive officers/senior
management of the Company who served in such capacities on or during December
28, 1996 for services rendered to the Company in all capacities during the
fiscal years ended December 31, 1994, December 30, 1995 and December 28, 1996.
Officers of Holding and BVH are not compensated for their services as such.
-23-
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------------------- -------------------------
Other
Annual Option All Other
Fiscal Compen- Shares Compensa-
Name and Principal Position Year Salary($) Bonus($) sation($)(1) Granted tion($)(2)
- --------------------------- ---- -------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
David G. Bronstein 1996 150,000 -- 11,855 -- 5,105
Chairman of the Board 1995 274,038 -- 12,380 -- 5,625
1994 300,000 -- 22,338 -- 4,875
Joseph V. Fisher 1996 325,000 75,000 4,048 -- 5,105
Chief Executive Officer 1995 245,998 25,000 11,382 17,000 5,375
and President 1994 167,529 -- 34,200 -- 4,300
James A. Toopes, Jr. 1996 170,769 -- 24,130 12,000 --
Executive Vice President-
Finance, Administration,
Corporate Development and
Corporate Secretary
Stephen L. Hittman 1996 113,173 31,610 1,854 -- 4,654
Vice President-Real Estate 1995 99,302 42,500 2,441 3,400 5,080
and Assistant Secretary 1994 75,016 15,000 2,123 -- 2,788
John Onufer, Jr.
Vice President-Controller and 1996 109,808 15,000 2,484 -- 568
Assistant Treasurer 1995 28,846 -- 280 -- --
Gary S. Koppele 1996 62,846 -- 131,058 -- --
Senior Vice President- 1995 171,230 -- 2,170 -- 5,625
Administration, Treasurer 1994 162,000 -- 2,150 -- 4,875
and Chief Financial Officer
(through April 3, 1996)
Cornelius J.J. Madera, Jr. 1996 59,538 -- 115,727 -- --
Senior Vice President-Corporate 1995 171,230 -- 2,600 -- 5,625
Development, General Counsel 1994 162,000 -- 2,580 -- 4,875
and Secretary (through
April 3, 1996)
(see notes on following page)
</TABLE>
- ----------
(1) This represents the taxable portion of the personal use of a company
automobile, life insurance and relocation expenses. For Messrs. Koppele and
Madera, also represents payments made pursuant to termination agreements
included herein.
(2) This represents the annual Company profit-sharing contribution and 401(k)
matching funds.
-24-
<PAGE>
Employment Agreements
On May 1, 1996, the Company and BVH entered into an employment and non-
competition agreement with Mr. Toopes, which agreement is scheduled to expire on
April 30, 1998, subject to annual renewals thereafter. Pursuant to this
agreement, the Company has agreed to pay an annual base salary to Mr. Toopes of
$240,000. In addition to such base salary, Mr. Toopes is entitled to receive
certain other employment benefits, including cash bonuses based upon the
Company's attaining or surpassing profit targets established by the Company's
Board of Directors.
On December 19, 1995, the Company and BVH entered into an employment and
non-competition agreement with Mr. Fisher, which agreement is scheduled to
expire on December 31, 1998, subject to renewals thereafter. Pursuant to this
agreement, the Company has agreed to pay an annual base salary to Mr. Fisher of
$325,000. In addition to such base salary, Mr. Fisher is entitled to receive
certain other employment benefits, including cash bonuses based upon the
Company's attaining or surpassing profit targets established by the Company's
Board of Directors.
Pursuant to the employment agreement with Mr. Toopes, the Company and BVH
caused Holding to sell 8,000 shares of Holding's Class A Common Stock to Mr.
Toopes for an aggregate purchase price of $280,000 in exchange for a $75,000
payment in cash and a promissory note payable in the amount of $205,000. See
this Item 11--"Loans to Management." Also pursuant to such employment agreement,
the Company and BVH caused Holding to grant Mr. Toopes options to purchase
12,000 shares of Holding's Class A Common Stock under the Stock Option Plan.
See this Item 11-- "Management Stock Option Plan." In the event Mr. Toopes'
employment is terminated without cause, or upon his death or disability, his
salary (including an increase in base salary for at least a portion of the
period after termination without cause, death or disability) and other
employment benefits will, subject to certain adjustments and limitations,
continue until the end of his term of employment. In addition, the employment
agreement places certain restrictions upon the ability of Mr. Toopes to
communicate confidential information concerning the Company to third parties.
Pursuant to the non-competition provisions of this employment agreement, Mr.
Toopes will not, for one year following termination of his employment, engage in
certain specified activities relating to the Company or the Company's business.
Compensation Pursuant to 401(k) Plan
The Company has a discretionary profit-sharing retirement plan for officers
and non-union employees which includes a qualified cash or deferred arrangement
pursuant to Section 401(k) of the Internal Revenue Code. Under this arrangement,
officers and non-union employees may elect to forego the current receipt of up
to 10% of their cash compensation and have such amounts contributed to the plan
on their behalf. In addition, the Company matches 25% of such elected amounts
up to 5% of each individual employee's income. The Company may also elect to
make additional, discretionary contributions to the plan. The amounts
contributed for the benefit of executive officers in 1995 with respect to such
plan are included in this Item 11 under the heading "All Other Compensation."
Management Stock Option Plan
-25-
<PAGE>
Holding's Time Accelerated Restricted Stock Plan (the "Stock Option Plan"),
adopted effective as of December 28, 1990, and as amended effective as of
February 1, 1995, provides for the granting of non-qualified stock options, each
in such amounts, on such terms and to such officers and other key employees of
the Company as the administrators of the Stock Option Plan, in accordance with
the terms of the Stock Option Plan, may select. The Stock Option Plan is
administered by the Compensation Committee of the Board of Directors of Holding,
subject to the supervision and control of the entire Board. A total of 111,111
shares of Common Stock are reserved for issuance pursuant to the Stock Option
Plan. As of March 21, 1997, options to purchase 74,402 shares were granted and
outstanding, options to purchase 6,738 shares had vested and no options had been
exercised.
Pursuant to the Stock Option Plan, as amended, all of the performance based
options shall have a per share exercise price not less than the per share fair
market value of the Common Stock as of the date of the grant of such options.
All of the options granted through March 21, 1997 (other than options to
purchase 21,739 shares granted to Mr. Bronstein) have 9 1/2 year vesting
schedules, subject to acceleration during the first four years following the
date of grant upon the attainment of certain performance criteria. The options
granted to Mr. Bronstein have 15 year vesting schedules, subject to acceleration
during the first four years following the date of grant upon the attainment of
certain performance criteria.
With the exception of an option granted to Frelinghuysen, all options
granted through March 21, 1997 are non-transferable other than by will or the
laws of descent and distribution, and all options are exercisable only while the
optionee remains in the employ of the Company or for a short period of time
thereafter. If an optionee dies or becomes disabled while in the employ of the
Company, the option is exercisable prior to the 365th day following the date of
termination of employment. If an optionee's employment is terminated without
cause, the option is exercisable for 90 days following the date of termination
of employment. If an optionee leaves the employ of the Company for any other
reason, the option is exercisable for only five days following the date of
termination of employment. Options which are exercisable following termination
of employment are exercisable only to the extent that the optionee was entitled
to exercise such options on the date of such termination.
The right to exercise the option granted to Frelinghuysen is not
transferable, but such option may be assigned to any person or entity which
acquires all of the outstanding capital stock or substantially all of the assets
of Frelinghuysen. Additionally, such option may be assigned to any person or
entity which is controlled by, controlling or under common control with Mr.
Frelinghuysen.
Compensation of Directors
The Company does not pay an annual retainer or meeting attendance fee to any
Director other than Mr. Kahn who is paid $4,000 for each meeting he attends;
however,
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<PAGE>
expenses incurred in connection with attending each Board meeting and committee
meeting are paid by the Company.
Incentive Compensation Plan
The Company maintains an incentive compensation plan for all non-union
management associates, pursuant to which the Company makes cash incentive awards
to such members of management in varying amounts based upon the achievement of
various budgeted operating targets established on an annual basis by the Board
of Directors.
Option Grants
During the fiscal year ended December 28, 1996, there were grants of options
to purchase 12,000 shares of Holding's Class A Common Stock while forfeitures of
same amounted to 23,512.
Aggregated Option Values at Fiscal Year-End
The following information is furnished for the fiscal year ended December
28, 1996 with respect to the stock options held by the Company's Chief Executive
Officer and each of the other individuals named in the Summary Compensation
Table. No stock options were exercised during the fiscal year ended December 28,
1996.
<TABLE>
<CAPTION>
Aggregated Option Fiscal Year-End Option Values
Number of Value of Unexercised
Options at In-the-Money Options at
December 28, 1996 December 28, 1996 (1)
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David G. Bronstein 5,435 16,304 -0- -0-
Joseph V. Fisher -0- 17,000 -0- -0-
James A. Toopes, Jr. -0- 12,000 -0- -0-
Stephen L. Hittman -0- 3,400 -0- -0-
John Onufer, Jr. -0- -0- -0- -0-
Gary S. Koppele 380 -0- -0- -0-
Cornelius J.J. Madera, Jr. 380 -0- -0- -0-
</TABLE>
__________
(1) None of the options are in-the-money.
Loans to Management
Mr. Fisher borrowed from Holding a portion of the purchase price for shares
of Holding's Class A Common Stock purchased by him as of December 20, 1993. The
principal amount of this note was $387,500, which note was cancelled and
replaced with a new note in the principal amount of $615,000. The payment of
this new note is secured by
-27-
<PAGE>
the 12,500 and 6,500 shares of Class A Common Stock purchased by Mr. Fisher in
December 1993 and December 1995, respectively. Mr. Fisher's note matures on
December 31, 2005 and bears interest at a rate equal to the prime rate plus 1.5%
per annum.
Mr. Madera borrowed $100,000 from Holding on May 25, 1994. The principal
amount of this note is secured by the shares of Class A Common Stock owned by
Mr. Madera, is payable on demand and bears interest at a rate equal to the prime
rate plus 1.5% per annum.
Mr. Toopes borrowed from Holding a portion of the purchase price for shares
of Holding's Class A Common Stock purchased by him as of December 14, 1996. The
principal amount of his note was $205,000. The payment of this note is secured
by 8,000 shares of Class A Common Stock purchased by Mr. Toopes. Mr. Toopes'
note matures on December 31, 2005 and bears interest at a rate equal to the
prime rate plus 1.5% per annum.
In addition, certain members of the Company's management (none of whom is a
named executive officer) borrowed from Holding and the Company a portion of the
purchase price for shares of Holding's Class A Common Stock purchased by such
individuals in connection with the Acquisition. Payment of obligations under
each of these management notes is secured by the shares of Class A Common Stock
purchased by the makers of these notes.
The aggregate principal amount of such management stock purchase loans
currently owed to Holding is equal to approximately $23,000, which amount is
payable in five equal installments commencing January 1, 1996. The amounts due
Holding for such loans are represented by secured promissory notes which bear
interest at the rate of 8.57% per annum.
-28-
<PAGE>
Compensation Committee Interlocks and Insider Participation
Messrs. Frelinghuysen, Bronstein, Fisher and Childs served on the
Compensation Committee during fiscal 1996. Mr. Bronstein served as the
Company's Chairman of the Board during fiscal 1996. Mr. Fisher served as the
Company's Chief Executive Officer in fiscal 1996. None of the other members of
the Compensation Committee served as officers or employees of the Company or any
of its subsidiaries during fiscal 1996.
In connection with the Acquisition, THL, Thomas H. Lee Equity Partners, L.P.
(the "Lee Fund"), ML-Lee Acquisition Fund II, L.P., ML-Lee Acquisition Fund
(Retirement Accounts) II, L.P. (collectively, the "ML-Lee Funds") and their
respective affiliates (together with THL, the Lee Fund and the ML-Lee Funds, the
"THL" Companies"), Frelinghuysen, certain members of the Company's senior
management and Prudential made investments in Holding and the Company. See
"Certain Relationships and Related Transactions."
Also in connection with the Acquisition, the Company entered into five-year
management agreements with each of THL and Frelinghuysen. The agreements call
for payment to them of $150,000 and $100,000 per year, respectively, for five
years beginning January 1, 1991, for management and other consulting services
rendered to the Company, with annual renewals following the scheduled expiration
date of December 31, 1995. See Item 13.
ITEM 12: Security Ownership of Certain Beneficial Owners and Management
There are 1,000 shares of Common Stock, $1.00 par value per share, of Big V
outstanding, all of which outstanding shares of Common Stock are beneficially
owned by BVH and 100 shares of common stock, $.01 par value per share, of BVH
all of which are beneficially owned by Holding. Holding has sole voting and
investment power with respect to all shares of common stock of BVH and BVH has
sole voting and investment power with respect to all shares of common stock of
Big V.
Security Ownership of Big V Holding Corp.
As of December 28, 1996, there were outstanding 705,123 shares of Holding
Class A Common Stock, par value $.01 per share. The information in the table
below presents the beneficial ownership of (i) each person known to Holding to
own beneficially more than five percent of the outstanding voting common stock
of Holding, (ii) each director and each executive officer of Holding named in
the Summary Compensation Table, and (iii) all directors and executive officers
of Holding, BVH and Big V, respectively as a group.
-29-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of
of Class A Common Outstanding
Stock Beneficially Shares of Class A
Beneficial Owner Owned (1)(2) Common Stock (1)
- ---------------- ------------------ ------------------
<S> <C> <C>
Thomas H. Lee Equity Partners, L.P. (3) 296,808 42.09
ML-Lee Acquisition Fund II, L.P. (4) 117,333 16.64
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P. (4) 62,667 8.89
Thomas H. Lee (5) 36,513 5.18
Gary S. Koppele (6) 32,973 4.68
Cornelius J. J. Madera, Jr. (6) 26,973 3.83
David G. Bronstein (7) 35,335 4.99
Joseph S. Frelinghuysen, Jr. (8) 10,543 1.50
C. Hunter Boll (9) 3,146 **
John W. Childs (10) (11) 11,882 1.69
Leo J. Kahn 5,317 **
Steven G. Segal (12) 1,258 **
Joseph V. Fisher 19,000 2.70
James A. Toopes, Jr. 8,000 1.14
Stephen L. Hittman -0- **
John Onufer, Jr. -0- **
All directors and executive officers of Holding
as a group (11 persons) (13) 94,481 13.27
</TABLE>
---------------
** Represents less than l%
(1) For purposes of the computation of percentages of Holding presented in this
table, a holder is deemed to beneficially own all shares which may be
acquired by such holder upon exercise of options held by such holder, which
options are exercisable within 60 days. Such shares which may be acquired
by such holder (but no shares which may be acquired by any other holder
upon exercise of options held by such other holder) are deemed to be
outstanding.
(2) Share amounts are rounded to the nearest whole number.
(3) Each of (i) THL Equity Advisors Limited Partnership, (ii) THL Equity Trust,
(iii) Thomas H. Lee, as Trustee of THL Equity Trust, (iv) John W. Childs,
as Trustee of THL Equity Trust, (v) C. Hunter Boll, as an officer of THL
Equity Trust, and (vi) Steven G. Segal, as an officer of THL Equity Trust,
may be deemed to be the beneficial owner of 296,808 shares held by the Lee
Fund. Such entities and Messrs. Lee, Boll, Childs and Segal disclaim
beneficial ownership of such shares. The foregoing entities and Messrs.
Lee and Boll maintain their principal business address c/o Thomas H. Lee
Company, 75 State Street, Boston, MA 02109. Messrs. Childs and Segal
maintain their principal business address c/o J.W. Childs Associates, L.P.,
One Federal Street, Boston, MA 02110.
(4) Each of (i) Thomas H. Lee Advisors II, L.P. ("Advisors II"), the Investment
Advisor of each of the ML-Lee Funds, (ii) T.H. Lee Mezzanine II ("Mezzanine
-30-
<PAGE>
II"), a general partner of Advisors II, (iii) Thomas H. Lee, as Trustee of
Mezzanine II and an Individual General Partner of each of the ML-Lee Funds,
(iv) John W. Childs, as Trustee of Mezzanine II, (v) C. Hunter Boll, as an
officer of Mezzanine II, and (vi) Steven G. Segal, as an officer of
Mezzanine II, may be deemed to be the beneficial owners of 180,000 shares
held, in the aggregate, by the ML-Lee Funds. Each of Advisors II,
Mezzanine II, Mr. Lee, Mr. Childs, Mr. Boll and Mr. Segal disclaim
ownership of such shares. Each of Advisors II and Mezzanine II maintains
their principal business address c/o Thomas H. Lee Company, 75 State
Street, Boston, MA 02109. The ML-Lee Funds maintain principal business
addresses c/o Merrill Lynch, 225 Liberty Street, World Financial Center,
South Tower--23rd Floor, New York, New York 10080-6123.
(5) Represents 36,513 shares which may be deemed to be beneficially owned by
State Street Bank and Trust Company of Connecticut, N.A., as trustee of the
1989 Thomas H. Lee Nominee Trust (the "Lee Trust"). State Street Bank and
Trust Company of Connecticut, N.A. disclaims beneficial ownership of such
shares. Does not include 476,808 shares which may be deemed to be
beneficially owned by Mr. Lee as a result of his relationships with the Lee
Fund and the ML-Lee Funds. Mr. Lee disclaims beneficial ownership of such
shares. Mr. Lee maintains his principal business address c/o Thomas H. Lee
Company, 75 State Street, Boston, MA 02109.
(6) Includes options to purchase 380 shares. Also includes, solely with
respect to Mr. Koppele, 32,593 shares held of record by GSK, Inc., a
Delaware corporation wholly owned by Mr. Koppele. Mr. Koppele may be
deemed to beneficially own these shares as a result of his relationship
with GSK, Inc.
(7) Includes options to purchase 5,435 shares.
(8) Includes options to purchase 543 shares.
(9) Includes options to purchase 1,581 shares from Mr. Lee which are currently
exercisable. Does not include 476,808 shares which may be deemed to be
beneficially owned by Mr. Boll as a result of his relationship with the Lee
Fund and the ML-Lee Funds. Mr. Boll disclaims beneficial ownership of such
shares.
(10) Includes options to purchase 6,211 shares from Mr. Lee which are currently
exercisable. Does not include 476,808 shares which may be deemed to be
beneficially owned by Mr. Childs as a result of his relationship with the
Lee Fund and the ML-Lee Funds. Mr. Childs disclaims beneficial ownership
of such shares.
(11) Does not include 426 shares which Mr. Childs may be deemed to own by virtue
of proxies he holds with respect to shares owned by his siblings. Mr.
Childs disclaims beneficial ownership of such shares.
(12) Includes options to purchase 632 shares from Mr. Lee which are currently
exercisable. Does not include 476,808 shares which may be deemed to be
beneficially owned by Mr. Segal as a result of his relationship with the
Lee Fund and the ML-Lee Funds. Mr. Segal disclaims beneficial ownership of
such shares.
(13) Does not include 513,320 shares which may be deemed to be beneficially
owned by certain directors as a result of their relationships with the Lee
Fund, the
-31-
<PAGE>
ML-Lee Funds and the Lee Trust, as beneficial ownership of such shares is
disclaimed. Includes options to purchase 6,738 shares.
ITEM 13: Certain Relationships and Related Transactions
The Company and THL entered into an agreement dated December 28, 1990,
pursuant to which THL received a financial advisory fee of $1,250,000 from the
Company at the closing of the Acquisition and a strategic planning fee of
$250,000 on January 15, 1991. In addition, pursuant to such agreement, THL
received $150,000 per year for five years beginning January 1, 1991 for
management and other consulting services rendered to the Company. After the
initial five-year term, the management agreement with THL automatically renews
on an annual basis unless either party serves notice of termination at least 90
days prior to the renewal date. The Company believes that the terms of this
agreement are comparable to those that would have been obtainable from
unaffiliated sources.
The Company and Frelinghuysen entered into an agreement dated December 28,
1990, pursuant to which Frelinghuysen received a financial advisory fee of
$1,250,000 from the Company at the closing of the Acquisition (which was
comprised of $875,000 in cash and 10,714.286 shares of Holding's Class A Common
Stock) and a strategic planning fee of $250,000 on January 15, 1991. In
addition, pursuant to such agreement, Frelinghuysen received $100,000 per year
for five years beginning January 1, 1991 for management and other consulting
services rendered to the Company. After the initial five year term, the
management agreement with Frelinghuysen automatically renews on an annual basis
unless either party serves notice of termination at least 90 days prior to the
renewal date. The Company believes that the terms of this agreement are
comparable to those that would have been obtained from unaffiliated sources.
Each of the management and consulting agreements between the Company and
THL and the Company and Frelinghuysen provides that the Company will indemnify
THL and Frelinghuysen respectively for any liability arising from the
performance of management or consulting services under such agreement, unless
such liability is the result of gross negligence or willful misconduct.
The existing shareholders of Holding (the "Existing Shareholders") have
entered into a shareholders' agreement, dated as of December 28, 1990, as
amended and restated on December 17, 1993 (the "Shareholders' Agreement"), which
sets forth certain rights and obligations of the parties with respect to the
Common Stock and corporate governance of Holding, including certain transfer
restrictions on shares of Common Stock, certain put and call rights and
obligations relating to the Common Stock, agreements relating to the composition
of the Board of Directors of Holding and registration rights.
The Shareholders' Agreement provides that the Existing Shareholders must,
subject to certain conditions, vote their shares to elect a Board of Directors
of Holding consisting of not more than five directors, subject to increase
pursuant to the Shareholders'
-32-
<PAGE>
Agreement, one director to be nominated by THL and certain of its officers,
employees, consultants and affiliates (collectively with their permitted
transferees, the "Lee Holders"), one director to be nominated by the ML-Lee
Funds, one director to be nominated by the Lee Fund, one director to be
nominated by Frelinghuysen and one director to be nominated by the Chief
Executive Officer of Big V. Notwithstanding the foregoing, the right of any of
the foregoing shareholders to designate directors will be eliminated at such
time as such shareholder no longer owns any of the shares of Common Stock then
outstanding.
In addition, the Shareholders' Agreement provides that the Existing
Shareholders are (i) in certain instances, subject to "come along" rights
allowing them to participate in private sales of Common Stock by certain
Existing Shareholders and (ii) in certain instances, subject to "take along"
rights allowing certain Existing Shareholders who are selling all of their
shares to require the other Existing Shareholders to sell all of their shares of
Common Stock to the same purchaser in the same transaction. The Shareholders'
Agreement requires Holding's Existing Shareholders to vote together as a group
on certain matters, including the nomination and election of the Board of
Directors, establishing the number of directors in accordance with the
Shareholders' Agreement and certain sales or mergers relating to the "take
along" rights contained in the Shareholders' Agreement.
The Shareholders' Agreement also provides certain registration rights to
the Existing Shareholders. If Holding receives a written request from any of
the ML-Lee Funds, the Lee Fund, the Lee Holders or Frelinghuysen or any of their
permitted transferees (collectively, the "Institutional Investors") that Holding
file a registration statement under the Securities Act covering the registration
of at least 10% of the Registrable Securities (as defined therein), then Holding
is required, on no more than two occasions, to (a) promptly give written notice
to all other Existing Stockholders of such request and (b) with reasonable
promptness, and generally within 120 days after receipt by Holding of a written
request for a demand registration, file a registration statement with the
Securities and Exchange Commission (the "Commission") relating to such
Registrable Securities as to which such request for a demand registration
relates and Holding shall use its best efforts to cause all Registrable
Securities of the same class that holders have requested be registered to be
registered under the Securities Act, subject to customary proportional
reductions if necessary to accommodate market conditions.
The Shareholders' Agreement also provides that if Holding proposes to
register shares of Common Stock under the Securities Act, in connection with the
public offering of such securities solely for cash on a form that would also
permit the registration of any of the Registrable Securities, either for its own
account or for the account of others, then each Existing Shareholder has a
right, subject to certain restrictions, to request that Holding register its
shares of Common Stock.
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<PAGE>
PART IV
ITEM 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements
See Financial Statements Index included in Item 8 of Part II of this Form
10-K.
(2) Financial Statement Schedules:
Schedules have been omitted as they are not applicable or the required
information is presented in the financial statements or related notes.
(3) Exhibits
See Index to Exhibits on Page II-I. A copy of the exhibits listed herein
can be obtained by writing:
James A. Toopes, Jr.
Executive Vice President-Finance,
Administration and Corporate Development
Big V Supermarkets, Inc.
176 North Main Street
Florida, New York 10921
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter for the year
ended December 28, 1996.
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<PAGE>
BIG V SUPERMARKETS, INC.
INDEX TO EXHIBITS
Exhibits Incorporated by Reference. Except as otherwise noted, the
following is a list of exhibits incorporated herein by reference to the
Company's Registration Statement No. 33-74132, as amended, filed with the
Securities and Exchange Commission (exhibit numbers indicated below correspond
to those used for exhibits originally filed with such Registration
No. 33-74132).
Exhibit Exhibit
No. Description
- ----- -----------
3.1 Certificate of Incorporation of Big V Supermarkets, Inc., as amended to
date.
3.2 Amended and Restated By-Laws of Big V Supermarkets, Inc.
4.1 Indenture dated December 17, 1993 between Big V Supermarkets, Inc. and
United States Trust Company of New York, as Trustee, relating to the
Notes (including form of Note).
4.2 Registration Rights Agreement dated December 10, 1993 between Big V
Supermarkets, Inc., BT Securities Corporation and CS First Boston
Corporation.
4.3 Amended and Restated Bank Credit Agreement dated December 17, 1993
between Big V Holding Corp., BV Holdings Corporation, Big V
Supermarkets, Inc., various banks, Union Bank of Switzerland as co-
agent and Bankers Trust Company as agent.
4.4 Note and Stock Purchase Agreement dated December 28, 1990 between Big V
Holdings Corporation, Big V Supermarkets, Inc., The Prudential
Reinsurance Company, ML-Lee Acquisition Fund II, L.P., and ML-Lee
Acquisition (Fund Retirement Accounts) II, L.P.
4.5 Amendment to Note and Stock Purchase Agreement dated as of December 17,
1993 between Big V Holding Corp., BV Holdings Corporation, Big V
Supermarkets, Inc., ML-Lee Acquisition Fund II, L.P. and ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P.
4.6 Stock Subscription Agreement and Promissory Note by Big V Supermarkets,
Inc. for stock of Wakefern Food Corp. dated March 9, 1988, including
Schedule of Similar Documents not included in Exhibits.
II-1
<PAGE>
4.7 Loan and Security Agreement by and between Big V Supermarkets, Inc. and
the CIT Group/Equipment Financing, Inc. dated as of July 20, 1993, as
amended.
4.8 Loan and Security Agreement by and between Big V Supermarkets, Inc. and
the CIT Group/Equipment Financing, Inc. dated as of August 12, 1991.
4.9 Loan and Security Agreement, dated as of December 28, 1992 between Big
V Supermarkets, Inc. and Pitney Bowes Credit Corporation.
4.10 Loan and Security Agreement dated December 31, 1992 between Big V
Supermarkets, Inc. and MetLife Capital Corporation.
4.11 Promissory Note dated November 12, 1993 from Big V Supermarkets, Inc.
to Insure-Rite, Ltd.
4.12 Consent and Amendment dated December 13, 1993 to Loan and Security
Agreement by and between Big V Supermarkets, Inc. and the CIT
Group/Equipment Financing, Inc. dated as of August 12, 1991.
4.13 Bond Purchase Agreement among Orange County Industrial Development
Agency, Big V Supermarkets, Inc. and the CIT Group/Equipment Financing,
Inc. dated as of December 22, 1993.
4.14 Second Consent and Amendment dated March 23, 1994 to Loan and Security
Agreement by and between Big V Supermarkets, Inc. and the CIT
Group/Equipment Financing, Inc. dated as of August 12, 1991.
4.15 Third Consent and Amendment dated May 9, 1994 to Loan and Security
Agreement by and between Big V Supermarkets, Inc. and the CIT
Group/Equipment Financing, Inc. dated as of August 12, 1991.
4.16 Fourth Consent and Amendment dated February 27, 1995 to Loan and
Security Agreement by and between Big V Supermarkets, Inc. and The CIT
Group/Equipment Financing, Inc. dated as of August 12, 1991.
4.17 Orange County Industrial Development Agency taxable industrial
development revenue bond in the aggregate principal amount of $2
million dated June 3, 1994.
4.18 Orange County Industrial Development Agency taxable industrial
development revenues bond in the aggregate principal amount of $2
million dated December 5, 1994.
4.19 Note and Security Agreement dated as of August 9, 1995 between Big V
Supermarkets, Inc. and El Camino Resources, Ltd.
II-2
<PAGE>
4.20* Third Amendment dated as of January 9, 1996 to Amended and Restated
Bank Credit Agreement dated December 17, 1993 between Big V Holding
Corp., BV Holdings Corporation, Big V Supermarkets, Inc., various
banks, and Bankers Trust Company, as agent
4.21* Consent dated as of January 23, 1996 to Amended and Restated Bank
Credit Agreement dated December 17, 1993 between Big V Holding Corp.,
BV Holdings Corporation, Big V Supermarkets, Inc., various banks, and
Bankers Trust Company, as agent
4.22** Consent dated October 10, 1996 to Amended and Restated Bank Credit
Agreement dated December 17, 1993 between Big V Holding Corp., BV
Holdings Corporation, Big V Supermarkets, Inc., various banks, and
Bankers Trust Company, as agent, and MetLife Capital Corporation
4.23** Consent and Waiver dated November 5, 1996 to Amended and Restated Bank
Credit Agreement dated December 17, 1993 between Big V Holding Corp.,
BV Holdings Corporation, Big V Supermarkets, Inc., various banks, and
Bankers Trust Company, as agent, and MetLife Capital Corporation
4.24** Fourth Amendment and Consent dated January 22, 1997 to Amended and
Restated Bank Credit Agreement dated December 17, 1993 between Big V
Holding Corp., BV Holdings Corporation, Big V Supermarkets, Inc.,
various banks, and Bankers Trust Company, as agent
4.25** Term Promissory Note and Loan and Security Agreement dated as of
October 30, 1996 between Big V Supermarkets, Inc. and MetLife Capital
Corporation
4.26** UCC-3 Termination Statements on behalf of El Camino Resources, Ltd.
(reference to 4.19)
10.1 Letter Agreement dated as of October 10, 1990 among Big V Holding
Corp., Big V Acquisition Corp., Thomas H. Lee Company, J. S.
Frelinghuysen & Company, Inc., BV Holdings Corporation and Big V
Supermarkets, Inc. regarding agreement with Wakefern Food Corporation.
10.2 Letter Agreement dated as of December 28, 1990 between Big V
Supermarkets, Inc., BV Holdings Corporation, Big V Holding Corp., Big V
Acquisition Corp., ML-Lee Acquisition Fund II, L.P., ML-Lee Acquisition
Fund (Retirement Accounts) II, L.P., Thomas H. Lee Equity Partners,
L.P., Thomas H. Lee Advisors II, L.P., THL Equity Advisors Limited
Partnership, ML Mezzanine Investments II, L.P., Frelinghuysen Equity
Corp., THL-EP Equity Corporation, Thomas H. Lee Company and Wakefern
Food Corporation.
II-3
<PAGE>
10.3 Letter Agreement dated as of December 28, 1990 between Big V
Supermarkets, Inc., BV Holdings Corporation, Big V Holding Corp., Big V
Acquisition Corp., ML-Lee Acquisition Fund II, L.P., ML-Lee Acquisition
Fund (Retirement Accounts) II, L.P., Thomas H. Lee Equity Partners,
L.P., THL Equity Advisors Limited Partnership, Mezzanine Investments
II, L.P., J. E. Frelinghuysen Equity Corp., 1987 Merchant Investment
Partnership, Merchant GP Inc., Merchant LBO, Inc. and Metropolitan Life
Insurance Company regarding obligations to Wakefern, as amended by an
amendment dated April 22, 1991.
10.4 Letter Agreement between Big V Supermarkets, Inc., BV Holdings
Corporation, Big V Holding Corp., Thomas H. Lee Equity Partners, L.P.,
Joseph S. Frelinghuysen, ML-Lee Acquisition Fund II, L.P., ML-Lee
Acquisition Fund (Retirement Accounts) II, L.P., David G. Bronstein,
Gary S. Koppele, Cornelius J., J. Madera, Jr. and Wakefern Food
Corporation dated November 22, 1993.
10.5 By-Laws of Wakefern Food Corporation.
10.6 Stockholders Agreement dated as of August 20, 1987 by and among
Wakefern Food Corp., and each of the Member--Stockholders of Wakefern.
10.7 Amendment to Stockholders Agreement dated as of January, 1992 by and
among Wakefern Food Corp. and each of the Member-Stockholders of
Wakefern.
10.8 Order on Consent between the DEC, Big V Supermarkets, Inc. and Somers
Development Corp. regarding Baldwin Place Shopping Center dated
July 27, 1992.
10.9 Trademark License Agreement between Big V Supermarkets, Inc. and
Wakefern Food Corporation.
10.10 Big V Supermarkets, Inc. Profit-Sharing Plan and Trust.
10.11 Somers Agreement dated as of December 28, 1990, by and among BV
Holdings Corporation, Big V Investment Corp., Big V Supermarkets, Inc.,
Somers Development Corp,. and Merchant GP, Inc., as agent and
representative.
10.12 Employment and Non-Competition Agreement dated as of December 28, 1990
between David G. Bronstein, BV Holdings Corporation and Big V
Supermarkets, Inc.
10.13 Employment and Non-Competition Agreement between Cornelius J. J.
Madera, Jr., BV Holdings Corporation and Big V Supermarkets, Inc. dated
December 28, 1990.
II-4
<PAGE>
10.14 Employment and Non-Competition Agreement dated December 28, 1990
between Gary S. Koppele, BV Holdings Corporation and Big V
Supermarkets, Inc.
10.15 Employment and Non-Competition Agreement dated December 19, 1995
between BV Holdings Corporation, Big V Supermarkets, Inc. and Joseph
Fisher.
10.16 Employment and Non-Competition Agreement dated August 6, 1993 between
BV Holdings Corporation, Big V Supermarkets, Inc. and Stuart Rosenthal.
10.17 Management Agreement with BV Holdings Corporation dated December 28,
1990 between BV Holdings Corporation and Big V Supermarkets, Inc.
10.18 Management Agreement with Thomas H. Lee Company dated December 28, 1990
between Thomas H. Lee Company, Big V Holding Corp., Big V Acquisition
Corp., BV Holdings Corporation and Big V Supermarkets, Inc.
10.19 Management Agreement dated December 28, 1990 between J. S.
Frelinghuysen/Company, Inc., Big V Holding Corp., BV Holdings
Corporation, and Big V Supermarkets, Inc.
10.20 Agreement for the allocation of Federal Income Tax Liability and
Benefits among members of Big V Holding Corp. Consolidated Group dated
December 28, 1990 between Big V Holding Corp., BV Holdings Corporation,
Big V Supermarkets, Inc., Somers Development Corp., Dixx Mart, Inc. and
Big V Investment Corp.
10.21 Big V Holding Corp. 1990 Time Accelerated Restricted Stock Option Plan.
10.22** Employment and Non-Competition Agreement dated as of May 1, 1996
between James A. Toopes, Big V Holding Corp. and Big V Supermarkets,
Inc.
10.23** Employment Termination Agreement between Big V Supermarkets, Inc., Big
V Holding Corp. and Gary S. Koppele dated June 17, 1996
10.24** Employment Termination Agreement between Big V Supermarkets, Inc.,
Big V Holding Corp. and Cornelius J. J. Madera, Jr. dated June 17, 1996
12.1** Statement re: computation of ratio of earnings to fixed charges.
21.1 Subsidiaries of the Registrant.
- -----------------
* Incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 23, 1996.
** Included herein.
/1/ December 19, 1995
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Village of
Florida, State of New York, on March 28, 1997.
BIG V SUPERMARKETS, INC.
By: /s/ Joseph V. Fisher
-------------------------------
Joseph V. Fisher,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ David G. Bronstein Director, Chairman of the March 28, 1997
- ---------------------------- Board
David G. Bronstein
/s/ Joseph V. Fisher Director, Chief Executive March 28, 1997
- ---------------------------- Officer and President
Joseph V. Fisher (principal executive officer)
/s/ James A. Toopes, Jr. Director, Executive Vice March 28, 1997
- ---------------------------- President-Finance,
James A. Toopes, Jr. Administration, Corporate
Development and Corporate
Secretary
(principal financial officer)
/s/ John Onufer, Jr. Vice President-Controller March 28, 1997
- ---------------------------- and Assistant Treasurer
John Onufer, Jr.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ John W. Childs Director March 28, 1997
- --------------------------------
John W. Childs
/s/ C. Hunter Boll Director March 28, 1997
- --------------------------------
C. Hunter Boll
/s/ Joseph S. Frelinghuysen, Jr. Director March 28, 1997
- --------------------------------
Joseph S. Frelinghuysen, Jr.
/s/ Leo J. Kahn Director March 28, 1997
- --------------------------------
Leo J. Kahn
/s/ Steven G. Segal Director March 28, 1997
- --------------------------------
Steven G. Segal
</TABLE>
<PAGE>
------------------------------------------------
Big V Supermarkets, Inc.
Consolidated Financial Statements for the
Fiscal Years 1996, 1995 and 1994, and
Independent Auditors' Report
<PAGE>
BIG V SUPERMARKETS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS 1996, 1995 AND 1994
- ------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED STATEMENTS OF LOSS F-3
CONSOLIDATED BALANCE SHEETS F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS F-6 - F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 - F-23
<PAGE>
INDEPENDENT AUDITORS' REPORT
Big V Supermarkets, Inc.
Florida, New York
We have audited the accompanying consolidated balance sheets of Big V
Supermarkets, Inc. and subsidiaries (the "Company") as of December 28, 1996 and
December 30, 1995, and the related consolidated statements of loss,
stockholder's deficit and cash flows for each of the three fiscal years in the
period ended December 28, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Big V Supermarkets, Inc. and
subsidiaries as of December 28, 1996 and December 30, 1995, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 28, 1996 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Parsippany, New Jersey
March 25, 1997
F-2
<PAGE>
[GRAPHIC OMITTED]
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF LOSS
FOR THE YEARS ENDED DECEMBER 28, 1996 (52 WEEKS),
DECEMBER 30, 1995 (52 WEEKS), AND DECEMBER 31, 1994 (53 WEEKS)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 28, December 30, December 31,
1996 1995 1994
<S> <C> <C> <C>
SALES $ 735,975,920 $ 768,681,588 $ 754,401,185
---------------- ---------------- ----------------
COSTS AND EXPENSES:
Cost of sales (exclusive of depreciation and
amortization shown separately below) 545,851,021 568,298,763 560,864,799
Selling, general and administrative 151,824,568 161,745,756 160,068,289
Special charges 3,003,736 - -
Depreciation and amortization 17,381,369 18,547,788 17,777,777
Interest expense, net of interest income
of $254,504 for 1996, $311,312 for 1995,
and $554,768 for 1994 24,381,855 27,277,180 24,621,373
---------------- ---------------- ----------------
Total costs and expenses 742,442,549 775,869,487 763,332,238
---------------- ---------------- ----------------
LOSS BEFORE INCOME TAXES (6,466,629) (7,187,899) (8,931,053)
INCOME TAX BENEFIT 2,508,721 2,109,700 2,770,600
---------------- ---------------- ----------------
NET LOSS $ (3,957,908) $ (5,078,199) $ (6,160,453)
================ ================ ================
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 AND DECEMBER 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash $ 10,595,208 $ 11,683,235
Accounts receivable 13,066,647 12,157,940
Inventories 35,436,972 34,971,590
Refundable income taxes 120,000 144,769
Prepaid expenses and other current assets 3,433,463 3,467,905
------------ ------------
Total current assets 62,652,290 62,425,439
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $70,004,649 at December 28, 1996 and
$59,423,357 at December 30, 1995 72,304,447 88,793,076
GOODWILL - Less accumulated amortization of $10,913,661 at December 28, 1996 and
$8,901,257 at December 30, 1995 68,395,470 70,407,873
INVESTMENT IN WAKEFERN FOOD CORP. 11,236,370 11,634,287
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated amortization of $6,205,213 at
December 28, 1996 and $5,171,011 at December 30, 1995 35,162,875 36,197,077
OTHER ASSETS 14,865,650 15,497,754
------------ ------------
TOTAL ASSETS $264,617,102 $284,955,506
============ ============
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 39,738,270 $ 41,814,974
Accrued expenses and taxes other than income taxes 15,028,037 15,331,066
Income taxes payable 17,000 -
Deferred income taxes 6,313,500 6,455,700
Current portion of long-term debt 10,959,354 9,691,548
Current portion of capitalized lease obligations 447,183 328,427
------------ ------------
Total current liabilities 72,503,344 73,621,715
------------ ------------
OTHER LONG-TERM LIABILITIES 6,246,950 4,916,736
------------ ------------
LONG-TERM DEBT - Less current portion 165,589,901 172,158,330
------------ ------------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 36,614,164 44,773,557
------------ ------------
DEFERRED INCOME TAXES 7,973,000 9,698,174
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT:
Common stock, par value, $1.00 per share; authorized, 1,000 shares;
issued, 1,000 shares 1,000 1,000
Paid-in capital 8,664,388 8,803,731
Accumulated deficit (32,975,645) (29,017,737)
------------ ------------
Total stockholder's deficit (24,310,257) (20,213,006)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $264,617,102 $284,955,506
============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
[GRAPHIC OMITTED]
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
FOR THE YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Retained
Common Stock Earnings Total
----------------------- Paid in (Accumulated Stockholder's
Shares Amount Capital Deficit) Deficit
<S> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 25, 1993 1,000 $ 1,000 9,105,482 (17,779,085) (8,672,603)
Return of capital to Holding - - (144,813) - (144,813)
Capital contribution
from Holding - - 34,429 - 34,429
Net loss - - - (6,160,453) (6,160,453)
-------- -------- -------- ------------ ------------
BALANCE,
DECEMBER 31, 1994 1,000 1,000 8,995,098 (23,939,538) (14,943,440)
Return of capital to Holding - - (976,587) - (976,587)
Capital contribution
from Holding - - 785,220 - 785,220
Net loss - - - (5,078,199) (5,078,199)
-------- -------- -------- ------------ -------------
BALANCE,
DECEMBER 30, 1995 1,000 1,000 8,803,731 (29,017,737) (20,213,006)
Return of capital to Holding - - (214,343) - (214,343)
Capital contribution
from Holding - - 75,000 - 75,000
Net loss - - - (3,957,908) (3,957,908)
-------- -------- -------- ------------ ------------
BALANCE,
DECEMBER 28, 1996 1,000 $ 1,000 $ 8,664,388 $ (32,975,645) $(24,310,257)
======== ======== =========== ============= ============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 28, 1996,
DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
December 28, December 30, December 31,
1996 1995 1994
<S> <C> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $ 11,683,235 $ 15,736,225 $ 20,405,766
------------------ --------------- -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss (3,957,908) (5,078,199) (6,160,453)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 17,381,369 18,547,788 17,777,777
Amortization of deferred debt costs 1,166,399 1,196,431 1,209,700
Amortization of discount on debt 77,746 221,814 96,757
Deferred income taxes (1,867,374) (2,254,900) (1,895,857)
Noncash rent expense 722,778 984,704 1,091,227
Noncash gain from lease termination (1,072,554) - -
Noncash loss on sale of video equipment - 17,459 28,163
Noncash gain on retirement of Wakefern notes - (13,972) -
Changes in assets and liabilities:
Increase in inventories (3,063,422) (1,323,119) (5,185,251)
(Increase) decrease in prepaid expenses (445,519) 312,223 (653,485)
Increase in accounts receivable (908,707) (358,057) (442,063)
Decrease in refundable income taxes 24,769 117,001 4,533,064
(Increase) decrease in other assets (905,921) (3,094,508) 1,023,493
(Decrease) increase in accounts payable (2,076,704) (390,873) 7,224,095
(Decrease) increase in accrued expenses and
taxes other than income taxes (319,701) 2,472,584 1,968,575
Increase in income taxes payable 17,000 - -
Increase in long-term liabilities 836,542 2,440 1,002,957
--------- ---------- -----------
Net cash provided by operating activities 5,608,793 11,358,816 21,618,699
--------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (9,756,270) (10,690,081) (26,556,458)
Sale of Connecticut stores 8,552,122 - -
Sale of property and equipment 2,948 26,614 7,038
Increase in investment in Wakefern Food Corp. (40,000) - (158,500)
--------- ----------- -----------
Net cash used in investing activities (1,241,200) (10,663,467) (26,707,920)
--------- ----------- -----------
</TABLE>
(Continued)
F-6
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 28, 1996,
DECEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
December 28, December 30, December 31,
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt $ (8,771,661) $ (7,346,047) $ (5,232,665)
Payments of capital lease obligations (375,825) (314,928) (302,634)
Proceeds of long-term borrowings 3,831,209 3,104,003 6,065,363
Return of capital to Holding (214,343) (976,587) (144,813)
Capital contribution from Holding 75,000 785,220 34,429
------------- ---------------- ---------------
Net cash (used in) provided by
financing activities (5,455,620) (4,748,339) 419,680
------------ ---------------- ---------------
NET DECREASE IN CASH (1,088,027) (4,052,990) (4,669,541)
------------ ---------------- ---------------
CASH BALANCE, END OF PERIOD $ 10,595,208 $ 11,683,235 $ 15,736,225
============ ================ ===============
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 23,723,134 $ 25,815,235 $ 20,130,773
============= ================ ===============
Income taxes $ 783,460 $ 128,574 $ 309,885
============= ================ ===============
</TABLE>
During the year ended December 31, 1994, the Company's investment in Wakefern
and notes payable to Wakefern increased by $1,993,188. The Company entered into
capital lease obligations of $17,161,319 for leased store space.
During the year ended December 30, 1995, notes payable to Wakefern for $511,785
were entered into which increased the investment in Wakefern.
During the year ended December 28, 1996, notes payable to Wakefern for $250,498
were entered into which increased the investment in Wakefern.
(Concluded)
See notes to consolidated financial statements.
F-7
<PAGE>
BIG V SUPERMARKETS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATIONAL STRUCTURE
On December 28, 1990, Big V Supermarkets, Inc. (the "Company") was
purchased by Big V Holding Corp. ("Holding") through the merger of a
wholly-owned subsidiary of Holding with and into BV Holdings Corporation
(the "Predecessor Company"), the owner of all voting stock of the Company.
The financial statements presented herein are those of the Company,
subsequent to the purchase by Holding. The Company is a wholly-owned
indirect subsidiary of Holding, whose principal shareholders include
Thomas H. Lee Equity Partners, L.P., ML-Lee Acquisition Fund II, L.P.,
ML-Lee Acquisition Fund (Retirement Accounts) II, L.P., Thomas H. Lee, and
management of the Company. The consideration paid by Holding to acquire
the Company was approximately $210.2 million.
The acquisition by Holding was accounted for as a purchase, and
accordingly, Holding recorded the assets and liabilities of the Company at
their fair value at the date of the acquisition. The accompanying
consolidated financial statements of the Company reflect Holding's basis.
The Company operates a chain of 29 modern supermarkets under the
ShopRite(R) trade name located primarily in the Hudson River Valley Region
of New York State. The Company also operates one supermarket under the
"Big V Market" trade name and one supermarket under the "CostRite" trade
name. The Company is the largest member of the Wakefern Food Corp.
Cooperative ("Wakefern") located in Elizabeth, New Jersey.
The Company has incurred net losses for the fiscal years ended December
28, 1996, December 30, 1995, and December 31, 1994. Current liabilities
exceed current assets at December 28, 1996. However, management believes
cash flows produced by operations, supplemented by available borrowing
capacity under the Credit Agreement (see Note 5), will meet seasonal cash
requirements, scheduled debt payments, and fund the capital expenditure
program. Still, the Company may refinance a portion or all the
indebtedness prior to its maturity. Operating plans include opening,
replacing, or expanding ten supermarkets during the next three years.
Management believes this capital investment program will increase market
share within its existing trade area and generate incremental store
contribution within its existing overhead expense structure.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The Company's fiscal year ends on the last Saturday in
December. The fiscal year ended December 31, 1994 was a 53-week period and
the fiscal years ended December 28, 1996 and December 30, 1995 were
52-week periods.
Principles of Consolidation - The consolidated financial statements of the
Company include the accounts of Big V Supermarkets, Inc. and its
nonoperating subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Since the Company is a
wholly-owned subsidiary, earnings per share information is not presented.
The Company operates in one industry segment, the selling of retail food
and nonfood products.
Inventories - Inventories are valued using the last-in, first-out method.
Inventories are priced at prevailing selling prices and reduced to cost by
application of a cost complement factor.
At December 28, 1996 and December 30, 1995, inventories would have been
higher by $2,444,000 and $1,631,000, respectively, if the first-in,
first-out method of valuation had been used.
F-8
<PAGE>
Property and Equipment - Property and equipment is stated at cost.
Depreciation and amortization, computed by the straight-line method for
financial statement purposes, are based on an estimated useful life of
between three and eight years for equipment, ten years or lease term,
whichever is less, for leasehold improvements and the related lease term
for leasehold interests and capitalized leases and twenty years for
building. Costs of major improvements to existing facilities are
capitalized. Costs of repairs, maintenance and replacements which do not
significantly improve or extend the life of the respective assets are
charged to expense as incurred. Leasehold interests represent an
intangible value assigned to leased properties resulting from a fair
market determination made by independent appraisers in connection with the
purchase of the net assets of the Company.
Effective December 31, 1995, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." This Statement
establishes accounting standards for the measurement of the impairment of
long-lived assets, certain identifiable intangibles and goodwill related
to those assets. This Statement requires that an asset to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company's long-lived assets are not impaired based on a
review of such assets.
Goodwill - Goodwill is being amortized on the straight-line method over
forty years. Management assesses the recoverability of goodwill by
comparing the Company's forecasts of cash flows from future operating
results, on an undiscounted basis, to the unamortized balance of goodwill
at each balance sheet date. Cash flows from operating results represents
net income excluding depreciation and amortization expense. If the results
of such comparison indicate that an impairment may be likely, the Company
will recognize a charge to operations at that time based upon the
difference between the present value of the expected cash flows from
future operating results (utilizing a discount rate equal to the Company's
average cost of funds at the time), and the balance sheet value of
goodwill as of such time. The recoverability of goodwill is at risk to the
extent the Company is unable to achieve its forecast assumptions regarding
cash flows from operating results. Management believes, at this time, that
the goodwill carrying value and useful life continues to be appropriate.
Investment in Wakefern Food Corp. - Represents the Company's stock
ownership in Wakefern. Such stock has been valued at its redemption value,
which represents cost, in accordance with the Wakefern by-laws and is
obtained by the Company upon payments made with respect to new store
openings (see Note 10). The Wakefern by-laws specify that, such stock can
be sold to Wakefern at the greater of $100 per share or Wakefern's then
book value. Since this stock can only be sold to Wakefern at a specified
amount in accordance with the Wakefern by-laws it is not practicable to
estimate the fair value of such stock.
Wakefern Warehouse Agreement - Represents the value assigned to the
Company's ability to participate in Wakefern as a member and its ability
to share in the annual patronage dividend (see Note 10). The value
assigned resulted from a fair market determination made by independent
appraisers in connection with the purchase of the net assets of the
Company. The Wakefern Warehouse Agreement contains an evergreen provision
providing for a continual 10-year renewal period. The Company's obligation
to purchase from Wakefern may be terminated only ten years following the
approval of such termination by the holders of at least 75% of the
outstanding voting stock of Wakefern. Accordingly, the cost of the
Wakefern Warehouse Agreement is being amortized on a straight-line basis
over forty years.
F-9
<PAGE>
Debt Issuance Costs - Debt issuance costs represent costs associated with
borrowings and are amortized using the straight-line method over the terms
of the related debt.
Special Charges - During 1996 the Company adjusted its reserves for
certain items, explained below, based on new facts and estimates. The
special charges, approximating $3.0 million, consist of an increase in
reserves for and/or settlement of future lease obligations on store leases
assigned in 1988 to another supermarket chain which declared bankruptcy
during 1995. Such charges also include costs associated with the
abandonment of potential new store sites and incurred expenses from closed
store sites.
Income Taxes - The Company files a consolidated Federal income tax return
with its ultimate parent, Holding. Effective December 28, 1990, the
Company implemented the provisions of Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes." Deferred taxes
have been recorded for the differences between the financial reporting
basis and the tax basis of the Company's assets and liabilities.
Preopening Costs - Costs associated with new store openings are amortized
in the twelve-month period following such store opening.
Self-Insured Liabilities - Effective February 1994, the Company began
self-insuring workers' compensation claims. Such liability has been
recorded at its present value utilizing a risk free discount rate based on
the projected payout of these claims. The Company determines the required
liability based upon various actuarial assumptions which include, but are
not limited to, the Company's historical loss experience, industry loss
standards, projected loss development factors, projected payroll, employee
headcount and interest rates. It is reasonably possible that the final
resolution of some of these workers' compensation claims may require
significant expenditures by the Company in excess of its existing
reserves, over an extended period of time and in a range of amounts that
cannot be reasonably estimated. As of December 28, 1996 and December 30,
1995, the accompanying balance sheets includes a liability of
approximately $2.9 and $2.0 million, respectively, related to these
matters.
Fair Value of Financial Instruments - The following methods and
assumptions were used by the Company in estimating its fair value
disclosures for financial instruments:
. Cash and Cash Equivalents - The carrying amounts for these items
approximate their fair value because of the short maturity of these
items.
. Investments - The fair values of investments are based on quoted
market prices.
. Interest Rate Cap Agreements - The fair values represent the
estimated amounts at which the Company could settle these
agreements, as quoted by the counterparty.
. Long-Term Debt - The fair value of the Company's long-term debt is
based upon the market price of the Company's publicly traded debt
securities at December 28, 1996 and December 30, 1995, and for the
debt instruments which are not publicly traded, current incremental
borrowing rates for similar types of borrowing arrangements are
utilized as a basis to determine fair value of such debt
instruments.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
F-10
<PAGE>
Reclassifications - Certain reclassifications have been made to the prior
years' consolidated financial statements to conform to the fiscal 1996
presentation.
3. PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land $ 839,041 $ 800,000
Building 160,518 -
Equipment and fixtures 62,164,250 62,124,883
Leasehold improvements 35,850,943 34,913,542
Leasehold interests 5,893,896 5,893,896
Property and equipment under capital leases (see Note 7) 37,400,448 44,484,112
------------ -----------
Property and equipment, at cost 142,309,096 148,216,433
Less accumulated depreciation and amortization,
including accumulated amortization of capitalized
leases of $9,408,799 at December 28, 1996 and
$8,489,211 at December 30, 1995 (70,004,649) (59,423,357)
------------ -----------
Property and equipment, net $ 72,304,447 $ 88,793,076
============ ============
</TABLE>
On January 28, 1996, the Company sold the assets and assigned the leases
of its two Connecticut stores (West Haven and Milford) to Wakefern. This
sale approximated the Company's net book value of assets sold, including
inventory, and resulted in total proceeds of approximately $8.6 million
which was used primarily to reduce long-term debt.
4. OTHER ASSETS
Other assets consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Mutual aid fund $ 1,593,784 $ 1,378,217
Notes receivable 367,970 340,780
Property held for sale - Somers, N.Y. (a) 3,032,198 2,772,478
Deferred debt issuance costs 5,023,885 6,190,283
New store costs (b) 1,829,635 1,446,532
Investments at cost - 114,252
Noncurrent receivables 641,693 780,180
Insurance deposits 658,327 685,327
Investment in real estate partnership (c) 1,288,925 1,199,561
Deposits 283,125 463,048
Other 146,108 127,096
------------ ------------
Total other assets $ 14,865,650 $ 15,497,754
============ ============
</TABLE>
F-11
<PAGE>
(a) Soil and groundwater contamination was detected at this property. The
property is on the Department of Environmental Conservation's ("DEC")
New York State Inactive Hazardous Water Disposal Site List. Based on
the results of investigations made to date, in management's opinion,
the potential liability associated with this property is unlikely to
have a material adverse effect on the Company's results of operations,
financial condition or liquidity. Further with respect to this
property, the Company has been named as a party in law suits by area
residents. The Company is vigorously defending these suits and
believes that the ultimate outcome of these suits will not have a
material adverse effect on its operations, financial position or
liquidity. Also, the Company impleaded prior owners of the Baldwin
Place Shopping Center in Somers, N.Y. ("Somers location") as third
party defendants since the Company believes that potential
responsibility only arises from the actions of a former tenant in the
Somers location. In January 1994, the Company commenced an action
against the prior owners of the Somers location seeking reimbursement
for costs and expenses incurred by the Company in connection with the
environmental remediation and testing of the Somers location.
The Company entered into a settlement agreement with the prior owners
pursuant to which the prior owners have reimbursed the Company for
approximately $1.2 million, less attorney fees of approximately
$430,000, of costs and expenses incurred by the Company in connection
with the environmental remediation and testing. The Company recorded
the settlement agreement as a reduction of the costs capitalized in
connection with the remediation of the contamination at the Somers
location. A Record of Decision with respect to the environmental
status of this site was issued by the DEC in December 1995. Based upon
the results of investigations made in this Record of Decision,
management believes that the potential liability associated with the
environmental status of this property is not likely to have a material
adverse effect on the Company's results of operation, financial
condition or liquidity. Management estimates that the cost associated
with the remaining studies and subsequent remediation will approximate
$1.1 million. The Company will capitalize such costs and recover them
upon the sale or development of this property.
Subsequent to December 28, 1996 the Company settled the law suits
brought by area residents. The Company's share of settlement
approximates $175,000 and will be capitalized and recovered upon the
sale or development of this property.
(b) Represents costs incurred to make new store sites ready for their
intended use.
(c) During the fourth quarter of fiscal 1994 the Company acquired a 50%
equity interest in a real estate partnership. The partnership owns a
strip mall which leases a retail store site to the Company. Such lease
between the Company and the partnership has been classified as a
capital lease in the accompanying balance sheet. The Company has
accounted for its interest in the partnership in accordance with the
equity method.
F-12
<PAGE>
5. INDEBTEDNESS
Debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Notes payable, bearing interest at rates of 7.15% to
14.77%, payable in installments through
December 15, 2002 (A) $ 9,611,121 $ 11,144,516
Notes payable for Wakefern stock subscriptions, face
amount of $1,679,368 in 1996 and $2,638,406 in 1995
due in installments through December 2002 (less
unamortized discounts of $339,763 in 1996 and $521,594
in 1995 based on imputed interest rates
of 9.25% to 12.5%) 1,339,605 2,116,812
Notes payable for deposit with Insure-Rite, due in
installments through January 1996 - 106,341
Mortgage bond payable for land, interest accruing at
11.24% and added to principal due February 28,
1999 in the amount of $1,400,000 1,098,529 982,209
Bank term loans (B) 59,500,000 64,000,000
Revolving loans (B) 2,500,000 1,000,000
Subordinated note due March 15, 2001 (C) 20,000,000 20,000,000
Secured non-recourse note (D) 2,500,000 2,500,000
11% Series B Senior Subordinated Notes (E) 80,000,000 80,000,000
------------- ---------------
176,549,255 181,849,878
Less current portion 10,959,354 9,691,548
------------- ---------------
$ 165,589,901 $ 172,158,330
============= ===============
</TABLE>
(A) The notes payable are secured by equipment with a net book value of
$9,276,100 at December 28, 1996 and $11,816,100 at December 30, 1995.
(B) The Company has a Credit Agreement ("Agreement") with Bankers Trust
Company as agent, and a syndicate of five additional institutions.
The Agreement includes $30.0 million in aggregate principal amount of
A Term Loans, $40.0 million in aggregate principal amount of B Term
Loans (the "A Term Loans" and the "B Term Loans", hereinafter referred
to collectively as the "Term Loans") and the Revolving Credit
Facility, which permits the Company to borrow up to $26.0 million to
finance working capital and letter of credit needs.
Indebtedness under the Agreement bears interest at a floating rate.
Indebtedness under the Revolving Credit Facility and the Term Loans
bears interest at a rate based (at the Company's option) upon (i) the
Base Rate (defined as the higher of (a) the applicable prime rate of
Bankers Trust Company or (b) the Federal Reserve reported certificate
of deposit rate plus 1/2 of 1%) plus 1-1/2% in respect of the A Term
Loans and the loans under the Revolving Credit Facility and 1-7/8% in
respect of the B Term Loans; or (ii) the Eurodollar Rate (as defined)
for one, two, three,
F-13
<PAGE>
or six months, plus 2-1/2% in respect of A Term Loans and Revolving
Loans and 2-7/8% in respect of B Term Loans. The Company is required
to maintain specified levels of interest rate protection.
The A Term Loans and the B Term Loans will mature on October 31,
1998 and March 15, 2000, respectively, and such Term Loans are
subject to quarterly amortizations. The Revolving Credit Facility
will mature on October 31, 1998. In addition, the Bank Credit
Agreement provides for mandatory repayments of the Term Loans (and
after all Term Loans have been repaid, certain commitment reductions
under the Revolving Credit Facility) based on certain asset sales
outside the ordinary course of business of Holding and its
subsidiaries, the proceeds of certain debt and equity issuance's and
100% of Excess Cash Flow (as defined in the Agreement) per annum.
Loans under the Revolving Credit Facility may be repaid and
reborrowed. The Company is required to pay to the lenders under the
Bank Credit Agreement in the aggregate a commitment fee equal to 1/2
of 1% per annum, payable on a quarterly basis, on the average unused
portion of the Revolving Credit Facility during such quarter. During
1994, 1995 and 1996, the Company paid $84,603, $53,515 and $76,904
in commitment fees, respectively. As of December 28, 1996, the
Company was utilizing $8,930,000 available under the Revolving
Credit Facility, $6,430,000 of which was being utilized for
issuances of letters of credit.
The Agreement requires the Company to meet certain financial
covenants, including minimum levels of earnings before interest,
taxes, depreciation and amortization ("EBITDA"), minimum amounts of
consolidated net worth, maximum amounts of capital expenditures, and
minimum fixed charge coverage ratios. As of October 5, 1996 and
December 28, 1996, the Company was not in compliance with the EBITDA
and maximum levels of capital expenditure covenants under the
Agreement. The Company obtained a waiver for such noncompliance
through January 31, 1997 and amended the covenants in January 1997.
At December 28, 1996 the Company was in compliance with all
remaining covenants.
The Fourth Amendment and Consent, dated January 27, 1997,
establishes revised levels for fiscal 1997 EBITDA and capital
expenditure requirements. The Company is confident that it will meet
all 1997 covenants.
The Agreement requires the Company to enter into Interest Rate
Protection Agreements. Accordingly, on December 23, 1993, the
Company entered into two Interest Rate Protection ("Cap") Agreements
with Bankers Trust Company commencing April 1, 1994 whereby for
quarterly periods commencing April 1, 1994 and terminating December
31, 1995 interest on $40 million of outstanding debt was capped at
6.5% and from January 1, 1996 to December 28, 1996 interest on $30
million of outstanding debt was capped at 7.5%. Under the Cap
Agreements, if the three month rate rises above the cap rate,
Bankers Trust Company agrees to pay the Company the excess of the
calculated interest amount using actual LIBOR, over the protected
interest amount for each protected quarterly period. The Company
paid approximately $116,000 for such Cap Agreements. The Company
amortized costs of the Cap Agreements on a straight-line basis over
the life of the Cap Agreements. The net book value of the Cap
agreements at December 30, 1995 is included in the accompanying
balance sheets as other assets. For fiscal year 1994, the Company
received no amounts with respect to the aforementioned Cap
Agreements. For fiscal year 1995, the Company received $1,580 with
respect to the aforementioned Cap Agreements.
F-14
<PAGE>
(C) The Company has $20 million Senior Subordinated Promissory Notes due
March 15, 2001 held by certain principal shareholders. Interest
accrues at the annual rate of 14.14%, payable in quarterly
installments. The Note Agreement contains various restrictive
covenants similar to the covenants contained in the Term Loan
Agreement.
(D) The Company has a noninterest bearing note due to certain
shareholders of the Predecessor Company. The note is payable solely
out of the net proceeds of the sale, exchange, or development of the
land and buildings comprising the "Baldwin Place Shopping Center" in
Somers, NY (see Note 4).
(E) On December 17, 1993, the Company recapitalized by issuing $80
million of 11% Series B Senior Subordinated Notes (the "Series B
Notes"). Proceeds from the recapitalization were used to repay $30
million of Senior Secured Promissory Notes, $30 million of Senior
Subordinated Promissory Notes, $9 million of Term Loans, $15.6
million of Revolving Loans, to repurchase 270,000 shares of Holding
Class B Common Stock for $4.5 million and to pay premiums and fees
in connection with the recapitalization of $23.3 million. In
addition, the Term Loans were increased by $40 million (see B).
The Series B Notes are unsecured obligations of the Company, ranking
subordinated in right of payment to all other outstanding debt of
the Company. The Series B Notes mature on February 15, 2004.
Interest accrues at the rate of 11% per annum and is payable
semiannually on each February 15, and August 15 and commenced on
February 15, 1994.
The Series B Notes will be redeemable, at the Company's option, in
whole at any time or in part from time to time, on and after
February 15, 1999 at the following redemption prices (expressed as
percentages of the principal amount) if redeemed during the
twelve-month period commencing on February 15 of the year set forth
below, plus, in each case, accrued and unpaid interest thereon to
the date of redemption:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
1999 104.125 %
2000 102.750
2001 101.375
2002 and thereafter 100.000
</TABLE>
The Indenture (the "Indenture") that governs the Series B Notes
imposes certain limitations on the ability of the Company and its
subsidiaries to, among other things, pay dividends or make certain
other restricted payments, incur additional indebtedness, enter into
certain transactions with affiliates, incur liens, incur
indebtedness which is subordinate in right of payment to any senior
debt and senior in right of payment to the Series B Notes, impose
restrictions on the ability of a subsidiary to pay dividends or make
certain payments to the Company, issue preferred stock of the
Company's subsidiaries, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of the assets of the Company, consummate
certain asset sales, or adopt a plan of liquidation. At December 28,
1996, the Company was in compliance with all the terms and covenants
of the Indenture.
F-15
<PAGE>
Aggregate maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1997 $ 10,959,354
1998 18,474,207
1999 21,485,851
2000 23,549,511
2001 1,261,980
Thereafter 100,818,352
---------------
$ 176,549,255
===============
</TABLE>
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Company's financial
instruments for which such amounts differ are as follows:
<TABLE>
<CAPTION>
December 28, 1996 December 30, 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Investments (Note 4) $ 91,464 $ 102,445 $ 114,252 $ 124,790
============== ============ ============= ==============
Long-term debt (Note 5):
Bank term loans $ 59,500,000 $ 59,500,000 $ 64,000,000 $ 64,000,000
Revolving loan 2,500,000 2,500,000 1,000,000 1,000,000
11% Senior subordinated notes 80,000,000 75,200,000 80,000,000 66,400,000
Subordinated note due
March 15, 2001 20,000,000 20,000,000 20,000,000 20,000,000
Notes payable secured by
equipment 9,611,121 9,611,121 11,144,516 11,144,516
Notes payable for Wakefern
stock subscriptions 1,339,605 1,339,605 2,116,812 2,116,812
Notes payable, Insure-Rite - - 106,341 106,341
Mortgage bond payable for land 1,098,529 1,098,529 982,209 982,209
Secured nonrecourse note 2,500,000 2,500,000 2,500,000 2,500,000
-------------- ------------- ------------- --------------
$ 176,549,255 $ 171,749,255 $ 181,849,878 $ 168,249,878
============== ============= ============= ==============
Interest Rate Cap Agreements
(Note 5) $ - $ - $ 22,833 $ 239
============== ============= ============= ==============
</TABLE>
The fair values of investments are based on quoted market prices at
December 28, 1996 and December 30, 1995. Similarly, the fair value of
long-term debt is based on quoted market prices on December 28, 1996 and
December 30, 1995 or in the absence of such quoted market prices the
latest available quoted market price is used. The fair values of the Bank
Term Loans at December 28, 1996 and December 30, 1995 approximated their
carrying value due to their floating interest rates. The fair values of
the notes payable and mortgage bond payable were assumed to reasonably
approximate their carrying value since the interest rates associated with
these borrowings approximate market and the remaining maturities are
relatively short-term. The fair value of the secured non-recourse note was
assumed to reasonably approximate its carrying value because it is payable
solely out of the net proceeds of the sale, exchange or development of the
Somers, NY location (see Note 4).
F-16
<PAGE>
The fair values of the Interest Rate Cap Agreements represent the
estimated amounts at which the Company could have settled the Interest
Rate Cap Agreements, as quoted by the counterparty.
7. COMMITMENTS AND CONTINGENCIES
Description of Leasing Arrangements - The Company currently conducts all
of its operations from leased facilities. Store leases generally are
entered into for terms ranging from ten to twenty-five years. All of the
Company's leases expire over the next twenty-five years.
Most of the Company's leases contain renewal options of five or ten years
each. These options enable the Company to retain use of facilities in
desirable operating areas. Management expects that, in the normal course
of business, leases will be renewed or replaced by other leases. The
Company is obligated on all leases to pay for utilities and liability
insurance and, in accordance with the terms of certain store leases, to
pay additional sums related to real estate taxes, maintenance, insurance
and additional rent based upon a percentage of sales in excess of
stipulated amounts. The Company is also obligated to pay scheduled rent
increases for certain stores.
During June 1995, the Company was notified that the sub-lessee at two
locations for which the Company is the primary lessee filed for bankruptcy
and subsequently vacated the leased premises. The Company is liable under
these leases for the minimum annual rentals over the remaining initial
lease term, certain common area maintenance expenses and property taxes.
As of December 28, 1996, the minimum annual rentals, expiring in the year
2008, under these leases amounted to approximately $4,372,300. At December
28, 1996, the accompanying balance sheet includes a liability of
approximately $549,000 which represents management's best estimate as to
the costs expected to be incurred. The Company is in the process of
searching for suitable sub-tenants to lessen the future impact on
operations of the properties. The Company will continue to monitor and
assess its exposure with respect to this matter as the actual costs could
differ from the Company's current estimates.
A lease, for a currently nonproductive store site, was terminated as a
result of finding tenants acceptable to the landlord. The termination
agreement contains provisions which would reinstate a portion of the
Company's original obligation should certain events occur. At December 28,
1996, the accompanying balance sheet includes a liability approximating
$290,000 which represents the Company's current obligations under the
termination agreement. The result of this transaction was the removal of
capital lease obligations approximating $2,173,000 and the recording of a
noncash gain approximating $1,073,000.
F-17
<PAGE>
Capital Leases - The following is a schedule, by year, of future minimum
lease payments under capital leases, together with the present value of
the net minimum lease payments, as of December 28, 1996:
<TABLE>
<S> <C>
1997 $ 5,618,477
1998 5,721,902
1999 5,809,042
2000 5,893,334
2001 5,919,167
2002 and thereafter 67,164,756
--------------
Net minimum lease payments 96,126,678
Less amount representing interest 59,065,331
--------------
Present value of net minimum lease payments $ 37,061,347
==============
</TABLE>
No contingent lease payments were made under capital leases for the years
ended December 28, 1996, December 30, 1995, and December 31, 1994.
Operating Leases - The following is a schedule, by year, of future minimum
rental payments required under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of December
28, 1996:
<TABLE>
<S> <C>
1997 $ 8,117,770
1998 7,946,708
1999 7,971,530
2000 7,788,328
2001 7,875,298
2002 and thereafter 115,630,932
--------------
Total minimum payments $ 155,330,566
==============
</TABLE>
Rental Expense - The following schedule shows the composition of total
rental expense for all operating leases for the years ended December 28,
1996, December 30, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
December 28, December 30, December 31,
1996 1995 1994
<S> <C> <C> <C>
Minimum rentals $ 6,745,550 $ 7,193,282 $ 5,392,242
Contingent rentals 58,077 58,152 89,544
Noncash rent expense 722,778 984,704 1,091,227
Reduction of noncash rent expense
due to sale of Connecticut stores (229,106) - -
--------------- -------------- ----------------
Total rental expense $ 7,297,299 $ 8,236,138 $ 6,573,013
=============== ============== ================
</TABLE>
F-18
<PAGE>
Letter of Credit Obligation to Wakefern - In connection with the
acquisition of the Predecessor Company, the Company, the Predecessor
Company and Holding (collectively, the "Big V Companies") and certain
members of the Company's management entered into a letter agreement with
Wakefern (the "Wakefern Letter") as a condition to Wakefern's agreement
not to deem the Big V Companies to be an "Unqualified Successor" as
defined in Wakefern's By-laws as a result of the consummation of the
acquisition. In accordance with the terms of the Wakefern Letter, the Big
V Companies have agreed that if at any time certain net worth tests are
not met (a "Net Worth Event"), then the Big V Companies are required to
obtain an irrevocable letter of credit in favor of Wakefern in an amount
equal to two and one-half times the average weekly purchases of the
Company from Wakefern for the most recent calendar quarter of Wakefern
ended prior to such event. In addition, under the Wakefern Letter the Big
V Companies are required to obtain a letter of credit in favor of Wakefern
in the event the Company fails to pay any of its payables to Wakefern
within the time periods and in the manner prescribed by the Wakefern
By-laws.
The Wakefern Letter further provides that if the Company defaults on its
obligations to Wakefern then due and payable and any letter of credit
required to be obtained pursuant to the Wakefern Letter is not obtained
within thirty days thereafter, then Wakefern has the right (the "Purchase
Right") to purchase all of the capital stock of Holding for an aggregate
purchase price equal to the fair value thereof. Upon the election to
exercise the Purchase Right, Wakefern has the right to assume control of
the management of the Big V Companies for a period of up to 120 days (the
"Management Period"), and to manage the Big V Companies for the account of
Holding. In the event that Wakefern assumes management of the Big V
Companies, Wakefern will have all and may exercise any of the rights,
powers, privileges and remedies of the existing shareholders in respect of
the management, operation or conduct of the business of the Big V
Companies. On or prior to the expiration of the Management Period, the
existing shareholders have the right to resume control of the management
of the Big V Companies by bringing current all obligations of the Big V
Companies to Wakefern. If the Big V Companies do not bring such
obligations current at or prior to the expiration of the Management
Period, Wakefern is required, within 90 days thereafter, to effect the
purchase of Holding's capital stock from the existing shareholders and to
pay such shareholders the purchase price therefor as determined under the
Wakefern Letter.
Insure-Rite Premium Calls - The Company's general liability insurer,
Insure-Rite, Ltd., can make additional premium calls up to a maximum of
45% of premiums paid, for policy years 1993 and 1994. At December 28,
1996, no additional 1993 and 1994 policy year premium calls have been
made; however, if the maximum amounts were called, they would approximate
$900,000 and $800,000, respectively. The insurer has advised the Company
that they cannot conclude whether a call will be necessary for these
policy years.
During fiscal 1996, Insure-Rite, Ltd. called an additional $750,000
relating to the 1992 policy year. At December 28, 1996, the accompanying
balance sheet includes a call premium liability of approximately $750,000.
This balance represents the unpaid balance on the 1992 policy year,
$250,000 along with an additional $500,000 representing a reserve for the
anticipated 1993 policy year premium call.
The Company is a party to a number of legal proceedings in the ordinary
course of business. Management believes that the ultimate resolution of
these proceedings will not, in the aggregate, have a material adverse
impact on the financial condition, results of operations, liquidity or
business of the Company.
F-19
<PAGE>
8. INCOME TAXES
The benefit for income taxes on at December 28, 1996, December 30,
1995 and December 31, 1994 is comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Provision (benefit) for Federal income taxes:
Current $ (641,940) $ 90,000 $ -
Deferred (1,749,000) (1,657,200) (2,098,100)
------------- --------------- --------------
Total benefit for Federal
income taxes (2,390,940) (1,567,200) (2,098,100)
------------- --------------- --------------
Provision (benefit) for state income taxes:
Current 619 55,200 48,100
Deferred (118,400) (597,700) (720,600)
------------- ---------------- --------------
Total benefit for state income taxes (117,781) (542,500) (672,500)
Total income tax benefit $ (2,508,721) $ (2,109,700) $ (2,770,600)
============= ================ ==============
</TABLE>
The actual income tax benefit differs from the statutory tax rate as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Federal statutory tax rate of 34% $ (2,198,600) $ (2,443,900) $ (3,036,600)
Goodwill amortization 684,200 674,100 674,100
State benefit, net of Federal income
tax benefit (310,700) (358,100) (443,800)
Loss carrybacks taken at 46% rate (678,221) - -
Other (5,400) 18,200 35,700
--------------- ------------- -------------
Total income tax benefit $ (2,508,721) $ (2,109,700) $ (2,770,600)
=============== ============= =============
</TABLE>
F-20
<PAGE>
The net deferred income tax liabilities/(assets) of the Company for the
years ended December 28, 1996 and December 30, 1995 consist of the
following:
<TABLE>
<CAPTION>
December 28, December 30,
1996 1995
<S> <C> <C>
Current deferred tax liabilities/(assets):
Prepaid expenses $ 459,500 $ 331,100
Receivables 1,324,100 1,825,800
Inventory 4,459,300 4,330,000
Accounts payable 70,600 (31,200)
-------------- --------------
Total current deferred tax liabilities 6,313,500 6,455,700
-------------- --------------
Noncurrent deferred tax liabilities/(assets):
Property and equipment (including capital leases) 8,965,100 12,603,074
Wakefern Warehouse Agreement 14,398,600 14,822,000
Other long-term liabilities 2,098,700 2,874,300
Other assets (941,800) (1,437,400)
Capital leases (10,346,200) (11,388,800)
Alternative minimum tax credit carryforward (1,544,700) (504,000)
Net operating loss carryforward - state (1,719,000) (1,719,000)
Net operating loss carryforward - federal (2,937,700) (5,552,000)
-------------- --------------
Total noncurrent deferred tax liabilities 7,973,000 9,698,174
-------------- --------------
Net deferred income tax liability $ 14,286,500 $ 16,153,874
============== ==============
</TABLE>
The Company's net operating loss carryforwards expire beginning in fiscal
2008. The Company records the consolidated Holding Federal and State
provision or benefit. If the Company were to file its own Federal and
State returns such amounts would not be materially different from the
consolidated Holding returns.
In August 1993, the U.S. Congress enacted the Omnibus Budget
Reconciliation Act of 1993 (the "Act") which, among other things,
increased the Federal Income tax rates to 35% from 34% for Corporations
with taxable income in excess of $10 million. Since the Company has not
attained such level of taxable income, nor projects such levels of income
in the foreseeable future, the Act has had no effect on the operating
results and the deferred income tax liability at December 28,1996 and
December 30, 1995 continues to represent the tax effect of temporary
differences at a 34% rate.
F-21
<PAGE>
9. EMPLOYEE BENEFIT PLANS
The Company has a non-contributory discretionary profit-sharing retirement
plan for officers and non-union employees and incentive programs for
certain management personnel and officers. The Company has amended the
profit sharing retirement plan to include a qualified cash or deferred
arrangement pursuant to Section 401(k) of the Internal Revenue Code. Under
this arrangement, officers and non-union employees may elect to forego the
current receipt of up to 10% of their cash compensation and have such
amounts contributed to the plan on their behalf. In addition, the Company
matches 25% of such elected amounts up to 5% of each individual employee's
income. The Company is also obligated for pension and welfare payments for
pension plans covering substantially all employees whose terms of
employment are covered under collective bargaining agreements. For the
years ended December 28, 1996, December 30, 1995 and December 31, 1994
provisions for these plans were as follows:
<TABLE>
<CAPTION>
Company Profit-Sharing (Including Union Pension
401(k) Arrangement) and Incentive Plans and Welfare
<S> <C> <C>
1994 $ 1,757,100 $ 7,387,200
1995 1,616,300 7,560,300
1996 913,000 7,284,200
</TABLE>
10. RELATED PARTY TRANSACTIONS
Investment in Wakefern Food Corp. - The Company is a stockholder of
Wakefern Food Corp. ("Wakefern"), a corporation operated on a cooperative
basis for its stockholder customers. The Company is restricted with regard
to its ability to dispose of its stock ownership of Wakefern. Such
restrictions include all sales, transfers, assignments, pledges,
encumbrances or other dispositions, except to Wakefern or as permitted by
Wakefern or Wakefern's By-laws. The Company, along with other stockholder
members, is obligated to purchase at least 85% of its merchandise
requirements from Wakefern under a Warehouse Agreement which contains an
evergreen provision providing for a continual 10-year expiration date for
all members. The Company's merchandise and other purchases from Wakefern
approximated $531 million, $556 million and $518 million for the years
ended December 28, 1996, December 30, 1995 and December 31, 1994,
respectively. At December 28, 1996 and December 30, 1995, the Company was
indebted to Wakefern for approximately $23 million and $29 million,
respectively, representing current charges in the ordinary course of
business, which have been included in accounts payable. The Company was
indebted to Wakefern for various notes payable approximating $106,300 at
December 30, 1995.
As required by Wakefern's By-laws, all members of the cooperative are
required to make an investment in the common stock of Wakefern for each
supermarket owned, with the exact amount per store computed in accordance
with a formula based on the volume of each store's purchases from
Wakefern. The maximum required investment per store was $450,000 at
December 28, 1996 and December 30, 1995. The Company's shares of stock in
Wakefern are assigned to and held by Wakefern as collateral security for
any amounts owed. The Company has Subscription Agreements to invest
additional funds in Wakefern and has remaining unfunded balances of
$1,679,368 as of December 28, 1996 and $2,638,406 as of December 30, 1995
(see Note 5).
As a member of Wakefern, the Company is entitled to a share of an annual
Wakefern patronage dividend calculated after the close of Wakefern's
fiscal year ending the last Saturday in September, as the result of the
distribution of all operating profits to its members on a pro rata basis
based on the
F-22
<PAGE>
actual member purchases from each merchandising division. It is the
Company's policy to accrue monthly an estimate of the annual patronage
dividend. The patronage dividend was $7,907,614, $10,113,906 and
$8,900,175 for fiscal years 1996, 1995 and 1994, respectively. The Company
reflects this patronage dividend as a reduction of cost of sales in the
consolidated statements of loss. At December 28, 1996 and December 30,
1995, accounts receivable includes approximately $4,821,800 and
$5,625,800, respectively, for this aforementioned patronage dividend.
Other - Holding has agreements with certain of its stockholders which
require the annual payment of management consulting fees. Such fees
approximated $250,000 at December 28, 1996 and December 30, 1995.
The Company has employment agreements with two executives expiring through
1998. Unless terminated pursuant to same, the agreements renew
automatically in one-year periods. At December 28, 1996 the Company's
total future obligation under these agreements approximates $1,024,000.
At December 28, 1996 and December 30, 1995, certain executives and other
key employees of the Company held 74,402 and 85,914, respectively, stock
options to purchase Holding Class A common stock. Exerciseable options for
each year equaled 6,738.
******
F-23
<PAGE>
EXHIBIT 4.22
CONSENT
-------
CONSENT (this "Consent"), dated as of October 10, 1996, among BIG V
HOLDING CORP. ("Holdings"), BV HOLDINGS CORPORATION ("BV Holdings"), BIG V
SUPERMARKETS, INC. (the "Borrower"), the financial institutions party to the
Credit Agreement referred to below (the "Banks") and BANKERS TRUST COMPANY, as
Agent (the "Agent"). Unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, BV Holdings, the Borrower, the Banks and the Agent
are parties to an Amended and Restated Credit Agreement, dated as of December
28, 1990, and amended and restated as of November 1, 1993, and further amended
and restated as of December 17, 1993 (as amended, modified or supplemented
through the date hereof, the "Credit Agreement");
WHEREAS, pursuant to a Consent to the Credit Agreement, dated as of
August 2, 1996 (the "August 2 Consent"), the Banks agreed to allow the Borrower
to incur the Wakefern Equipment Financing Loan (as defined therein);
WHEREAS, in lieu of the Wakefern Equipment Financing Loan, the
Borrower desires to incur a $2,039,886.44 Equipment Financing Loan from MetLife
Capital Corporation (the "MetLife Equipment Financing Loan") pursuant to
Sections 7.01(vi) and 7.05(n) of the Credit Agreement and, in connection
therewith, the Borrower has requested that the Banks consent to a certain
modification to Section 7.0l(vi) of the Credit Agreement as set forth in Section
1 below;
WHEREAS, concurrently with the effectiveness of this Consent, the
August 2 Consent shall no longer be effective and the Borrower shall not be
permitted to incur the Wakefern Equipment Financing Loan; and
WHEREAS, subject to the terms and conditions set forth herein, the
Banks wish to consent to the modification
<PAGE>
to Section 7.0l(vi) of the Credit Agreement as set forth in Section 1 below;
NOW, THEREFORE, it is agreed:
1. Notwithstanding anything to the contrary contained in Section
7.01(vi) of the Credit Agreement, the Banks hereby agree that the Borrower shall
use the proceeds from the MetLife Equipment Financing Loan to finance the
original purchase by the Borrower of the equipment and machinery located at its
supermarket in Montgomery, New York even though such original purchase occurred
more than 90 days prior to the incurrence of the MetLife Equipment Financing
Loan so long as the terms and conditions of the MetLife Equipment Financing Loan
otherwise comply with the provisions of Sections 7.0l(vi) and 7.05(n) of the
Credit Agreement.
2. In order to induce the Banks to enter into this Consent, Holdings,
BV Holdings and the Borrower hereby represent and warrant that (x) no Default or
Event of Default exists on the Consent Effective Date (as hereinafter defined)
both before and after giving effect to this Consent, (y) all of the
representations and warranties contained in the Credit Documents shall be true
and correct in all respects on the Consent Effective Date both before and after
giving effect to this Consent with the same effect as though such
representations and warranties had been made on and as of the Consent Effective
Date (it being understood that any representation or warranty made as of a
specified date shall be true and correct in all material respects as of such
specific date) and (z) except as otherwise specifically provided in Section 1 of
this Consent, the terms and conditions of the MetLife Equipment Financing Loan
comply with the terms and conditions of the Credit Agreement.
3. This Consent is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
4. This Consent may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
-2-
<PAGE>
5. THIS CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
6. This Consent shall become effective on the date (the "Consent
Effective Date") when Holdings, BV Holdings, the Borrower and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of telecopier) the same
to the Agent at its Notice Office.
7. From and after the Consent Effective Date, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement after giving effect to
this Consent.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
BIG V HOLDING CORP.
By /s/ James A. Toopes
------------------------------
Title: Executive Vice President
BV HOLDINGS CORPORATION
By /s/ James A. Toopes
------------------------------
Title: Executive Vice President
BIG V SUPERMARKETS, INC.
By /s/ James A. Toopes
------------------------------
Title: Executive Vice President
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Dana Klein
------------------------------
Title: Vice President
BANQUE NATIONAL DE PARIS
By /s/[SIGNATURE APPEARS HERE]
------------------------------
Title: Vice President
By /s/ Pamela Lucash
------------------------------
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE)
By /s/[SIGNATURE APPEARS HERE]
------------------------------
Title: Vice President
-4-
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
-------------------------------------
Title: Sr. Vice Pres. - Portfolio Mgr.
FIRST SOURCE FINANCIAL LLP.
By : First Source Financial, Inc.
its Agent/Manager.
By /s/ James W. Wilson
-------------------------------------
Title: Senior Vice President
BANK POLSKA KASA OPIEKI S.A.
By /s/ William A. Shea
-------------------------------------
Title: Vice President
Senior Lending Officer
HELLER FINANCIAL, INC.
By /s/ Julia F. Maslanka
-------------------------------------
Title: AVP
-5-
<PAGE>
EXHIBIT 4.23
CONSENT AND WAIVER
------------------
CONSENT AND WAIVER (this "Consent"), dated as of November 5, 1996,
among BIG V HOLDING CORP. ("Holdings"), BV HOLDINGS CORPORATION ("BV Holdings"),
BIG V SUPERMARKETS, INC. (the "Borrower"), the financial institutions party to
the Credit Agreement referred to below (the "Banks") and BANKERS TRUST COMPANY,
as Agent (the "Agent"). Unless otherwise defined herein, all capitalized terms
used herein shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, BV Holdings, the Borrower, the Banks and the Agent
are parties to an Amended and Restated Credit Agreement, dated as of December
28, 1990, and amended and restated as of November 1, 1993, and further amended
and restated as of December 17, 1993 (as amended, modified or supplemented
through the date hereof, the "Credit Agreement"); and
WHEREAS, subject to the terms and conditions set forth herein, the
Borrower has requested the Banks to consent to a modification of the Credit
Agreement as set forth in Section 1 below, and the Banks wish to consent to such
modification of the Credit Agreement;
NOW, THEREFORE, it is agreed:
1. Notwithstanding anything to the contrary contained in the Credit
Agreement, the Borrower hereby covenants and agrees that in no event shall
Capital Expenditures made by the Borrower and its Subsidiaries for fiscal year
1996 exceed $10,900,000, and with any breach of such covenant to constitute an
Event of Default.
2. Notwithstanding anything to the contrary contained in the Credit
Agreement, with respect to the Borrower's fiscal quarters ended on October 5,
1996 and ending on December 28, 1996, the Banks hereby waive any Default or
Event of Default which has arisen or may arise under Sections 7.08 and/or 7.10
of the Credit Agreement solely as a result of the Borrower incurring up to
$3,990,000
<PAGE>
of one-time charges during the Borrower's fiscal quarter ended on
October 5, 1996, it being understood and agreed, however, that the waiver of any
Default or Event of Default contained in this Section 2 shall expire at 5:00
P.M. (New York time) on January 31, 1997, and any Default or Event of Default
which has arisen under such Sections 7.08 and/or 7.10 of the Credit Agreement
without giving effect to the waiver contained in this Section 2 shall be
reinstated on and after such time.
3. In order to induce the Banks to enter into this Consent,
Holdings, BV Holdings and the Borrower hereby represent and warrant that (x) no
Default or Event of Default exists on the Consent Effective Date (as defined
below) after giving effect to this Consent and (y) all of the representations
and warranties contained in the Credit Documents shall be true and correct in
all respects on the Consent Effective Date after giving effect to this Consent
with the same effect as though such representations and warranties had been made
on and as of the Consent Effective Date (it being understood that any
representation or warranty made as of a specified date shall be true and correct
in all material respects as of such specific date).
4. This Consent is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
5. This Consent may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
6. THIS CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
7. This Consent shall become effective on the date (the "Consent
Effective Date") when Holdings, BV Holdings, the Borrower and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of telecopier) the same
to the Agent at its Notice Office.
-2-
<PAGE>
8. From and after the Consent Effective Date, all references in the
Credit Agreement and each of the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Credit Agreement after giving effect to
this Consent.
-3-
<PAGE>
IN WITNESS WHEROF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of
the date first above written.
BIG V HOLDING CORP.
By /s/ Joseph V. Fisher
-----------------------------
Title: Joseph V. Fisher
President and Chief Executive Officer
BV HOLDINGS CORPORATION
By /s/ Joseph V. Fisher
-----------------------------
Title: Joseph V. Fisher
President and Chief Executive Officer
BIG V SUPERMARKETS, INC.
By /s/ Joseph V. Fisher
-----------------------------
Title: Joseph V. Fisher
President and Chief Executive Officer
BANKERS TRUST COMPANY,
Individually and as Agent
By
-----------------------------
Title:
BANQUE NATIONAL DE PARIS
By
-----------------------------
Title:
By
-----------------------------
Title:
BANKERS TRUST (DELAWARE)
By
-----------------------------
Title:
IN WITNESS WHEROF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
BIG V HOLDING CORP.
By
-----------------------------
Title:
BV HOLDINGS CORPORATION
By
-----------------------------
Title:
BIG V SUPERMARKETS, INC.
By
-----------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Dana Klein
-----------------------------
Title: Dana Klein
Vice President
BANQUE NATIONAL DE PARIS
By
-----------------------------
Title:
By
-----------------------------
Title:
BANKERS TRUST (DELAWARE)
By
-----------------------------
Title:
IN WITNESS WHEROF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
BIG V HOLDING CORP.
By
-----------------------------
Title:
BV HOLDINGS CORPORATION
By
-----------------------------
Title:
BIG V SUPERMARKETS, INC.
By
-----------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By
-----------------------------
Title:
BANQUE NATIONAL DE PARIS
By /s/ [SIGNATURE APPEARS HERE]
-----------------------------
Title: Vice President
By /s/ Pamela Lucash
-----------------------------
Title: Pamela Lucash
Assistant Treasurer
BANKERS TRUST (DELAWARE)
By
-----------------------------
Title:
IN WITNESS WHEROF, each of the parties hereto has caused a
counterpart of this Consent to be duly executed and delivered as of the date
first above written.
BIG V HOLDING CORP.
By
-----------------------------
Title:
BV HOLDINGS CORPORATION
By
-----------------------------
Title:
BIG V SUPERMARKETS, INC.
By
-----------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By
-----------------------------
Title:
BANQUE NATIONAL DE PARIS
By
-----------------------------
Title:
By
-----------------------------
Title:
BANKERS TRUST (DELAWARE)
By /s/ [SIGNATURE APPEARS HERE]
-----------------------------
Title: Vice President
-4-
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
----------------------------
Title: JEFFREY W. MAILLET
SENIOR VICE PRESIDENT & DIRECTOR
FIRST SOURCE FINANCIAL LLP.
By: First Source Financial, Inc.
its Agent/Manager.
By
----------------------------
Title:
BANK POLSKA KASA OPIEKI S.A.
By
----------------------------
Title:
HELLER FINANCIAL, INC.
By
----------------------------
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By
----------------------------
Title:
FIRST SOURCE FINANCIAL LLP.
By: First Source Financial, Inc.
its Agent/Manager.
By /s/ Gary L. Francis
----------------------------
Title: GARY L. FRANCIS
SENIOR VICE PRESIDENT
BANK POLSKA KASA OPIEKI S.A.
By
----------------------------
Title:
HELLER FINANCIAL, INC.
By
----------------------------
Title:
-5-
<PAGE>
EXHIBIT 4.24
FOURTH AMENDMENT AND CONSENT
----------------------------
FOURTH AMENDMENT AND CONSENT (this "Amendment"), dated as of January
22, 1997, among BIG V HOLDING CORP. ("Holdings"), BV HOLDINGS CORPORATION ("BV
Holdings"), BIG V SUPERMARKETS, INC. (the "Borrower"), the financial
institutions party to the Credit Agreement referred to below (the "Banks") and
BANKERS TRUST COMPANY, as Agent (the "Agent"). Unless otherwise defined herein,
all capitalized terms used herein shall have the respective meanings provided
such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, BV Holdings, the Borrower, the Banks and the Agent
are parties to an Amended and Restated Credit Agreement, dated as of December
28, 1990, and amended and restated as of November 1, 1993, and further amended
and restated as of December 17, 1993 (as amended, modified or supplemented
through the date hereof, the "Credit Agreement"); and
WHEREAS, subject to the terms and conditions set forth herein, the
parties hereto wish to amend and/or modify the Credit Agreement as provided
herein;
NOW, THEREFORE, it is agreed:
1. The table appearing in Section 7.10 of the Credit Agreement is
hereby amended by deleting the phrase "June 30, 1997" and the corresponding
amount "$40,000,000" set forth opposite such phrase, in each case appearing
therein and inserting the following text in lieu thereof:
"March 31, 1997 $38,000,000
First day of fiscal quarter beginning
closest to April 1, 1997 through and
including the last day of the fiscal
quarter ended closest to June 30, 1997 $39,000,000".
<PAGE>
2. Notwithstanding anything to the contrary contained in the Credit
Agreement, for the purpose of calculating EBITDA under the Credit Agreement (i)
for any period of four consecutive fiscal quarters of the Borrower (taken as one
accounting period) which includes the Borrower's fiscal quarter ended on October
5, 1996, there shall be added to EBITDA for such period an amount equal to
$3,904,000, which amount equals the one-time charges (a portion of which were
one-time non-cash charges) incurred by the Borrower in its fiscal quarter ended
on October 5, 1996 and (ii) for any period of four consecutive fiscal quarters
of the Borrower (taken as one accounting period), there shall be subtracted from
EBITDA for such period any cash payments made by the Borrower on or after
December 28, 1996 through and including the last day of the fiscal quarter of
the Borrower ending closest to June 30, 1997 with respect to any of the non-cash
charges referred to in clause (i) of this Section 2.
3. Notwithstanding anything to the contrary contained in Section
7.08(a) of the Credit Agreement, the Borrower shall not be permitted to make any
Capital Expenditures pursuant to such Section 7.08(a) during its fiscal year
ending closest to December 31, 1997 in excess of $7,000,000 unless such excess
Capital Expenditures are financed with Equipment Financing Loans and/or the sale
of equity of Holdings, the proceeds of which are permitted to be retained
pursuant to clause (i) of the second parenthetical of Section 3.02(e) of the
Credit Agreement, it being understood and agreed that (i) the Borrower may
initially make such excess Capital Expenditures prior to incurring such
Equipment Financing Loans or receipt of such equity proceeds so long as (x) the
Borrower has theretofore delivered to the Agent a commitment letter from a
lender or lenders agreeing to make such Equipment Financing Loans, which
commitment letter shall be in form and substance satisfactory to the Agent and
(y) such Equipment Financing Loans are in fact incurred by the Borrower within
90 days after the opening of the respective store constructed with such Capital
Expenditures (or, to the extent such Equipment Financing Loans are not incurred
by such 90th day, such excess Capital Expenditures are financed by such 90th day
with equity proceeds permitted to be retained by the Borrower as provided above)
and (ii) nothing contained in this Section 3 shall otherwise permit the Borrower
(x) to make any Capital Expenditures in excess of the amounts otherwise
permitted under the Credit Agreement or (y) to incur any Equipment Financing
Loans in excess of the amounts otherwise permitted under the Credit Agreement.
-2-
<PAGE>
4. In order to induce the Banks to enter into this Amendment,
Holdings, BV Holdings and the Borrower hereby represent and warrant that (x) no
Default or Event of Default exists on the Fourth Amendment Effective Date (as
defined below), both before and after giving effect to this Amendment and (y)
all of the representations and warranties contained in the Credit Documents
shall be true and correct in all respects on the Fourth Amendment Effective
Date, both before and after giving effect to this Amendment with the same effect
as though such representations and warranties had been made on and as of the
Fourth Amendment Effective Date (it being understood that any representation or
warranty made as of a specified date shall be true and correct in all material
respects as of such specific date).
5. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
6. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
7. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
8. This Amendment shall become effective on the date (the "Fourth
Amendment Effective Date") when Holdings, BV Holdings, the Borrower and the
Required Banks shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including by way of
telecopier) the same to the Agent at its Notice Office.
9. From and after the Fourth Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement after giving
effect to this Amendment.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of
the date first above written.
BIG V HOLDING CORP.
By /s/ James A. Toopes, Jr.
------------------------------
Title: Executive Vice President-Finance,
Adm. and Corporate Development
BV HOLDINGS CORPORATION
By /s/ James A. Toopes, Jr.
------------------------------
Title: Executive Vice President-Finance,
Adm. and Corporate Development
BIG V SUPERMARKETS, INC.
By /s/ James A. Toopes, Jr.
------------------------------
Title: Executive Vice President-Finance,
Adm. and Corporate Development
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Dana Klein
------------------------------
Title: Vice President
BANQUE NATIONALE DE PARIS
By [SIGNATURE APPEARS HERE]
------------------------------
Title: Vice President
By [SIGNATURE APPEARS HERE]
------------------------------
Title: Vice President
BANKERS TRUST (DELAWARE)
By [SIGNATURE APPEARS HERE]
------------------------------
Title: Vice President
<PAGE>
DLJ CAPITAL FUNDING, INC.
By
-------------------------------
Title:
FIRST SOURCE FINANCIAL LLP.
By: First Source Financial, Inc.
its Agent/Manager.
By /s/ Gary L. Francis
-------------------------------
Title: Senior Vice President
BANK POLSKA KASA OPIEKI S.A.
By
-------------------------------
Title:
HELLER FINANCIAL, INC.
By
-------------------------------
Title:
DLJ CAPITAL FUNDING, INC.
By
-------------------------------
Title:
FIRST SOURCE FINANCIAL LLP.
By: First Source Financial, Inc.
its Agent/Manager.
By
-------------------------------
Title:
BANK POLSKA KASA OPIEKI S.A.
By /s/ William A. Shea
-------------------------------
Title: Vice President Senior
Lending Officer
HELLER FINANCIAL, INC.
By
-------------------------------
Title:
DLJ CAPITAL FUNDING, INC.
By
-------------------------------
Title:
FIRST SOURCE FINANCIAL LLP.
By: First Source Financial, Inc.
its Agent/Manager.
By
------------------------------
Title:
BANK POLSKA KASA OPIEKI S.A.
By
------------------------------
Title:
HELLER FINANCIAL, INC.
By /s/ Robert A Pierce
------------------------------
Title: Vice President
<PAGE>
Loan and Security Agreement
THIS LOAN AND SECURITY AGREEMENT entered into as of the of the 30th day of
------
October, 1996, by and between MetLife CAPITAL CORPORATION, a Delaware
- -------
corporation, whose addresses 10909 N.E. 4th Street Suite 500, mailing address
C-97550, Bellevue, WA 98009 ("Lender") and BIG V SUPERMARKETS, INC., a New York
--------
corporation whose address is 176 Main Street, Florida NY 10921 ("Borrower").
---------------------------------
WHEREAS, Lender has agreed to make a commercial loan to Borrower; and
WHEREAS, as a condition to making the loan, and in order to secure the
repayment thereof, Lender has required Borrower to execute and deliver to Lender
this Loan and Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower and Lender agree as follows:
1. Creation of Security Interest. As security for the due and punctual
-----------------------------
payment of any and all of the present and future obligations of the Borrower to
Lender under the Loan Documents (as hereinafter defined in Section 4), Borrower
hereby conveys, assigns and grants to Lender a continuing security interest in
all of Borrower's rights, title and interests in and to the equipment described
in the Supplemental Security Agreement entered into pursuant to this Loan and
Security Agreement ("Equipment) including all present and future additions,
attachments and accessories thereto, all substitutions therefor and replacements
thereof and all proceeds thereof, including all proceeds of insurance (such
Equipment and property hereinafter called "Collateral").
2. The Loan.
--------
(a) Subject to the terms and conditions of this Loan and Security
Agreement, Lender agrees to make a loan to Borrower in the original
principal amount of $2,039,886.44 (the "Loan Amount").
(b) The Loan Amount shall be repaid by Borrower as a term loan ("Term
Loan"), evidenced by a promissory note in the form attached hereto as
Exhibit "A" ("Term Note"). The payment provisions of the Term Note
shall be stated therein.
3. Method for Borrowing. Borrower shall give Lender at least five (5)
--------------------
business days written notice of its request for disbursement of the proceeds of
the Term Loan ("Request"), specifying the date on which the Loan Amount is to be
disbursed. Such Request shall be in the form attached hereto as Exhibit "C".
Such Request shall be accompanied by an original copy of the invoice or invoices
to be paid from the proceeds of the Term Loan. Such Request shall constitute a
representation and warranty by the Borrower that (i) as of the date of the
Request no Event of Default or event which with the passing of time or the
giving of notice or both would constitute an Event of Default hereunder has
occurred and is continuing and (ii) in the event items of Equipment have been
delivered to Borrower, Borrower has unconditionally accepted the Equipment from
the vendor thereof. Subject to the conditions of this Loan and Security
Agreement, Lender shall disburse the proceeds of the Term Loan to the invoicing
party or parties, or if Borrower shall have paid the amount of such invoice,
Lender shall reimburse Borrower, upon receipt of proof of payment from Borrower.
4. Cross Collateral/Cross Default. All Collateral shall secure the
------------------------------
payment and performance of all of Borrower's liabilities and obligations to
Lender hereunder and under any of the documents or instruments now or hereafter
executed and delivered by Borrower in connection with or pursuant to this
Agreement or the Term Loan including, but not limited to the Term Note (the Loan
and Security Agreement, the Term Note, the Supplemental Security Agreement(s)
and all such other documents or instruments may be referred to herein
collectively as the "Loan Documents"). Lender's security interest in the
Collateral shall not be terminated until and unless all of Borrower's
obligations to Lender under any of the Loan Documents are fully paid and
performed. The occurrence of an event of default under any other of the Loan
Documents shall be deemed to be an Event of Default hereunder and an Event of
Default hereunder shall be deemed to be an event of default under any other of
the Loan Documents.
5. Representations and Warranties. Borrower hereby represents and
------------------------------
warrants as follows:
(a) Power and Authorization. Borrower has the full power and
corporate authority to execute deliver and perform Borrower's
obligations under the Loan Documents, The execution and
delivery of the Loan Documents have been authorized by all
requisite corporate action on the part of Borrower. The
execution, delivery and performance of the Loan Documents have
not constituted and will not constitute a breach, default or
violation of or under Borrower's articles of incorporation,
by-laws, or any other agreement, indenture, contract, lease,
law, order, decree, judgment, or injunction to which Borrower
is a party or my be bound and have not resulted and will not
result in the creation of any lien upon the Equipment pursuant
to any agreement, indenture, lease, contract or other
instrument to which Borrower is a party, except the lien
created by this Loan and Security Agreement.
(b) Existence. Borrower (i) is duly incorporated, validly existing
and in good standing under the laws of its state of
incorporation, (ii) has all corporate power and all
governmental licenses, authorizations, consents and approvals
required to carry out its business as now conducted, and (iii)
is duly qualified to transact business as now conducted, and
(iv) is duly qualified to transact business as a foreign
corporation in each jurisdiction where the Equipment will be
located and in the jurisdiction where its principal place of
business is located.
[LOGO OF METLIFE CAPITAL APPEARS HERE]
<PAGE>
(c) Binding Effect This Loan and Security Agreement constitutes
the valid and binding agreement of the Borrower; the Term Note,
when executed and delivered, will constitute the valid and
binding obligation of the Borrower; and the Loan Documents are
enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by the bankruptcy laws,
and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability.
(d) Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower, threatened
against or affecting the Borrower, before any court or
arbitrator or any governmental body, agency or official which
has not been previously disclosed to the Lender in writing and
in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the business,
financial condition or results of operations of the Borrower or
which would in any manner draw into question the validity of
any of the Loan Documents.
(e) Filing of Tax Returns. The Borrower has filed all tax returns
required to have been filed and has paid all taxes shown to be
due and payable on such returns, including interest and
penalties, and all other taxes which are payable by it, to the
extent the same have become due and payable. The Borrower knows
of no proposed tax assessment against it and all tax
liabilities of the Borrower are adequately provided for.
(f) Title. The Borrower has or shall have at the time it executes
the Term Note good and indefeasible title to the Collateral
free and clear of all liens other than the Lender's lien.
(g) Compliance with Law. The business and operations of the
Borrower have been and are being conducted in accordance with
all applicable laws, rules and regulations, other than
violations which could not (either individually or
collectively) have a material adverse effect on the financial
condition or operations of the Borrower.
(h) Full Disclosure. All documents, records, instruments,
certificates, statements (including, but not by way of
limitation, financial statements of Borrower) and information
provided to Lender by Borrower in connection with this Loan and
Security Agreement are true and accurate in all material
respects and do not contain any untrue statement, or fail to
contain any statement of a material fact necessary to make the
statements contained herein or therein not misleading. There is
no fact known to the Borrower that Borrower has not disclosed
in writing which could materially and adversely affect the
financial condition or operations of Borrower.
(i) Security Interest The security interest granted to Lender
hereunder is a valid, first priority security interest in the
Collateral and has been, or promptly after the execution of the
Supplemental Security Agreement describing the Collateral will
be, perfected in accordance with the requirements of all states
in which any item of the Collateral is located.
(j) Personal Property. Under the laws of the state(s) in which
the Collateral is to be located, the Collateral is deemed to
consist solely of personal property.
(k) Pollution and Environmental Control. To Borrower's knowledge,
Borrower has obtained all permits, licenses and other
authorizations which are required under, and is in material
compliance with, all federal, state, and local laws and
regulations relating to pollution, reclamation, or protection
of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into
air, water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous
or toxic materials or wastes. Borrower shall maintain all such
permits, licenses, and authorizations current.
6. Covenants. Borrower hereby agrees and covenants as follows:
---------
(a) Payment Borrower shall pay the indebtedness secured hereby as
provided herein and in the Term Note.
(b) Location of Collateral. Borrower will keep the Collateral
located at the location or locations stated on the Supplemental
Security Agreement, provided, however, that Borrower may change
the location or locations of the Collateral upon Lender's prior
written consent, which consent shall not be unreasonably
withheld, and upon written notice to Lender after approval of the
change in location or locations is given by Wakefern Food Corp.
(c) No Liens. Except for the security interest granted hereby or
under any other agreement under which Lender is the secured
party, whether as mortgagee, beneficiary or otherwise, Borrower
shall keep the Collateral free and clear of any security
interest, lien or encumbrance of any kind and Borrower shall not
sell, assign (by operation of law or otherwise) exchange or
otherwise dispose of any of the Collateral.
(d) Insurance. Borrower shall procure and continuously maintain and
pay for (a) all risk physical damage and property insurance
covering loss or damage to the Equipment for not less than the
full replacement value thereof naming Lender as loss payee and
(b) bodily injury and property damage combined single limit
liability insurance, all in such amounts and against such risks
and hazards as are reasonably required by Lender, with insurance
companies and pursuant to contracts or policies and with
deductibles satisfactory to Lender. All contracts and policies
shall include provisions for the protection of Lender
notwithstanding any act or neglect of or breach or default by
Borrower, shall provide for payment of insurance proceeds to
Lender, shall provide that they may not be modified, terminated
or canceled unless Lender is given at least thirty (30) days'
advance written notice thereof, and shall provide that the
coverage is "primary coverage" for the protection of Borrower or
Lender notwithstanding any other coverage carried by Lender
protecting against similar risks. Borrower shall promptly notify
any
<PAGE>
appropriate insurer and Lender of each and every occurrence,
which may become the basis of a claim or cause of action against
the insured and provide Lender with all data pertinent to such
occurrence. Borrower shall furnish Lender with certificates of
such insurance or copies of policies upon request and shall
furnish Lender with renewal certificates not less than thirty
(30) days prior to the renewal date. Proceeds of all insurance
are payable first to Lender to the extent of its interest.
Notwithstanding the foregoing, prior to the occurrence of an
Event of Default hereunder, Borrower shall have the exclusive
right to make, settle, and adjust any and all claims under such
policies of insurance; provided, however, that Borrower shall not
legally conclude the settlement or adjustment of any claim in
excess of $100,000 without the written consent of Lender.
(e) Financing Statements. At the request of Lender, Borrower will
join Lender in executing one or more financing statements
pursuant to the Uniform Commercial Code and other documents
deemed necessary by Lender under applicable law to record or
perfect its security interest in the Collateral, including
continuation statements, in form satisfactory to Lender and will
pay the cost of filing the same in all public offices wherever
filing is deemed by Lender to be necessary or desirable. Borrower
hereby authorizes Lender, in such jurisdictions where such action
is authorized by law, to effect any such recordation or filing of
financing statements or other documents without Borrower's
signature thereto.
(f) Change of Name or Address. Borrower will immediately notify
Lender in writing of any change in its place of business or the
adoption or change of any tradename or fictitious business name,
and will upon request of Lender, execute any additional financing
statements or other similar documents necessary to perfect or
maintain its security interest.
(g) Use of Equipment, Maintenance. Borrower will cause the Equipment
to be used in a careful and proper manner, will comply with and
conform to all governmental laws, rules and regulations relating
thereto, and will cause the Equipment to be operated in
accordance with the manufacturer's or supplier's instructions or
manuals and only by competent and duly qualified personnel.
Borrower will cause the Equipment to be kept and maintained in
good repair, condition and working order and will furnish all
parts, replacements, mechanisms, devices and servicing required
therefor so that the value, condition and operating efficiency
thereof will at all times be maintained and preserved, normal
wear and tear excepted. All such repairs, parts, mechanisms,
devices and replacements shall immediately, without further act,
become part of the Equipment and subject to the security interest
created by this Loan and Security Agreement. Borrower will not
make any improvement, change, addition or alteration to the
Equipment if such improvement, change, addition or alteration
will impair the originally intended function or use of the
Equipment or impair the value of the Equipment as it existed
immediately prior to such improvement, change, addition or
alteration. Any part added to the Equipment in connection with
any improvement, change, addition or alteration shall
immediately, without further act, become part of the Equipment
and subject to the security interest created by this Loan and
Security Agreement.
(h) Inspection. Lender may at any reasonable time or times inspect
the Equipment and may at any reasonable time or times inspect the
books and records of Borrower. So long as no Event of Default
shall have occurred and be continuing, Lender shall conduct such
inspections only upon reasonable advance notice and during normal
business hours.
(i) Taxes. Borrower shall promptly pay, when due, all charges, fees,
assessments and taxes (excluding all taxes measured by Lender's
income) which may now or hereafter be imposed upon the ownership,
leasing, possession, sale or use of the Collateral.
(j) Performance by Lender. If Borrower fails to perform any
agreement or obligation contained herein, Lender may itself
perform, or cause the performance of such agreement or
obligation. Borrower will pay, or reimburse Lender, on demand,
for any and all fees, including attorneys' fees, costs and
expenses of whatever kind or nature incurred by Lender in
connection with (i) the creation, preservation and protection of
Lender's security interest in the Collateral, including, without
limitation, all fees and taxes in connection with the recording
or filing of instruments and documents in public offices, (ii)
payments or discharge of any taxes or liens upon or in respect of
the Collateral, (iii) premiums for insurance with respect to the
Equipment and (iv) this Loan and Security Agreement and with
protecting, maintaining or preserving the Collateral and Lender's
interests therein, whether through judicial proceedings or
otherwise, or in connection with defending or prosecuting any
actions, suits or proceedings arising out of or related to the
Loan and Security Agreement and the Loan Documents or in
connection with any debt restructuring, loan workout negotiations
or bankruptcy or insolvency case or proceedings. All such amounts
shall constitute obligations of Borrower secured by the
Collateral. In the event that Borrower fails to perform any of
its agreements contained herein, Borrower will, on demand,
reimburse Lender for all such expenditures, together with
interest thereon from the date of such expenditure until fully
reimbursed at the rate of fifteen percent (15%) per annum on the
outstanding balance of such expenditures or the highest rate
permitted by law, whichever is less.
(k) Power of Attorney. Borrower hereby irrevocably appoints Lender
Borrower's attorney-in-fact, with full authority in the place and
stead of Borrower and in the name of Borrower or otherwise, from
time to time in the Lender's discretion, from and after the
occurrence of an Event of Default, to take any action and to
execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this Loan and Security
Agreement, including, without limitation: (i) to obtain,
compromise and adjust insurance required to be paid to Lender;
(ii) to ask, demand, collect, sue for, recover, receive, and give
acquaintance and receipts for moneys due and to become due under
or in respect of any of the Collateral; (iii) to receive,
endorse, and collect any drafts or other instruments, documents,
and chattel paper in connection with clause (i) or (ii) above;
and (iv) to file any claims or take any action or institute any
proceedings which Lender may deem necessary or desirable for the
collection of any of the Collateral otherwise to enforce the
rights of Lender with respect to any of the Collateral.
(l) No Duties. The powers conferred on Lender hereunder are solely
to protect its interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting
[LOGO METLIFE CAPITAL APPEARS HERE]
<PAGE>
for moneys actually received by it hereunder, Lender shall have
no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
(m) Financial Data. Borrower will furnish to Lender and will cause
any guarantor of Borrower's obligations to furnish to Lender on
request (i) to the extent that Borrower has previously furnished
the following information to Lender, annual balance sheet and
profit and loss statements prepared in accordance with generally
accepted accounting principles and practices consistently applied
and, if Lender so requires, accompanied by the annual audit
report of an independent certified public accountant reasonably
acceptable to Lender, and (ii) all other financial information
and reports that Lender may from time to time reasonably request.
7. Conditions of Borrowing. Lender shall not be obligated to make the
loan hereunder unless:
(a) The Term Note evidencing such loan shall have been duly
executed and delivered to Lender;
(b) Borrower shall have executed and delivered to Lender the
Supplemental Security Agreement describing the Collateral and
stating, except with respect to progress payment fundings, the
location thereof;
(c) Except with respect to progress payment fundings, Lender shall
have received evidence (as described in Section 6d hereof) that
insurance has been obtained in accordance with the provisions
of this Loan and Security Agreement;
(d) Lender shall have received any and all third party consents,
waivers or releases deemed necessary or desirable by it in
connection with the loan and the Collateral being financed,
including, without limitation, Uniform Commercial Code lien
releases and the consent and waiver, in form and substance
satisfactory to Lender, of each and every realty owner,
landlord and mortgagee holding an interest in or encumbrance on
the real property where any of the Collateral is to be located;
(e) All filings, recordings and other actions deemed necessary or
desirable by Lender in order to establish, protect, preserve
and perfect its security interest in the Collateral being
financed by such loan as a valid perfected first priority
security interest shall have been duly effected, including,
without limitation, the filing of financing statements and the
recordation of landlord (owners) and/or mortgagee waivers or
disclaimers, all in form and substance satisfactory to Lender,
and all fees, taxes and other charges relating to such filings
and recordings shall have been paid by Borrower;
(f) The representations and warranties contained in this Loan and
Security Agreement shall be true and correct in all respects on
and as of the date of the making of any loan hereunder with the
same effect as if made on and as of such date;
(g) In the sole judgment of Lender, there shall have been no
material adverse change in the financial condition, business or
operations of Borrower from the earliest date of any financial
statement, credit report, business report or similar document
submitted to Lender for its review;
(h) All Loan Documents shall be satisfactory to Lender's attorneys;
and
(i) Lender shall have received, in form and substance satisfactory
to Lender, such other documents as Lender shall require
including, but not limited to, a Request, proof of payment,
vendor invoices and certificates of authority and incumbency.
8. Default. The occurrence of any of the following events, following
-------
the giving of any required notice and/or the expiration of any applicable
period of grace, shall constitute an event of default ("Event of Default")
hereunder:
(a) Borrower's default in payment of any installment of the
principal of or interest on the Term Note when and after the
same shall become due and payable, whether at the due date
thereof or by acceleration or otherwise, which default shall
continue unremedied for ten (10) days; or
(b) The failure by Borrower to make payment of any other amount
payable hereunder or under the Term Note, and the continuance
of such failure for more than ten (10) days after written
notice thereof by Lender to Borrower; or
(c) The failure by Borrower to perform or observe any covenant,
condition, obligation or agreement to be performed or observed
by it hereunder, which failure shall continue unremedied for
thirty (30) days after written notice thereof by Lender to
Borrower; or
(d) The occurrence of a default described in Section 4 hereof; or
(e) Any warranty, representation or statement made or furnished
with respect to the Borrower or the Collateral to Lender by or
on behalf of Borrower, in connection with this Loan and
Security Agreement, or the indebtedness secured hereby, shall
prove to have been false in any adverse, material respect when
made or furnished; or
(f) Borrower shall become insolvent or bankrupt or make an
assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a
receiver shall be appointed for Borrower or for a substantial
part of its property without its consent and shall not be
dismissed for a period of sixty (60) days; or bankruptcy,
reorganization, liquidation, insolvency or dissolution
proceedings shall be instituted by or against Borrower and, if
instituted against Borrower, shall be consented to or be
pending and not dismissed for a period of sixty (60) days; or
any execution or writ of process shall be issued under any
action or proceeding against Borrower in such capacity whereby
any of the Collateral may be taken or restrained; Borrower
shall cease doing business as a going concern; or, without the
prior written consent of Lender, which consent shall not be
unreasonably
<PAGE>
appropriate insurer and Lender of each and every occurrence,
which may become the basis of a claim or cause of action against
the insured and provide Lender with all data pertinent to such
occurrence. Borrower shall furnish Lender with certificates of
such insurance or copies of policies upon request and shall
furnish Lender with renewal certificates not less than thirty
(30) days prior to the renewal date. Proceeds of all insurance
are payable first to Lender to the extent of its interest.
Notwithstanding the foregoing, prior to the occurrence of an
Event of Default hereunder, Borrower shall have the exclusive
right to make, settle, and adjust any and all claims under such
policies of insurance; provided, however, that Borrower shall not
legally conclude the settlement or adjustment of any claim in
excess of $100,000 without the written consent of Lender.
(e) Financing Statements. At the request of Lender, Borrower will
join Lender in executing one or more financing statements
pursuant to the Uniform Commercial Code and other documents
deemed necessary by Lender under applicable law to record or
perfect its security interest in the Collateral, including
continuation statements, in form satisfactory to Lender and will
pay the cost of filing the same in all public offices wherever
filing is deemed by Lender to be necessary or desirable. Borrower
hereby authorizes Lender, in such jurisdictions where such action
is authorized by law, to effect any such recordation or filing of
financing statements or other documents without Borrower's
signature thereto.
(f) Change of Name or Address. Borrower will immediately notify
Lender in writing of any change in its place of business or the
adoption or change of any tradename or fictitious business name,
and will upon request of Lender, execute any additional financing
statements or other similar documents necessary to perfect or
maintain its security interest.
(g) Use of Equipment, Maintenance. Borrower will cause the Equipment
to be used in a careful and proper manner, will comply with and
conform to all governmental laws, rules and regulations relating
thereto, and will cause the Equipment to be operated in
accordance with the manufacturer's or supplier's instructions or
manuals and only by competent and duly qualified personnel.
Borrower will cause the Equipment to be kept and maintained in
good repair, condition and working order and will furnish all
parts, replacements, mechanisms, devices and servicing required
therefor so that the value, condition and operating efficiency
thereof will at all times be maintained and preserved, normal
wear and tear excepted. All such repairs, parts, mechanisms,
devices and replacements shall immediately, without further act,
become part of the Equipment and subject to the security interest
created by this Loan and Security Agreement. Borrower will not
make any improvement, change, addition or alteration to the
Equipment if such improvement, change, addition or alteration
will impair the originally intended function or use of the
Equipment or impair the value of the Equipment as it existed
immediately prior to such improvement, change, addition or
alteration. Any part added to the Equipment in connection with
any improvement, change, addition or alteration shall
immediately, without further act, become part of the Equipment
and subject to the security interest created by this Loan and
Security Agreement.
(h) Inspection. Lender may at any reasonable time or times inspect
the Equipment and may at any reasonable time or times inspect the
books and records of Borrower. So long as no Event of Default
shall have occurred and be continuing, Lender shall conduct such
inspections only upon reasonable advance notice and during normal
business hours.
(i) Taxes. Borrower shall promptly pay, when due, all charges, fees,
assessments and taxes (excluding all taxes measured by Lender's
income) which may now or hereafter be imposed upon the ownership,
leasing, possession, sale or use of the Collateral.
(j) Performance by Lender. If Borrower fails to perform any
agreement or obligation contained herein, Lender may itself
perform, or cause the performance of such agreement or
obligation. Borrower will pay, or reimburse Lender, on demand,
for any and all fees, including attorneys' fees, costs and
expenses of whatever kind or nature incurred by Lender in
connection with (i) the creation, preservation and protection of
Lender's security interest in the Collateral, including, without
limitation, all fees and taxes in connection with the recording
or filing of instruments and documents in public offices, (ii)
payments or discharge of any taxes or liens upon or in respect of
the Collateral, (iii) premiums for insurance with respect to the
Equipment and (iv) this Loan and Security Agreement and with
protecting, maintaining or preserving the Collateral and Lender's
interests therein, whether through judicial proceedings or
otherwise, or in connection with defending or prosecuting any
actions, suits or proceedings arising out of or related to the
Loan and Security Agreement and the Loan Documents or in
connection with any debt restructuring, loan workout negotiations
or bankruptcy or insolvency case or proceedings. All such amounts
shall constitute obligations of Borrower secured by the
Collateral. In the event that Borrower fails to perform any of
its agreements contained herein, Borrower will, on demand,
reimburse Lender for all such expenditures, together with
interest thereon from the date of such expenditure until fully
reimbursed at the rate of fifteen percent (15%) per annum on the
outstanding balance of such expenditures or the highest rate
permitted by law, whichever is less.
(k) Power of Attorney. Borrower hereby irrevocably appoints Lender
Borrower's attorney-in-fact, with full authority in the place and
stead of Borrower and in the name of Borrower or otherwise, from
time to time in the Lender's discretion, from and after the
occurrence of an Event of Default, to take any action and to
execute any instrument which Lender may deem necessary or
advisable to accomplish the purposes of this Loan and Security
Agreement, including, without limitation: (i) to obtain,
compromise and adjust insurance required to be paid to Lender;
(ii) to ask, demand, collect, sue for, recover, receive, and give
acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral; (iii) to receive,
endorse, and collect any drafts or other instruments, documents,
and chattel paper in connection with clause (i) or (ii) above;
and (iv) to file any claims or take any action or institute any
proceedings which Lender may deem necessary or desirable for the
collection of any of the Collateral otherwise to enforce the
rights of Lender with respect to any of the Collateral.
(l) No Duties. The powers conferred on Lender hereunder are solely
to protect its interest in the Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting
[LOGO METLIFE CAPITAL APPEARS HERE]
<PAGE>
for moneys actually received by it hereunder, Lender shall have
no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
(m) Financial Data. Borrower will furnish to Lender and will cause
any guarantor of Borrower's obligations to furnish to Lender on
request (i) to the extent that Borrower has previously furnished
the following information to Lender, annual balance sheet and
profit and loss statements prepared in accordance with generally
accepted accounting principles and practices consistently applied
and, if Lender so requires, accompanied by the annual audit
report of an independent certified public accountant reasonably
acceptable to Lender, and (ii) all other financial information
and reports that Lender may from time to time reasonably request.
7. Conditions of Borrowing. Lender shall not be obligated to make the
loan hereunder unless:
(a) The Term Note evidencing such loan shall have been duly
executed and delivered to Lender;
(b) Borrower shall have executed and delivered to Lender the
Supplemental Security Agreement describing the Collateral and
stating, except with respect to progress payment fundings, the
location thereof;
(c) Except with respect to progress payment fundings, Lender shall
have received evidence (as described in Section 6d hereof) that
insurance has been obtained in accordance with the provisions
of this Loan and Security Agreement;
(d) Lender shall have received any and all third party consents,
waivers or releases deemed necessary or desirable by it in
connection with the loan and the Collateral being financed,
including, without limitation, Uniform Commercial Code lien
releases and the consent and waiver, in form and substance
satisfactory to Lender, of each and every realty owner,
landlord and mortgagee holding an interest in or encumbrance on
the real property where any of the Collateral is to be located;
(e) All filings, recordings and other actions deemed necessary or
desirable by Lender in order to establish, protect, preserve
and perfect its security interest in the Collateral being
financed by such loan as a valid perfected first priority
security interest shall have been duly effected, including,
without limitation, the filing of financing statements and the
recordation of landlord (owners) and/or mortgagee waivers or
disclaimers, all in form and substance satisfactory to Lender,
and all fees, taxes and other charges relating to such filings
and recordings shall have been paid by Borrower;
(f) The representations and warranties contained in this Loan and
Security Agreement shall be true and correct in all respects on
and as of the date of the making of any loan hereunder with the
same effect as if made on and as of such date;
(g) In the sole judgment of Lender, there shall have been no
material adverse change in the financial condition, business or
operations of Borrower from the earliest date of any financial
statement, credit report, business report or similar document
submitted to Lender for its review;
(h) All Loan Documents shall be satisfactory to Lender's attorneys;
and
(i) Lender shall have received, in form and substance satisfactory
to Lender, such other documents as Lender shall require
including, but not limited to, a Request, proof of payment,
vendor invoices and certificates of authority and incumbency.
8. Default. The occurrence of any of the following events, following
-------
the giving of any required notice and/or the expiration of any applicable
period of grace, shall constitute an event of default ("Event of Default")
hereunder:
(a) Borrower's default in payment of any installment of the
principal of or interest on the Term Note when and after the
same shall become due and payable, whether at the due date
thereof or by acceleration or otherwise, which default shall
continue unremedied for ten (10) days; or
(b) The failure by Borrower to make payment of any other amount
payable hereunder or under the Term Note, and the continuance
of such failure for more than ten (10) days after written
notice thereof by Lender to Borrower; or
(c) The failure by Borrower to perform or observe any covenant,
condition, obligation or agreement to be performed or observed
by it hereunder, which failure shall continue unremedied for
thirty (30) days after written notice thereof by Lender to
Borrower; or
(d) The occurrence of a default described in Section 4 hereof; or
(e) Any warranty, representation or statement made or furnished
with respect to the Borrower or the Collateral to Lender by or
on behalf of Borrower, in connection with this Loan and
Security Agreement, or the indebtedness secured hereby, shall
prove to have been false in any adverse, material respect when
made or furnished; or
(f) Borrower shall become insolvent or bankrupt or make an
assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a
receiver shall be appointed for Borrower or for a substantial
part of its property without its consent and shall not be
dismissed for a period of sixty (60) days; or bankruptcy,
reorganization, liquidation, insolvency or dissolution
proceedings shall be instituted by or against Borrower and, if
instituted against Borrower, shall be consented to or be
pending and not dismissed for a period of sixty (60) days; or
any execution or writ of process shall be issued under any
action or proceeding against Borrower in such capacity whereby
any of the Collateral may be taken or restrained; Borrower
shall cease doing business as a going concern; or, without the
prior written consent of Lender, which consent shall not be
unreasonably
<PAGE>
withheld, or the prior written consent of Wakefem Food Corp.
and written notice to Lender, Borrower shall sell, transfer or
dispose of all or substantially all of its assets or property;
or
(g) The liquidation, merger, consolidation, reorganization,
conversion to an "S" status or dissolution, if Borrower is a
corporation or partnership, of Borrower, if in Lender's
reasonable opinion, such act shall materially and adversely
affect Borrower's ability to perform under any of the Loan
Documents; or
(h) Any item of Collateral is seized or levied on under legal or
governmental process.
The occurrence of an Event of Default shall terminate any commitment or
obligation by Lender to make any of the loans contemplated by this Loan and
Security Agreement.
9. Remedies Upon Default. Upon the occurrence of an Event of Default
---------------------
hereunder, Lender may, at its option, do any one or more of the following:
(a) Declare all obligations of Borrower to Lender under the Loan
Documents to be immediately due and payable, whereupon all
unpaid principal of and interest on said indebtedness and other
amounts declared due and payable shall be and become
immediately due and payable;
(b) Take possession of all or any of the Collateral and exclude
therefrom Borrower and all others claiming under Borrower, and
thereafter hold, store, use, operate, manage, maintain and
control, make repairs, replacements, alterations, additions and
improvements to and exercise all rights and powers of Borrower
in respect to the Collateral or any part thereof. In the event
Lender demands, or attempts to take possession of the
Collateral in the exercise of any rights under this Loan and
Security Agreement, Borrower promises and agrees to promptly
turn over and deliver complete possession thereof to Lender;
(c) Require Borrower to assemble the Collateral, or any portion
thereof, at a place designated by Lender and reasonably
convenient to both parties, and promptly to deliver such
Collateral to Lender, or an agent or representative designated
by it;
(d) Sell, lease or otherwise dispose of the Collateral at public or
private sale, without having the Collateral at the place of
sale, and upon terms and in such manner as Lender may determine
(and Lender may be a purchaser at any sale); and
(e) Exercise any remedies of a secured party under the Uniform
Commercial Code as adopted in the state where the Collateral is
located or any other applicable law.
Except as to portions of the Collateral which are perishable or threaten
to decline speedily in value or are of a type customarily sold on a recognized
market, Lender shall give Borrower at least ten (10) days' prior written notice
of the time and place of any public or private sale of the Collateral or other
intended disposition thereof to be made. Such notice may be mailed to Borrower
at the address set forth in the first paragraph of this Loan and Security
Agreement. Borrower hereby specifically agrees (to the extent that applicable
law and public policy allows it to effectively do so) that any public or private
sale held in accordance with the terms of this Loan and Security Agreement
shall, for the purpose of the Uniform Commercial Code as adopted in the state
where the Collateral is located and for all other purposes, be deemed to have
been conducted in a commercially reasonable manner and in good faith.
The proceeds of any sale under Section 9(d) shall be applied as follows:
(i) To the repayment of the costs and expenses of retaking,
holding and preparing for the sale and the selling of the
Collateral (including legal expenses and attorneys' fees) and
the discharge of all assessments, encumbrances, charges or
liens, if any, on the Collateral prior to the lien hereof
(except any taxes, assessments, encumbrances, charges or liens
subject to which such sale shall have been made);
(ii) To the payment of the whole amount then due and unpaid
of the indebtedness of Borrower to Lender under the Loan
Documents,
(iii) To the payment of other amounts then secured hereunder;
and
(iv) The surplus, if any, shall be paid to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
Lender shall have the right to enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to stop or
prevent Lender from pursuing any further remedy which it may have, and any
repossession or retaking or sale of the Collateral pursuant to the terms hereof
shall not operate to release Borrower until full payment of any deficiency has
been made in cash.
10. Limitation on Interest. It is the intent of the parties to this Loan
----------------------
and Security Agreement to contract in strict compliance with applicable usury
laws from time to time in effect. In furtherance thereof, the parties stipulate
and agree that none of the terms and provisions contained in the Loan Documents
shall ever be construed to create a contract to pay for the use, forbearance or
detention of money at a rate in excess of the maximum interest rate permitted to
be charged by applicable law from time to time in effect.
11. Personal Property/Tags. No item of Equipment will be attached or
----------------------
affixed to realty or any building without Lender's prior knowledge and written
consent and waiver of the landlord and the mortgagee, if any, of the real
property. If so requested by Lender, Borrower will affix tags supplied by
Lender, reflecting Lender's security interest in the Equipment.
[LOGO OF METLIFE CAPITAL APPEARS HERE]
<PAGE>
12. Loss and Damage. Borrower shall bear the risk of damage, loss, theft,
---------------
or destruction, partial or complete of the Equipment, whether or not such loss
or damage is covered by insurance. Unless an Event of Default shall have
occurred and be continuing, Lender agrees to apply toward payment of the
obligations of Borrower under this Section 12, Insurance proceeds payable to
Lender by reason of such damage, loss, theft, or destruction. In the event of
any damage, loss, theft, or destruction, partial or complete, of any item of
Equipment, Borrower shall promptly notify Lender in writing and at the option of
Borrower (a) repair or restore the Equipment to good condition and working
order, or (b) replace the Equipment with similar equipment in good repair,
condition and working order, or (c) pay Lender, in cash, an amount equal to the
unamortized equipment cost for the item or if the Equipment was not purchased
with the loan proceeds, the pro rata portion of the outstanding principal
balance due under the Term Note, as the case may be, and all other amounts
relating to that item of Equipment then due and owing hereunder, and upon
payment of that amount, Lender's lien shall be terminated with respect to that
item of Equipment only, and Lender will release its interest in that item of
Equipment.
13. Assignment. Borrower may not assign or transfer any rights under this
----------
Loan and Security Agreement or to the Collateral without Lender's prior written
consent, which consent shall not be unreasonably withheld.
14. Indemnification. Borrower shall indemnify and hold harmless Lender
---------------
from and against any and all claims, losses, liabilities, causes of action,
costs and expenses (including the fees of Lender's attorneys) ("Claims") in any
way relating to or arising out of this Loan and Security Agreement, the other
Loan Documents or the Collateral, except for any Claims resulting solely and
directly from Lender's gross negligence or willful misconduct.
15. Notices. Whenever Borrower or Lender shall desire to give or serve
-------
any notice, demand, request or other communication with respect to this Loan and
Security Agreement, each such notice, demand, request or communication shall be
in writing and shall be effective only if the same is physically delivered or is
by certified mail, postage prepaid, return receipt requested, or by overnight
courier, postage prepaid, mailed to the parties at the addresses set forth in
the first paragraph of this Loan and Security Agreement, with a copy to Lender's
Vice President of Credit. Any party hereto may change its address for such
notices by delivering or mailing to the other parties hereto, as aforesaid, a
notice of such change.
16. No Waiver by Lender. By exercising or failing to exercise any of its
-------------------
rights, options or elections hereunder, Lender shall not be deemed to have
waived any breach or default on the part of Borrower or to have released
Borrower from any of the obligations secured hereby, unless such waiver or
release is in writing and is signed by Lender. In addition, the waiver by Lender
of any breach hereof for default in payment of an indebtedness secured hereby
shall not be deemed to constitute a waiver of any succeeding breach or default.
17. Further Agreements. From time to time, Borrower will execute such
-------------------
further instruments as Lender may reasonably require, in order to protect,
preserve, and maintain the security interest granted hereby.
18. Binding Upon Successors. All agreements, covenants, conditions and
-----------------------
provisions of this Loan and Security Agreement shall apply to and bind the
successors and assigns of all parties hereto.
19. Governing Laws. This Loan and Security Agreement shall be governed
--------------
by the laws of the State of Washington.
20. Amendment. This Loan and Security Agreement can be modified or
---------
rescinded only by a writing expressly referring to this Loan and Security
Agreement, signed by both of the parties hereto.
21. Invalidity of Provisions. Every provision of this Loan and Security
------------------------
Agreement is intended to be severable. In the event that any term or provision
hereof is declared by a court to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding and
enforceable, then to the extent possible all of the other provisions shall
nonetheless remain in full force and effect.
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Loan and
Security Agreement the day and year first above written.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lender: MetLife Capital Corporation Borrower: Big V Supermarkets, Inc.
--------------------------- ------------------------
By: /s/Judy Johnston By: /s/ James A. Toopes, Jr.
--------------------------- ------------------------
Print Name: Judy Johnston (Print Name): James A. Toopes, Jr.
--------------------------- ------------------------
Title: Vice President Title: Exec. Vice President
--------------------------- ------------------------
Federal Tax Identification Number 14-1459448
------------------------
</TABLE>
<PAGE>
EXHIBIT 4.26
[LETTERHEAD APPEARS HERE]
STATE OF NEW YORK
DEPARTMENT OF STATE
ALBANY, NY 12231-0001
ALEXANDER F. TREADWELL
SECRETARY OF STATE
FILING ACKNOWLEDGMENT
September 10, 1996
RETURN TO CUSTOMER SERVICE COUNTER
Customer Reference Number: 31764
C T CORPORATION SYSTEM
155 WASHINGTON AVENUE
ALBANY, NY 12210
Attached is the acknowledgment copy of your recently submitted filing. This
document has been filed with the New York State Department of State, Uniform
Commercial Code Division.
This UCC-3 Termination has been assigned Filing Number: 178808, Filing Date:
09/09/1996.
The Original Financing Statement No.009126 filed 01/16/1996 and any associated
UCC-3 filings referencing this financing statement have been removed from our
active files by this action.
If you have any concerns regarding the way this document was referenced and/or
processed, please contact one of our Customer Service Representatives at (518)
432-2733, or respond in writing to the UCC Data Processing Unit at the address
indicated above.
Sincerely,
Uniform Commercial Code Division
Data Processing Unit REF #: 571522
<PAGE>
SECRETARY OF THE STATE
30 TRINITY STREET
P.O. BOX 150470
HARTFORD, CT 06115-0470
NOVEMBER 12,1996
CT CORPORATION SYSTEM
ONE COMMERCIAL PLAZA
280 TRUMBULL STREET
HARTFORD, CT 06103-3597
RE: Acceptance of UCC Filing
This Letter is to confirm the acceptance of the following filing:
Work Order Number: 1996121770-003
UCC Filing Number: 0001722201
Reference Number: 0001650738
Type of Request: TERMINATION
Date Accepted: SEP 04 1996
Time Accepted: 01:30 PM
Work Order Payment Received: 100.00
Payment Received: 25.00
Account Balance: 19554.30
Customer Id: 007625
A UCC filing report has been provided for verification.
Commercial Recording Division
LILLIAN FLETCHER
<PAGE>
UCC FILING REPORT
WORK ORDER NUMBER:1996121770-003
UCC FILING NUMBER:0001722201
DEBTOR NAMES AND ADDRESSES:
NAME PREFIX:
BUSINESS NAME:EL CAMINO RESOURCES, LTD.
NAME SUFFIX:
ADDRESS:21051 WARNER CENTER LANE
CITY/STATE/ZIP:WOODLAND HILLS, CA 91367
SECURED PARTY NAMES AND ADDRESSES:
NAME PREFIX:
BUSINESS NAME:THE CIT GROUP/EQUIPMENT FINANCING, INC.
NAME SUFFIX:
ADDRESS:900 ASHWOOD PARKWAY, 6TH FLR.
CITY/STATE/ZIP:ATLANTA, GA 30338
** END OF REPORT **
<PAGE>
EXHIBIT 10.22
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
THIS AGREEMENT is entered into as of the 1st day of May, 1996 by and
among James A. Toopes, an individual resident of [Ridgewood, NJ] (the
"Executive"), Big V Holding Corp., a Delaware corporation ("Holding"), and Big V
Supermarkets, Inc., a New York corporation (the "Company").
RECITALS
--------
WHEREAS, the Company and Holding are parties to a Management
Agreement under which Holding provides the services of senior management to the
Company (the "Management Agreement");
WHEREAS, Holding desires to employ the Executive, and the Executive
desires to serve as an employee of Holding, on the terms and conditions herein
set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements hereinafter set forth, Holding, the Company and the
Executive agrees as follows:
SECTION ONE
-----------
EMPLOYMENT
----------
1.01 Office. Holding hereby employs, engages and hires the Executive,
------
and the Executive agrees to serve Holding, as an executive-level employee of
Holding for the term of employment specified in Section 1.04 herein.
1.02 Responsibilities. The Executive shall serve as Executive Vice
----------------
President - Finance and Corporate Development of Holding and the Company,
performing such duties as shall reasonably be required of an Executive Vice
President - Finance and Corporate Development, reporting only to the Chief
Executive Officer of Holding and the Company and Board of Directors
<PAGE>
of Holding (the "Board"). The Executive shall have such other powers and perform
such other reasonable additional executive duties as may from time to time be
assigned to him by the Chief Executive Officer or Board.
1.03 Full-Time Commitment. The Executive will serve Holding and the
--------------------
Company faithfully and to the best of his ability and will devote substantially
all of his time, energy, experience, and talents during regular business hours
and as otherwise reasonably necessary to such employment, to the exclusion of
all other business activities.
1.04 Term. The term of this Agreement (the "Term") shall be from the
----
date hereof until the earlier of (a) the termination of the Executive's
employment hereunder pursuant to Section 3.01 or 3.04 hereof or (b) [April 30,
1998], provided, however, that the Term shall be automatically renewed for an
additional one-year period following [April 30, 1998] and for additional
one-year periods thereafter unless (i) either Holding or the Executive notifies
the other of its or his desire not to renew the Term no later than [October 31,
1997] or, with respect to a year in which the Term has been renewed, October 31
of such renewal year, (ii) the Executive's employment is terminated pursuant to
Sections 3.01 or 3.04, in which case the Term shall end as of the date of such
termination or (iii) the Executive's employment is terminated pursuant to
Sections 3.02, 3.03 or 3.05, in which case the Term shall end on the later of
(x) [April 30, 1998] or, with respect to any renewal year, April 30 of the year
in which such termination occurred or (y) [six months following the date of such
termination.
-2-
<PAGE>
SECTION TWO
-----------
COMPENSATION OF EXECUTIVE
-------------------------
2.01 Base Salary. During the Term the Executive shall receive as a
-----------
base salary $240,000 per annum (the "Base Salary"). The Base Salary shall be
paid in weekly installments in arrears and subject to withholding and other
applicable taxes. The Base Salary shall be reviewed annually at the end of each
calendar year beginning with calendar year 1996 by the Board and may be
increased at that time if the Board determines, in its sole discretion, that the
Base Salary warrants any increase.
2.02 Bonuses. The Executive shall be entitled to receive annual
-------
incentive bonuses at the end of each calendar year in accordance with the Annual
Incentive Bonus Plan attached hereto as Schedule 1. The Annual Incentive Bonus
----------
Plan provides for a $120,000 annual base bonus depending on the Company's
meeting certain performance criteria set forth in the Plan, and subject to
adjustment downward or upward for performance below or in excess of the criteria
set forth in the Plan. The payment of the Executive's bonus shall be subject to
withholding and other applicable taxes.
2.03 Options. As soon as practicable after the execution of this
-------
Agreement, the Executive shall be granted an option, pursuant to Holding's 1990
Time Accelerated Restricted Stock Option Plan (the "Option Plan"), to purchase
12,000 shares of the common stock, $.01 par value per share, of Holding ("Common
Stock") for $35 per share. Such option shall be evidenced by an option agreement
in substantially the form attached hereto as Exhibit A (the "Stock Option
---------
Agreement").
2.04 Vacation. The Executive shall be entitled to take four weeks of
--------
paid vacation annually during the Term, to be taken at such time or times as
shall be mutually convenient and consistent with his duties and obligations to
Holding and the requirements of the Company.
-3-
<PAGE>
2.05 Expenses. Holding shall promptly pay or reimburse the Executive
--------
for all reasonable expenses incurred by him in connection with the performance
of his duties and responsibilities hereunder, including, but not limited to,
expenses paid or incurred for travel relating to the business of Holding or the
Company. All requests for reimbursement of expenses referred to in this
paragraph shall be accompanied by such underlying documents or other evidence as
are reasonably required to support the deduction of such expenses in accordance
with the rules established by Holding, which shall be consistent with the rules
in effect at the Company for the Company's executive officers.
[2.06 Life Insurance. Subject to the Executive's reasonable
--------------
insurability, Holding shall obtain and keep in full force and effect during the
Term, at its own cost and expense, insurance covering the Executive's life in an
amount equal to 200% of his Base Salary as of January 1st of each year during
the Term, or such higher percentage as the Company may maintain from time to
time with respect to its senior executives, payable to his estate or such other
person or persons as he may from time to time direct. In addition to such
insurance, Holding or the Company, in its discretion, and at its own cost and
expense, may also obtain insurance for its own benefit covering the Executive's
life in such amount as it considers advisable, and the Executive agrees to
cooperate fully to enable Holding or the Company to obtain such insurance.]
2.07 Automobile. During the Term, Holding shall make available to the
----------
Executive a luxury class automobile in accordance with the Company's car policy
for senior officers, together with all normal maintenance of such automobile
including insurance, garage, repairs, etc. If Holding makes available to the
Executive a leased automobile, the Executive shall have the right to purchase
the same with his own funds at the end of the lease term at the purchase option
exercise price.
-4-
<PAGE>
2.08 Relocation Expenses. (a) The Company shall reimburse the
-------------------
Executive for certain specified reasonable expenses actually incurred by the
Executive and his immediate family in relocating to the Florida, New York area
in accordance with the Company's established relocation policy guidelines. Upon
the purchase or renting of a residence, the Executive will be reimbursed for
specific closing costs or allowances in accordance with the Company's
established relocation policy guidelines relating to "buy-side" transactions.
The Company will also provide the Executive with the assistance of a national
relocation company to market the Executive's home in South Carolina.
(b) The Company will provide the Executive with temporary
living arrangements in an apartment rented by the Company for a period of six
months from first day of employment, which period may be extended for up to
three additional months if necessary and approved by the Chief Executive
Officer.
(c) The Company will reimburse the Executive and his
immediate family for a reasonable number of return trips to South Carolina and
house search trips to New York.
(d) In the event that the reimbursement of the Executive
for foregoing expenses results in taxable income to the Executive, the Executive
will be grossed-up to the extent of 33% of the incremental taxable income
through a bonus.
2.09 Other Benefits. The Executive shall be entitled to participate
--------------
in all employment benefit plans now existing or hereafter established by
Holding, which shall be consistent with such benefit plans or arrangements
generally made available to senior executive officers of the Company and shall
include, without limitation, the participation in the Company's Profit Sharing
Program commencing one year after the Executive's employment with the Company.
-5-
<PAGE>
SECTION THREE
-------------
TERMINATION
-----------
3.01 Cause. The Executive may be terminated from his employment by
-----
Holding at any time for Cause without prior notice, and Holding shall, upon such
termination, have no obligation to pay the compensation specified in Section 2
herein except that Holding shall be obligated to pay the Base Salary specified
in Section 2.01 herein through the date of such termination. For purposes of
this Agreement, "Cause" shall mean a termination of employment of the Executive
by Holding or any of its subsidiaries due to (a) the commission by the Executive
of an act of fraud or embezzlement (including the unauthorized disclosure of
confidential or proprietary information of Holding or the Company which results
in, or which could be reasonably expected to result in, a material injury to
Holding or the Company), (b) a felony conviction or guilty plea of the
Executive, (c) willful misconduct as an employee of Holding or the Company which
results in material injury to Holding or the Company or (d) the willful failure
of the Executive to render services to Holding or the Company in accordance with
his employment which failure amounts to a material neglect of his duties to
Holding or the Company; as determined in each case in good faith by the Board.
In the event of a termination for Cause pursuant to this Section 3.01, the
Executive's right to receive compensation and other benefits, except for
payments for services previously rendered, shall cease immediately upon such
termination.
3.02 Disability: Death. If the Executive shall fail to or be unable
-----------------
to perform the duties required hereunder because of any serious physical or
other incapacity, as determined by an independent medical doctor selected by the
Board, and such failure or inability shall continue for a period of 180
consecutive days or longer during the Term, Holding shall have the right to
terminate
-6-
<PAGE>
this Agreement. This Agreement shall terminate automatically upon the death of
the Executive. In the event of termination due to death or disability pursuant
to this Section 3.02, the Executive's right to receive compensation hereunder
shall cease, except that (a) the Executive shall receive any life or disability
insurance benefits (as applicable) and Holding shall pay to the Executive all
bonus compensation earned or awarded hereunder to the date of termination, (b)
in the event of termination due to disability and subject to the Executive's
reasonable insurability, during the Term the Executive shall continue to receive
medical and health insurance benefits otherwise made available to other senior
executives, except to the extent such coverage is available to the Executive
from sources other than Holding or the Company, (c) in the event of termination
due to disability, Holding shall continue to treat the Executive as an employee
for federal tax purposes but only if and to the extent Holding is permitted to
do so under applicable statutes, regulations and rulings and only for so long as
Holding is required to pay the Executive Base Salary pursuant to the terms
hereof and the Executive is not employed by any other person or entity and (d)
in the event of termination due to disability, Holding shall continue to pay the
Executive his Base Salary in accordance with Section 2.01 hereof until the end
of the Term, provided that any Base Salary payable pursuant to this Section 3.02
shall be reduced by any compensation received by the Executive during such
period from any entity or person (it being understood that the Executive shall
not be obligated to seek other employment) and by any disability insurance
benefits received by the Executive.
3.03 Termination Without Cause. Holding shall have the right to
-------------------------
terminate the employment of the Executive at any time without Cause (Cause as
determined according to Section 3.01 herein). In such case, the Executive's
right to receive compensation and other benefits hereunder, other than bonus
compensation earned or awarded to the date of such termination, shall
-7-
<PAGE>
cease. Notwithstanding the foregoing, Holding shall continue to pay the
Executive his Base Salary in accordance with Section 2.01 hereof until the end
of the Term; provided that any Base Salary payable pursuant to this Section 3.03
shall be reduced by any compensation received by the Executive during such
period from any entity or person (it being understood that the Executive shall
not be obligated to seek other employment).
3.04 Voluntary Termination. The Executive may voluntarily terminate
---------------------
his employment hereunder at any time, for any reason or for no reason. In such
case, the Executive's right to receive compensation and other benefits
hereunder, other than Base Salary and bonus compensation earned or awarded, in
each case to the date of such termination, shall cease.
3.05 Termination for Good Reason. The Executive shall have the right
---------------------------
to terminate his employment with Holding for "Good Reason" upon written notice
to Holding, delivered to Holding promptly after the event or cause constituting
"Good Reason." For purposes of this Agreement, "Good Reason" shall mean (a) the
failure to elect or appoint the Executive as Executive Vice President - Finance
and Corporate Development of Holding or the Company or (b) the failure by
Holding or the Company to pay any compensation or other amount due the Executive
under this Agreement, which failure is not remedied within ten (10) business
days after written notice thereof is delivered to Holding by the Executive. The
Executive's termination for Good Reason hereunder shall be treated for purposes
of this Agreement, and for purposes of the Amended and Restated Shareholders'
Agreement by and among Holding and the shareholders of Holding named therein,
dated as of December 17, 1993 (the "Shareholders' Agreement"), and the
Non-Qualified Time Accelerated Restricted Stock Option Agreement to be entered
into pursuant to Section 2.03 hereof, as if the Executive were terminated
without Cause by Holding pursuant to Section 3.03 hereof.
-8-
<PAGE>
SECTION FOUR
------------
SALE OF COMMON STOCK TO EXECUTIVE
---------------------------------
Executive hereby agrees to purchase from Holding, and Holding hereby
agrees to sell, assign and convey to the Executive, an additional 8,000 shares
(the "Shares") of Common Stock for the aggregate purchase price of $280,000 at a
closing to occur within 90 days hereof (the "Closing"). At the Closing: (a) the
Executive shall pay such purchase price by $75,000 Payment In Cash and
delivering to Holding a promissory note in the principal amount of ($205,000)
payable to the order of Holding in the form of Exhibit B hereto (the
---------
"Promissory Note") and a pledge agreement in the form of Exhibit C hereto (the
---------
"Pledge Agreement"), and (b) the Company shall deliver to the Executive
certificates representing the Shares, duly registered in the name of the
Executive.
SECTION FIVE
------------
COVENANT NOT TO COMPETE
-----------------------
5.01 Non-Competition. So long as the Executive is employed by Holding
---------------
and for a period of one (1) year from the date of the Executive's termination of
employment hereunder or, if terminated pursuant to Sections 3.02 or 3.03, until
the expiration of the Term notwithstanding such termination, the Executive shall
not, directly or indirectly, by or for himself or as the agent of another or
through another as his agent (a) own any interest in (other than up to five
percent of any publicly traded security), provide consulting or other services
to or serve as an officer or director or engage in the management or operation
of any entity that, directly or indirectly, owns, manages or operates, or
participates in the operation of, any supermarket or other retail grocery store
located within 20 miles of any supermarket owned or operated by the Company or
any subsidiary of the Company, or (b) solicit for employment, employ or induce
or advise any employee to leave the
-9-
<PAGE>
employ of Holding, the Company or any of its subsidiaries. Notwithstanding the
foregoing, if the Executive is terminated pursuant to Sections 3.02 or 3.03
hereof, after one year from the date of such termination the Executive may elect
by written instrument in form and substance reasonably acceptable to Holding, to
waive any and all rights to, and release Holding and the Company from any and
all obligations to pay or provide, any Base Salary or benefits to which the
Executive would otherwise be entitled pursuant to such Sections 3.02 or 3.03. In
such event, notwithstanding anything herein to the contrary, from and after ten
(10) business days following the date on which an originally executed copy of
such instrument is delivered to Holding, the Executive shall no longer be
subject to the restrictions set forth in this Section 5.01 and neither Holding
nor the Company shall be obligated to make any payments or provide any benefits
or other compensation to the Executive.
5.02 Restitution. In addition to all other remedies provided for
-----------
hereunder, the Executive agrees that if he shall violate any of the provisions
of this Section 5, Holding shall be entitled to an accounting and repayment of
all profits, compensation, remuneration or other benefits that the Executive may
realize arising from or related to any such violation.
5.03 Modification. The parties agree and acknowledge that the
------------
duration, scope and geographic area of the covenant not to compete described in
this Section 5 are fair, reasonable and necessary in order to protect the good
will and other legitimate interests of Holding, that adequate compensation has
been received by the Executive for such obligations, and that these obligations
do not prevent the Executive from earning a livelihood. If, however, for any
reason any court determines under applicable law that the provisions in this
Section 5 pertain to duration, scope and geographic area in relation to non-
competition are too broad or otherwise unreasonable, that the consideration
provided for hereunder is inadequate or that the Executive has been prevented
-10-
<PAGE>
unlawfully from earning a livelihood (together, such provisions being
hereinafter referred to as "Restrictions"), such Restrictions shall be
interpreted, modified or rewritten, and such court is hereby requested and
authorized by the parties hereto to revise the Restrictions, to include the
maximum Restrictions as are valid and enforceable under applicable law.
SECTION SIX
-----------
CONFIDENTIAL INFORMATION
------------------------
6.01 Proprietary Information. In the course of his service to Holding
-----------------------
and the Company, the Executive shall have access to confidential and proprietary
information, including, but not limited to strategic plans or data, financial
statements, information concerning the business, operations or financial
condition of Holding, the Company and its subsidiaries and affiliates and
Wakefern Food Corporation, marketing data, customer research and data,
information concerning sources of supply, pricing information and data, and
trade secrets. Such information shall be referred to hereinafter as "Proprietary
Information" and shall include any and all items enumerated in the preceding
sentence, whether previously existing, now existing or arising hereafter,
whether conceived or developed by others or by the Executive alone or with
others, and whether or not conceived or developed during regular working hours.
Proprietary Information which is in the public domain during the period of
service by the Executive, provided the same is not in the public domain as a
consequence of disclosure directly or indirectly by the Executive in violation
of this Agreement, shall not be subject to the restrictions of Section 6.01
through 6.03 herein.
6.02 Fiduciary Obligations. The Executive acknowledges that Holding
---------------------
and the Company have expended, and will continue to expend, significant amounts
of time, effort and money in the procurement of their Proprietary Information,
that Holding and the Company have taken all
-11-
<PAGE>
reasonable steps in protecting the secrecy of the Proprietary Information, that
said Proprietary Information is of critical importance to Holding and the
Company and that a violation of this Section 6 would seriously and irreparably
impair and damage the business of both Holding and the Company, and the
Executive agrees to keep all Proprietary Information in a fiduciary capacity for
the sole benefit of Holding and the Company.
6.03 Non-Disclosure. The Executive shall not disclose, directly or
--------------
indirectly (except as the Executive's duties in the regular and proper course of
business of Holding or the Company may require and except as required by law),
any Proprietary Information to any person other than Holding, the Company or
authorized employees thereof at the time of such disclosure, or to such other
persons to whom the Executive has been specifically instructed to make
disclosure by the Board of Directors of Holding or the Company and in all such
cases only to the extent required in the regular and proper course of business
of Holding and the Company. At the termination of his employment, the Executive
shall deliver to Holding all notes, letters, documents and records which may
contain Proprietary Information which are then in his possession or control and
shall not retain or use any copies or summaries thereof.
SECTION SEVEN
-------------
REMEDIES
--------
7.01 Remedies. The Executive acknowledges that he has carefully read
--------
and considered the terms of this Agreement and knows them to be essential to
induce Holding and the Company to enter into this Agreement and that any breach
of the provisions contained herein will result in serious and irreparable injury
to Holding and the Company. Therefore, in the event of a breach of this
Agreement, Holding and the Company shall be entitled to equitable relief against
the Executive,
-12-
<PAGE>
including, without limitation, an injunction to restrain the Executive from such
breach and to compel compliance with this Agreement in protecting or enforcing
its rights and remedies.
SECTION EIGHT
-------------
MISCELLANEOUS
-------------
8.01 Notice of Sale. If, during the term of Executive's employment
--------------
hereunder, Holding, the Company or an Affiliate (as defined in the Shareholders'
Agreement) of the Company to which this Agreement is assigned is sold to a third
party (whether directly or indirectly, by sale of stock or assets, merger or
otherwise), Holding shall endeavor to give Executive such advance notice
therefor as is practicable in the circumstances, taking into account the need of
the parties to the transaction to maintain confidentiality of their negotiations
until public announcement thereof. In such event, Executive shall not disclose
to any other person the pendency of such transaction until such public
announcement is made.
8.02 Indemnification. Holding and the Company shall indemnify
---------------
Executive in the event that he is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of Holding or the Company, its subsidiaries or
Affiliates, in which capacity he is or was serving at the request of Holding or
the Company, against expenses (including attorneys' fees which shall be advanced
as incurred by him in connection with such action, suit or proceeding to the
fullest extent and in the manner set forth and permitted by the General
Corporation Law of the State of Delaware, and any other applicable law, as from
time to time in effect.
8.03 Notices. All notices hereunder, to be effective, shall be in
-------
writing and shall be deemed delivered when delivered by hand or five days after
being sent by first-class, certified mail,
-13-
<PAGE>
postage and fees prepaid, as follows (unless and until notice of another or
different address shall be given):
<TABLE>
<S> <C> <C>
(i) If to Holding: Big V Holding Corp.
176 North Main Street
Florida New York 10921
Attn: President and Chief Executive Officer
Copy to: Michael J. Riccio, Jr., Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
(ii) If to the Executive: To the address set forth below.
</TABLE>
8.04 Modification. This Agreement, together with the Stock Option
------------
Agreement, Promissory Note, Pledge Agreement and Shareholders' Agreement,
constitute the entire agreement between the parties hereto with regard to the
subject matter hereof, terminating and superseding all prior understandings and
agreements, whether written or oral. This Agreement may not be amended or
revised except by a writing signed by the parties.
8.05 Assignment. This Agreement and all rights hereunder are personal
----------
to the Executive and may not be assigned by him. Notwithstanding anything else
in this Agreement to the contrary, Holding and the Company may assign this
Agreement to and all rights hereunder shall inure to the benefit of any person,
firm or corporation succeeding to all or substantially all of the business or
assets of the Company whether by purchase, merger or consolidation.
8.06 Captions. Captions herein have been inserted solely for
--------
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
-14-
<PAGE>
8.07 Severability. The provisions of this Agreement are severable,
------------
and the invalidity of any provision shall not affect the validity of any other
provision. In the event that any arbitrator or court of competent jurisdiction
shall determine that any provision of this Agreement or the application thereof
is unenforceable because of the duration or scope thereof, the parties hereto
agree that said arbitrator or court in making such determination shall have the
power to reduce the duration and scope of such provision to the extent necessary
to make it enforceable, and that the Agreement in its reduced form shall be
valid and enforceable to the full extent permitted by law.
8.08 Taking Effect. The terms and conditions set forth in this
-------------
Agreement shall take effect and be binding upon the parties as of the date first
above written.
8.09 Governing Law. This Agreement shall be construed under and
-------------
governed by the laws of the State of New York.
* * *
-15-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a binding contract as of the day and year first above written.
BIG V HOLDING CORP.
By /s/ Joseph V. Fisher
-----------------------------------
(signature)
Joseph V. Fisher
-------------------------------------
(print name)
President & C.E.O
-------------------------------------
(print title)
EXECUTIVE: BIG V SUPERMARKETS, INC.
/s/ James A. Toopes By /s/ Joseph V. Fisher
- ----------------------------------- -----------------------------------
James A. Toopes (signature)
Joseph V. Fisher
-------------------------------------
(print name)
President & C.E.O.
-------------------------------------
(print title)
Executive's Home Address:
264 Highland Avenue
- -----------------------------
Ridgewood, NJ 07450
- -----------------------------
- -----------------------------
-16-
<PAGE>
SCHEDULE 1
----------
TO
--
EMPLOYMENT AGREEMENT WITH JAMES A. TOOPES
-----------------------------------------
ANNUAL INCENTIVE BONUS PLAN
---------------------------
I. ANNUAL INCENTIVE BONUS BASE AMOUNT AND SCALE
--------------------------------------------
The Annual Incentive Bonus base amount (the "Base Amount") for the
Executive is one hundred and twenty thousand dollars ($120,000). For each
year shown below, the Executive will earn all of the Base Amount upon the
achievement by the Company of the "Plan Cash Flow' shown below for such
year:
<TABLE>
<CAPTION>
YEAR PLAN CASH FLOW ($000)
---- --------------------
<S> <C>
1996 $50,000
1997 $57,000
1998 $63,000
</TABLE>
The achievement of the Plan Cash Flow target will result in the payment
of an Annual Incentive Bonus equal to the Base Amount. The Bonus will be
reduced by one eleventh of the Base Amount for each one percent by which
the Plan Cash Flow target exceeds the Company's actual Cash Flow for the
applicable year; provided, however, that if less than 90% of the Plan
-------- -------
Cash Flow target is achieved, no Bonus will be paid.
In the event the Company's actual Cash Flow exceeds the Plan Cash Flow
target for the applicable year, the Annual Incentive Bonus will be
increased as follows: (i) by 0.2% of the Executive's Base Salary for each
0.1% by which the Company's actual Cash Flow exceeds the applicable Plan
Cash Flow target but is less than 110% of the Cash Flow target, (ii) by
0.3% of the Base Salary for each 0.1% by which the Company's actual Cash
Flow exceeds 110% of the applicable Cash Flow target but is less than
120% of the Plan Cash Flow target, and (iii) by 0.4% of the Base Salary
for each 0.1% by which the Company's actual Cash Flow exceeds 120% of the
applicable Plan Cash Flow target.
<PAGE>
II. "CASH FLOW" DEFINED
-------------------
For purposes of the Plan, "Cash Flow" shall mean the Company's
consolidated income without reduction for non-cash or deferred
compensation expense, interest (except as indicated below), income taxes,
depreciation or amortization but after deduction of: (i) all operating
expenses (including up to $250,000 in management fees payable to Thomas
H. Lee Company and J.S. Frelinghuysen & Co. pursuant to their respective
Management Agreements with the Company), (ii) interest on working capital
loans and (iii) other reserves required in connection with the operation
of the Company's business in the ordinary course. The determination of
Cash Flow shall not take into account any income or expense attributable
to LIFO reserves, gains or losses on sales of assets or other
extraordinary gains or losses or non-cash rent expenses. Except as
otherwise provided herein, Cash Flow shall be determined in accordance
with generally accepted accounting principles consistently applied, all
as reflected in the Company's most recently available consolidated
audited financial statements for the immediately preceding fiscal year
and as certified by the Chief Financial Officer of the Company. The Cash
Flow targets set forth above shall be adjusted in the manner and to the
extent reasonably determined by the Company's Board of Directors in order
to take into account (i) the institution of a supplemental cash bonus
compensation plan for junior management, (ii) material changes in the
Company's methods of accounting or (iii) the sale of substantial assets
by the Company or the acquisition of ongoing business, whether by merger,
consolidation or otherwise. Any such adjustment shall be made in good
faith with the intent that, after taking into account the nature of the
cause of the adjustment, the measure of the Company's performance
established by the Cash Flow targets before and after the adjustment will
be as nearly equivalent as is reasonably possible.
III. PAYMENT
-------
The Annual Incentive Bonus is to be paid by Holdings, on April 30th of
the year immediately following the year in which it was earned or within
thirty days of the date on which the Company receives its audited
financial statements for such year, whichever occurs first. Such Bonus is
not payable prior to such date unless the Company is sold. In that event,
the Bonus will vest to the extent that the bonus would otherwise be
payable by measuring the Company's Cash Flow as of the sale date against
the Plan Cash Flow pro rated to the sale date, taking into account
seasonal factors as determined in good faith by the Company's Board of
Directors; provided, however, that the amount of any resulting Bonus will
also be pro rated to the sale date based on the number of days elapsed
(up to and including the sale date). For the purpose of this Plan, a sale
of the Company shall mean a sale of all or substantially all of the
assets of the Company or the sale or other transfer of fifty percent or
more of the common stock of the Company held by the Institutional
Investors (as defined in the Amended and Restated Shareholders' Agreement
<PAGE>
among Big V Holding Corp. and its shareholders dated as of December
17, 1993) to an unaffiliated third party or parties.
IV. EARLY TERMINATION
-----------------
Annual Incentive Bonus payments are not assignable or transferable except
by beneficiary designations to take effect at death. If the Executive is
terminated without Cause or as a result of disability or death during the
four year term of the Plan, his Annual Incentive Bonus is pro-rated to
the date of termination as provided in Section III above and paid within
45 days of the end of the fiscal quarter in which such termination
occurred.
If the participant's employment terminates for any other reason, no
portion of his Annual Incentive Bonus will be paid without authorization
and approval of the Board of Directors of Holdings.
<PAGE>
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
---------------------------------------
This Management Stock Subscription Agreement is entered into as of the
14 day of Dec 1996, by and between Big V Holding Corp., a Delaware corporation
(the "Company"), and the management investor so indicated on the signature page
hereof (the "Management Investor").
WHEREAS, the Company desires to sell to the Management Investor, and
the Management Investor desires to purchase from the Company, shares of common
stock of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement, intending to be legally bound,
mutually agree as follows:
ARTICLE I
Purchase and Sale of Shares
---------------------------
1.1 Sale and Issuance of Shares. Subject to the terms and conditions
---------------------------
of this Agreement, the Management Investor does hereby subscribe for and agrees
to acquire at the Closing (as hereinafter defined), and the Company agrees to
issue to the Management Investor at the Closing, the aggregate number of shares
of the Company's common stock set forth under his name on the signature page
hereto (the "Shares") in exchange for the aggregate consideration set forth on
the signature page hereto (the "Purchase Price"). A portion of the Purchase
Price shall be payable in cash in the amount set forth on the signature page
hereto (the "Cash Amount"), and the balance of the Purchase Price shall be paid
by the Management Investor's issuance to the Company of a Secured Promissory
Note in the principal amount set forth on the signature page hereto (the
"Note").
1.2 Closing. The closing (the "Closing") of the purchase and sale of
-------
the Shares being purchased by the Management Investor shall occur at the offices
of the Company, on the date hereof (the "Closing Date"). At the Closing, the
Company shall deliver to the Management Investor a certificate or certificates
representing the Shares purchased hereunder and the Management Investor shall
deliver to the Company (i) the Cash Amount, (ii) the Note, (iii) a Stock Pledge
Agreement executed in favor of the Company, and (iv) a counterpart signature
page to the Amended and Restated Shareholders' Agreement dated as of December
17, 1993 (the "Shareholders' Agreement").
<PAGE>
ARTICLE II
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to the Management Investor that:
2.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted.
2.2 Authorization. All corporate action on the part of the Company and
-------------
its officers and directors necessary for the authorization, execution and
delivery of this Agreement and the performance of all obligations of the Company
under this Agreement required to be performed at or prior to the Closing and for
the authorization, issuance and delivery of the Shares being sold under this
Agreement has been taken. This Agreement, when executed and delivered by all
parties hereto, shall constitute the valid and legally binding obligations of
the Company, except to the extent the enforceability thereof may be limited by
bankruptcy laws, insolvency laws, reorganization laws, moratorium laws or other
laws affecting creditors' rights generally or by general equitable principles.
2.3 Validity of Shares. The Shares, when issued, sold and delivered in
------------------
accordance with the terms of this Agreement, shall be duly and validly issued,
fully paid and nonassessable.
ARTICLE III
Representations, Warranties and Agreements of
---------------------------------------------
the Management Investor
-----------------------
3.1 Authorization. The Management Investor represents and warrants that
-------------
this Agreement, when executed and delivered by him, will constitute a valid and
legally binding obligation of the Management Investor, except to the extent the
enforceability thereof may be limited by bankruptcy laws, insolvency laws,
reorganization laws, moratorium laws or other laws affecting creditors' rights
generally or by general equitable principles.
3.2 Investment Representations.
--------------------------
(a) This Agreement is made with the Management Investor in reliance
upon the Management Investor's representation to the Company, which by his
acceptance hereof the Management Investor hereby confirms, that (i) the
Shares to be received by him will be acquired by him, or a trust for the
benefit of his spouse, children or parents, for investment for his own
account, and not with a view to the sale or distribution of any part
thereof in
<PAGE>
violation of applicable Federal and state securities laws, and
(ii) he has no current intention of selling, granting participation in or
otherwise distributing the same in violation of applicable Federal and
state securities laws. By executing this Agreement, the Management
Investor further represents that he does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to such person, or to any third person, with respect
to any of the Shares in violation of applicable Federal and state
securities laws.
(b) The Management Investor understands that the Shares have not been
registered under the 1933 Act on the basis that the sale provided for in
this Agreement and the issuance of securities hereunder is exempt from
registration under the 1933 Act pursuant to Section 4(2) thereof and
regulations issued thereunder, and that the Company's reliance on such
exemption is predicated on representations of the Management Investor set
forth herein.
(c) The Management Investor represents that he has, either alone or
together with his "purchaser representative" as that term is defined in
Regulation D promulgated under the 1933 Act, such knowledge and experience
in financial and business matters as to be capable of evaluating the
merits and risks of his investment. The Management Investor further
represents that he has had access, during the course of the transaction
and prior to his purchase of Shares, to information concerning the Company
and its assets, liabilities and prospects, and that he has had, during the
course of the transaction and prior to his purchase of the Shares, the
opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the offering and to obtain
additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to him or to
which he had access.
(d) The Management Investor understands that the Shares may not be
sold, transferred or otherwise disposed of without registration under the
1933 Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Shares or an available
exemption from registration under the 1933 Act, the Shares must be held
indefinitely. In particular, the Management Investor is aware that the
Shares may not be sold pursuant to Rule 144 promulgated under the 1933 Act
unless all of the conditions of that Rule are met. Among the current
conditions for use of Rule 144 by certain holders is the availability to
the public of current information about the Company. Such information is
not now available, and the Company has no current plans to make such
information available. Such Management Investor represents that, in the
absence of an effective registration statement covering the Shares, he
will sell, transfer or otherwise dispose of the Shares only in a manner
consistent with his representations set forth herein and then only in
accordance with the Shareholders' Agreement.
<PAGE>
(e) Each Management Investor agrees, except with respect to transfers
permitted under the Shareholders' Agreement, that he will not make a
transfer, disposition or pledge of any of the Shares other than pursuant
to an effective registration statement under the 1933 Act, unless and
until (i) the Management Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the disposition, and (ii) if requested by
the Company, at the expense of the Management Investor or transferee, he
shall have furnished to the Company an opinion of counsel, reasonably
satisfactory to the Company and its counsel, to the effect that such
transfer may be made without registration of the Shares under the 1933
Act.
3.3 Legends: Stop Transfer.
----------------------
(a) The Management Investor acknowledges that all certificates
evidencing the Shares shall bear the following legend:
"TRANSFER RESTRICTED
These securities have not been registered under the Securities Act of
1933, as amended, and may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective registration statement as
to the securities under said Act or an opinion of counsel
satisfactory to the Company and its counsel that such registration is
not required.
These securities are subject to the terms and conditions, including
restrictions on transfer, of an Amended and Restated Shareholders'
Agreement dated as of December 17, 1993, as amended from time to
time, a copy of which is on file with the Secretary of the Company"
(b) The certificates evidencing the Shares shall also bear any
legend required by any applicable state securities law
(c) In addition, the Company shall make a notation regarding the
restrictions on transfer of the Shares in its stock books, and the Shares
shall be transferred on the books of the Company only if transferred or
sold pursuant to an effective registration statement under the 1933 Act
covering such Shares or pursuant to and in compliance with the provisions
of Section 3.2(e) hereof. All Common Stock of the Company hereafter issued
to the Management Investor shall bear the same endorsement, shall be
subject to all the terms and conditions of this Agreement, and for all
purposes shall be deemed "Shares" hereunder. A copy of this Agreement,
together with any amendments thereto, shall remain on file with the
Secretary of the Company and shall be available for inspection to any
properly interested person without charge within five (5) days after the
Company's receipt of a written request therefor.
<PAGE>
ARTICLE IV
Miscellaneous
-------------
4.1 Notices. All notices and other communications necessary or
-------
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given when delivered by hand or one day after sending
by overnight delivery service, or five days after sending by certified mail,
postage prepaid, return receipt requested: to the Company, at the address of its
principal executive offices, and to the Management Investor, at his address
listed on the signature page hereto.
By notice complying with the foregoing provisions of this Section 4.1, each
party shall have the right to change the mailing address for future notices and
communications to such party.
4.2 Execution of Counterparts. This Agreement may be executed in
-------------------------
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.
4.3 Binding Effect: Assignment. The rights and obligations of the
--------------------------
Management Investor under this Agreement may not be assigned to any other
person. Except as expressly provided in this Agreement, this Agreement shall not
be construed so as to confer any right or benefit upon any person other than the
parties to this Agreement, and their respective successors and assigns. This
Agreement shall be binding upon the Company and the Management Investor, and
their respective successors and assigns.
4.4 Governing Law. This Agreement shall be deemed to be a contract made
-------------
under the laws of the State of Delaware, and for all purposes shall be construed
in accordance with the laws of said State, without regard to principles of
conflicts of law. Both of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of Delaware in any action or proceeding
arising out of or relating to this Agreement.
4.5 Severability of Provisions. Any provision of this Agreement which is
--------------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
4.6 Exhibits and Headings. All Exhibits to this Agreement shall be deemed
---------------------
to be a part of this Agreement. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
<PAGE>
* * *
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal, as of the date first above written.
BIG V HOLDING CORP.
By: /s/ Joseph Fisher
---------------------------------
Name: Joseph Fisher
Title: President & CEO
MANAGEMENT INVESTOR
/s/ James A. Toopes
-----------------------------------
Name: James A. Toopes
Number of Shares: 8,000
Aggregate Purchase Price: $280,000
Cash Amount: $75,000
Note Amount: $205,000
<PAGE>
COUNTERPART SIGNATURE PAGE
--------------------------
The undersigned, in connection with the purchase of shares of Common
Stock, par value $.01 per share, of Big V Holding Corp., a Delaware corporation
(the "Company"), hereby agrees to be bound by the terms and conditions of the
Amended and Restated Shareholders' Agreement, dated as of December 17, 1993, by
and among the Company and the investors named therein (the "Shareholders'
Agreement"), as a "Management Investor" (as such term is defined in the
Shareholders' Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Counterpart
Signature Page as of Dec. 14, 1996.
/s/ James A. Toopes
-------------------------------
Name:
<PAGE>
EXHIBIT A
---------
BIG V HOLDING CORP.
1990 TIME ACCELERATED RESTRICTED STOCK OPTION PLAN
--------------------------------------------------
NON-QUALIFIED TIME ACCELERATED
RESTRICTED STOCK OPTION AGREEMENT
with
JAMES A. TOOPES
<PAGE>
BIG V HOLDING CORP.
STOCK OPTION AGREEMENT
UNDER 1990 TIME ACCELERATED RESTRICTED STOCK OPTION PLAN
NON-QUALIFIED TIME ACCELERATED RESTRICTED STOCK OPTION
------------------------------------------------------
AGREEMENT entered into this 14th day of December, 1996 by and between Big
V Holding Corp., a Delaware corporation (the "Company"), and the undersigned
employee (the "Employee") of the Company (or one of its subsidiaries) (the
Company and its subsidiaries herein together referred to as the "Company").
1. The Company desires to grant the Employee a non-qualified stock option
under the Company's 1990 Time Accelerated Restricted Stock Option Plan (the
"Plan") to acquire shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock").
2. Section 6 of the Plan provides that each option is to be evidenced by
an option agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Employee hereby agree as
follows:
1. Grant of Option. The Company hereby irrevocably grants to the Employee
---------------
a non-qualified stock option (the "Option") to purchase all or any part of an
aggregate of 12,000 shares of Common Stock (the "Shares") on the terms and
conditions hereinafter set forth. This option shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Purchase Price. The purchase price ("Purchase Price") for the Shares
--------------
covered by the Option shall be $35.00 per Share, which Purchase Price is not
less than the fair market value of the Shares on the date hereof.
3. Time of Exercise of Option; Exercisability. Except as provided below,
------------------------------------------
the Option shall not be exercisable prior to nine years and six months from the
date of grant of the Option at which time the Option shall become exercisable in
full. The Option shall become exercisable earlier, however, with respect to the
number of Shares and upon the attainment of certain performance goals on or
prior to the end of certain performance periods, all as shown on Schedule I
----------
attached hereto and incorporated herein.
<PAGE>
4. Term of Options; Exercisability
-------------------------------
(a) Term.
----
(1) Each Option shall expire ten (10) years from the date of the
granting thereof, but shall be subject to earlier termination as provided in
subsections (2) through (4) below.
(2) If the Employee is terminated for Cause (as defined in the
Employment Agreement among the Company, Big V Supermarkets, Inc., and the
Employee dated as of May 1, 1996) or voluntarily terminates his employment with
the Company, at any time, for any reason or for no reason, in either such case,
the option granted to the Employee shall terminate, with respect to any Shares
subject to options exercisable on the date of such termination, on the fifth day
following such termination and, with respect to any Shares subject to options
not exercisable on the date of such termination, on the date of such
termination.
(3) If the Employee is terminated by the Company without Cause,
at any time, the option granted to the Employee shall terminate, with respect to
any Shares subject to options exercisable on the date of such termination, on
the 90th day following such termination and, with respect to any Shares subject
to options not exercisable on the date of such termination, on the date of such
termination.
(4) In the event of the termination of the Employee's employment
with the Company or one of its subsidiaries due to the death or disability of
the Employee, the option granted to the Employee shall terminate, with respect
to any Shares subject to options exercisable on the date of such termination, on
the 365th day following such termination and, with respect to any Shares subject
to options not exercisable on the date of such termination, on the date of such
termination.
(b) Exercisability. If the Employee ceases to be an employee of the
--------------
Company, at any time, for any reason or for no reason, the Option granted to the
Employee hereunder shall be exercisable only to the extent that the right to
purchase Shares under such Option has accrued and is in effect on the date such
Employee ceases to be an employee of the Company or one of its subsidiaries.
5. Manner of Exercise of Option.
----------------------------
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the Option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. Payment may be either wholly in
cash or by check payable to the Company. Upon such exercise, delivery of a
certificate for paid-up, non-assessable Shares shall be made at the principal
office of
<PAGE>
the Company to the person exercising the Option, not more than thirty (30) days
from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares of its common stock as will be
sufficient to satisfy the requirements of the Option.
(c) Notwithstanding the provision of Section 5(a) of this Agreement,
the Company may delay the issuance of Shares covered by the exercise of this
Option and the delivery of a certificate for such Shares until one of the
following conditions shall be satisfied:
(i) The Shares with respect to which such Option has been
exercised are at the time of the issue of such Shares effectively
registered or qualified under applicable federal and state securities
acts now in force or as hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such
Shares are exempt from registration and qualification under applicable
federal and state securities acts now in force or as hereafter
amended.
6. Non-Transferability. The right of the Employee to exercise the Option
-------------------
shall not be assignable or transferable by the Employee otherwise than by will
or the laws of descent and distribution, and the Option may be exercised during
the lifetime of the Employee only by him or her. The Option shall be null and
void and without effect upon the bankruptcy of the Employee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.
7. Shares Subject to Restrictions; Representation Letter and Investment
--------------------------------------------------------------------
Legend.
- ------
(a) Each of the Shares shall be subject to the restrictions on
transfer imposed on, the terms and conditions requiring the sale or transfer of,
and the rights and the options of the Company and certain stockholders of the
Company to purchase, those shares of Common Stock held by Management Investors
under the terms of the Amended and Restated Shareholders' Agreement Dated as of
December 17, 1993 (the "Restrictions"). The Shares shall be subject to the
Restrictions and the Employee hereby agrees to be bound by and undertakes to
comply with the Restrictions, whether or not the Employee is a party to the
Shareholders' Agreement, in the same manner and to the same extent as a
Management Investor, and agrees and undertakes to execute and deliver any and
all such additional agreements, instruments and other documents deemed necessary
by the Company to effect the provisions of this subparagraph (a).
<PAGE>
(b) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the Securities
Act of 1933 (the "1933 Act"), upon any date on which the Option is exercised in
whole or in part, the person exercising the Option shall give a written
representation to the Company in the form attached hereto as Exhibit 1 and the
Company shall place an "investment legend", so-called, as described in Exhibit 1
hereto, upon any certificate for the Shares issued by reason of such exercise.
(c) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization. Adjustments or changes in
----------------------------------------
capitalization and the like shall be made in accordance with Section 12 of the
Plan, as in effect on the date of this Agreement.
9. Recapitalizations, Reorganizations, Changes in Control and the Like.
-------------------------------------------------------------------
Adjustments and other matters relating to recapitalizations, reorganizations,
sale of the assets of the Company, changes in control and the like shall be made
and determined in accordance with Section 12 of the Plan, as in effect on the
date of this Agreement (including, but not limited to, the termination and
cancellation of options upon a sale of all or substantially all of the assets of
the Company or a change of control in the Company).
10. No Special Employment Rights. Nothing contained in the Plan or this
----------------------------
Agreement shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of the Employee for the period
within which this Option may be exercised. However, during the period of the
Employee's employment, the Employee shall render diligently and faithfully the
services which are assigned to the Employee from time to time by the Board of
Directors or by the executive officers of the Company and shall at no time take
any action which directly or indirectly would be inconsistent with the best
interests of the Company.
11. Rights as a Shareholder. The Employee shall have no rights as a
-----------------------
shareholder with respect to any Shares which may be purchased by exercise of
this Option unless and until a certificate or certificates representing such
Shares are duly issued and delivered to the Employee and the Employee has
executed and delivered to the Company any and all agreements, instruments and
other documents required by the Company pursuant to Section 7(a) hereof. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
12. Withholding Taxes. Whenever Shares are to be issued upon exercise of
-----------------
this Option, the Company shall have the right to require the Employee to remit
to the Company an amount sufficient to satisfy all Federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such Shares.
<PAGE>
*******************************
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal to be hereto affixed by its officer thereunto duly
authorized, and the Employee has hereunto set his or her hand and seal, all as
of the day and year first above written.
BIG V HOLDING CORP.
By: /s/ Joseph V. Fisher
-----------------------------
Name: Joseph V. Fisher
Title:
EMPLOYEE
/s/ James A. Toopes
--------------------------------
Address: 264 Highland Ave.
Ridgewood, NJ 07450
Social Security
No.: ###-##-####
----------------------------
<PAGE>
SCHEDULE I
Option Vesting Schedule
-----------------------
(a) The Option will become exercisable with respect to all Shares
subject thereto (the "Performance Shares") in the manner provided below.
(b) If the Company's Cash Flow (as hereinafter defined) is greater than
the Target Cash Flow for the applicable Target Period, as specified in Schedule
--------
A below, then the Option shall become exercisable with respect to twenty-five
- -
percent (25%) of the Performance Shares. If the Company's Cash Flow is less than
the Target Cash Flow for the applicable Target Period but at least ninety
percent (90%) of the Target Cash Flow for the Target Period, then the Option
shall become exercisable with respect to two and one-half percent (2.5%) of the
Performance Shares for each one percent (1%) by which the Company's actual Cash
Flow exceeds ninety percent of the Target Cash Flow for the Target Period, up to
a maximum of twenty-five percent (25%) of the Performance Shares for any one
Target Period. An Option shall be so exercisable on or after the later of the
end of the applicable Target Period or the date that the Company's Cash Flow for
such Target Period is certified by the Chief Financial Officer of the Company.
For the purpose of this Agreement, Cash Flow shall mean the Company's
consolidated income without reduction for non-cash or deferred compensation
expense, interest (except as indicated below), income taxes, depreciation or
amortization but after deduction of: (i) all operating expenses (including up to
$250,000 in management fees payable to Thomas H. Lee Company and J.S.
Frelinghuysen & Co. pursuant to their respective Management Agreements with the
Company), and (ii) other reserves required in connection with the operation of
the Company's business in the ordinary course. The determination of Cash Flow
shall not take into account any income or expense attributable to LIFO reserves,
gains or losses on sales of assets or other extraordinary gains or losses or
non-cash rent expenses. Except as otherwise provided herein, Cash Flow shall be
determined in accordance with generally accepted accounting principles
consistently applied, all as reflected in the Company's most recently available
consolidated audited financial statements for the immediately preceding fiscal
year and as certified by the Chief Financial Officer of the Company.
(c) In addition to the vesting of the Options under paragraph (b) above,
upon the expiration of the four year period ended December 31, 1998, any of the
Options with respect to the Performance Shares which remain unexercisable (after
giving effect to paragraph (b) above) (the "Remaining Shares") may also become
exercisable as follows: (i) if the Company's cumulative Cash Flow for the four
year period ended December 31, 1998 (the "Cumulative Cash Flow") is equal to or
greater than $213 million, then the Option will become exercisable with respect
to all of the Remaining Shares; and (ii) if the Cumulative Cash Flow is greater
than $192 million but less than $213 million, then, the Option will become
exercisable with respect to a portion of the Remaining Shares equal to (x) four
and three-quarters percent (4.75%) of the
<PAGE>
Performance Shares for each additional $1,000,000 of Cash Flow in excess of $192
million less (y) the number of Performance Shares which have vested under
----
paragraph (b) above, such that the Option will be exercisable in full if the
Cumulative Cash Flow is equal to $213 million. The Option will be exercisable
pursuant to this paragraph (c) on or after the later of the end of the Total
Target Period of the date that the Company's Cumulative Cash Flow is certified
by the Chief Financial Officer of the Company.
(d) The Target Cash Flow levels set forth on Schedule A shall be adjusted
----------
in the manner and to the extent reasonably determined by the Board of Directors
in good faith to take into account (i) material changes in the Company's method
of accounting or (ii) the sale of substantial assets by the Company or the
acquisition of ongoing businesses, whether by merger, consolidation or
otherwise. Any such adjustment shall be made in good faith with the intent that,
after taking into account the nature of the cause of the adjustment, the measure
of the Company's performance established by the Target Cash Flow levels before
and after the adjustment will be as nearly equivalent as is reasonably possible.
<TABLE>
<CAPTION>
SCHEDULE A
----------
Maximum Percentage
Target Target Cash Flows of Shares Eligible
Period (1,000's) for Early Vesting
- ------ -------------- -----------------
<S> <C> <C>
1/1/95 to 12/31/95 $43,000 25%
1/1/96 to 12/31/96 $50,000 25%
1/1/97 to 12/31/97 $57,000 25%
1/1/98 to 12/31/98 $63,000 25%
Total Target Cash Flow
for Total Target Period
(1/1/95 to 12/31/98) $213,000
</TABLE>
(e) In the event of a Sale of the Company (as hereinafter defined), then
any as yet unvested Shares shall vest if and to the extent they would otherwise
vest hereunder based on the following formula: (i) the Cash Flow for the Target
Period in which the Sale takes place (the "Sale Target Period") shall be
annualized based on the Company's most recently available consolidated audited
financial statements for the portion of the Sale Target Period prior to the Sale
(or, if audited financial statements are not available, unaudited financial
statements prepared in accordance with generally accepted accounting principles
consistently applied subject to year end adjustments and the absence of notes,
as certified by the Chief Financial Officer of the Company) and after taking
into account seasonal adjustment as determined in good faith by the Company's
Board of Directors, and the Company will be deemed to have achieved such
annualized Cash Flow in the Sale Target Period and (ii) the Company will be
deemed to have achieved in any Target Periods occurring after the Sale Target
Period, the average of the percentages of the Target Cash Flows achieved in the
prior Target Periods (based on the
<PAGE>
annualized Cash Flow with respect to the Sale Target Period). Any Shares that
would have vested had the Company achieved such deemed Cash Flows shall vest and
become exercisable immediately prior to the Sale of the Company. For the
purposes hereof, a "Sale" of the Company shall mean a sale of all or
substantially all of the assets of the Company or the sale or other transfer of
fifty percent or more of the common stock of the Company held by the
Institutional Investors (as defined in the Shareholders' Agreement) to an
unaffiliated third party or parties.
<PAGE>
STOCK OPTION AGREEMENT
EXHIBIT 1
---------
Gentlemen:
In connection with the exercise by me as to _____ shares of common stock,
no par value per share, of BIG V HOLDING CORP. (the "Company") under the non-
qualified stock option dated July __, 1996, granted to me under the 1990 Time
Accelerated Restricted Stock Option Plan, I hereby acknowledge that I have been
informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant
to the exercise of said option have not been registered under the Securities Act
of 1933, as amended (the "Act"), and accordingly, must be held indefinitely
unless such shares are subsequently registered under the Act, or an exemption
from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the Act. In view of this representation and warranty, I agree
that there may be affixed to the certificates for the shares to be issued to me,
and to all certificates issued hereafter representing such shares (until in the
opinion of counsel, which opinion must be reasonably satisfactory in form and
substance to counsel for the Company, it is no longer necessary or required) a
legend as follows:
"These securities have not been registered under the
Securities Act of 1933 and may not be sold, transferred,
offered for sale, pledged or hypothecated
<PAGE>
in the absence of an effective registration statement
as to the securities under said Act or an opinion of
counsel satisfactory to the Company, both as to opinion
and counsel, that such registration is not required."
"These securities are subject to the terms and conditions,
including restrictions on transfer, of an Amended and
Restated Stockholders Agreement dated as of December 17,
1993, as amended from time to time, a copy of which is on
file with the Secretary of the Company."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
<PAGE>
EXHIBIT B
$ 205,000 December 14, 1996
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned (the "Obligor"), promises to pay to
the order of Big V Holding Corp., a Delaware corporation, with its principal
executive offices located at 75 State Street, Boston, Massachusetts 02109 (the
"Company"), the principal sum of two hundred and five thousand DOLLARS
($205,000) (the "Principal Amount"), together with any amounts which are deemed
to be converted principal in accordance with the terms hereof ("Converted
Amounts", and collectively with the Principal Amount, sometimes referred to
herein as the "Aggregate Principal Amount") in lawful money of the United States
of America, together with all accrued but unpaid interest, on December 31, 2005
(the "Maturity Date"), subject to mandatory prepayment and/or acceleration as
set forth herein.
Interest shall accrue on the Principal Amount outstanding from time to
time, and to the extent permitted by applicable law, on the Converted Amounts
outstanding from time to time, at a fluctuating rate per annum (the "Stated
Rate") at all times equal to the rate at which the loans outstanding under the
Company's senior credit facility bear interest, changes in the Stated Rate to
take effect simultaneously with changes in the rate under the senior credit
facility, computed on the basis of a 365- or 366-day year, as the case may be,
from and after the date of this Note and continuing until the date of payment of
the Aggregate Principal Amount in full. Interest shall be payable hereunder
annually on each Interest Payment Date (as defined below), in an amount equal to
the aggregate federal, state and local income tax liability incurred by the
Company as a result of all interest accrued hereunder for the preceding fiscal
year of the Company, as conclusively determined by the Company, and as set forth
in the Interest Notice (as defined below). All interest accrued hereunder and
not required to be paid on the next succeeding Interest Payment Date in
accordance with the terms hereof shall be deemed for all purposes hereunder
converted to principal hereunder and shall be deemed to be a Converted Amount
and shall be due and payable on the Maturity Date, subject to mandatory
prepayment and/or acceleration as set forth below.
If the date set for payment of principal or interest hereunder is a
Saturday, Sunday or legal holiday, then such payment shall be made on the next
succeeding business day.
The terms below shall have the following definitions:
(a) "Interest Notice" as used herein shall mean a written notice sent by
the Company to the Obligor specifying the aggregate amount of federal, state and
local income tax liability incurred by the Company as a result of all interest
accrued hereunder for the preceding fiscal year of the Company.
<PAGE>
(b) "Interest Payment Date" as used herein shall mean a date ten days
after the Obligor receives the Interest Notice. For purposes hereof, the Obligor
shall conclusively be deemed to have received the Interest Notice (i) three days
after the Company sends such notice by certified or registered mail or the day
after the Company sends such notice by certified or registered mail or the day
after the Company sends such notice by a nationally recognized overnight
courier, to the address of the Obligor set forth below the Obligor's signature
hereon or such other address that the Obligor specifies in writing to the
Company at its address set forth above, or (ii) the day the Company delivers
such notice by hand.
(c) "Obligations" as used herein shall mean the Aggregate Principal Amount
outstanding from time to time, all accrued but unpaid interest hereunder and all
other amounts hereunder, whether principal, interest, fees or otherwise.
Payment of the principal of and interest on this Note is secured pursuant
to the terms of a Stock Pledge Agreement dated as of the date hereof, between
the Obligor and the Company (the "Pledge Agreement"), reference to which is made
for a description of the collateral provided thereby and the rights of the
Company and the holder of this Note in respect of such collateral.
This Note is subject to the following further terms and conditions:
1. Payment and Prepayment.
----------------------
(a) All payments and prepayments of principal of and interest on this
Note shall be made to the Company or its order, or to the legal holder of this
Note or such holder's order, in lawful money of the United States of America at
the principal offices of the Company (or at such other place as the holder
hereof shall notify the Obligor in writing) upon final payment of principal of
and interest on this Note it shall be surrendered for cancellation. Concurrently
with any prepayment of any portion of the Aggregate Principal Amount of this
Note pursuant to this Section 1, the Company (or other holder of this Note)
shall make a notation of such payment hereon. Any partial prepayment shall be
applied first to accrued and unpaid interest hereof and then to the unpaid
Aggregate Principal Amount.
(b) Voluntary Prepayment. The Obligor may, at its option, prepay this
--------------------
Note in whole or in part at any time or from time to time without penalty or
premium. Any prepayments of any portion of the Aggregate Principal Amount of
this Note shall be accompanied by payment of all interest accrued but unpaid
hereunder.
(c) Mandatory Prepayment.
--------------------
(i) If at any time, or from time to time, after the date hereof
and following the occurrence and during the continuance of an Event of Default
(as that term is defined below) the Obligor or any of the Obligor's Permitted
Transferees (as that term is
<PAGE>
defined in a an Amended and Restated Shareholders' Agreement dated as of
December 17, 1993 among the Company and its shareholders (the "Shareholders'
Agreement")) shall receive or shall otherwise become entitled to receive from
the Company (or other holder of this Note) any cash payments, cash dividends or
other cash distributions in respect of the Company's Common Stock, then and in
each case the Obligor and any of the Obligor's Permitted Transferees shall, upon
the receipt thereof, return to the Company (or other holder of this Note) such
payments, dividends and distributions, and the Company (or other holder of this
Note) shall apply such amount to the prepayment of the Obligations in the manner
set forth in Section 1(b), and the Company (or other holder of this Note) shall
not be obligated to make any such payment, cash dividend or other cash
distribution not theretofore made to which the Obligor and any of the Obligor's
Permitted Transferees are otherwise entitled in respect of their Common Stock
and may, instead, in lieu thereof, set off the amount of such cash payment, cash
dividend or other cash distribution against the Obligations.
(ii) If at any time, the Obligor receives any proceeds from the
sale by the Obligor or any of the Obligor's Permitted Transferees of any Common
Stock to anyone, the Net Proceeds (as defined in the Stock Pledge Agreement
dated as of the date hereof between the Obligor and the Company) from such sale
of Common Stock shall be applied to the prepayment of this Note in the manner
provided in the Stock Pledge Agreement.
(iii) In addition to the provisions of subsections (c)(i) and
(c)(ii) above:
(A) If the Obligor voluntarily terminates his employment with
the Company, or if the Company terminates the employment of the Obligor for
Cause (as such term is defined in the Employment and Non-Competition Agreement
dated May 1, 1996 by and between the Company and the Obligor, the "Employment
Agreement"), then the Obligor shall, without the necessity of any notice or
demand by the Company of any kind, immediately make a mandatory prepayment
hereunder in an amount equal to the then outstanding Obligations.
(B) If the Obligor dies, suffers a disability in accordance with
Section 3.02 of the Employment Agreement or if the Company terminates his
employment without Cause (as such term is defined in the Employment Agreement)
(each an "Involuntary Termination"), then the Obligor shall, without the
necessity of any notice or demand by the Company of any kind, immediately make a
mandatory prepayment hereunder in an amount equal to the then outstanding
Obligations; provided, however, that if upon such Involuntary Termination (I)
either the Company exercises its Call Option (as defined in the Shareholders'
Agreement) or the Obligor exercises his Put Option (as defined in the
Shareholders' Agreement), and the proceeds of the exercise of such Call Option
or Put option, as the case may be, after first being applied to all of the then
outstanding Obligations other than Converted Amounts, is not sufficient to pay
all Converted Amounts, or (II) neither the Company exercises its Call Option nor
the Obligor exercises his Put Option, then, in the case
<PAGE>
of subclause (B)(I), such unpaid Converted Amounts, and in the case of subclause
(B)(II), all outstanding Converted Amounts, shall not be immediately due and
payable but shall be due and payable in equal monthly installments ("Converted
Amount Installments") payable on the first day of each month from the date of
the Involuntary Termination until the Maturity Date; provided further, however,
that the Obligor's obligation to pay Converted Amount Installments shall cease
at such time as the Company has no further obligation to pay any amounts to the
Obligor either under Section 3.02 of the Employment Agreement (in the case of
the Obligor's death or disability) or Section 3.03 of the Employment Agreement
(in the case of the termination of the Obligor's employment without Cause). The
Converted Amount shall bear interest hereunder at the Stated Rate and such
interest shall be payable with each Converted Amount Installment.
2. Events of Default. Upon the occurrence of any of the following events
-----------------
("Events of Default"):
(a) Failure to pay any principal of this Note, including any
prepayments required hereunder, when due;
(b) Failure to pay any interest installment due under this Note which
shall remain unremedied for ten days following the date when such
installment was originally due hereunder;
(c) Failure to pay any Converted Amount Installment when due;
(d) An event of default under any other note evidencing indebtedness
of the Obligor to the Company or its subsidiaries;
(e) Failure of the obligor to perform his obligations under the
Employment Agreement; or
(f) The filing of a voluntary or involuntary petition for an order
of relief under the Bankruptcy Code by or against the Obligor, or any
filing for relief under any statue or federal insolvency statute by or
against the Obligor;
then, and in any such event, the holder of this Note may declare, by notice of
default given to the Obligor, the entire unpaid Aggregate Principal Amount of
the Note, all Converted Amount Installments, if any, and all accrued and unpaid
interest thereon to be forthwith due and payable whereupon the entire Aggregate
Principal Amount of this Note outstanding, all Converted Amount Installments, if
any, and any accrued and unpaid interest hereunder shall become due and payable
without presentment, demand, protest, notice of dishonor or other demands and
notices of any kind, all of which are hereby expressly waived. Upon the
occurrence of an Event of Default, the accrued and unpaid interest hereunder
shall thereafter
<PAGE>
bear the same rate of interest as on the Principal Amount hereunder, but in no
event shall such interest be charged which would violate any applicable usury
law. If an Event of Default shall occur hereunder, the obligor shall, subject to
Section 3 hereof, pay costs of collection, including reasonable attorneys'
fees, incurred by the holder in the enforcement hereof.
No delay or failure by the holder of this Note in the exercise of any
right or remedy shall constitute a waiver thereof, and no single or partial
exercise by the holder hereof of any right or remedy shall preclude other or
future exercise thereof or the exercise of any other right or remedy.
3. Miscellaneous.
-------------
(a) The provisions of this Note shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law rules thereof.
(b) Notwithstanding the terms set forth above, in no event shall the
interest rate on this Note exceed the maximum interest rate permitted by
law.
(c) All notices and other communications (other than the Interest
Notice) hereunder shall be in writing and will be deemed to have been duly
given if delivered or mailed in accordance with the Employment Agreement.
IN WITNESS WHEREOF, this Note has been duly executed and
delivered by the Obligor on the date first above written.
/s/ James A. Toopes
-------------------------------
James A. Toopes
Address: 264 Highland Ave.
Ridgewood, NJ 07450
<PAGE>
EXHIBIT C
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT dated as of December 14, 1996 is made and
entered into by and between Big V Holding Corp., a Delaware corporation
("Holding") and James A. Toopes (the "Pledgor").
RECITALS
--------
A. The Pledgor has entered into a certain Employment and Non-competition
Agreement dated as of May 1, 1996 by and between Holding and the Pledgor (the
"Employment Agreement") whereby Holding has agreed to issue and sell an
aggregate of 8,000 shares of its common stock, par value $0.01 per share (the
"Common Stock") to the Pledgor. Capitalized terms used herein and not otherwise
defined shall have the same meanings ascribed to them in the Employment
Agreement.
B. On the date hereof the Pledgor is delivering a note or notes of Pledgor
payable to Holding in the principal amount of $205,000 dated as of the date
hereof (the "Indebtedness"), which Indebtedness is being incurred in connection
with the sale of 8,000 shares of Common Stock to the Pledgor.
C. The Pledgor wishes to grant further security and assurance to Holding
in order to secure the payment of the principal and interest on the Indebtedness
and to pledge to Holding all shares of Common Stock to be held by such Pledgor.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Pledge. As collateral security for the full and timely payment of the
------
principal of and interest on the Indebtedness, the Pledgor hereby delivers,
deposits, pledges, transfers and assigns to Holding, in form transferable for
delivery, and creates in Holding a security interest in 8,000 shares of Common
Stock held by the Pledgor and all certificates or other instruments or documents
evidencing the same now or hereafter owned by the Pledgor (together with any
securities or property to be delivered to the Pledgor pursuant to Section 2(c)
hereof, the "Pledged Securities").
The Pledgor hereby delivers to Holding appropriate undated security
transfer powers duly executed in blank for the Pledged Securities set forth
above and will deliver appropriate undated security transfer powers duly
executed in blank for the Pledged Securities to be pledged hereunder from time
to time hereafter.
<PAGE>
2. Administration of Security. The following provisions shall govern the
--------------------------
administration of the Pledged Securities:
(a) So long as an Event of Default has not occurred and is continuing
with respect to any Indebtedness (as used herein, "Event of Default" shall mean
the occurrence of any event of default under any instrument evidencing any
Indebtedness), the Pledgor shall be entitled to act with respect to the Pledged
Securities in any manner not inconsistent with this Stock Pledge Agreement, the
Employment Agreement, the Amended and Restated Shareholders' Agreement dated as
of December 17, 1993 by and among the Holding and its stockholders (the
"Shareholders' Agreement") or any instrument evidencing any Indebtedness,
including voting the Pledged Securities and receiving all cash distributions
thereon and giving consents, waivers and ratifications in respect thereof;
(b) If at any time, the Pledgor receives any proceeds from the sale by
the Pledgor or any of the Pledgor's Permitted Transferees (as that term is
defined in the Shareholders' Agreement) of any Common Stock to anyone, the Net
Proceeds (as defined below) from such sale of Common Stock shall be applied to
the prepayment first of the accrued and unpaid interest on any Indebtedness and
then to the unpaid principal of any Indebtedness. The term "Net Proceeds" shall
mean the total proceeds received from the sale of Common Stock, minus an amount
-----
equal to the sum of (i) the federal income tax liability that would be payable
in respect of the gain recognized upon such sale, after giving effect to any
state income tax liability described in clause (ii) below, assuming a tax rate
equal to the maximum federal income tax rate on long-term capital gains in
effect at the time of sale, and (ii) any state income tax liability that would
be payable in respect of such gain, assuming the maximum applicable state income
tax rate on sales of such securities.
(c) If, while this Stock Pledge Agreement is in effect, the Pledgor (or
any of the Pledgor's Permitted Transferees) shall become entitled to receive or
shall receive any debt or equity security certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization), option or right, whether as a
dividend or distribution in respect of, in substitution of, or in exchange for
any Pledged Securities, or otherwise, the Pledgor and each of the Pledgor's
Permitted Transferees agree to accept the same as Holding's agent and to hold
the same in trust on behalf of and for the benefit of Holding and to deliver the
same forthwith to Holding in the exact form received, with the endorsement of
the Pledgor and the Pledgor's Permitted Transferees when necessary and/or
appropriate undated security transfer powers duly executed in blank, to be held
by Holding, subject to the terms of this Stock Pledge Agreement, as additional
collateral security for the Indebtedness. Notwithstanding the foregoing, it is
agreed that the Pledgor or any of the Pledgor's Permitted Transferees may
exercise any option or right received as contemplated in the preceding sentence,
and Holding will exercise any such option or right upon receipt of written
instructions to that effect and any required payments or documents from the
Pledgor or the Pledgor's Permitted
<PAGE>
Transferees and the securities received upon such exercise of any such option or
right shall thereafter be held by Holding as contemplated by the preceding
sentence.
(d) The Pledgor and each of the Pledgor's Permitted Transferees shall
immediately upon request by Holding and in confirmation of the security
interests hereby created, execute and deliver to Holding such further
instruments, deeds, transfers, assurances and agreements, in form and substance
as Holding shall request, including any financing statements and amendments
thereto, or any other documents, as required under Delaware law and any other
applicable law to protect the security interests created hereunder and to enable
Holding to exercise its rights hereunder.
(e) If at any time, Holding exercises its right as set forth in the
Shareholders' Agreement to purchase the Pledged Securities, or the Pledgor
exercises his right as set forth in the Shareholders' Agreement to require
Holding to purchase the Pledged Securities, then the cash payable for the
Pledged Securities so purchased shall be the difference between the Put Price or
the Call Price, as applicable (as those terms are defined in the Shareholders'
Agreement), and the outstanding principal balance and accrued but unpaid
interest then due in respect of the Indebtedness.
(f) Subject to any sale by Holding or other disposition by Holding of
the Pledged Securities or other property pursuant to this Stock Pledge Agreement
and subject to Section 5 below, the Pledged Securities shall be returned to the
Pledgor or such Pledgor's Permitted Transferees upon payment in full of the
unpaid principal of accrued interest on and any other amounts due in respect of
the Indebtedness.
3. Remedies in Case of an Event of Default.
---------------------------------------
(a) In case of an Event of Default shall have occurred and be
continuing, Holding shall have in each case all of the remedies of a secured
party under the Delaware Uniform Commercial Code, and, without limiting the
foregoing, shall have the right, in its sole discretion, to sell, resell, assign
and deliver all or, from time to time, any part of the Pledged Securities, or
any interest in or option or right to purchase any part thereof, on any
securities exchange on which the Pledged Securities or any of them may be
listed, at any private sale or at public auction, with or without demand of
performance or other demand, advertisement or notice of the time or place of
sale or adjournment thereof or otherwise (except that Holding shall give ten
days' notice to the Pledgor of the time and place of any sale pursuant to this
Section 3), for cash, on credit or for other property, for immediate or future
delivery, and for such price or prices and on such terms as Holding shall, in
its sole discretion, determine, the Pledgor and the Pledgor's Permitted
Transferees hereby waiving and releasing any and all right or equity of
redemption whether before or after sale hereunder. At any such sale Holding may
bid for and purchase the whole or any part of the Pledged Securities so sold
free from any such right or equity of redemption. Holding shall apply the
proceeds of any such sale first to the payment of all costs and expenses,
-----
including reasonable attorneys' fees, incurred by Holding in enforcing its
rights under this Stock Pledge Agreement, second to the payment of accrued and
------
unpaid interest
<PAGE>
on and then of unpaid principal of the Indebtedness of the Pledgor and third to
-----
any other amounts due on the Indebtedness.
(b) The Pledgor and the Pledgor's Permitted Transferees recognize that
Holding may be unable to effect a public sale of all or a part of the Pledged
Securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Act"), or in the rules and regulations promulgated
thereunder, or in applicable state securities or "blue sky" laws, but may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. The Pledgor and the Pledgor's Permitted
Transferees agree that private sale so made may be at prices and on other terms
less favorable to the seller and that Holding has no obligation to delay the
sale of the Pledged Securities for the period of time necessary to permit the
registration of the Pledged Securities for public sale under the Act and under
applicable state securities or "blue sky" laws. The Pledgor and the Pledgor's
Permitted Transferees agree that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
(c) If any consent, approval or authorization of any state, municipal
or other governmental department, agency or authority should be necessary to
effectuate any sale or disposition by Holding pursuant to this Section 3 of the
Pledged Securities, the Pledgor and each of the Pledgor's Permitted Transferee
will execute all such applications and other instruments as may be required in
connection with securing any such consent, approval or authorization, and will
otherwise use their best efforts to secure the same.
(d) Neither failure nor delay on the part of Holding to exercise any
right, remedy power or privilege provided for herein or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other right,
remedy, power or privilege.
4. Pledgor's Obligations Not Affected. The obligations of the Pledgor and
----------------------------------
each of the Pledgor's Permitted Transferees under this Stock Pledge Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by: (a) any subordination, amendment or modification of or
addition or supplement to the Employment Agreement, the Shareholders' Agreement,
or the Indebtedness or any assignment or transfer thereof; (b)any exercise or
non-exercise by Holding of any right, remedy, power or privilege under or in
respect of this Stock Pledge Agreement, the Shareholders' Agreement or any
instrument evidencing any Indebtedness, or any waiver of any such right, remedy,
power or privilege; (c) any waiver, consent, extension indulgence or other
action or inaction in respect of this Stock Pledge Agreement, the Employment
Agreement, the Shareholders' Agreement or any instrument evidencing any
Indebtedness, or any assignment or transfer of any thereof; or (d) any
bankruptcy, insolvency, reorganization arrangement, readjustment, composition,
liquidation or the like, of Holding, whether or not the Pledgor and the
Pledgor's Permitted Transferees shall have notice or knowledge of any of the
foregoing.
<PAGE>
5. Transfer by Pledge. The Pledgor and the Pledgor's Permitted Transferees
------------------
will not sell, assign, transfer or otherwise dispose of, grant any option with
respect to, or mortgage, pledge or otherwise encumber the Pledged Securities or
any interest therein except as provided in the Employment Agreement and the
Shareholders' Agreement. In the event of a sale, assignment, transfer or other
disposition of or mortgage, pledge or other encumbrance of Pledged Securities
pursuant to the Employment Agreement or the Shareholders' Agreement, the Common
Stock so sold, assigned, transferred or otherwise disposed of or mortgaged,
pledged or otherwise encumbered shall remain subject to the provisions of this
Stock Pledge Agreement and of the Shareholders' Agreement and the purchaser,
assignee, transferee or other acquirer, mortgagee or pledgee shall agree in
writing, in form and substance satisfactory to Holding, to be bound by all the
terms of this Stock Pledge Agreement and of the Shareholders' Agreement with the
same force and effect as if such transferee were a party hereto.
6. Attorney-in-Fact. Holding is hereby appointed the attorney-in-fact of
----------------
the Pledgor and the Pledgor's Transferees for the purpose of carrying out the
provisions of this Stock Pledge Agreement and taking any action and executing
any instrument which Holding reasonably may deem necessary or advisable to
accomplish the purposes hereof, including without limitation, the execution of
the applications and other instruments described in Section 3(c) hereof, which
appointment as attorney-in-fact is irrevocable as one coupled with an interest.
7. Termination. Upon payment in full of the unpaid principal of, accrued
-----------
interest on and all other amounts payable in respect of the Indebtedness, this
Stock Pledge Agreement shall terminate and the Pledgor or the Pledgor's
Permitted Transferees shall be entitled to the return of such of the Pledged
Securities as have not theretofore been sold or otherwise applied pursuant to
the provisions of this Stock Pledge Agreement.
8. Notices. All notices or other communications required or permitted to
-------
be given hereunder shall be deemed delivered when delivered by hand or when sent
by first class, certified mail, postage and fees prepaid, as follows:
(i) If to Holding: Big V Holding Corp.
c/o Thomas H. Lee Company
75 State Street
Boston, Massachusetts 02109
Copy to: Michael J. Riccio, Jr., Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
(ii) If to the Executive: To the address set forth below
unless and until notice of another
or different address shall be
given as provided herein.
<PAGE>
9. Binding Effect, Successors and Assigns. This Stock Pledge Agreement
--------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and nothing herein is intended or shall be
construed to give any other person any right, remedy or claim under, to or in
respect of this Stock Pledge Agreement. No transfer of Pledged Securities of the
Pledgor to the Pledgor's Permitted Transferees shall be permitted hereunder, and
any such transfer shall be null and void, unless and until each such Permitted
Transferee agrees in writing, in form and substance satisfactory to Big V
Supermarkets, Inc. and Holding, to become bound by this Stock Pledge Agreement
with respect to the Pledged Securities so transferred.
10. Miscellaneous. Holding and its assigns shall have no obligation in
-------------
respect of the Pledged Securities, except to hold and dispose of the same in
accordance with the terms of this Stock Pledge Agreement. Neither this Stock
Pledge Agreement nor any provision hereof may be amended, modified, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the amendment, modification, waiver,
discharge or termination is sought. The provisions of this Stock Pledge
Agreement shall be binding upon the successors and assigns of the Pledgor and
each of the Pledgor's Permitted Transferees. The captions in this Stock Pledge
Agreement are for convenience of reference only and shall not limited to the
provisions hereof. This Stock Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to the conflicts of law rules thereof. This Stock Pledge
Agreement may be executed simultaneously in counterparts, each of which is an
original, but all of which together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be executed and delivered on the date first above written.
BIG V HOLDING CORP.
By: /s/ Joseph V. Fisher
---------------------------
Title: Joseph V. Fisher
/s/ James A. Toopes
------------------------------
James A. Toopes
Address: 264 Highland Ave.
Ridgewood, NJ 07450
<PAGE>
EXHIBIT 10.23
EMPLOYMENT TERMINATION AGREEMENT
AGREEMENT, dated as of June 17,1996, between BIG V SUPERMARKETS,
INC., a New York corporation (the "Company"), BIG V HOLDING CORP., a Delaware
corporation ("Holding"), and Gary S. Koppele ("Koppele").
PRELIMINARY STATEMENT
Koppele served as Senior Vice President Administration, Treasurer and
Chief Financial Officer and a Director of Holding and the Company through
December 31, 1995 pursuant to an Employment Agreement dated December 28, 1990
(the "Employment Agreement") and, thereafter, was employed by Holding and the
Company on an "at will" basis. Koppele was terminated without Cause as an
employee of the Company and Holding effective April 3, 1996.
Koppele owns 32,593.20 shares of Holding's Common Stock through GSK,
Inc. (the "Koppele Shares"). Koppele also has vested options to acquire 380
shares of the Company's Common Stock (the "Vested Options"), and unvested
options to acquire 7,229 shares of Common Stock (the "Unvested options"), all of
which were granted to him pursuant to the Big V Holding Corp. 1990 Time
Accelerated Restricted Stock Option Plan.
In order to settle any and all claims between Koppele, the Company,
Holding, and their directors, officers and employees for all matters relating to
or arising out of such employment and such termination, and to provide for the
Koppele Shares and the Vested Options and the Unvested Options, the parties
mutually agree to the terms and conditions expressly set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
<PAGE>
1. Resignations. Koppele resigns as Senior Vice President
------------
Administration, Treasurer and Chief Financial Officer, as a Director of Holding
and the Company, and as a director or officer of any subsidiary of Holding or
the Company, effective April 3, 1996.
2. Monthly Severance Payments. The Company shall pay Koppele twelve
--------------------------
(12) consecutive monthly payments through April 30, 1997 in the amount of
$14,333.33 each. The amount of these severance payments to Koppele shall be
reduced by any compensation earned (whether paid on a current or deferred basis)
by Koppele during such 12-month period from any entity or person. Although it is
understood that Koppele shall not be obligated to seek other employment to
entitle him to receive such severance payments, Koppele shall be obligated, as a
condition to receipt of such payments, to inform the Company monthly in writing
of the amount of compensation, if any, he received during the previous month and
the amount, if any, be expects to receive during the current month. Koppele
represents that he has received no such compensation since April 3, 1996. The
monthly payments for May and June 1996 shall be made to Koppele eight days after
the execution and delivery by him of the Agreement and the Release. The monthly
payments for July 1996 through April 1997 shall be made in semi-monthly
installments in arrears and subject to withholding and other applicable taxes.
Koppele waives any rights to receive any bonus from Holding or the Company for
the fiscal year ended December 31, 1995 or any other periods.
3. Weeks of Accrued Vacation. The Company has paid Koppele for four
-------------------------
weeks of accrued vacation time, less the number of vacation days Koppele took
during 1996.
4. Health and Life Insurance. The Company shall continue to provide
-------------------------
Koppele group health, dental and vision insurance coverage through the earlier
of April 30,
-2-
<PAGE>
1997 and the date on which Koppele is eligible for such insurance benefits by
reason of being employed by another employer. The Company shall maintain the
life insurance policy currently held by the Company on Koppele's life (the
"Policy") through the earlier of April 30, 1997 and the date Koppele is eligible
for such insurance by reason of being employed by another employer. On and after
May 1, 1997, Koppele, at his expense, shall be entitled to elect to continue his
coverage under the Company's group medical plans in accordance with this rights
under the Consolidated Omnibus Budget Reconciliation act of 1985. At Koppele's
request made prior to May 1, 1997, and to the extent permitted, the Company
shall transfer to Koppele the Policy and upon such transfer Koppele shall be
responsible for the payment of all premiums and other charges.
5. Automobile. In consideration of Koppele's return of the automobile
----------
leased by the Company for the benefit of Koppele, the Company shall pay Koppele
$5,000 eight days after the execution of this Agreement and the Release.
6. Additional Payment. In lieu of the Company providing Koppele with
------------------
the services of an executive outplacement firm, the Company shall pay Koppele
$22,000, subject to withholding and other applicable taxes, eight days after the
execution of this Agreement and the Release.
7. Continued Ownership of Holding Stock. The parties acknowledge that
------------------------------------
the Koppele Shares shall continue to be subject to the Amended and Restated
Shareholders' Agreement, dated as of December 17, 1993, among Holding, Koppele
and other shareholders of Holding (the "Shareholders' Agreement"), except that
Koppele waives any rights he may
-3-
<PAGE>
have to exercise the "Put Option" with respect to the Koppele Shares and Holding
waives any rights it may have to exercise the "Call Option" with respect to the
Koppele Shares.
8. Vested Options and Unvested Options. (a) The Company waives its
-----------------------------------
right to exercise its "Call Option" pursuant to Section 2.5 of the Shareholders'
Agreement to purchase from Koppele the Vested Options and thus such Vested
Options shall remain outstanding, subject to the terms thereof. Koppele waives
any rights he might otherwise have had to exercise the "Put Option" with
respect to the Vested Options.
(b) The Unvested Options and all of Koppele's rights with respect
thereto shall be deemed terminated upon the execution of this Agreement.
9. Non-compete Provision.
---------------------
(a) Koppele agrees that in consideration of his continued employment
under the Employment and Non-Competition Agreement, dated as of December 28,
1990, by and among Koppele, Holding and the Company (the "Employment Agreement")
and the Letter Agreement, and in consideration of the Company's agreement to
provide Koppele with the severance and other benefits provided under this
Agreement, and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, Koppele shall not, prior to the
expiration of one year from the date the Company ceases to make payments under
Section 2 hereof, directly or indirectly, by or for himself or as the agent of
another or through another as his agent, whether or not he has remained entitled
to receive all of the severance benefits provided herein, (i) own any interest
in (other than up to five percent of any publicly traded security), provide
consulting or other services to or serve as an employee, officer or director or
engage in the management or operation of any entity that directly or indirectly,
-4-
<PAGE>
owns, manages or operates, or participates in the operation of, any supermarket
or other retail grocery store which is located within 20 miles of any
supermarket owned or operated by Holding or any subsidiary of Holding, or (ii)
solicit, induce or advise any employee to leave the employ of Holding, the
Company or any of its subsidiaries. If a current employee shall leave on his/her
own volition without any violation by Koppele of the undertakings hereunder,
there shall be no restriction on employment of such former employee by Koppele
after termination of the former employee.
(b) In addition to all other remedies provided for hereunder, Koppele
agrees that if he shall violate any of the provisions of this Section 9, the
Company and Holding shall be entitled to an accounting and repayment of all
profits, compensation, remuneration or other benefits that Koppele may realize
arising from or related to any such violation. The parties also agree and
acknowledge that the duration, scope and geographic area of the covenant not to
compete described in this Section 9 are fair, reasonable and necessary in order
to protect the good will and other legitimate interests of the Company and
Holding, that adequate compensation has been received by Koppele for such
obligations, and that these obligations do not prevent Koppele from earning a
livelihood. If, however, for any reason any court determines under applicable
law that the provisions in this Section 9 pertaining to duration, scope and
geographic area in relation to non-competition are too broad or otherwise
unreasonable, that the consideration provided for is inadequate or that Koppele
has been prevented unlawfully from earning a livelihood (together, such
provisions being hereinafter referred to as "Restrictions"), such Restrictions
shall be interpreted, modified or rewritten, and
-5-
<PAGE>
such court is hereby requested and authorized by the parties hereto to revise
the Restrictions, to include the maximum Restrictions as are valid and
enforceable under applicable law.
10. Confidential Information. (a) Koppele acknowledges and agrees
------------------------
that as an officer and director of the Company and Holding be has knowledge of
confidential and proprietary information including, but not limited to strategic
plans or data, financial statements, information concerning the business,
operations or financial condition of Holding, the Company and their subsidiaries
and affiliates and Wakefern Food Corporation, marketing data, customer research
and data, information concerning sources of supply, pricing information and
data, and trade secrets. Such information shall be referred to hereinafter as
"Proprietary Information" and shall include any and all items enumerated in the
preceding sentence, whether conceived or developed by others or by Koppele alone
or with others, and whether or not conceived or developed during regular working
hours.
(b) Koppele acknowledges that Holding and the Company have expended
significant amounts of time, effort and money in the procurement of their
Proprietary Information, that Holding and the Company have taken all reasonable
steps in protecting the secrecy of the Proprietary Information, that said
Proprietary Information is of critical importance to Holding and the Company and
that a violation of Section 10 of this Agreement would seriously and irreparably
impair and damage the business of both Holding and the Company, and Koppele
agrees to keep all Proprietary Information in a fiduciary capacity for the sole
benefit of Holding and the Company.
(c) Koppele acknowledges and agrees that he shall treat as
confidential all Proprietary Information and Koppele represents and warrants
that during his employment by
-6-
<PAGE>
the Company he has done the same. Without the prior written consent of the
Company or Holding, Koppele agrees that he shall not, directly or indirectly,
disclose any Proprietary Information to any party not at the time of such
disclosure an officer of the Company, or remove from the Company's premises any
notes or records relating thereto, copies thereof or any other property of the
Company or Holding. Koppele agrees that all Proprietary Information, together
with all his notes and records relating thereto and all copies thereof in his
possession, are the exclusive property of the Company and Holding and that he
shall promptly deliver to the Company all such information in his possession
without retaining a copy thereof. Koppele agrees that he shall not in any manner
use any such information or any other property of the Company or Holding in any
manner not specifically directed by the Company or Holding in any way which is
detrimental to the Company or Holding, as determined by the Company or Holding
in its sole discretion.
11. Injunctive Relief. In view of the irreparable harm and damage,
-----------------
which would be incurred by Holding and the Company in the event of any violation
by Koppele of any of the provisions hereof, Koppele hereby consents and agrees
that in any such event, Holding and the Company, in addition to any other rights
either may have, and without prejudice to any other remedies which may be
available at law or in equity, shall be entitled to an injunction or similar
equitable relief to be issued by any court of competent jurisdiction restraining
Koppele from committing or continuing any such violation, without the necessity
of proving damage, or posting any bond or other security.
12. Mutual Release. In partial consideration for the Company's and
--------------
Holding's obligations to Koppele hereunder and Koppele's obligations to the
Company hereunder, the
-7-
<PAGE>
parties hereto shall execute and deliver the releases in the forms set forth in
Exhibit A to this Agreement.
13. Mutual Non-Disparagement: References. Koppele agrees that he will
------------------------------------
not disparage in any manner Holding, the Company or their respective directors,
officers, stockholders, employees, representatives and attorneys, successors,
subsidiaries, related corporations, and any person or entity acting for or on
behalf of Holding or the Company. Each of Holding, the Company and their
respective officers and directors agrees that it or he will not, and the Company
will use best efforts to cause its employees to not, disparage in any manner
Koppele or any person or entity acting for or on behalf of Koppele. Concurrently
with the execution of this Agreement, the Company will deliver to Koppele a
signed letter of reference in the form of Exhibit B hereto.
14. Miscellaneous.
-------------
(a) Payments in cash made to Koppele pursuant to this Agreement shall
be subject to withholding and other applicable taxes, except that payments under
Section 5 shall not be subject to withholding or other applicable taxes.
(b) This Agreement may not be amended, modified, terminated or
discharged except by a writing signed by the party against whom enforcement of
such amendment, modification, termination or discharge is sought.
(c) Any failure to exercise or delay in exercising, on the part of
Koppele, the Company or Holding, any right, power or privilege under this
Agreement shall not operate as a waiver thereof, and any exercise or partial
exercise of any right, power or privilege hereunder shall not preclude any other
right, power or privilege.
-8-
<PAGE>
(d) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, administrators,
executors, successors and assigns.
(e) This Agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of New York.
(f) This Agreement, the Shareholders' Agreement and the release
provided for in Section 12 herein, constitute the entire agreement of the
parties hereto regarding the subject matters contained herein and therein and
shall supersede in all respects any provision of the Employment Agreement and
the letter dated March 21, 1995 from David G. Bronstein to Koppele which
otherwise would have governed the rights and obligations of the Company, Holding
and Koppele upon the termination of Koppele's employment.
(g) No provision of this Agreement that is deemed unenforceable shall
in any way invalidate any other provision hereof, each of which shall remain in
full force and effect.
(h) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
(i) The captions used herein are inserted for reference purposes only
and shall not affect the interpretation or meaning of the Agreement.
(j) Koppele acknowledges that he may have up to twenty-one (21) days
to review and sign this Agreement and the attached Release and that he has seven
(7) days following his execution and delivery of this Agreement and the Release
to revoke them and neither this Agreement nor the Release shall become effective
and enforceable until the revocation period has expired. If Koppele determines
to revoke this Agreement and the Release, he must notify
-9-
<PAGE>
the Company in writing by 5:00 p.m. on the 7th calendar day after he signs this
Agreement and the Release. If Koppele revokes this Agreement or the Release, he
shall forfeit all the rights and benefits provided to him hereunder.
(k) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
* * *
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
BIG V SUPERMARKETS, INC.
By: /s/ Joseph V. Fisher
---------------------------
BIG V HOLDING CORP. INC.
By: /s/ Joseph V. Fisher
---------------------------
/s/ Gary S. Koppele
------------------------------
Gary S. Koppele
-11-
<PAGE>
EXHIBIT A
RELEASE
-------
Pursuant to the terms of the Agreement (the "Agreement"), dated as of
June 17, 1996, between Big V Supermarkets, Inc. (the "Company"), Big V Holding
Corp. ("Holding") and the undersigned, and in consideration of the payments made
to me and other benefits to be received by me pursuant thereto, I, Gary S.
Koppele, being of lawful age, do hereby release and forever discharge the
Company and Holding, and their respective directors, officers, shareholders,
subsidiaries, agents, and employees, from any and all actions, causes of action,
claims, or demands for general, special or punitive damages or for any other
legal or equitable relief, attorneys' fees, expenses, or other payments, which
in any way relate to or arise out of my employment with the Company and Holding,
the termination of such employment and the termination of my unvested options to
acquire shares of Holding Common Stock, which I may now or hereafter have under
any federal, state or local law, regulation or order, including without
limitation, under the Age Discrimination in Employment Act, as amended. Nothing
herein shall act as a waiver or act as a bar to any action to enforce the terms
of the Agreement or the Shareholders' Agreement (as defined therein).
I acknowledge that I have consulted an attorney before signing the
Agreement or this release.
I further state that I have carefully read the Agreement and this
release, that I know the contents of such documents, and that I have executed
the same as my own free act.
WITNESS my hand as of the 17th day of June, 1996.
/s/ Gary S. Koppele
------------------------
Gary S. Koppele
<PAGE>
RELEASE
-------
Pursuant to the terms of this Agreement (the "Agreement"), dated as
of June 17, 1996, between Big V Supermarkets, Inc. (the "Company"), Big V
Holding Corp. ("Holding") and Gary S. Koppele ("Koppele"), and in consideration
of the covenants made by Koppele pursuant to the Agreement, each of the Company
and Holding do hereby release and forever discharge Koppele from any and all
actions, causes of action, claims, or demands for general, special or punitive
damages or for any other legal or equitable relief, attorneys' fees, expenses,
or other payments, which in any way relate to or arise out of his employment
with the Company and Holding and the termination of such employment, which
either the Company or Holding may now or hereafter have under any federal, state
or local law, regulation or order. Nothing herein shall act as a waiver or act
as a bar to any action to enforce the terms of the Agreement or the
Shareholders' Agreement (as defined therein) or any action arising from the
willful or intentional misconduct of Koppele while employed by either the
Company or Holding.
The undersigned acknowledge that they have consulted an attorney
before signing the Agreement and this release.
The undersigned further state that they have carefully read the
Agreement and this release, that I know the contents of such documents, and that
they have executed the same as my own free act.
<PAGE>
WITNESS my hand as of the 17th day of June, 1996.
BIG V SUPERMARKETS, INC.
By: /s/ Joseph V. Fisher
-----------------------
Name:
Title:
BIG V HOLDING CORP.
By: /s/ Joseph V. Fisher
-----------------------
Name:
Title:
<PAGE>
EXHIBIT B
---------
June 12, 1996
Dear Sir or Ms.
This letter is to recommend [ full name ] for a position with your
firm and to acknowledge his contribution as a Senior Executive with the company.
For a decade, [ 1st name ] reported directly to me and was a valued
advisor as both a Senior Vice President and Director of the Corporation. In this
capacity, he played an important role in the success of Big V.
[ -1st name ] resigned in good standing when his position was restructured
and consolidated. We wish him well in his future career endeavors.
Very Truly Yours,
David Bronstein
Chairman of the Board
<PAGE>
EMPLOYMENT TERMINATION AGREEMENT
AGREEMENT, dated as of June 17, 1996, between BIG V SUPERMARKETS,
INC., a New York corporation (the "Company"), BIG V HOLDING CORP., a Delaware
corporation ("Holding"), and Cornelius J. J. Madera, Jr. ("Madera").
PRELIMINARY STATEMENT
---------------------
Madera served as Senior Vice President/Corporate Development, General
Counsel and Secretary and a Director of Holding and the Company through December
1995 pursuant to an Employment Agreement dated December 28, 1990 (the
"Employment Agreement") and, thereafter, was employed by Holding and the Company
on an "at-will" basis. Madera was terminated without Cause as an employee of the
Company and Holding effective April 3, 1996.
Madera owns 32,593.20 shares of Holding's Common Stock (the "Madera
Shares"). Madera also has vested options to acquire 380 shares of the Company's
Common Stock (the "Vested Options"), and unvested options to acquire 7,229
shares of Common Stock (the "Unvested Options"), all of which were granted to
him pursuant to the Big V Holding Corp. 1990 Time Accelerated Restricted Stock
Option Plan.
In order to settle any and all claims between Madera, the Company,
Holding, and their directors, officers and employees for all matters relating to
or arising out of such employment and such termination, and to provide for the
Madera Shares and the Vested options and the Unvested Options, the parties
mutually agree to the terms and conditions expressly set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
<PAGE>
1. Resignations. Madera resigns as Senior Vice President/Corporate
------------
Development, General Counsel and Secretary, as a Director of Holding and the
Company, and as a director or officer of any subsidiary of Holding or the
Company, effective April 3, 1996.
2. Monthly Severance Payments. The Company shall pay Madera six (6)
--------------------------
consecutive monthly payments through October 31, 1996" in the amount of
$14,333.33 each. The amount of these severance payments to Madera shall not be
reduced by any compensation earned by Madera from any entity or person. The
monthly payments for May and June 1996 shall be made to Madera eight days after
the execution and delivery by him of this Agreement and the Release. The monthly
payments for July 1996 through October 1996 shall be made in semi-monthly
installments in arrears and subject to withholding and other applicable taxes.
Madera waives any rights to receive any bonus from Holding or the Company for
the fiscal year ended December 31, 1995 or any other periods.
3. Weeks of Accrued Vacation. The Company has paid Madera for four
-------------------------
weeks of accrued vacation time, less the number of vacation days Madera took
during 1996.
4. Health and Life Insurance. The Company shall continue to provide
-------------------------
Madera group health, dental and vision insurance coverage through the earlier of
October 31, 1996 and the date on which Madera is eligible for such insurance
benefits by reason of being employed by another employer. The Company shall
maintain the life insurance policy currently held by the Company on Madera's
life (the "Policy") through the earlier of October 31, 1996 and the date Madera
is eligible for such insurance by reason of being employed by another employer.
On and after November 1, 1996, Madera, at his expense, shall be entitled to
elect to continue his coverage under the Company's group medical plans in
accordance with his rights under the
-2-
<PAGE>
Consolidated Omnibus Budget Reconciliation Act of 1985. At Madera's request made
prior to November 1, 1996 and to the extent permitted, the Company shall
transfer to Madera the Policy and upon such transfer Madera shall be responsible
for the payment of all premiums and other charges.
5. Automobile. The Company shall pay to Madera $5,000 in
----------
consideration of the assumption by him of the lease of the automobile which the
Company currently provides him for his use. Madera shall be responsible for all
amounts due under the lease and all other payments with respect to the
automobile. Such payment shall be made to Madera upon the Company's receipt of
documentation reasonably satisfactory to it evidencing Madera's assumption of
the lease. In the event Madera does not elect to assume the lease, he shall
promptly return the automobile to the Company.
6. Additional Payment. In lieu of the Company providing Madera with
------------------
the services of an executive outplacement firm, the Company shall pay to Madera
$22,000, subject to withholding and other applicable taxes, eight days after the
execution of this Agreement and Release.
7. Continued Ownership of Holding Stock; Outstanding Loan. The
------------------------------------------------------
parties acknowledge that the Madera Shares shall continue to be subject to the
Amended and Restated Shareholders' Agreement, dated as of December 17, 1993,
among Holding, Madera and other shareholders of Holding (the "Shareholders'
Agreement"), except that Madera waives any rights he may have to exercise the
"Put Option" (other than with respect to the 6,000 shares referred to in the
next sentence) with respect to the Madera Shares and Holding waives any rights
it may have to exercise the "Call Option" with respect to the Madera Shares. The
-3-
<PAGE>
Company acknowledges that Madera has exercised the Put Option with respect to
6,000 shares and shall pay to Madera $210,000 in respect thereto eight days
after the execution of this Agreement and Release. The $100,000 promissory note
issued to the Company by Madera and interest due thereon, if any (the "Madera
Note"), will remain outstanding and will not be required to be paid at this
time.
8. Vested Options and Unvested Options. (a) The Company waives its
-----------------------------------
right to exercise its "Call Option" pursuant to Section 2.5 of the Shareholders'
Agreement to purchase from Madera the Vested Options and thus such Vested
Options shall remain outstanding, subject to the terms thereof. Madera waives
any rights he might otherwise have to exercise the "Put Option" with respect to
the Vested Options.
(b) The Unvested Options and all of Madera's rights with respect
thereto shall be deemed terminated upon the execution of this Agreement.
9. Non-compete Provision; Confidential Information. Madera agrees to
-----------------------------------------------
comply with the provisions contained in Sections 4, 5 and 6 of the Employment
and Non-Competition Agreement, dated as of December 28, 1990, by and among
Madera, Holding and the Company (the "Employment Agreement") through December
31, 1996.
10. Mutual Release. In partial consideration for the Company's and
--------------
Holding's obligations to Madera hereunder, and Madera's obligations to the
Company hereunder, the parties hereto shall execute and deliver the release set
forth in Exhibit A to this Agreement.
11. Mutual Non-Disparagement; References. Madera agrees that he will
-----------------------------------
not disparage in any manner Holding, the Company or their respective directors,
officers,
-4-
<PAGE>
stockholders, employees, representatives and attorneys, successors,
subsidiaries, related corporations, and any person or entity acting for or on
behalf of Holding or the Company. Each of Holding, the Company and their
respective officers and directors agrees that it or he will not, and the Company
will use best efforts to cause its employees to not, disparage in any manner
Madera or any person or entity acting for or on behalf of Madera. Concurrently
with the execution of this Agreement, the Company will deliver to Madera a
signed letter of reference in the form of Exhibit B hereto.
12. Miscellaneous.
-------------
(a) Payments in cash made to Madera pursuant to Sections 2, 3 and 6
of this Agreement shall be subject to withholding and other applicable taxes and
all other payments shall not be subject to withholding and other applicable
taxes.
(b) This Agreement may not be amended, modified, terminated or
discharged except by a writing signed by the party against whom enforcement of
such amendment, modification, termination or discharge is sought.
(c) Any failure to exercise or delay in exercising, on the part of
Madera, the Company or Holding, any right, power or privilege under this
Agreement shall not operate as a waiver thereof; and any exercise or partial
exercise of any right, power or privilege hereunder shall not preclude any other
right, power or privilege.
(d) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, administrators,
executors, successors and assigns.
(e) This Agreement is made under, and shall be governed by and
construed in accordance with, the laws of the State of New York.
-5-
<PAGE>
(f) This Agreement, the Shareholders' Agreement and the release
provided for in Section 10 herein, constitute the entire agreement of the
parties hereto regarding the subject matters contained herein and therein and
shall supersede in all respects any provision of the Employment Agreement and
the letter dated March 21, 1995 from David G. Bronstein to Madera which
otherwise would have governed the rights and obligations of the Company, Holding
and Madera upon the termination of Madera's employment, except that Sections 4,
5 and 6 of the Employment Agreement shall continue in effect as proYided in
Section 9 hereof.
(g) No provision of this Agreement that is deemed unenforceable shall
in any way invalidate any other provision hereof, each of which shall remain in
full force and effect.
(h) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
(i) The captions used herein are inserted for reference purposes only
and shall not affect the interpretation or meaning of the Agreement.
(j) Madera acknowledges that he may have up to twenty-one days to
review and sign this Agreement and the attached Release and that he has seven
(7) days following his execution and delivery of this Agreement and the Release
to revoke them and neither this Agreement nor the Release shall become effective
and enforceable until the revocation period has expired. If Madera determines to
revoke this Agreement and the Release, he must notify the Company in writing by
5:00 p.m. on the 7th calendar day after he signs this Agreement
- 6 -
<PAGE>
and the Release. If Madera revokes this Agreement or the Release, he shall
forfeit all the rights and benefits provided to him hereunder.
(k) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
***
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
BIG V SUPERMARKETS, INC.
By: /s/ Joseph V. Fisher
-----------------------------------
BIG V HOLDING CORP, INC.
By: /s/ Joseph V. Fisher
-----------------------------------
/s/ Cornelius J.J. Madera, Jr.
-----------------------------------
Cornelius J.J. Madera, Jr.
- 8 -
<PAGE>
EXHIBIT A
RELEASE
-------
Pursuant to the terms of the Agreement (the "Agreement"), dated as of
June 17, 1996, between Big V Supermarkets, Inc. (the "Company"), Big V Holding
Corp. ("Holding") and the undersigned, and in consideration of the payments made
to me and other benefits to be received by me pursuant thereto, I, Cornelius
J.J. Madera, Jr., being of lawful age, do hereby release and forever discharge
the Company and Holding, and their respective officers, shareholders,
subsidiaries, agents, and employees, from any and all actions, causes of action,
claims, or demands for general, special or punitive damages or for any other
legal or equitable relief, attorneys' fees, expenses, or other payments, which
in any way relate to or arise out of my employment with the Company and Holding,
the termination of such employment and the termination of my unvested options to
acquire shares of Holding Common Stock, which I may now or hereafter have under
any federal, state or local law, regulation or order, including without
limitation, under the Age Discrimination in Employment Act, as amended. Nothing
herein shall act as a waiver or act as a bar to any action to enforce the terms
of the Agreement and the Shareholders' Agreement (as defined therein).
I acknowledge that I have consulted an attorney before signing the
Agreement or this release.
I further state that they have carefully read the Agreement and this
release, that I know the contents of such documents, and that they have executed
the same as my own free act.
WITNESS my hand as of the 17th day of June, 1996.
/s/ Cornelius J.J. Madera Jr.
-------------------------------
Cornelius J.J. Madera Jr.
-9-
<PAGE>
RELEASE
-------
Pursuant to the terms of the Agreement (the "Agreement"), dated as of
June 17, 1996, between Big V Supermarkets, Inc. (the "Company"), Big V Holding
Corp. ("Holding") and Cornelius J.J. Madera, Jr. ("Madera"), and in
consideration of the covenants made by Madera pursuant to the Agreement, each of
the Company and Holding do hereby release and forever discharge Madera from any
and all actions, causes of action, claims, or demands for general, special or
punitive damages or for any other legal or equitable relief, attorneys' fees,
expenses, or other payments, which in any way relate to or arise out of his
employment with the Company and Holding and the termination of such employment
which either the Company or Holding may now or hereafter have under any federal,
state or local law, regulation or order. Nothing herein shall act as a waiver or
act as a bar to any action to enforce the terms of the Agreement, the
Shareholders' Agreement or the Madera Note (each as defined therein) or any
action arising from the willful or intentional misconduct of Madera while
employed by either the Company or Holding.
The undersigned acknowledge that they have consulted all attorney
before signing the Agreement and this release.
The undersigned further state that they have carefully read the Agreement and
this release, that I know the contents of such documents, and that they have
executed the same as my own free act.
-10-
<PAGE>
WITNESS my hand as of the 17th day of June, 1996.
BIG V SUPERMARKETS, INC.
By: /s/ Joseph V. Fisher
---------------------------
Name:
Title:
BIG V HOLDING CORP.
By: /s/ Joseph V. Fisher
---------------------------
Name:
Title:
-11-
<PAGE>
EXHIBIT B
---------
June 12, 1996
Dear Sir or Ms.
This letter is to recommend [ full name ] for a position with your
firm and to acknowledge his contribution as a Senior Executive with the company.
For a decade, [ 1st name ] reported directly to me and was a valued
advisor as both a Senior Vice President and Director of the Corporation. In this
capacity, he played an important role in the success of Big V.
[ 1st name ] resigned in good standing when his position was
restructured and consolidated. We wish him well in his future career endeavors.
Very Truly Yours,
David Bronstein
Chairman of the Board
-12-
<PAGE>
Exhibit 12.1
BIG V SUPERMARKETS, INC.
<TABLE>
<CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
- ----------------------------------------------------------------------------------------------------------------------------
52 52 53 52 52
Weeks Weeks Weeks Weeks Weeks
Ended Ended Ended Ended Ended
December 28, December 30, December 31, December 25, December 25,
1996 1995 1994 1993 1992
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
(Loss) income from
continuing operations
before income taxes $ (6,467) $ (7,188) $ (8,931) $ (11,216) $ 2,406
Add:
Interest on indebtedness,
including amortization
of deferred debt costs 24,636 27,588 25,176 20,409 20,003
Portion of rents
representative of the
interest factor 2,226 2,374 1,779 1,301 1,009
--------- --------- --------- ---------- ----------
Income, as adjusted $ 20,395 $ 22,774 $ 18,024 $ 10,494 $ 23,418
========= ========= ========= ========== ==========
Fixed charges:
Interest on indebtedness,
including amortization
of deferred debt costs $ 24,636 $ 27,588 $ 25,176 $ 20,409 $ 20,003
Portion of rents
representative of the
interest factor 2,226 2,374 1,779 1,301 1,009
--------- --------- --------- ---------- ----------
Fixed charges $ 26,862 $ 29,962 $ 26,955 $ 21,710 $ 21,012
========= ========= ========= ========== ==========
Ratio of earnings to - - - - 1.1x
fixed charges --------- --------- --------- ---------- ----------
Deficiency in earnings
available to cover
fixed charges $ 6,467 $ 7,188 $ 8,931 $ 11,216 $ -
========= ========= ========= ========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 10,595,208
<SECURITIES> 0
<RECEIVABLES> 14,021,609
<ALLOWANCES> 954,962
<INVENTORY> 35,436,972
<CURRENT-ASSETS> 62,652,290
<PP&E> 142,309,096
<DEPRECIATION> 70,004,649
<TOTAL-ASSETS> 264,617,102
<CURRENT-LIABILITIES> 72,503,344
<BONDS> 165,589,901
0
0
<COMMON> 1,000
<OTHER-SE> (24,311,257)
<TOTAL-LIABILITY-AND-EQUITY> 264,617,102
<SALES> 735,975,920
<TOTAL-REVENUES> 735,975,920
<CGS> 545,851,021
<TOTAL-COSTS> 545,851,021
<OTHER-EXPENSES> 20,385,105
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,381,855
<INCOME-PRETAX> (6,466,629)
<INCOME-TAX> (2,508,721)
<INCOME-CONTINUING> (3,957,908)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,957,908)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
