SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 10, 1998
CROWLEY MILNER AND COMPANY
(Exact name of registrant as specified in its charter)
Michigan 1-1594 38-0454910
(State or other (Commission File (IRS Employer
jurisdiction) Number) Identification
Number)
2301 West Lafayette Boulevard, Detroit, Michigan 48216
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (313) 962-2400
Not applicable
(Former name or former address, if changed since last report)
Item 5. Other Items.
Loan and Security Agreement -- Congress Financial Corporation (Central).
As previously reported by the registrant in its Current Report on
Form 8-K dated August 31, 1996, effective as of September 5, 1996, Congress
Financial Corporation (Central) ("Congress"), Crowley, Milner and Company, a
Michigan corporation (the "Company"), and Steinbach Stores, Inc., an Ohio
corporation and a wholly-owned subsidiary of the Company ("Steinbach"),
entered into an Amended and Restated Loan and Security Agreement (the
"Amended Loan Agreement") pursuant to which Congress was obligated to
provide, on an aggregate basis to the Company and Steinbach, a fully secured
line of credit of up to $24 million and, included within such line of
credit, a facility for letters of credit of up to $5 million, with the
interest rate on the foregoing, subject to certain terms and conditions, at
25 basis points above the prime rate of CoreStates Bank, N.A. The Company
and Steinbach each granted Congress a security interest in and general lien
upon substantially all of their respective tangible and intangible personal
assets and property, whether now owned or hereafter acquired, as security
for all debts, liabilities and obligations of the Company and Steinbach
under the Amended Loan Agreement. The Amended Loan Agreement shall continue
for a term ending on November 4, 1999, and from year to year thereafter
unless sooner terminated pursuant to the terms thereof.
As also previously reported by the registrant in its Current Report
on Form 8-K dated July 3, 1997, Congress, the Company and Steinbach entered
into Amendment No. 1 to the Amended Loan Agreement, pursuant to which (i)
the maximum credit available under the Amended Loan Agreement was increased
from $24 million to $35 million for the period of December 1 of any year
through August 31 of the following year and $42 million for the period of
September 1 through November 30 of each year, and (ii) the letter of credit
accommodation was increased from $5 million to $10 million.
Effective as of June 10, 1998, Congress, the Company and Steinbach
entered into Amendment No. 2 to the Amended Loan Agreement, pursuant to
which, among other things, (i) the maximum credit available under the
Amended Loan Agreement was increased from $35 million to $43 million for the
period of December 1 of any year through August 31 of the following year and
from $42 million to $50 million for the period of September 1 through
November 30 of each year; (ii) the borrowing rate was increased to 34% of
eligible retail inventory from 30%; and (iii) a new feature was added
pursuant to which the Company and Steinbach may, from time to time and
subject to certain stated terms and conditions, request that the prime rate
loans (i.e., loans bearing interest 25 basis points above the prime rate of
CoreStates Bank, N.A.) be converted to Eurodollar rate loans bearing
interest equal to the average rates at which CoreStates Bank, N.A. is
offered deposits of United States dollars in the London interbank market.
The information set forth in Amendment No. 2 to the Amended Loan
Agreement attached hereto as Exhibit 10.10 is hereby incorporated herein by
reference.
Resignation of Chief Financial Officer
On July 9, 1998 the Company issued a press release announcing that
Vice-President of Finance, Chief Financial Officer, Secretary and Treasurer,
John R. Dallacqua has tendered his resignation to be effective as of July
10, 1998 in order to pursue a new career opportunity in a non-retail
business. The press release is attached hereto as Exhibit 99.1 and is
hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
10.10 Amended and Restated Loan and Security Agreement, dated
September 5, 1996, among Congress Financial Corporation
(Congress), Crowley, Milner and Company and Steinbach
Stores, Inc. (amends and restates Loan and Security
Agreement previously filed as an exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended October
31, 1994) (previously filed as an exhibit to the Company's
Current Report on Form 8-K dated August 31, 1996), Amendment
No. 1 thereto (previously filed as an exhibit to the
Company's Current Report on Form 8-K dated July 3, 1997), as
amended by Amendment No. 2 thereto (a copy of which is filed
herewith).
99.1 Press release issued by Crowley, Milner and Company on July
9, 1998.
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 hereunto duly authorized.
CROWLEY, MILNER AND COMPANY
/s/ JOHN R. DALLACQUA
John R. Dallacqua,
Vice President of Finance
July 10, 1998
EXHIBIT INDEX
Exhibit
No. Description
10.10 Amended and Restated Loan and Security Agreement, dated September 5,
1996, among Congress Financial Corporation (Congress), Crowley,
Milner and Company and Steinbach Stores, Inc. (amends and restates
Loan and Security Agreement previously filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1994) (previously filed as an exhibit to the Company's
Current Report on Form 8-K dated August 31, 1996), Amendment No. 1
thereto (previously filed as an exhibit to the Company's Current
Report on Form 8-K dated July 3, 1997), as amended by Amendment No.
2 thereto (a copy of which is filed herewith).
99.1 Press Release issued by Crowley, Milner and Company on July 9, 1998.
AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
This Amendment No. 2 is dated as of the 10th day of June, 1998 and
is by and among Congress Financial Corporation (Central), an Illinois
corporation ("Congress"), Crowley, Milner and Company, a Michigan
corporation ("Crowley") and Steinbach Stores, Inc., an Ohio corporation
("Steinbach").
WITNESSETH:
WHEREAS, Congress and Crowley and Steinbach (collectively,
"Borrowers") are parties to that certain Amended and Restated Loan and
Security Agreement, dated as of September 5, 1996 (as amended or otherwise
modified from time to time, the "Loan Agreement"), pursuant to which
Congress agreed to provide certain loans and other financial accommodations
to Borrowers;
WHEREAS, Borrowers and Congress have agreed to amend the Loan
Agreement in certain respects.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Congress and Borrowers hereby agree as follows:
1. Amendment to Loan Agreement. Subject to the satisfaction of
the conditions precedent set forth in Section 2 of this Amendment No. 2, and
in reliance on the representations and warranties set forth in Section 4 of
this Amendment No. 2, the Loan Agreement is hereby amended as follows:
(a) Section 1.4 of the Loan Agreement is hereby amended
and restated as follows:
"1.4 "Business Day" shall mean any day other
than a Saturday, Sunday, or other day on which commercial
banks are authorized or required to close under the laws of
the State of New York or the Commonwealth of Pennsylvania,
and a day on which the Reference Bank and Lender are open
for the transaction of business, except that if a
determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in
dollar deposits in the London interbank market or other
applicable Eurodollar Rate market."
(b) Section 1.18 of the Loan Agreement is hereby
amended and restated as follows:
"1.18 "Interest Rate" shall mean, as to Prime
Rate Loans, a rate of one-quarter of one percent (0.25%)
percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of two and one-quarter of one
percent (2.25%) percent per annum in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate applicable for
the Interest Period selected by the applicable Borrower as
in effect three (3) Business Days after the date of receipt
by Lender of the request of either Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate
previously quoted to either Borrower); provided, that, the
Interest Rate shall mean the rate of two and one-quarter of
one percent (2.25%) percent per annum in excess of the Prime
Rate as to Prime Rate Loans and the rate of four and one-
quarter of one percent (4.25%) percent per annum in excess
of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans,
at Lender's option, without notice, (a) for the period (i)
from and after the date of termination or non-renewal hereof
until Lender has received full and final payment of all
Obligations (notwithstanding entry of a judgment against
either Borrower) and (ii) from and after the date of the
occurrence of an Event of Default or any event which with
notice or passage of time or both would constitute an Event
of Default, and for so long as such Event of Default or
other event described in this paragraph is continuing as
determined by Lender, and (b) on the Revolving Loans at any
time outstanding in excess of the amounts available to
either one or both Borrowers under Section 2 (whether or not
such excess(es), arise or are made with or without Lender's
knowledge or consent and whether made before or after an
Event of Default)."
(c) Section 1.23 of the Loan Agreement is hereby
amended to (i) delete the reference to "$35,000,000" and to replace it with
a reference to "$43,000,000" and (ii) delete the reference to "$42,000,000"
and to replace it with a reference to "$50,000,000".
(d) The following defined terms are hereby added to the
Loan Agreement as Sections 1.33 through and including 1.38:
"1.33 "Adjusted Eurodollar Rate" shall mean, with
respect to each Interest Period for any Eurodollar Rate
Loan, the rate per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such
Interest Period by (b) a percentage equal to: (i) one (1)
minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or
foreign banking authority for determining the reserve
requirement which is or would be applicable to deposits of
United States dollars in a non-United States or an
international banking office of Reference Bank used to fund
a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans.
The Adjusted Eurodollar Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage."
"1.34 "Eurodollar Rate Loans" shall mean any
Revolving Loans or portion thereof on which interest is
payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof."
"1.35 "Eurodollar Rate" shall mean with respect
to the Interest Period for a Eurodollar Rate Loan, the
interest rate per annum equal to the arithmetic average of
the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%)
percent) at which Reference Bank is offered deposits of
United States dollars in the London interbank market (or
other Eurodollar Rate market selected by either Borrower and
approved by Lender) on or about 9:00 a.m. (New York time)
two (2) Business Days prior to the commencement of such
Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by
and available to the applicable Borrower in accordance with
this Agreement, with a maturity of comparable duration to
the Interest Period selected by the applicable Borrower."
"1.36 "Interest Period" shall mean for any
Eurodollar Rate Loan, a period of approximately one (1), two
(2), or three (3) months duration as either Borrower may
elect, the exact duration to be determined in accordance
with the customary practice in the applicable Eurodollar
Rate market; provided, that, neither Borrower may elect an
Interest Period which will end after the last day of the
then-current term of this Agreement."
"1.37 "Prime Rate Loans" shall mean any Revolving
Loans or portion thereof on which interest is payable based
on the Prime Rate in accordance with the terms thereof."
"1.38 "Reference Bank" shall mean CoreStates
Bank, N.A. and its successors-in-interest, or such other
bank as Lender may from time to time designate."
(e) Section 2.1(a) of the Loan Agreement is hereby
amended to delete the reference to "thirty percent (30%)" and to replace it
with a reference to "thirty-four percent (34%)".
(f) Section 2.2(c) of the Loan Agreement is hereby
amended to delete the reference to "seventy percent (70%)" and to replace it
with a reference to "sixty-six percent (66%)".
(g) Section 3.1 of the Loan Agreement is hereby amended
and restated as follows:
"3.1 Interest.
(a) Borrowers shall pay to Lender interest on
the outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or
termination or non-renewal hereof shall be payable on
demand.
(b) Either Borrower may from time to time
request that Prime Rate Loans be converted to Eurodollar
Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request
from either Borrower shall specify the amount of the Prime
Rate Loans which will constitute Eurodollar Rate Loans
(subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans.
Subject to the terms and conditions contained herein, three
(3) Business Days after receipt by Lender of such a request
from either Borrower, such Prime Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate
Loans shall continue, as the case may be, provided, that,
(i) no Event of Default, or event which with notice or
passage of time or both would constitute an Event of Default
exists or has occurred and is continuing, (ii) no party
hereto shall have sent any notice of termination or non-
renewal of this Agreement, (iii) the applicable Borrower
shall have complied with such customary procedures as are
established by Lender and specified by Lender to Borrowers
from time to time for requests by either Borrower for
Eurodollar Rate Loans, (iv) no more than four (4) Interest
Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not
less than $2,000,000 or an integral multiple of $1,000,000
in excess thereof, (vi) the maximum amount of the Eurodollar
Rate Loans at any time requested by either or both Borrowers
shall not exceed the amount equal to sixty percent (60%) of
the lowest principal amount of the Revolving Loans which it
is anticipated will be outstanding during the applicable
Interest Period, in each cash as determined by Lender (but
with no obligation of Lender to make such Revolving Loans)
and (vii) Lender shall have determined that the Interest
Period or Adjusted Eurodollar Rate is available to Lender
through the Reference Bank and can be readily determined as
of the date of the request for such Eurodollar Rate Loan by
the applicable Borrower. Any request by either Borrower to
convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary
contained herein, Lender and Reference Bank shall not be
required to purchase United States Dollar deposits in the
London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Lender and Reference
Bank had purchased such deposits to fund the Eurodollar Rate
Loans.
(c) Any Eurodollar Rate Loans shall
automatically convert to Prime Rate Loans upon the last day
of the applicable Interest Period, unless Lender has
received and approved a request to continue such Eurodollar
Rate Loan at least three (3) Business Days prior to such
last day in accordance with the terms hereof. Any
Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to the applicable Borrower, convert to Prime Rate
Loans in the event that (i) an Event of Default or event
which, with the notice or passage of time, or both, would
constitute an Event of Default, shall exist, (ii) this
Agreement shall terminate or not be renewed, or (iii) the
aggregate principal amount of the Prime Rate Loans which
have previously been converted to Eurodollar Rate Loans or
existing Eurodollar Rate Loans continued, as the case may
be, at the beginning of an Interest Period shall at any time
during such Interest Period exceed either (A) the aggregate
principal amount of the Revolving Loans then outstanding, or
(B) the Revolving Loans then available to Borrowers under
Section 2 hereof. Borrowers shall pay to Lender, upon
demand by Lender (or Lender may, at its option, charge any
loan account of either Borrower) any amounts required to
compensate Lender, the Reference Bank or any participant
with Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime
Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to
Lender monthly in arrears not later than the first day of
each calendar month and shall be calculated on the basis of
a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after
any change in such Prime Rate is announced based on the
Prime Rate in effect on the last day of the month in which
any such change occurs. In no event shall charges
constituting interest payable by either Borrower to Lender
exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such
law or regulation, such part or provision shall be deemed
amended to conform thereto."
(h) Section 3.6 is hereby added to the Loan Agreement,
which section shall read as follows:
"3.6 Changes in Laws and Increased Costs of
Revolving Loans.
(a) Notwithstanding anything to the contrary
contained herein, all Eurodollar Rate Loans shall, upon
notice by Lender to either Borrower, convert to Prime Rate
Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof)
shall either (A) make it unlawful for Lender, Reference Bank
or any participant to make or maintain Eurodollar Rate Loans
or to comply with the terms hereof in connection with the
Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Lender, Reference Bank or any participant of
making or maintaining any Eurodollar Rate Loans by an amount
deemed by Lender to be material, or (C) reduce the amounts
received or receivable by Lender in respect thereof, by an
amount deemed by Lender to be material or (ii) the cost to
Lender, Reference Bank or any participant of making or
maintaining any Eurodollar Rate Loans shall otherwise
increase by an amount deemed by Lender to be material.
Borrowers shall pay to Lender, upon demand by Lender (or
Lender may, at its option, charge any loan account of either
Borrower) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss
(including loss of anticipated profits), cost or expense
incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or
expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such
person to make or maintain the Eurodollar Rate Loans or any
portion thereof. A certificate of Lender setting forth the
basis for the determination of such amount necessary to
compensate Lender as aforesaid shall be delivered to either
Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect
of the Eurodollar Rate Loans are received by Lender other
than on the last day of the applicable Interest Period
(whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the
application of collections under Section 6.3 or any other
payments made with the proceeds of Collateral, Borrowers
shall pay to Lender upon demand by Lender (or Lender may, at
its option, charge any loan account of either Borrower) any
amounts required to compensate Lender, the Reference Bank or
any participant with Lender for any additional loss
(including loss of anticipated profits), cost or expense
incurred by such person as a result of such prepayment or
payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such
person to make or maintain such Eurodollar Rate Loans or any
portion thereof."
2. The effectiveness of the amendments herein are
subject to the satisfaction of the following conditions precedent or
concurrent:
(a) Congress shall have received this Amendment No. 2,
executed by the Borrowers.
(b) Congress shall have received an amendment fee of
$40,000, paid in immediately available funds.
3. References; Effectiveness. Congress and Borrowers
hereby agree that all references to the Loan Agreement which are contained
in any of the other "Financing Agreements" (as that term is defined in the
Loan Agreement) shall refer to the Loan Agreement as amended by this
Amendment No. 2.
4. Representations and Warranties. To induce Congress
to enter into this Amendment No. 2, Borrowers hereby represent and warrant
to Congress that:
(a) The execution, delivery and performance by
Borrowers of this Amendment No. 2 are within their respective corporate
powers, have been duly authorized by all necessary corporate action, have
received all necessary governmental approval (if any shall be required), and
do not and will not contravene or conflict with any provision of law
applicable to Borrowers, the articles of incorporation and code of
regulations of either Borrower, any order, judgment or decree of any court
or governmental agency, or any agreement, instrument or document binding
upon any Borrower or any of their respective property;
(b) Each of the Loan Agreement and the other Financing
Agreements, as amended by this Amendment No. 2, are the legal, valid and
binding obligation of Borrowers, enforceable against Borrowers in accordance
with its terms;
(c) The representations and warranties contained in the
Loan Agreement and the other Financing Agreements are true and accurate as
of the date hereof with the same force and effect as if such had been made
on and as of the date hereof, except that Crowley has closed its Birmingham,
Michigan store;
(d) Borrowers have performed all of their obligations
under the Loan Agreement and the Financing Agreements to be performed by
them on or before the date hereof and as of the date hereof, Borrowers are
in compliance with all applicable terms and provisions of the Loan Agreement
and each of the Financing Agreements to be observed and performed by them
and no event of default or other event which upon notice or lapse of time or
both would constitute an event of default has occurred.
5. Counterparts. This Amendment No. 2 may be executed
in any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
Amendment No. 2.
6. Continued Effectiveness. Except as specifically
set forth herein, the Loan Agreement and each of the Financing Agreements
shall continue in full force and effect according to its terms.
7. Costs and Expenses. Borrowers hereby agree that
all expenses incurred by Congress in connection with the preparation,
negotiation and closing of the transactions contemplated hereby, including
without limitation reasonable attorneys' fees and expenses, shall be part of
the "Obligations" (as defined in the Loan Agreement).
IN WITNESS WHEREOF, this Amendment No. 2 has been executed
as of the day and year first written above.
CROWLEY MILNER AND COMPANY
By:
Its:
STEINBACH STORES, INC.
By:
Its:
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By:
Its:
From: Crowley, Milner and Company Contact: Ray Attebery
2301 West Lafayette Boulevard (313) 962-2558
Detroit, Michigan 48216-1891
For Immediate Release
CROWLEY'S ACCEPTS RESIGNATION OF
CHIEF FINANCIAL OFFICER JOHN R. DALLACQUA
DETROIT, July 9, 1998 - Crowley's (AMEX symbol: COM) announces that
Vice-President of Finance, Chief Financial Officer, Secretary and Treasurer
John R. Dallacqua has tendered his resignation to be effective as of July
10, 1998 in order to pursue a new career opportunity in a non-retail
business.
Dallacqua, 42, has served as Crowley's CFO since July 1996. Mr. Ray
Attebery, Crowley's Senior Vice President of Operations and Chief
Information Officer, will assume financial responsibilities as the Company's
acting CFO. Mr. Attebery, 55, holds a Bachelor of Science degree in
Economics, an MBA degree in Finance and Marketing, and has twenty-five years
of varied retail experience, including service as the Senior Vice President
- - Controller of John A. Brown, a division of the Dayton Hudson Corporation,
for several years.
"It saddens me to leave the many wonderful people in the
Crowley's/Steinbach family," Dallacqua said. "However, after finalizing the
Company's financing package recently, the timing made sense. Now that the
financing is securely in place, and the Company is focused on its mission of
providing high quality and fashionable merchandise to its customers at
competitive prices, I am confident that the management team will be
successful."
"John was instrumental in establishing and implementing disciplines
in our financial area," said Denny Callahan, Crowley's chairman and chief
executive officer. "He introduced a level of professionalism to the Company
that has been embraced by everyone. We will miss him, and we all wish him
well as he prepares to tackle his next challenge."
Founded in 1914, Crowley's is engaged in the operation of nine
retail specialty department stores in the Detroit-metropolitan and suburban
Flint, Michigan areas and, through its wholly-owned subsidiary, Steinbach
Stores, Inc., also operates 16 retail specialty department stores in the
states of Connecticut, New York, New Hampshire, New Jersey and Vermont.
