<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 3, 1998
---------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
176 NORTH MAIN STREET, FLORIDA, NEW YORK 10921
(Address of principal executive offices) (Zip Code)
(914) 651-4411
(Registrant's telephone number, including area code)
NOT APPLICABLE.
(Former name, former address and former fiscal year,
if changed since last report)
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
------ ------
Shares of Common Stock outstanding as of November 16, 1998: 1,000 shares
This quarterly report on Form 10-Q is being filed voluntarily and shall not be
deemed to be subject to Section 18 of the Securities Exchange Act of 1934.
<PAGE>
BIG V SUPERMARKETS, INC.
FORM 10-Q FOR THE 16 and 40 WEEKS ENDED OCTOBER 3, 1998
INDEX
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Item 1. Financial Statements
Unaudited Consolidated Statements of Income.............. 3
Unaudited Consolidated Balance Sheets.................... 4
Unaudited Consolidated Statements of Cash Flows.......... 5
Notes to Unaudited Consolidated Financial Statements..... 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 8-13
PART II
OTHER INFORMATION
Item 1. Legal Proceedings............................................. 14
Item 2. Changes in Securities......................................... 14
Item 3. Defaults upon Senior Securities............................... 14
Item 4. Submission of Matters to a Vote of Security Holders........... 14
Item 5. Other Information............................................. 14
Item 6. Exhibits and Reports on Form 8-K.............................. 14
SIGNATURES............................................................. 15
</TABLE>
See notes to unaudited consolidated financial statements.
-2-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
--------------------------------------------------------------------
Sixteen Sixteen Forty Forty
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
October 3, 1998 October 4, 1997 October 3, 1998 October 4, 1997
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
SALES $251,012 $234,913 $618,015 $579,062
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of Sales (exclusive of depreciation and
amortization shown separately below) 184,966 172,347 455,979 429,545
Selling, general and administrative 51,966 49,141 129,337 118,214
Depreciation and amortization 4,195 4,473 11,551 12,196
Interest expense, net of interest income of $60 and
$86 for the 16-week periods and $172 and $194
for the 40-week periods ended October 3, 1998
and October 4, 1997, respectively 6,945 7,564 17,659 19,196
-------- -------- -------- --------
Total costs and expenses 248,072 233,525 614,526 579,151
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 2,940 1,388 3,489 (89)
INCOME TAX EXPENSE (BENEFIT) 1,584 (60) 1,905 (523)
-------- -------- -------- --------
NET INCOME $ 1,356 $ 1,448 $ 1,584 $ 434
======== ======== ======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
-3-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
OCTOBER 3, 1998 DECEMBER 27, 1997/1/
---------------- --------------------
<S> <C> <C>
ASSETS
- - ------
CURRENT ASSETS:
Cash $ 13,370 $ 13,498
Accounts receivable 12,998 14,669
Inventories 33,940 36,851
Refundable income taxes 850 1,688
Prepaid expenses and other current assets 3,348 2,486
-------- --------
Total current assets 64,506 69,192
PROPERTY AND EQUIPMENT - At cost, less accumulated
depreciation and amortization of $82,655 at October 3, 1998
and $73,653 at December 27, 1997 59,720 60,783
GOODWILL - Less accumulated amortization of $14,474 at
October 3, 1998 and $12,926 at December 27, 1997 64,835 66,383
INVESTMENT IN WAKEFERN FOOD CORPORATION 11,551 11,236
WAKEFERN WAREHOUSE AGREEMENT - Less accumulated
amortization of $8,035 at October 3, 1998 and $7,239
at December 27, 1997 33,333 34,129
OTHER ASSETS 14,014 13,422
-------- --------
TOTAL ASSETS $247,959 $255,145
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIT
- - -------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 38,795 $ 43,257
Accrued expenses and taxes other than income taxes 14,093 17,372
Deferred income taxes 6,539 6,152
Current portion of long-term debt 20,567 19,401
Current portion of capitalized lease obligations 619 619
-------- --------
Total current liabilities 80,613 86,801
-------- --------
OTHER LONG-TERM LIABILITIES 9,768 9,974
-------- --------
LONG-TERM DEBT - Less current portion 151,371 154,097
-------- --------
CAPITALIZED LEASE OBLIGATIONS - Less current portion 25,560 26,036
-------- --------
DEFERRED INCOME TAXES 6,324 5,423
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT
Common stock, par value, $1.00 per share; authorized, 1,000
shares; issued, 1,000 shares 1 1
Paid-in capital 8,455 8,530
Accumulated deficit (34,133) (35,717)
-------- --------
Total stockholder's deficit (25,677) (27,186)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $247,959 $255,145
======== ========
</TABLE>
/1/Taken from the audited consolidated financial statements for the year ended
December 27, 1997.
See notes to unaudited consolidated financial statements.
-4-
<PAGE>
BIG V SUPERMARKETS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
UNAUDITED
---------------------------------
Forty Forty
Weeks Ended Weeks Ended
October 3, 1998 October 4, 1997
---------------- ----------------
<S> <C> <C>
CASH BALANCE, BEGINNING OF PERIOD $13,498 $10,595
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 1,584 434
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,551 12,100
Noncash gain from lease termination - (1,170)
Amortization of deferred debt costs 906 887
Amortization of discount on debt 92 104
Noncash rent expense 993 676
Deferred income taxes 1,288 (2,158)
Loss on disposal of equipment - 96
Loss on sale of equity investment - 596
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,671 (1,249)
Decrease in inventories 2,911 3,661
Decrease in refundable income taxes 838 35
Increase in prepaid expenses (1,057) (14)
Increase in other assets (1,498) (198)
Decrease in accounts payable (4,462) (5,785)
Decrease in accrued expenses (3,279) (2,672)
Decrease in income taxes payable - (4)
(Decrease) increase in other long-term liabilities (1,199) 780
------- -------
Net cash provided by operating activities 10,339 6,119
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (7,958) (6,756)
Proceeds from the sale of store equipment 9 21
Note receivable from the sale of equity investment - (1,100)
Increase in investment in Wakefern Food Corp. (40) -
------- -------
Net cash used in investing activities (7,989) (7,835)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 111 5,699
Proceeds from revolver borrowings 7,500 4,500
Principal payments on long-term debt (9,538) (5,457)
Principal payments on capital lease obligations (476) (344)
Capital contribution from Holding - 16
Repurchase of stock for the treasury - (149)
Return of capital to Holding (75) -
------- -------
Net cash (used in) provided by financing activities (2,478) 4,265
------- -------
NET (DECREASE) INCREASE IN CASH (128) 2,549
------- -------
CASH BALANCE, END OF PERIOD $13,370 $13,144
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $18,857 $20,387
Income taxes $ 22 $ 1,768
</TABLE>
See notes to unaudited consolidated financial statements.
-5-
<PAGE>
BIG V SUPERMARKETS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. Basis of Presentation
---------------------
The accompanying interim consolidated financial statements as of and for the
period ended October 3, 1998, included herein, have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and rule 10-01 of Regulation S-X
promulgated by the Securities and Exchange Commission. The balance sheet at
December 27, 1997, has been taken from the audited financial statements as of
that date. In the opinion of management, the consolidated financial statements
include all adjustments, which consist only of normal recurring adjustments
necessary for a fair presentation of operating results for the interim periods.
Certain financial information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, reference is made to
the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 27, 1997.
Operating results for the periods presented are not necessarily indicative of
the results for the entire fiscal year.
2. Income Taxes
------------
Income taxes are based on the estimated effective tax rate expected to be
applicable for the full fiscal year in accordance with Accounting Standards
Board Opinion No. 28, "Interim Financial Reporting".
3. Accounting Pronouncements
-------------------------
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130 - Reporting
Comprehensive Income, which requires the separate reporting of all changes to
shareholder's equity, and SFAS No. 131 Disclosures about Segments of an
Enterprise and Related Information, which revises existing guidelines about the
level of financial disclosure of a company's operations. Both statements are
effective for financial statements issued for fiscal years beginning after
December 15, 1997. The Company has determined that the new standards will not
necessitate any changes to existing financial reporting.
In April 1998, the FASB issued Statement of Position (SOP) No. 98-5
"Reporting on the Costs of Start-Up Activities". This SOP requires the costs
associated with start-up activities, such as opening a new store, be expensed as
incurred. This SOP is effective for financial statements for fiscal years
beginning after December 15, 1998. Prior to the adoption of this standard, the
Company deferred pre-opening costs, including payroll, employee recruitment and
advertising, and other costs incurred in the pre-opening period. Payroll and
employee recruitment costs (payroll costs) were amortized over the twelve month
period following the opening of the related store. Non-payroll costs were
expensed immediately upon the opening of the related store. The Company plans on
adopting this standard in accordance with the timeline established by the FASB.
The adoption of this standard will not have a material effect on the Company's
1998 or 1999 results of operations.
-6-
<PAGE>
In June 1998, the FASB issued SFAS No. 133 - Accounting for Derivative
Instruments and Hedging Activities, which requires entities to report all
derivatives at fair value as assets or liabilities in their statements of
financial position. This statement is effective for financial statements issued
for fiscal periods beginning after June 15, 1999. The Company does not currently
have any derivative instruments or hedging activities to report under this
standard.
4. Reclassifications
-----------------
Certain reclassifications have been made to the prior years' consolidated
financial statement information provided herein to conform to the current
quarter's presentation.
-7-
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
BASIS OF PRESENTATION
The following discussion of the Company's financial condition and results
of operations should be read in conjunction with the unaudited financial
statements and notes thereto included elsewhere in this Form 10-Q.
<TABLE>
<CAPTION>
16-Weeks Ended 16-Weeks Ended 40-Weeks Ended 40-Weeks Ended
October 3, 1998 October 4, 1997 October 3, 1998 October 4, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales...................................... 100.0% 100.0% 100.0% 100.0%
Gross margin............................... 26.3 26.6 26.2 25.8
Selling, general and administrative........ 20.7 20.9 20.9 20.4
EBITDA (1)................................. 5.7 5.8 5.3 5.5
Depreciation and amortization.............. 1.7 1.9 1.9 2.1
Interest, net.............................. 2.8 3.2 2.9 3.3
------ ------ ------ ------
Income before income taxes................. 1.2 0.6 0.6 0.0
Income tax expense (benefit)............... 0.6 0.0 0.3 (0.1)
------ ------ ------
Net income................................. 0.5% 0.6% 0.3% 0.1%
====== ====== ====== ======
OTHER DATA (IN MILLIONS):
EBITDA..................................... $ 14.2 $ 13.7 $ 33.0 $ 31.9
====== ====== ====== ======
Net cash provided by operating activities.. $ 1.9 $ 0.3 $ 10.3 $ 6.1
====== ====== ====== ======
Net cash used in investing activities...... $ (2.2) $ (4.4) $ (8.0) $ (7.8)
====== ====== ====== ======
Net cash provided by (used in)
financing activities................... $ 1.0 $ 4.2 $ (2.5) $ 4.2
====== ====== ====== ======
</TABLE>
- - -----------
(1) EBITDA represents earnings before interest expense, depreciation and
amortization, including noncash losses on the sale of property, plant and
equipment, income taxes and LIFO provision/credit. EBITDA is a widely accepted
financial indicator of a company's ability to service and/or incur debt, and
also represents a primary debt covenant of the Company. 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.
-8-
<PAGE>
RESULTS OF OPERATIONS
16 AND 40-WEEKS ENDED OCTOBER 3, 1998 COMPARED TO 16 AND 40-WEEKS ENDED
OCTOBER 4, 1997
SALES
For the 16 and 40-week periods ended October 3, 1998, total store sales
were $251.0 million and $618.0 million, respectively. Sales for the comparable
periods ended October 4, 1997 totaled $234.9 million and $579.1 million,
respectively.
Total and same store sales increased 6.9% and 3.3%, respectively, for the
quarter ended October 3, 1998, as compared to the prior year. For the 40-week
period ended October 3, 1998 total and same store sales increased 6.7% and 3.1%,
respectively, as compared to the same period of the prior year.
The increase in total store sales was primarily attributable to the
opening of the Company's thirty-second store in Mt. Vernon, New York.
Additionally, two replacement stores in Montague, NJ, and Hyde Park, NY, added
significantly to the total and same store increases.
GROSS MARGIN
Gross margin, as a percentage of sales, was 26.3% and 26.2% for the 16 and
40-week periods ended October 3, 1998, respectively. Gross margin for the
comparable periods ended October 4, 1997, was 26.6% and 25.8%, respectively.
The decrease in gross margin of .3% for the sixteen week quarter was a result of
competitive pricing in certain markets partially offset by
improved selling margins in a number of the Company's operating departments and
improvements in stock loss.
The increase in gross margin of .4% for the 40-week comparison was the
result of improved selling margins, a shift in share of business toward the
higher margin perishable departments and improvements in stock loss. Partially
offsetting these items were the competitive impacts discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the third quarter of 1998, selling, general and administrative
expenses decreased to 20.7% of sales as compared to 20.9% in the third quarter
of 1997. The improvement was attributable to lower advertising costs partially
offset by increases in occupancy, store maintenance and leased store equipment.
Selling, general and administrative expenses increased to 20.9% of sales
for the 40-week period ended October 3, 1998 as compared to 20.4% in the first
three quarters of 1997. Store payroll and payroll related expenses, which exceed
57% of selling, general and administrative expenses, remained level as a
percentage of sales for both years. The year-to-date increase was attributable
to increased occupancy costs, pre-opening expenses related to new, expanded and
replacement stores and a reduction in vendor promotional money. The increases
were partially offset by reduced advertising expenses and a variety of in-store
cost containment efforts.
-9-
<PAGE>
EBITDA
EBITDA increased 3.6% to $14.2 million for the 16-week period ended
October 3, 1998, compared to $13.7 million for the comparable prior year period.
The quarterly EBITDA increase was attributable to the increase in total sales,
however, as a result of the lower gross margin, the EBITDA margin decreased .1%
to 5.7%.
For the 40-week period ended October 3, 1998, EBITDA increased 3.4% to
$33.0 million compared to $31.9 million for the comparable prior year period.
The year-to-date EBITDA increase was attributable to the aforementioned increase
in total sales supplemented by an increased gross margin. Higher selling,
general and administrative expenses had the effect of reducing the EBITDA margin
by .2% to 5.3%.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization, as a percentage of sales, was 1.7% and 1.9%
for the 16 and 40-week periods ended October 3, 1998, compared to 1.9% and 2.1%
for the comparable prior year periods. The reductions were primarily due to the
full amortization of several leasehold assets in late 1997, the termination of a
capital lease in 1997, and the loss associated with the disposal of NCR front-
end equipment replaced with leased IBM front-end equipment in the latter half of
the prior year.
INTEREST, NET
Interest, net, decreased $0.6 million, or .5% of sales for the 16-week
period ended October 3, 1998, compared to the prior year period. The decrease
was due to lower capital lease interest and scheduled principal payments
partially offset by increased revolver borrowings. For the 40-week period ended
October 3, 1998 interest, net, decreased $1.5 million or .5% of sales.
NET INCOME
Net income was $1.4 million for the 16-week periods ended October 3, 1998
and October 4, 1997. Consistency in net income for the current quarter compared
to the prior year was attributable to increased income from operations offset by
higher income tax expense. A higher federal income tax rate results from no
longer having loss carryforwards available to offset permanent differences
generated by goodwill amortization. Net income for the 40-week period ended
October 3, 1998 was $1.6 million compared to $0.4 million for the same period of
the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's long-term debt (including current maturities and capital
leases) at October 3, 1998 was $198.1 million. All mandatory principal payments
required by the various debt agreements were satisfied during the 16 and 40-week
periods ended October 3, 1998.
The Company had a working capital ratio of .8:1 at October 3, 1998 and
December 27, 1997. The Company typically requires small amounts of working
capital since inventory is generally sold prior to the time payments to Wakefern
Food Corp. and other suppliers are due.
-10-
<PAGE>
The Company's primary source of liquidity during the 16-weeks ended October 3,
1998 was cash flows generated through operations supplemented by increased
revolver borrowings.
Net cash provided by operating activities was $10.3 million and $6.1
million for the 40-week periods ended October 3, 1998 and October 4, 1997,
respectively. The increase in net cash provided by operating activities during
the current period was primarily due to a $1.2 million increase in net income
supplemented by increased non-cash items.
Net cash used in investing activities was $8.0 million and $7.8 million
for the 40-week periods ended October 3, 1998 and October 4, 1997, respectively.
The increase over the prior year was the result of capital expenditures for
store equipment, leasehold improvements, and various information technology
upgrades.
Net cash used in financing activities was $2.5 million for the 40-week
period ended October 3, 1998 compared to net cash provided of $4.3 million for
the comparable prior year period. The decrease in net cash provided by
financing activities during the current 40-week period compared to the prior
year was due to increased principal payments offset by fewer proceeds from long-
term financing.
During the 40-weeks ended October 3, 1998, the aggregate effect of net
cash provided by operating activities of $10.3 million, net cash used in
investing activities of $8.0 million and net cash used in financing activities
of $2.5 million resulted in a net decrease in cash of $0.1 million at October 3,
1998, as compared to December 27, 1997.
For the 52 weeks ending December 26, 1998, the Company projects its major
uses of cash will be as follows: (i) cash interest payments (including
capitalized leases) of $23.8 million; (ii) capital expenditures of $9.0 million;
and (iii) scheduled debt and capital lease payments of $12.7 million (including
the non-recourse demand note payable solely from the proceeds of the sale of the
Company's Baldwin Place Shopping Center located in Somers, New York).
Management believes operating cash flow, together with borrowings under the bank
revolving credit facility and equipment financing, will be sufficient to meet
the Company's operating needs, scheduled capital expenditures and will enable
the Company to service its debt in accordance with its terms.
The Bank Credit Agreement provides for a $26.0 million revolving credit
facility, under which there was $10.0 million outstanding as of October 3, 1998.
Additionally, $6.4 million was used from this facility for letters of credit and
bonding purposes. The Bank Credit Agreement requires the Company to maintain
minimum levels of consolidated net worth, EBITDA and fixed charge coverages, and
maximum levels of capital expenditures (each as defined in the Bank Credit
Agreement). The Company was in full compliance with all of its financial
covenants, as amended, as of October 3, 1998.
-11-
<PAGE>
An Eighth Amendment dated October 21, 1998 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 due
date of an October 31, 1998, $6.7 million principal payment to January 31, 1999.
The amendment also extended the Revolving Loan Maturity date to January 31, 1999
from its original October 31, 1998 expiration date. Additionally, the capital
expenditure limit for the Company's 1998 fiscal year was set at an amount not to
exceed $9.0 million.
The Company is nearing the completion of negotiations to refinance its
existing Bank Term loans and its existing Revolving loans. Although the Company
is confident such negotiations will be completed prior to January 31, 1999,
there can be no assurances that the refinancing will occur or that the terms
associated with any new agreement will be more favorable to the Company. Should
the refinancing fail to be consummated prior to January 31, 1999, the following
table represents principal payments due during the Company's next fiscal year.
<TABLE>
<CAPTION>
Date of Payment Amount Due Description
--------------- ---------- -----------
<S> <C> <C>
January 31, 1999 $6.7 million Term Note A
January 31, 1999 up to $26.0 million Revolving Credit Facility
April 30, 1999 8.0 million Term Note B
Various 3.4 million Various equipment and Wakefern stock subscription notes payable
Not determined 2.5 million Secured Nonrecourse Note/1/
</TABLE>
/1/ Payable solely from the proceeds (as defined) of the sale of the land
and buildings comprising the Baldwin Place Shopping Center in Somers, NY.
YEAR 2000 ISSUES
Most of the Company's key business processes (such as product procurement,
product delivery, inventory identification, retail sales and financial-
information reporting) depend on computer based systems. For this reason and the
information technology (IT) inter-relationships between the Big V Supermarkets,
Inc. and Wakefern Food Corporation (Wakefern), the Company is participating with
Wakefern in a comprehensive assessment of its business exposure relative to the
Year 2000 issue (Y2K). The assessment covers both IT and other environment (Non-
IT) systems to identify the potential areas affected by Y2K.
The Company and Wakefern have assessed all systems for Y2K readiness, giving
the highest priority to those IT systems that are considered critical to its
business operations. At present, the Company has implemented Wakefern's cash and
sales applications and will implement all remaining financial applications by
the second quarter of 1999. Some in-store IT systems are currently Y2K
compliant. Others, including receiving and labor management are at various
stages of remediation or testing. The Company anticipates that all critical IT
systems will be Y2K compliant before the end of 1999.
The Company has substantially completed an inventory of its Non-IT systems,
which includes those systems containing embedded chip technology commonly found
in buildings and equipment connected with a building's infrastructure. Ongoing
remediation required for the Non-IT Systems will be performed throughout 1999.
-12-
<PAGE>
The Company and Wakefern are utilizing the necessary internal and external
resources to replace, upgrade or modify all significant systems affected by Y2K.
The total estimated costs to remediate the Y2K issue will not have a significant
adverse affect on income from continuing operations.
To date, the Company has not established a contingency plan for possible
Y2K interruptions. Management will establish contingency plans based upon the
continuous assessment of probable risks. The Company anticipates that it will
have a fully developed contingency plan by the second quarter of 1999 and such
plan will be continuously reviewed and updated throughout the remainder of 1999.
Although the full consequences are currently unknown, the failure of either the
Company's critical systems (primarily Wakefern) or those of its material third
parties (primarily banking), to be Y2K compliant could result in the
interruption of its business, which could have a materially adverse affect on
the results of operations and/or the financial position of the Company.
FORWARD-LOOKING STATEMENTS
Other than statements of historical fact, all statements included in this
Form 10-Q, including the statements under Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations", are, or may be
considered forward-looking information, as defined in the Private Securities
Litigation Reform Act of 1995. Examples of such statements in this report
include those concerning the Year 2000 issue, the Company's bank refinancing,
projected cash outlays for interest, principal payments, and capital
expenditures. The Company cautions the reader that there is no assurance actual
results or business conditions will not differ materially from those forward-
looking statements whether expressed, suggested or implied as a result of
various factors. Such factors include, but are not limited to, increased
competitive pressures from existing competitors and new entrants, general or
regional economic conditions, the interest rate environment and its affect on
the Company's cost of capital, the liquidity of the Company on a cash flow basis
(including the Company's ability to comply with the financial covenants of all
applicable credit agreements), and the success of operating initiatives
including the ability to control various expense categories.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.31 Seventh Amendment dated as of October 2, 1998 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.
4.32 Eighth Amendment dated as of October 21, 1998 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.
10.39 Secured Promissory Note between Big V Holding Corp. and
James A. Toopes, Jr., dated August 7, 1998
10.40 Addendum to Stock Pledge Agreement dated December 14, 1996
between Big V Holding Corp. and James A. Toopes, Jr., dated
August 7, 1998
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the third quarter.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG V SUPERMARKETS, INC.
Date: November 17, 1998 /s/ James A. Toopes, Jr.
-------------------------
James A. Toopes, Jr.,
Vice Chairman and
Executive Vice President-Finance,
Administration and Corporate
Development
Date: November 17, 1998 /s/ John Onufer, Jr.
-------------------------
John Onufer, Jr.,
Vice President-Controller
-15-
<PAGE>
Exhibit 4.31
SEVENTH AMENDMENT
-----------------
SEVENTH AMENDMENT (this "Amendment"), dated as of October 2, 1998,
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 further amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement");
and
WHEREAS, subject to the terms and conditions set forth herein, the
parties hereto agree as follows;
NOW, THEREFORE, it is agreed:
1. Notwithstanding anything to the contrary contained in Section 7.08
of the Credit Agreement, the Banks hereby agree that the Borrower and its
Subsidiaries may make Capital Expenditures in an aggregate amount not to exceed
$8,500,000 for period from January 1, 1998 to the Borrower's fiscal quarter
ending closest to September 30, 1998.
2. Section 7.10 of the Credit Agreement is hereby amended by deleting
the reference to the amount "$43,000,000" appearing in the table appearing in
said Section and inserting the amount "$42,000,000" in lieu thereof.
3. 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 Amendment Effective Date (as defined
below), 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 Amendment Effective Date, after giving effect to this
Amendment with the same effect as though such representations and warranties had
been made on and as of the 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).
<PAGE>
4. 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.
5. 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.
6. 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.
7. This Amendment shall become effective on the date (the "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 the Notice Office.
8. From and after the 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.
-2-
<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
BV HOLDINGS CORPORATION
By /s/ James A. Toopes, Jr.
Title: Executive Vice President
BIG V SUPERMARKETS, INC.
By /s/ James A. Toopes, Jr.
Title: Executive Vice President
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ James Reilly
Title: Vice President
BANQUE NATIONALE DE PARIS
By
----------------------------
Title:
By
----------------------------
Title:
<PAGE>
BANKERS TRUST (DELAWARE)
By /s/ Donna Mitchell
Title: Vice President
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By
----------------------------
Title:
HELLER FINANCIAL, INC.
By /s/ Julia T. Maslanka
Title: Vice President
PAMCO CAYMAN, LTD.
By: Highland Capital Management, L.P.,
as Collateral Manager
By /s/ Mark K. Okada, CFA
Title: Executive Vice President
PAM CAPITAL FUNDING, L.P.
By: Highland Capital Management, L.P.
By /s/ Mark K. Okada, CFA
Title: Executive Vice President
<PAGE>
Exhibit 4.32
EIGHTH AMENDMENT
----------------
EIGHTH AMENDMENT (this "Amendment"), dated as of October 21, 1998,
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 further amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement");
and
WHEREAS, subject to the terms and conditions set forth herein, the
parties hereto agree as follows;
NOW, THEREFORE, it is agreed:
1. Section 2.01 of the Credit Agreement is hereby amended by
inserting the following new clause (g) at the end thereof:
"(g) In the event the Borrower has not repaid all Loans, Notes, Unpaid
Drawings (in each case together with interest thereon), Fees and all other
Obligations under the Credit Agreement, and the Total Commitment and all Letters
of Credit have not been terminated on or prior to January 15, 1999, the Borrower
agrees to pay to the Agent for distribution to each Bank, a fee equal to 1/4 of
1% of the sum of such Bank's (A) then outstanding Original Term Loans, (B) then
outstanding New Term Loans and (C) Revolving Loan Commitment at such time (or
after the termination thereof, the sum of such Bank's (x) outstanding Revolving
Loans at such time and (y) Revolving Loan Percentage of then outstanding
Swingline Loans and any Letter of Credit Outstandings at such time).
2. The table appearing in Section 3.02(b)(i) of the Credit Agreement
is hereby amended by deleting the date "October 31, 1998" appearing opposite the
amount "$6,666,667" appearing in said table and inserting the date "January 31,
1999" in lieu thereof.
3. Notwithstanding anything to the contrary contained in Section 7.08
of the Credit Agreement, the Banks hereby agree that the Borrower and its
Subsidiaries may make Capital Expenditures in an aggregate amount not to exceed
$9,000,000 for the period from January 1, 1998 to the last day of the Borrower's
fiscal quarter ending closest to December 31, 1998.
<PAGE>
4. Section 9 of the Credit Agreement is hereby amended by deleting
the definition of "Applicable Margin" appearing therein in its entirety and
inserting the following new definition of "Applicable Margin" in lieu thereof:
"Applicable Margin" shall mean, (x) in the case of Base Rate Loans,
1-7/8% and (y) in the case of Eurodollar Rate Loans, 2-7/8%.
5. The definition of "Original Term Loan Maturity Date" appearing in
Section 9 of the Credit Agreement is hereby amended by deleting the date
"October 31, 1998" appearing therein and inserting the date "January 31, 1999"
in lieu thereof.
6. The definition of "Revolving Loan Maturity Date" appearing in
Section 9 of the Credit Agreement is hereby amended by deleting the date
"October 31, 1998" appearing therein and inserting the date "January 31, 1999"
in lieu thereof.
7. 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 Amendment Effective Date (as defined
below), 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 Amendment Effective Date, after giving effect to this
Amendment with the same effect as though such representations and warranties had
been made on and as of the 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).
9. 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.
10. 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.
11. 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.
12. This Amendment shall become effective on the date (the "Amendment
Effective Date") when (i) Holdings, BV Holdings, the Borrower, the Required
Banks, each Bank with outstanding Original Term Loans and each Bank with a
Revolving Loan Commitment 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 the Notice Office and (ii) the Borrower
shall have paid to the Agent for the distribution to each Bank which has signed
a counterpart of this Amendment, an amendment fee equal to 1/2 of 1% of the sum
of such Bank's
-2-
<PAGE>
(A) outstanding Original Term Loans, (B) outstanding New Term
Loans and (C) Revolving Loan Commitment.
13. From and after the 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: Director
BV HOLDINGS CORPORATION
By /s/ James A. Toopes, Jr.
Title: Director
BIG V SUPERMARKETS, INC.
By /s/ James A. Toopes, Jr.
Title: Executive Vice President-Finance,
Administration and Corporate Development and
Corporate Secretary
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ James Reilly
Title: Vice President
BANQUE NATIONALE DE PARIS
By /s/ Stephanie Rogers
Title: Vice President
By /s/ Serge Desrayaud
Title: Vice President/Team Lender
<PAGE>
BANKERS TRUST (DELAWARE)
By /s/ Donna Mitchell
Title: Vice President
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By /s/ James W. Wilson
Title: Senior Vice President
HELLER FINANCIAL, INC.
By /s/ Julia T. Maslanka
Title: Vice President
PAMCO CAYMAN, LTD.
By: Highland Capital Management, L.P.,
as Collateral Manager
By /s/ Davis Deadman
Title:
PAM CAPITAL FUNDING, L.P.
By: Highland Capital Management, L.P.
as Collateral Manager
By /s/ Davis Deadman
Title:
<PAGE>
Exhibit 10.39
$75,000.000 August 7, 1998
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 SEVENTY FIVE THOUSAND DOLLARS ($75,000.000)
(the Principal Amount"), together with any amounts which are deemed to be
converted to 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
<PAGE>
income tax liability incurred by the Company as a result of all
interest accrued hereunder for the preceding fiscal year of the Company.
(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 December 14, 1996,
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.
--------- ----------
<PAGE>
(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 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, of 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
<PAGE>
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 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
<PAGE>
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
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, Jr.
------------------------
Address: 264 Highland Avenue
Ridgewood, NJ 07450
<PAGE>
Exhibit 10.40
ADDENDUM TO STOCK PLEDGE AGREEMENT
This Addendum to the Stock Pledge Agreement dated as of December 14, 1996 (the
"Pledge Agreement") is entered into by and between Big V Holding Corp., a
Delaware corporation ("Holding"), and James A. Toopes (the "Pledgor").
WHEREAS, Holding and the Pledgor have previously entered into the
Pledge Agreement pursuant to which the Pledgor granted a security interest in
8,000 shares of Common Stock, par value $.01 per share, of Holding as security
for the Pledgor's repayment of a loan made by Holding to the Pledgor in the
amount of $205,000;
WHEREAS, on the date hereof, Holding has loaned to the Pledgor an
additional $75,000 (the "New Loan") and the parties desire that the Pledge
Agreement extend to the prepayment of the New Loan.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Pledge. As collateral for security for the full and timely payment
------
of the principal of and interest on the New Loan, the Pledgor hereby agrees that
the New Loan is secured by a pledge of the Pledged Securities (as defined in the
Pledge Agreement) in the same manner and to the extent that the Indebtedness (as
defined in the Pledge Agreement ) is so secured and for purposes of the Pledge
Agreement the term "Indebtedness" shall be deemed to include the New Loan.
2. Acknowledgment. The Pledgor hereby represents and warrants to
--------------
Holding that the Pledge Agreement is in full force and effect and that the
Pledgor is in compliance with the terms thereof.
IN WITNESS WHEREOF, the parties have executed this Addendum as of
the date set forth above.
BIG V HOLDING CORP.
By: /s/ Joseph V. Fisher
--------------------
President
/s/ James A. Toopes, Jr.
------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> OCT-03-1998
<CASH> 13,370
<SECURITIES> 0
<RECEIVABLES> 13,115
<ALLOWANCES> 117
<INVENTORY> 33,940
<CURRENT-ASSETS> 64,506
<PP&E> 142,375
<DEPRECIATION> 82,655
<TOTAL-ASSETS> 247,959
<CURRENT-LIABILITIES> 80,613
<BONDS> 151,371
1
0
<COMMON> 0
<OTHER-SE> (25,678)
<TOTAL-LIABILITY-AND-EQUITY> 247,959
<SALES> 618,015
<TOTAL-REVENUES> 618,015
<CGS> 455,979
<TOTAL-COSTS> 455,979
<OTHER-EXPENSES> 11,551
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,659
<INCOME-PRETAX> 3,489
<INCOME-TAX> 1,905
<INCOME-CONTINUING> 1,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,584
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
