UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(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 January 1, 1994
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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
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Commission file number: 2-66296
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Roundy's, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0854535
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 Roundy Drive
Pewaukee, Wisconsin 53072
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 547-7999
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
--- ---
Indicate by check mark 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 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]
As of January 1, 1994, 15,500 shares of Class A Common Stock and
1,140,302 shares of Class B Common Stock were outstanding. There is no
market for such shares.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
--------- -------------------
Annual Report to Stockholders Part II, Items 6, 7, 8
for the year ended January 1, 1994
The exhibit index to this report will be found on page 26.
<PAGE>
PART I
ITEM 1. Business.
---------
GENERAL
-------
Roundy's, Inc. and its subsidiaries (collectively the "Company") are
engaged principally in the wholesale distribution of food and nonfood
products to supermarkets and warehouse food stores located in Wisconsin,
Illinois, Michigan, Indiana, Ohio, Iowa, Kentucky, Missouri,
Pennsylvania, Tennessee and West Virginia. The Company also owns and
operates 12 retail warehouse food stores under the name "Pick 'n Save,"
one limited assortment food store under the name "Price Less Foods," one
limited assortment food store under the name "Mor For Less" and five
conventional stores under the name "Cardinal Food Gallery" or "Buy Low
Foods." The Company offers its retail customers a complete line of
nationally-known name brand merchandise, as well as its own private
labels, including "Roundy's," "Old Time," "Scot Lad," "Spring Lake,"
"Perfect Match," "Shurfine," "Price Saver," "Buyers' Choice," "Super
Choice," "Sunny Valley," "Sunny Acres," "Sunny Acre Farms," "Classic,"
"Bonnie Blue," "Valu-Check'd," "Gold Coin," and "Meadow Moor Farms."
The Company services 1,130 retail grocery stores and 682 convenience
stores.
In addition to the distribution and sale of food and nonfood products,
the Company provides specialized support services for retail grocers,
including promotional merchandising and advertising programs, accounting
and inventory control, store development and financing and assistance
with other aspects of store management. The Company maintains a staff
of trained retail counselors who advise and assist individual owners and
managers with store operations.
Roundy's, Inc. was incorporated in 1952 under the Wisconsin Business
Corporation Law. The Company's executive offices are located at 23000
Roundy Drive, Pewaukee, Wisconsin 53072, and its telephone number is
(414) 547-7999. Unless the context indicates otherwise, as used herein,
the term "Company" refers to Roundy's, Inc. and its subsidiaries and the
term "Roundy's" refers to Roundy's, Inc. without its subsidiaries.
OPERATION AS A COOPERATIVE
--------------------------
Roundy's operates its food wholesale business as a cooperative and
determines its Federal income tax liabilities under Subchapter T of the
Internal Revenue Code, which governs the taxation of corporations
operating on a cooperative basis. Approximately 69% of the outstanding
Common Stock of Roundy's [including all Class A (Voting) Common Stock]
is owned by the owners ("stockholder-customers") of 155 retail grocery
stores serviced by the cooperative. These stockholder-customers receive
patronage dividends from Roundy's based on the sales of Roundy's to such
stockholder-customers. The patronage dividend is payable in at least
20% in cash and the remainder in Class B Common Stock. Patronage
dividends for the last three fiscal years were payable 30% in cash and
70% in Class B Common Stock. Under Subchapter T of the Internal Revenue
Code, patronage dividends are deducted by Roundy's, and are generally
taxable to the stockholder-customers (including the value of the Class B
Common Stock), for Federal income tax purposes.
<PAGE>
The subsidiaries of Roundy's do not operate as cooperatives. The
customers serviced by these subsidiaries are independent grocers,
operating 975 retail stores and 682 convenience stores and do not
receive patronage dividends. In addition, approximately 31% of the
outstanding Common Stock of Roundy's is held by employees or former
customers of Roundy's and, although they participate in the accumulation
of equity in the consolidated Company, they do not receive patronage
dividends and do not own any Class A (Voting) Common Stock.
The applicable laws, regulations, rulings and judicial decisions
affecting the determination of whether a corporation qualifies as a
cooperative for Federal income tax purposes under Subchapter T of the
Internal Revenue Code are subject to interpretation. Management
believes that Roundy's qualifies as a cooperative for such purposes. If
the Internal Revenue Service were to challenge the cooperative status of
Roundy's, and if Roundy's were to be unsuccessful in defending such
status, Roundy's might incur a Federal income tax liability with respect
to patronage dividends previously paid to stockholder-customers during
the tax years in question and deducted by Roundy's. Roundy's thereafter
might incur significantly increased consolidated Federal income tax
liabilities in future tax years.
WHOLESALE FOOD DISTRIBUTION
---------------------------
The Company distributes a broad range of food and nonfood products to
its customers and to corporate-owned retail stores. The Company has
seven product lines: dry grocery, frozen food, fresh produce, meat,
dairy products, bakery goods and general merchandise. The Company has
no long-term purchase commitments and management believes that the
Company is not dependent upon any single source of supply. No source of
supply accounted for more than 5% of the Company's purchases in fiscal
1993.
The Company sells brand name merchandise of unrelated manufacturers,
including most nationally advertised brands. In addition, the Company
sells numerous products under private labels, including "Roundy's,"
"Old Time," "Scot Lad," "Spring Lake," "Perfect Match," "Shurfine,"
"Price Saver," "Buyers' Choice," "Super Choice," "Sunny Valley," "Sunny
Acres," "Sunny Acre Farms," "Classic," "Bonnie Blue," "Valu-Check'd,"
"Gold Coin," and "Meadow Moor Farms." Private label product sales for
the Company accounted for $137,176,000, $148,074,000 and $128,132,000 of
the Company's sales during fiscal 1993, 1992 and 1991, respectively.
Roundy's, exclusive of its subsidiaries, operates as a cooperative with
respect to its wholesale food distribution business. Roundy's
cooperative operations accounted for approximately 36%, 34% and 31% of
the Company's consolidated net sales and service fees for the fiscal
years ended January 1, 1994, January 2, 1993 and December 28, 1991,
respectively. At January 1, 1994, Roundy's had 83 stockholder-customers
actively engaged in the retail grocery business, operating a total of
155 retail grocery stores. Roundy's cooperative wholesale food business
is focused primarily in Wisconsin, where all but 21 of the 155 retail
grocery stores are located (8 are in Illinois and 13 are in Indiana).
At January 1, 1994 the Company had 975 independent retail food stores
and 682 convenience store customers. Sales by the Company to the
independent retail food and convenience stores accounted for 55%, 56%
and 56% of the Company's consolidated net sales and service fees for the
fiscal years ended January 1, 1994, January 2, 1993 and December 28,
1991, respectively.
<PAGE>
The Company's primary marketing objective is to be the principal source
of supply to both its stockholder-customers and other independent
retailers. In an 11 state area the Company serviced 155 retail grocery
stores operated by its stockholder-customers, 975 independent retail
stores, 682 convenience stores, and 19 Company-owned and operated retail
stores during the fiscal year ended January 1, 1994. Of the Company's
consolidated net sales and service fees for this period, $459,206,000 or
18.5% were attributable to five customers, with one customer accounting
for $169,193,700 or 6.8% of such sales. Approximately 83% or 941 retail
store customers purchased less than $3,000,000 each from the Company in
the fiscal year ended January 1, 1994. 102 customers owned more than
one retail food store, with one customer owning 13 retail food stores.
Services to Customers
- ---------------------
Stockholder-customers are provided, and independent retailers are
offered, a variety of services to help them maintain a competitive
position within the retail grocery industry. These services include
pricing programs, ordering assistance, point-of-sale computer support,
detailed reports of purchases, store engineering, retail accounting,
group advertising, centralized bakery purchasing, merchandising,
insurance, real estate services and retail training. The Company
charges its stockholder-customers for some of these services, however,
the income generated by such charges is not material. The foregoing
services are also available to the Company's independent retailers on a
fee basis.
Customer Loans, Guarantees and Leases
- -------------------------------------
The Company has maintained a continuous effort to assist qualified
stockholder-customers and independent retailers to remodel and expand
existing retail locations and to develop new retail outlets, and has
made various loans to these individuals and entities for such purposes.
Loans outstanding as of January 1, 1994 are as follows:
Outstanding
Number Balance Range of Range of
of Original as of Interest Maturity
Loans Amount Jan. 1,1994 Dates Dates
----------- ----------- ----------- --------- ---------
Inventory,
Equipment
Loans 141 $33,967,000 $25,750,400 Variable(1) 1994-2011
- -----------------
(1) Variable rates based on the Company's cost of borrowing.
The Company has guaranteed customer bank loans and customer leases
amounting to $4,600,100 and $1,170,300, respectively at January 1, 1994.
The Company has a lease program under which it may, in its discretion,
lease prime store sites and equipment for sublease to qualified
customers. This enables customers to compete with large grocery store
chains for choice sites at favorable rates. The Company presently has
such real estate and equipment leases with lease terms from 1994 to
2018. Aggregate lease rentals received under this program were
$18,985,200, $18,590,300 and $17,326,800 in 1993, 1992 and 1991,
respectively.
<PAGE>
Marketing and Distribution of Products
- --------------------------------------
The Company generally distributes its various product lines by a fleet
of 270 tractor cabs and 650 trailers and some products are shipped
direct from manufacturers to customer locations. Most customers order
for their stores on a weekly basis and receive deliveries from one to
five days a week. Orders are generally transmitted directly to a
warehouse computer center for prompt assembly and dispatch of shipments.
The Company has retail counselors and merchandising specialists who
serve its customers in a variety of ways, including the analysis of and
recommendation on store facilities and equipment; development of
programs and objectives for establishing efficient methods and
procedures for receipt, handling, processing, checkout and other
operations; informing customers on latest industry trends; assisting and
dealing with training needs of customers; and, if the need arises,
acting as liaison or problem solver between the Company and the
customers. The retail counselors and specialists are assigned a
specific geographic area and periodically visit each customer within
their assigned area.
Terms of Sales and Bad Debt Experience
- --------------------------------------
The Company renders statements to its customers on a weekly basis to
coincide with regular delivery schedules. Roundy's accounts of single
store owners are sold on a prearranged "blank check with order" basis,
and an account is considered delinquent if not paid on the statement
date. Accounts of multiple store owners are considered delinquent if
not paid within three days of the statement date. Accounts of Roundy's
subsidiaries are considered delinquent if not paid within seven days of
the statement date. Delinquent accounts are charged interest at the
rate of prime plus 5%, computed on a daily basis. During each of the
past three fiscal years, the Company's bad debt expense has been less
than .28% of sales. In 1993, 1992 and 1991, the Company's bad debt
expense was $6,738,600, $5,772,900 and $4,030,300, respectively.
Roundy's stockholder-customers are required to maintain buying deposits
with Roundy's equal to the greater of the average amount of a
stockholder-customer's purchases over a two-week period of $20,000. The
book value of Class A and Class B Common Stock of Roundy's owned by a
stockholder-customer is credited against the buying deposit requirement,
and Roundy's has a lien against all such stock to secure any
indebtedness to Roundy's.
RETAIL FOOD STORES
------------------
The Company operates three types of corporate stores (high volume-
limited service retail "warehouse" stores, high value-limited assortment
retail store and conventional retail stores). The high volume-limited
service warehouse stores are designated as "Pick 'n Save" which
generally offer, at discount prices, complete food and general
merchandise lines to the customer, emphasizing higher demand items, with
stores ranging in square footage from 34,000 to 65,000 square feet per
store. The high value-limited assortment retail stores are designated
as "Mor For Less" or "Price Less Foods" which emphasize low cost, high
value lines to the customer, with stores ranging in square footage from
15,000 to 24,000 square feet per store. Conventional retail stores
operated under the name "Cardinal Food Gallery" or "Buy Low Foods"
generally emphasize full service to the customer at competitive prices.
These stores range in square footage from 25,000 to 42,000 square feet.
The number of stores operated by the Company at the end of its three
most recent fiscal years was as follows:
<PAGE>
Type of Store 1993 1992 1991
------------- ---- ---- ----
High Value-Limited Assort-
ment and High Volume-Limited
Service Stores (Warehouse
food stores...................... 14 14 19
Conventional Retail Stores....... 5 5 5
Sales of Company-operated stores during the three most recent fiscal
years were $238,724,000, $263,189,000 and $304,676,000 for 1993, 1992
and 1991, respectively. The additional volume of wholesale sales
generated by the retail stores owned and operated by the Company helps
to reduce the overhead of the business and increases the Company's
return to its stockholders.
EMPLOYEES
---------
At the end of fiscal year 1993, the Company had employed full-time 1,183
executive, administrative and clerical employees, 1,463 warehouse and
processing employees and drivers and 563 retail employees and had
employed 1,952 part-time employees. Substantially all of the Company's
warehouse employees, drivers and retail employees are represented by
unions, with contracts expiring in 1994 through 1998. The Company
considers its employee relations to be normal. However, during the
third quarter of 1991 the Company experienced a 12-week labor dispute at
the Milwaukee Division. There have been no other significant work
stoppages during the last five years. Substantially all full-time
employees are covered by group life, accident, and health and disability
insurance.
COMPETITION
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The grocery industry, including the wholesale food distribution
business, is characterized by intense competition and low profit
margins. The shifting of market share among competitors is typical of
the wholesale food business as competitors attempt to increase sales in
any given market. In order to compete effectively, the Company must
have the ability to meet rapidly fluctuating competitive market prices,
provide a wide range of perishable and nonperishable products, make
prompt and efficient delivery, and provide the related services which
are required by modern supermarket operations.
The Company competes with a number of local and regional grocery
wholesalers and with a number of major businesses which market their
products directly to retailers, including companies having greater
assets and larger sales volume than the Company. Roundy's stockholder-
customers and the Company's corporate stores also compete with several
chain store organizations which have integrated wholesale and retail
operations. The Company's competitors range from small local businesses
to large national and international businesses. The Company's success
is in large part dependent upon the ability of its independent retail
customers and its stockholder-customers to compete with larger grocery
store chains.
In the Milwaukee area, the "Pick 'n Save" group, which consists of both
independently and Company-owned stores, continues to be the market share
leader with 47% as reported in the Milwaukee Journal Consumer Analysis
Survey taken in the Fall of 1993.
<PAGE>
In competing for customers, emphasis is placed on high quality and a
wide assortment of product, low service fees and reliability of
scheduled deliveries. The Company believes that the range and quality
of other business services provided to retail store customers by the
wholesaler are increasingly important factors, and that success in the
wholesale food industry is dependent upon the success of the Company's
customers who are also engaged in an intensely competitive, low profit
margin industry.
ITEM 2. Properties.
-----------
The Company's principal executive offices are located in Pewaukee,
Wisconsin. These offices are on an 85-acre site.
Wholesale activities are conducted by the Company from the following
warehouses:
Approximate
Warehouse
Location Products Distributed Square Footage
- -------- -------------------- --------------
Wauwatosa, Wisconsin All product lines, 745,000 (O)
except nonfood products
Mazomanie, Wisconsin Dry groceries and 225,000 (L)
nonfood products
Westville, Indiana All product lines, 557,000 (L)
except nonfood products
Lima, Ohio All product lines, 460,000 (O)
except produce and
nonfood products
Eldorado, Illinois Dry groceries and 384,000 (O)
dairy products
Columbus, Ohio All product lines, 320,000 (L)
except produce
Parkersburg, West Virginia All product lines, 80,000 (O)
except produce
Van Wert, Ohio Nonfood products 115,000 (L)
Evansville, Indiana Frozen foods and 94,000 (O)
meat
South Bend, Indiana Frozen foods 84,000 (L)
Muskegon, Michigan All product lines, 215,000 (O)
except produce
O = Owned L = Leased
The Company is subject to regulation by the United States Food and Drug
Administration and to certain state and local health regulations in
connection with the operations of its facilities and its wholesale food
business. The Company has not been subject to any actions brought under
such regulations in the past five years.
<PAGE>
Transportation
- --------------
The Company's transportation fleet for distribution operations as of
January 1, 1994 consisted of 270 tractor cabs, 650 trailers and 20
straight delivery trucks. In addition, the Company owns 60 automobiles
and an airplane. Approximately 75% of the fleet is owned by the Company
and the balance is leased.
Computers
- ---------
The Company owns most of its computer and related peripheral equipment.
The computers are used for inventory control, billing and all other
general accounting purposes. The computer systems are adequate for the
Company's operations.
ITEM 3. Legal Proceedings.
------------------
Roundy's is not involved in any material litigation as either a
plaintiff or defendant, nor is any other material litigation
contemplated by Roundy's or, to the best of its knowledge, threatened
against it.
ITEM 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the 1993 fiscal year.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
----------------------------------------------------
The transfer of shares of Roundy's Class A Common Stock and Roundy's
Class B Common Stock is restricted and there is no market for Roundy's
stock. On January 1, 1994 an aggregate of 250 persons held shares of
Roundy's Class A and/or Class B Common Stock. There is also no market
for Roundy's Voting Trust Certificates and there were 83 holders of such
Certificates on January 1, 1994. Except for patronage dividends (see
Item 1, Business, and Note 3 to Roundy's financial statements), no
dividends have ever been paid on the Common Stock of Roundy's. There is
no intention of paying dividends, other than patronage dividends, in the
foreseeable future.
ITEM 6. Selected Financial Data.
------------------------
The information required by this Item is incorporated by reference from
the Registrant's Annual Report to Stockholders for the fiscal year ended
January 1, 1994 (the "Annual Report") under the caption "Selected
Financial Data."
ITEM 7. Management's Discussion and Analysis of Financial Conditions
and Results of Operations.
------------------------------------------------------------
The information required by this Item is incorporated by reference from
the Annual Report under the caption "Financial and Operational Review."
<PAGE>
ITEM 8. Financial Statements and Supplementary Data.
--------------------------------------------
The required Financial Statements are incorporated by reference from the
Annual Report; see response to Item 14(a)(1), of this report. The
required financial statement schedules are filed with this report; see
the response to Item 14(a)(2) of this report. Supplementary data is not
furnished pursuant to Item 30(a)(5) of Regulation S-K.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
-----------------------------------------------------------
None.
PART III
ITEM 10. Directors, Executive Officers, Promoters and Control Persons
of the Registrant.
------------------------------------------------------------
The Directors and Executive Officers of Roundy's are as follows:
Position(s) Held with Roundy's
Name Age and Business Experience
- ------------------ ---- ------------------------------
John R. Dickson 63 Chairman and Chief Executive Officer since
1993; President and Chief Executive
Officer 1986-1993; Director since 1986
(term expires 1995)
Gerald F. Lestina 51 President and Chief Operating Officer
since 1993; Vice President of Wisconsin
Region 1992-1993; President of Milwaukee
Division 1986-1993; Director since 1991
(term expires 1996)
Robert D. Ranus 53 Vice President and Chief Financial Officer
since 1987; Director since 1987 (term
expires 1994)
David C. Busch 45 Vice President of Administration since
1993; Vice President of Human Resources
1990-1993; Director of Human Resources
1988-1989
Edward G. Kitz 40 Vice President & Treasurer since 1989;
Vice President & Controller 1985-1988
Michael J. Schmitt 45 Vice President, Northern Region since
1992; Vice President and General Manager
of Milwaukee Division 1991; Vice President
of Retail Development 1990-1991; Director
of Retail Development 1988-1990
Robert G. Turcott 49 Vice President, Secretary and General
Counsel since 1987
Roger W. Alswager 45 Vice President of Real Estate and Develop-
ment since 1989; Director of Real Estate
and Development 1986-1988
<PAGE>
Londell J. Behm 43 Vice President of Advertising since 1987
John M. Granger 47 Vice President of Management Information
Services since 1990; Vice President of
Management Information Systems, Richfood,
Inc. 1987-1990
Charles H. 51 Vice President, Logistics and Planning
Kosmaler, Jr. since 1993; Vice President of Adminis-
trative Efficiencies 1992-1993; Vice
President and Financial Operating Officer
1990-1991; Vice President of Finance,
Milwaukee Division 1988-1989
Marion H. Sullivan 47 Vice President of Marketing since 1989;
President of Pick 'n Save 1989-1990;
Executive Vice President and Chief
Operating Officer, Pick 'n Save 1987-1988
Robert A. Farrell 40 Director since 1991 (term expires 1994);
President of Ultra Mart, Inc., Menomonee
Falls, Wisconsin
Gary N. Gundlach 50 Director since 1990 (term expires 1996);
President of G.E.M., Inc., McFarland,
Wisconsin
George C. Kaiser 61 Director since 1986 (term expires 1995);
Chairman and Chief Executive Officer,
Hanger Tight Company since 1988; Chief
Executive Officer, George C. Kaiser and
Co. since 1988; Director of The Baird
Funds, Inc. since 1992
George E. Prescott 46 Director since 1986 (term expires 1995);
President and Chief Executive Officer of
Prescott's Supermarkets, Inc., West Bend,
Wisconsin
Brenton H. Rupple 69 Director since 1993 (term expires 1996);
Retired Chairman of Robert W. Baird & Co.,
Milwaukee, Wisconsin
Robert R. Spitzer 71 Director since 1991 (term expires 1994);
President Emeritus of Milwaukee School of
Engineering, Milwaukee, Wisconsin
Directors of Roundy's are elected by class and generally serve three-
year terms; approximately one-third of the Board of Directors is elected
annually. Of the nine members of the Board of Directors, three are
currently Executive Officers of Roundy's (Messrs. Dickson, Lestina and
Ranus) and three are stockholder-customers of Roundy's (Messrs. Farrell,
Gundlach and Prescott). The terms of the Roundy's, Inc. Voting Trust
provide that each year the Trustees will vote to elect one stockholder-
customer, chosen by a plurality vote of the Voting Trust Certificate
Holders, to serve a three-year term as Director; therefore, at any time
there should be three "Retailer Directors" serving.
<PAGE>
ITEM 11. Executive Compensation.
-----------------------
The following table shows the compensation for the past three years of
Roundy's five most highly compensated executive officers performing
policy making functions for Roundy's, including the Chief Executive
Officer (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Securities
Name and Underlying All Other
Principal Annual Compensation (A)Options Compensation
Position Year Salary Bonus(1) (B)SARs (2) (3)
- -------------------------------------------------------------------------------
(A) (B)
----- -----
John R. Dickson 1993 $456,675 $60,000 6,000 - $25,621
Chairman and 1992 436,047 20,750 5,000 - 56,804
Chief Executive 1991 397,500 51,680 10,000 - -
Officer
Gerald F. Lestina 1993 193,605 63,127 4,000 - 7,367
President and Chief 1992 170,682 34,059 2,500 - 6,699
Operating Officer 1991 119,000 15,833 5,000 - -
Robert D. Ranus 1993 181,125 62,500 3,000 - 9,527
Vice President and 1992 178,365 30,000 2,500 - 9,054
Chief Financial 1991 167,500 34,000 5,000 - -
Officer
Terrance Kapron 1993 155,000 50,000 - - 6,734
Vice President of 1992 144,846 7,500 500 500 6,462
Operations 1991 125,000 20,400 1,000 1,000 -
Marion H. Sullivan 1993 116,000 22,936 - 500 7,324
Vice President of 1992 114,154 31,157 500 500 6,730
Marketing 1991 107,000 41,186 1,000 1,000 -
(1) Represents amounts paid in the year indicated for performance in
the previous year.
(2) Information for years ending prior to December 15, 1992 is not
required to be disclosed in the "All Other Compensation" column.
(3) The amounts shown in this column for 1993 and 1992, respectively,
were derived from the following figures. Mr. Dickson: $13,390
and $44,640 representing the current dollar value of the benefit
to Mr. Dickson of the premium paid by Roundy's for the split
dollar life insurance policy covering Mr. Dickson; $9,982 and
$9,982 - Roundy's paid term life insurance premium; $2,249 and
$2,182 - Roundy's contribution to the 401(k) plan. Term life
insurance premiums paid by Roundy's and Roundy's contributions to
the 401(k) plan, respectively, for the other named executive
officers are shown below. For 1993 - Mr. Lestina: $5,118 and
$2,249. Mr. Ranus: $7,278 and $2,249. Mr. Kapron: $4,945 and
$1,789. Mr. Sullivan: $5,584 and $1,740. For 1992 - Mr.
Lestina: $4,883 and $1,816. Mr. Ranus: $7,161 and $1,893. Mr.
Kapron: $4,920 and $1,542. Mr. Sullivan: $5,519 and $1,211.
<PAGE>
The executive officers of Roundy's are each covered by $250,000 of
executive equity life insurance. In addition, executives, except Mr.
Dickson, are covered by a group life carve-out plan in the amount of
three times salary, which is in lieu of the group term life insurance
provided to substantially all nonunion employees under a Roundy's-
sponsored Plan. Mr. Dickson is covered under a split dollar insurance
program in the amount of $1,500,000 for a 10-year term of which Roundy's
will pay 90% of the premium and Mr. Dickson 10% of the premium with
Roundy's retaining all cash value in the policy unless Mr. Dickson
exercises an option to purchase the cash value. The executive officers
of Roundy's are also covered by an executive disability income insurance
wrap-around plan which is in addition to the disability income insurance
provided to substantially all nonunion employees under a Roundy's-
sponsored Plan.
The Board of Directors of the Company has authorized the Company to
guarantee the repayment of any loans incurred by senior executives and
key employees for the purpose of exercising certain stock options
granted by the Company. The guarantee is limited to a total aggregate
principal amount of loans of $3,000,000. Under this authority, there is
one guaranty outstanding at January 1, 1994 for a loan in the amount of
$400,000 for John R. Dickson.
The Company has Deferred Compensation Agreements with certain executive
officers, including Messrs. Dickson, Lestina, Ranus and Sullivan. The
Deferred Compensation Agreements provide generally that upon the
occurrence of a change in control of the Company, the Company shall pay
to the employee deferred compensation equal to the sum of the employee's
then current annual salary plus any bonus which may have been paid to
the employee within the fiscal year of the Company preceding the change
in control plus any other deferred compensation which may accrue to the
employee for the fiscal year of the Company preceding the change in
control under any deferred compensation plan or agreement plus the value
of any health or life insurance benefits. The deferred compensation
amount must be paid in a single payment six months following the date of
occurrence of the change in control or, if employee should be terminated
following the change in control, within thirty days of the date of such
termination, whichever occurs earlier.
Roundy's has an employment agreement with John R. Dickson. This
agreement has a three-year term ending June 30, 1995. The agreement
states that as Chief Executive Officer, Mr. Dickson will receive an
annual base salary of $445,000 for the first year. Thereafter, each
July 1, this base salary shall be increased in an amount equal to the
rate of inflation in the Consumer Price Index For All Urban Consumers
(CPI-U) for all items for the previous 12 months ended December 31 of
the preceding year, but in no event shall the increase be less than 3%.
All or part of this salary may be deferred upon Mr. Dickson's request.
Mr. Dickson is included in the bonus program for executives at an amount
not to exceed 20% of his base salary, which may be deferred upon Mr.
Dickson's request. The agreement also provides for certain health
insurance, disability income and other benefits for Mr. Dickson and his
wife, until their deaths, in addition to those provided to officers in
general. During the term of his employment with Roundy's and for a
period of one year following termination, either voluntary or
involuntary, Mr. Dickson agrees not to compete with Roundy's within 150
miles of any company operated retail or wholesale facility operated at
any time during the term of the agreement. Also under certain
conditions specified in the agreement, Mr. Dickson may extend the
Exercise Period of the stock options granted to him under the 1991 Stock
Incentive Plan.
<PAGE>
Mr. Dickson also has a Supplemental Pension Plan Agreement with Roundy's
which provides additional retirement benefits of $15,625 per month for
each month of Mr. Dickson's employment. The benefit may accrue for 96
months to July 1, 1995 at which time the maximum benefit will be $1,500
per month, or $18,000 per year. Mr. Dickson is currently 80% vested in
these benefits pursuant to a schedule that results in 100% vesting on
July 1, 1995.
Effective November 1, 1991, the Board of Directors adopted the 1991
Stock Incentive Plan (the "Plan") under which up to 75,000 shares of
Class B Common Stock may be issued pursuant to the exercise of stock
options. The Plan also authorizes the grant of up to 25,000 stock
appreciation rights ("SARs"). Options and SARs may be granted to senior
executives and key employees of the Company by the Executive
Compensation Committee of the Board of Directors. No options or SARs
may be granted under the Plan after November 30, 2001. Options granted
become exercisable based on the vesting rate which ranges from 20% at
the date of grant to 100% eight years from the date of grant. SAR
holders are entitled, upon exercise of a SAR, to receive cash in an
amount equal to the excess of the book value per share of the Company's
common stock as of the last day of the Company's fiscal year immediately
preceding the date the SAR is exercised over the base price of the SAR.
SARs granted become exercisable based on the vesting rate which ranges
from 20% on the last day of the fiscal year of the grant to 100% eight
years from the last day of the fiscal year of the grant. In the event
of a change in control of the Company, all options and SARs previously
granted and not exercised, become exercisable.
The following tables provide information on the Named Executive
Officers' option and SAR grants in 1993, option and SAR exercises in
1993 and the value of unexercised options at January 1, 1994.
<TABLE>
OPTION AND SAR GRANTS IN 1993
Potential
Realizable
Value at
Assumed
% of Annual Rates
Number of Options/ Exer- of Stock
Securities SARs cise Price
Underlying Granted or Appreciation
(A)Options to Base for Option
(B)SARs Employees Price Expiration Terms
Name Granted in 1993(1) ($/Share) Date 5%($) 10%($)
- ------------------ ---------- ---------- --------- ---------- ------- -------
John R. Dickson (A)6,000 40.0 65.10 11/30/2003 245,640 622,500
(B) - - - - - -
Gerald F. Lestina (A)4,000 26.7 65.10 11/30/2003 163,760 415,000
(B) - - - - - -
Robert D. Ranus (A)3,000 20.0 65.10 11/30/2003 122,820 311,250
(B) - - - - - -
Marion H. Sullivan (A) - - - - - -
(B) 500 10.0 65.10 11/30/2003 20,470 51,875
(1) Roundy's granted options representing 15,000 shares and 5,000
freestanding SARs to employees in 1993.
<PAGE>
Aggregated Option/SAR Exercises in 1993
and 1993 Year-End Option Values
---------------------------------------
Number of Value ($)
Unexercised of Unexercised
Shares (A)Options In-The-Money
Acquired (B)SARs (A)Options
on Exercise at 1/1/94 (B)SARs at 1/1/94
(A)Options Value($) Exercisable/ Exercisable/
Name (B)SARs Realized Unexercisable Unexercisable
- ------------------ ----------- -------- -------------- ------------------
John R. Dickson (A)15,333 141,165 - / 5,667 - / 47,704
(B) - - - -
Gerald F. Lestina (A) - - 7,999 / 3,501 122,973 / 28,227
(B) - - - -
Robert D. Ranus (A) - - 7,666 / 2,834 120,791 / 23,859
(B) - - - -
Marion H. Sullivan (A) - - 550 / 950 9,355 / 15,645
(B) - - 650 / 1,350 10,010 / 18,265
Benefits under the Roundy's, Inc. Retirement Plan are, in general, an
amount equal to 50% of average compensation minus 50% of the
participant's primary Social Security benefit; provided, however, that
if the employee has fewer than 25 years of credited service, the monthly
amount so determined is multiplied by a fraction, the numerator of which
is the years of credited service and the denominator of which is 25. In
addition, if credited service is greater than 25 years, the benefit is
increased by 1% of average compensation for each year of credited
service in excess of 25 years to a maximum of 10 additional years.
The following table sets forth the estimated annual pensions (before
deduction of the Social Security offset described below) which persons
in specified categories would receive if they had retired on January 1,
1994, at the age of 65:
Average Annual
Compensation
During Last Annual Pension After Specified
Five Completed Years of Credited Service
Calendar Years 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------- ----------------------------------------------------
$125,000 $37,500 $50,000 $62,500 $68,800 $75,000
150,000 45,000 60,000 75,000 82,500 90,000
175,000 52,500 70,000 87,500 96,300 105,000
200,000 60,000 80,000 100,000 110,000 118,800
225,000 65,800 87,700 109,600 118,800 118,800
250,000 65,800 87,700 109,600 118,800 118,800
300,000 65,800 87,700 109,600 118,800 118,800
400,000 65,800 94,000 118,800 118,800 118,800
450,000 70,500 105,800 118,800 118,800 118,800
500,000 78,400 117,500 118,800 118,800 118,800
Directors who are employees of Roundy's receive no fees for serving as
Directors. Customer-directors each received $500 per meeting during
1993; outside Directors each received $12,500, prorated on an annual
basis, plus $500 per meeting for their services during 1993.
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Roundy's is authorized by its Articles of Incorporation to issue 60,000
shares of Class A Common Stock, $1.25 par value, and 2,400,000 shares of
Class B Common Stock, $1.25 par value. On January 1, 1994, 15,500
shares of Class A Common Stock and 1,140,302 shares of Class B Common
Stock were outstanding. Holders of Roundy's Class A Common Stock are
entitled to one vote for each share held, on all matters which are
submitted to a vote of stockholders. Except as otherwise required by
law, holders of Roundy's Class B Common Stock are not entitled to vote
on any matter submitted to a vote of the stockholders.
Roundy's has a Voting Trust which was established in 1971 (amended and
restated during 1983 and amended in 1986), as the successor to an
initial voting trust created at the time of the organization of
Roundy's, and which will terminate in 1997. The main purpose for the
establishment of the Trust, and its predecessor, was to insure the
stability of management necessary to obtain long-term warehouse and
other financing. On January 1, 1994, all of the outstanding shares of
Roundy's Class A Common Stock held by current stockholder-customers were
on deposit in the Voting Trust. The Voting Trust Agreement authorizes
the Trustees to vote all shares deposited in the Trust, in their
discretion, for the election of all but three of the Directors (there
are currently nine Directors). On other matters submitted to a vote of
stockholders, the Trustees are required to vote the shares deposited in
the Trust as a block as directed by a vote of a majority of the holders
of outstanding Voting Trust Certificates (with each share of Class A
Common Stock in the Trust entitling the depositor thereof to one vote).
The Trustees of the Trust currently are Gerald F. Lestina, Robert G.
Turcott, Charles E. Stenicka, Duane G. Tate, John A. McAdams, and
Charles R. Bonson. Mr. Lestina is a member of Roundy's Board of
Directors. Mr. Tate is President and Stockholder of Tate Foods, Inc.,
a stockholder-customer of Roundy's. Mr. McAdams is President and
Stockholder of McAdams, Inc., a stockholder-customer of Roundy's. Mr.
Bonson is President and Stockholder of Bonson's Foods, Inc., a
stockholder-customer of Roundy's. In the event of the death,
resignation, incapacity or inability of any of the Trustees, a successor
Trustee may be named by a majority of the remaining Trustees.
Vacancies need not be filled, except that there must be at least three
Trustees acting as such at all times, and one Trustee must always be a
stockholder-customer (or a principal of an entity which is a
stockholder-customer) of Roundy's.
Woodman's Food Market, Inc. (2919 North Lexington, Janesville, Wisconsin
53545) is the record owner of 99,334 shares (or 8.71%) of the Roundy's
Class B Common Stock outstanding on January 1, 1994. Voting and
investment power over the shares owned by Woodman's Food Market, Inc. is
solely held by its owner, Willard R. Woodman, Jr. McAdams, Inc. (36933
West Plank Road, Oconomowoc, Wisconsin 53066) is owner of 61,038 shares
(or 5.35%) of the Roundy's Class B Common Stock outstanding on January
1, 1994. Voting and investment power over the shares owned by McAdams,
Inc. is solely held by its owner, John A. McAdams. Prescott's
Supermarkets, Inc. (1719 South Main, P.O. Box 818, West Bend, Wisconsin
53095) is owner of 59,337 shares (or 5.20%) of the Roundy's Class B
Common Stock outstanding on January 1, 1994. Voting and investment
power over the shares owned by Prescott's Supermarkets, Inc. is solely
held by its owner, George E. Prescott. Martin's Super Markets, Inc.
<PAGE>
(P.O. Box 2709, South Bend, Indiana 46680) is the record owner of 1,300
shares (or 8.39%) of the Roundy's Class A Common Stock outstanding on
January 1, 1994. Voting and investment power over the shares owned by
Martin's Super Markets, Inc. is jointly held by its shareholders, Robert
E. Bartels and Nancy J. Bartels. Mega Marts, Inc. (6312 South 27th
Street, Oak Creek, Wisconsin 53154) is owner of 1,200 shares (or 7.74%)
of the Roundy's Class A Common Stock and 68,339 shares (or 5.99%) of the
Roundy's Class B Common Stock outstanding on January 1, 1994. Voting
and investment power over the shares owned by Mega Marts, Inc. is solely
held by its owner, David A. Ulrich. No other person (person or group
who, directly or indirectly, through any relationship, has or shares the
power to vote, or to direct the voting) owns of record or is known by
Roundy's to own beneficially more than 5% of the outstanding Roundy's
Class A Common Stock or Roundy's Class B Common Stock. Except for
Martin's Super Markets, Inc. and Mega Marts, Inc. mentioned above, no
other person owns of record or is known by Roundy's to own beneficially
more than 5% of the Voting Trust Certificates issued by the Trustees of
the Roundy's Voting Trust with respect to shares of Roundy's Class A
Common Stock deposited with the Trustees.
The following table sets forth the beneficial ownership of equity
securities of Roundy's by each Director at January 1, 1994, together
with the beneficial ownership of equity securities by all Directors and
Officers as a group:
Beneficial Percent
Title of Class Beneficial Owner Ownership(1) of Class
- -------------- ------------------ ----------------- --------
Class B Common John R. Dickson 20,333 shares (2) 1.78%
Class B Common Gerald F. Lestina 11,105 shares (3) 0.97%
Class B Common Robert D. Ranus 11,891 shares (4) 1.04%
Class B Common George C. Kaiser 2,500 shares (5) 0.22%
Class B Common Robert R. Spitzer 200 shares 0.02%
Class A Common George E. Prescott 500 shares (6) 3.23%
Class B Common George E. Prescott 59,337 shares (6) 5.20%
Class A Common Gary N. Gundlach 500 shares (7) 3.23%
Class B Common Gary N. Gundlach 14,148 shares (7) 1.24%
Class A Common Robert A. Farrell 600 shares (8) 3.87%
Class B Common Robert A. Farrell 27,415 shares (8) 2.40%
Class A Common All Directors and
Officers as a Group
(3 persons, including
the above) 1,600 shares 10.32%
Class B Common All Directors and
Officers as a Group
(18 persons, including
the above) 156,637 shares (9) 13.49%
<PAGE>
(1) Direct ownership except as otherwise noted, and except that all
shares of Class A Common Stock shown in the table are owned of
record by the Trustees of the Roundy's, Inc. Voting Trust.
(2) Includes 3,000 shares owned by the estate of Nancy B. Dickson.
There are no options for shares that are currently exercisable and
options for an additional 5,667 shares that have been granted that
are not currently exercisable are not included.
(3) Includes options for 7,999 shares that are currently exercisable
but does not include options for an additional 3,501 shares that
have been granted.
(4) Includes options for 7,666 shares that are currently exercisable
but does not include options for an additional 2,834 shares that
have been granted.
(5) Relates to shares owned by First Wisconsin Trust Company as
Trustee of George Kaiser Profit Sharing Plan.
(6) Relates to shares owned by Prescott's Supermarkets, Inc. of which
Mr. Prescott is principal shareholder.
(7) Relates to shares owned by Gary N. Gundlach, as sole proprietor or
G.E.M., Inc. of which Mr. Gundlach is principal shareholder.
(8) Relates to shares owned by Ultra Mart, Inc. of which Mr. Farrell
is principal shareholder.
(9) Includes options for 20,465 shares that are currently exercisable
but does not include options for an additional 21,202 shares that
have been granted.
ITEM 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Messrs. Farrell, Prescott and Gundlach, customer-directors of Roundy's,
and Messrs. Duane G. Tate, Charles R. Bonson and John A. McAdams,
Trustees of the Voting Trust, each own and/or operate retail food stores
which purchase merchandise from Roundy's as a supplier in the ordinary
course of business. Retail food stores owned by customer-directors or
Retailer Trustees purchase from Roundy's on the same basis and
conditions as all other stockholder-customers of Roundy's. During the
last three years, the aggregate amount of purchase from Roundy's for
each of the foregoing were as follows:
1993 1992 1991
------------ ------------ ------------
Robert A. Farrell $74,630,000 $74,523,000 $57,638,000
George E. Prescott 50,356,000 43,976,000 34,917,000
Gary N. Gundlach 28,110,000 22,202,000 17,132,000
Duane G. Tate 18,334,000 14,003,000 11,116,000
John A. McAdams 62,838,000 61,038,000 56,802,000
Charles R. Bonson 5,580,000 5,292,000 5,035,000
Woodman's Food Market, Inc., owner of 8.71% of Roundy's Class B Common
Stock, had aggregate purchases from Roundy's of $52,085,000,
$48,878,000, and $44,769,000 for 1993, 1992 and 1991, respectively.
Martin's Super Markets, Inc., owner of 8.39% of Roundy's Class A Common
Stock, has aggregate purchases from the Company of $65,988,000,
$61,330,000 and $55,012,000 for 1993, 1992 and 1991, respectively.
Mega Marts, Inc., owner of 7.74% of Roundy's Class A Common Stock, has
aggregate purchases from Roundy's of $169,194,000, $141,452,000, and
$120,207,000 for 1993, 1992 and 1991, respectively.
Ultra Mart, Inc. agreed to sublease land and buildings from the Company
for periods of one to 20 years at seven store sites, for an aggregate
annual rental of approximately $2,151,000.
<PAGE>
Prescott's Supermarkets, Inc. agreed to sublease land and buildings from
the Company for periods of four to 19 years at six store sites, for an
aggregate annual rental of approximately $1,268,000.
George E. Prescott, a customer-director of Roundy's, is also a director
of Performance Foods of Shawano, Inc., another customer-stockholder of
Roundy's.
Gary N. Gundlach and G.E.M., Inc. have agreed to sublease land and
buildings from the Company for periods of three to 18 years at four
store sites, for an aggregate annual rental of approximately $731,000.
Tate Foods, Inc. agreed to sublease land and buildings from the Company
for periods of four to 17 years at four store sites, for an aggregate
annual rental of approximately $405,000.
McAdams, Inc. agreed to sublease land and buildings from the Company for
periods of one to 17 years at four store sites, for an aggregate annual
rental of approximately $629,000.
Mega Marts, Inc. agreed to sublease land and buildings from the Company
for periods of one to 20 years at seven store sites, for an aggregate
annual rental of approximately $1,929,000.
In January, 1993 Ultra Mart, Inc. issued a promissory note to Roundy's,
Inc. in the amount of $393,600. The amount outstanding as of February
26, 1994 was $314,800.
In April, 1993, Tate Foods, Inc. issued promissory notes to Roundy's,
Inc. in the amount of $601,300. The amount outstanding as of February
26, 1994 was $531,300.
The Company has guaranteed $484,900 of notes which mature in December of
1997 for Tate Foods, Inc., of which Duane G. Tate is President and
stockholder.
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
on Form 8-K.
-------------------------------------------------------
(a)(1) Financial Statements
The following consolidated financial statements of the Company are
incorporated by reference from its Annual Report to Stockholders for the
year ended January 1, 1994, filed as an exhibit hereto:
Independent Auditors' Report
Statements of Consolidated Earnings for each of the three years
in the period ended January 1, 1994
Consolidated Balance Sheets at January 1, 1994 and January
2, 1993
Statements of Consolidated Stockholders' Equity for each of
the three years in the period ended January 1, 1994
Statements of Consolidated Cash Flows for each of the three
years in the period ended January 1, 1994
Notes to Financial Statements
(a)(2) Financial Statement Schedules as of January 1, 1994
Page
----
Independent Auditors' Report....................... 22
Schedule VII - Guarantees of securities
of other issuers................. 23
Schedule VIII - Valuation and qualifying
accounts......................... 24
<PAGE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or the notes
thereto.
(a)(3) Exhibits
3.1 Articles of Incorporation of the Company, as amended,
incorporated herein by reference to Exhibit 4.1 of Registrant's
Registration Statement on Form S-2 (File No. 2-94485) dated
December 5, 1984.
3.2 By-Laws of the Company as amended December 9, 1986,
incorporated herein by reference to Exhibit 3.2 of Registrant's
Annual Report on Form 10-K for fiscal year ended January 3,
1987, filed with the Commission on April 3, 1987.
3.3 1988-1 By-Law Amendments incorporated herein by reference to
Exhibit 3.3 of Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988, filed with the Commission on
April 1, 1988.
3.4 Amendment of By-Law Section 5.01, incorporated herein by
reference to Exhibit 3.4 of Registrant's Annual Report on Form
10-K for the fiscal year ended December 30, 1989, filed with
the Commission on March 30, 1990.
3.5 Amendment of By-Law Section 7.10, 7.11 and 7.12, incorporated
herein by reference to Exhibit 3.5 of Registrant's Annual
Report on Form 10-K for the fiscal year ended December 29,
1990, filed with the Commission on March 28,1991.
4.1 Modification Letter dated March 1, 1989 to Note Purchase
Agreement dated September 1, 1987 between Roundy's, Inc. and
Teachers Insurance and Annuity Association of America,
incorporated herein by reference to Exhibit 4.1 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1988, filed with the Commission on March 31, 1989.
4.2 Note Agreement dated March 1, 1989, between Roundy's, Inc. and
Teachers Insurance and Annuity Association of America,
incorporated herein by reference to Exhibit 4.2 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31, 1988, filed with the Commission on March 31, 1989.
4.3 Modification Letter dated March 20, 1990 to Modification Letter
dated March 1, 1989 and to Note Purchase Agreement dated March
1, 1989 between Roundy's, Inc. and Teachers Insurance and
Annuity Association of America, incorporated herein by
reference to Exhibit 4.3 of Registrant's Annual Report on Form
10-K for the fiscal year ended December 30, 1989, filed with
the Commission on March 30, 1990.
4.4 Credit Agreement dated March 6, 1989, between Roundy's, Inc.
and The Chase Manhattan Bank, N.A. (as agent), incorporated
herein by reference to Exhibit 4.3 of Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31,
1988, filed with the Commission on March 31, 1989.
4.5 Amendment No. 1 dated April 13, 1990 to the Credit Agreement
dated March 6, 1989, between Roundy's, Inc. and The Chase
Manhattan Bank, N.A. (as agent), incorporated herein by
reference to Exhibit 4.5 of Registrant's Registration Statement
on Form S-2 (File No. 2-66296), dated April 27, 1990.
4.6 Policy Relating to Redemption of Stock by Inactive Customer
Shareholders and Former Employees (Effective as of January 1,
1991), incorporated herein by reference to Exhibit 4.6 of
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 29, 1990, filed with the Commission on March 28,
1991.
<PAGE>
4.7 Amendment No. 2 dated October 9, 1991 (effective October 24,
1991) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.7 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December
28, 1991, filed with the Commission on March 26, 1992.
4.8 Amendment No. 3 dated December 9, 1991 (effective December 30,
1991) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.8 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December
28, 1991, filed with the Commission on March 26, 1992.
4.9 Note Agreement dated December 15, 1991 (effective December 30,
1991), between Roundy's, Inc. and Massachusetts Mutual Life
Insurance Company and United of Omaha Life Insurance Company,
incorporated herein by reference to Exhibit 4.9 of Registrant's
Annual Report on Form 10-K for the fiscal year ended December
28, 1991, filed with the Commission on March 26, 1992.
4.10 Amendment No. 4 dated December 14, 1992 (effective December 15,
1992) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent),
incorporated herein by reference to Exhibit 4.10 of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993, filed with the Commission on March 30,
1993.
4.11 Note Agreement dated December 15, 1992 between Roundy's, Inc.
and Connecticut Mutual Life Insurance Company, The Ohio
National Life Insurance Company, Provident Mutual Life
Insurance Company of Philadelphia, Providentmutual Life and
Annuity Company of America, Guarantee Mutual Life Company,
Woodmen Accident and Life Company and United of Omaha Life
Insurance Company, incorporated herein by reference to Exhibit
4.11 of Registrant's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993, filed with the Commission on March
30, 1993.
4.12 Policies relating to Roundy's Issuance and Sales and Redemptions/
Repurchases of its Stock (effective as of January 1, 1994).
4.13 Amendment No. 5 dated December 15, 1993 (effective December 13,
1993) to the Credit Agreement dated March 6, 1989, between
Roundy's, Inc. and The Chase Manhattan Bank, N.A. (as agent).
4.14 Note Agreement dated December 22, 1993 (effective December 22,
1993), between Roundy's, Inc. and The Variable Annuity Life
Insurance Company, The Life Insurance Company of Virginia,
Phoenix Home Life Mutual Insurance Company, Phoenix American
Life Insurance Company, Washington National Insurance Company,
and TMG Life Insurance Company.
9 Amended and Restated Voting Trust Agreement dated September 16,
1983, incorporated herein by reference to Exhibit 9 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1983, filed with the Commission on March 30, 1984.
9(a) Amendments No. 1 and 2, dated April 8, 1986 to Amended and
Restated Voting Trust Agreement, incorporated herein by
reference to Exhibit 9(a) of Registrant's Registration
Statement on Form S-2 (File No. 2-66296), dated April 29, 1986.
9(b) Amendment No. 1987-1 to Amended and Restated Voting Trust
Agreement, incorporated herein by reference to Exhibit 9(b) of
Registrant's Registration Statement on Form S-2 (File No. 2-
66296), dated April 29, 1987.
<PAGE>
10.1 Employment Agreement dated July 1, 1992 between the Registrant
and John R. Dickson, incorporated herein by reference to
Exhibit 10.1 of Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993, filed with the Commission on
March 30, 1993.
10.2 Roundy's, Inc. Supplemental Pension Plan Agreement, effective
July 1, 1987 between the Registrant and John R. Dickson,
incorporated herein by reference to Exhibit 10.3 of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993, filed with the Commission on March 30,
1993.
10.3 Deferred Compensation Agreement plan between the Registrant and
certain executive officers including Messrs. Dickson, Ranus,
Lestina and Sullivan, incorporated herein by reference to
Exhibit 10.4 of Registrant's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989 filed with the Commission
on March 30, 1990.
10.4 Directors and Officers Liability and Corporation Reimbursement
Policy issued by American Casualty Company of Reading,
Pennsylvania (CNA Insurance Companies) as of June 13, 1986,
incorporated herein by reference to Exhibit 10.3 of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 3, 1987, filed with the Commission on April 3,
1987.
10.4(a)Declarations page for renewal of Directors and Officers
Liability and Corporation Reimbursement Policy.
10.5 1991 Stock Incentive Plan, revised February 9, 1993,
incorporated herein by reference to Exhibit 10.6 of
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 2, 1993, filed with the Commission on March 30,
1993.
13. 1993 Annual Report to Stockholders of Roundy's, Inc.
21. Subsidiaries of Roundy's, Inc.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the last quarter
of 1993.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the consolidated financial statements of Roundy's, Inc.
and its subsidiaries as of January 1, 1994 and January 2, 1993, and for
each of the three years in the period ended January 1, 1994, and have
issued our report thereon dated February 28, 1994; such financial
statements and report are included in your 1993 Annual Report to
Stockholders and are incorporated herein by reference. Our audits also
included the financial statement schedules of Roundy's, Inc., listed in
Item 14. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the
information set forth therein.
DELIOTTE & TOUCHE
Milwaukee, Wisconsin
February 28, 1994
<PAGE>
SCHEDULE VII
ROUNDY'S, INC. AND SUBSIDIARIES
January 1, 1994
GUARANTEES OF SECURITIES OF OTHER ISSUERS
Name of Issuer Title of Issue
of Securities of Each Class Total Amount
Guaranteed by of Securities Guaranteed & Nature of
Registrant Guaranteed Outstanding Guarantee
- -------------------- ------------------ -------------- -----------
Performance Foods Note dated $250,000 Principal &
of Shawano, Inc. September 7, 1990 Interest
Tate Foods, Inc. Note dated 413,900 Principal &
December 31, 1993 Interest
Tate Foods, Inc. Note dated 71,000 Principal &
April 20, 1992 Interest
Harrisburg Mad Note dated 227,600 Principal &
Pricer, Inc. June 28, 1991 Interest
Spiegelhoff & Bartell Note dated 214,700 Principal &
Enterprises, Inc. February 13, 1992 Interest
Johanneson's of Note dated 212,000 Principal &
Wisconsin, Inc. November 16, 1992 Interest
Wilson Cardinal Note dated 109,000 Principal &
Markets, Inc. February 15, 1993 Interest
Witbeck's, Inc. Note dated 178,500 Principal &
December 8, 1993 Interest
G & G Foods, Inc. Note dated 2,000,000 Principal &
June 28, 1993 Interest
John R. Dickson Note dated 400,000 Principal &
December 23, 1993 Interest
Eastview Markets, Inc. Note dated 240,000 Lease
November 30, 1992 Rentals
William P. Cain Note dated 76,400 Principal &
July 17, 1992 Interest
Norwalk Real Estate Lease 8,400 Lease
June 14, 1979 Rentals
Scranton's-West Milton Real Estate Lease 136,000 Lease
April 30, 1980 Rentals
Mount Vernon Note dated 360,000 Principal &
January 29, 1986 Interest
Englewood Real Estate Lease 356,600 Lease
February 2, 1987 Rentals
Tremont Real Estate Lease 62,800 Lease
May 12, 1990 Rentals
Kitchens Real Estate Lease 87,000 Lease
December 13, 1989 Rentals
Clark's Finer Foods Real Estate Lease 366,500 Lease
October 2, 1986 Rentals
----------
$5,770,400
==========
None of the above securities were owned by the registrant, none were
held in the treasury of the issuer and none were in default.
<PAGE>
</TABLE>
<TABLE>
ROUNDY'S, INC. AND SUBSIDIARIES SCHEUDLE VIII
===============================
VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
- -------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------
ADDITIONS
---------
(1) (2)
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Description of Period Expenses Accounts Deductions(A) of Period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED January 1, 1994:
Allowance for Losses:
Current receivables.......... $7,578,200 $6,738,600 $5,550,300 $8,766,500
Notes receivable, long-term.. 1,483,000 - - 1,483,000
YEAR ENDED January 2, 1993:
Allowance for Losses:
Current receivables.......... $7,038,900 $4,289,900 $3,750,600 $7,578,200
Notes receivable, long-term.. - 1,483,000 - 1,483,000
YEAR ENDED December 28, 1991:
Allowance for Losses:
Current receivables.......... $5,422,100 $4,030,300 $2,413,500 $7,038,900
<FN>
(A) Amounts in Column D represent charges made for the purpose the allowance
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Roundy's, Inc. has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized.
ROUNDY'S, INC.
JOHN R. DICKSON ROBERT D. RANUS
- ------------------------ ------------------------
By: John R. Dickson By: Robert D. Ranus
(Principal Executive Officer) (Principal Financial
Officer and Principal
Accounting Officer)
Date: March 28, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons (constituting
a majority of the Board of Directors) on behalf of the Registrant and in
the capacities and on the dates indicated:
JOHN R. DICKSON GEORGE E. PRESCOTT
- ------------------------ ------------------------
John R. Dickson George E. Prescott
March 28, 1994 March 28, 1994
(Director) (Director)
GERALD F. LESTINA ROBERT D. RANUS
- ------------------------ ------------------------
Gerald F. Lestina Robert D. Ranus
March 28, 1994 March 28, 1994
(Director) (Director)
GEORGE C. KAISER GARY N. GUNDLACH
- ------------------------ ------------------------
George C. Kaiser Gary N. Gundlach
March 28, 1994 March 28, 1994
(Director) (Director)
BRENTON H. RUPPLE ROBERT R. SPITZER
- ------------------------ ------------------------
Brenton H. Rupple Robert R. Spitzer
March 28, 1994 March 28, 1994
(Director) (Director)
ROBERT A. FARRELL
- ------------------------
Robert A. Farrell
March 28, 1994
(Director)
<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
- -------- --------------- ----
4.12 Policies relating to Roundy's Issuance and Sales and 27
Redemptions/Repurchases of its stock (effective as of
January 1, 1994).
4.13 Amendment No. 5 dated December 15, 1993 (effective 32
December 13, 1993) to the Credit Agreement dated
March 6, 1989, between Roundy's, Inc. and The Chase
Manhattan Bank, N.A. (as agent).
4.14 Note Agreement dated December 22, 1993 (effective 59
December 22, 1993), between Roundy's, Inc. and The
Variable Annuity Life Insurance Company, The Life
Insurance Company of Virginia, Phoenix Home Life
Mutual Insurance Company, Phoenix American Life
Insurance Company, Washington National Insurance
Company, and TMG Life Insurance Company.
10.4(a)Declarations page for renewal of Directors and 161
Officers Liability and Corporation Reimbursement
Policy.
13 1993 Annual Report to Stockholders of Roundy's, Inc. 162
21 Subsidiaries of Roundy's, Inc. 210
<PAGE>
POLICY REGARDING ROUNDY'S REDEMPTIONS/REPURCHASES OF ITS STOCK
---------------------------------------------------------------
(As Adopted By the Board of Directors on December 7, 1993)
The following are the terms and conditions upon which Roundy's ordinarily
will respond to its shareholders' requests to redeem or repurchase their
Roundy's, Inc. stock:
(1) WHEN REPURCHASE REQUESTS MAY BE MADE. Requests by a shareholder
to have its stock repurchased or redeemed will be accepted only during three
(3) "window" periods each year -- after the first, second and third fiscal
quarters of the Company consisting of the first two weeks of May, August and
November, respectively. These "window" periods are subject to closure or
modification by management or the Board of Directors of the Company if, in the
best judgment of management or the Board, it would be inappropriate for the
Company to be engaged in the purchase or sale of its shares at such time.
Requests for redemption will be deemed to have been duly made during these
periods if they a re received in writing at the Company's Pewaukee office
during the window period or, if received thereafter, if they were postmarked
during the window period. With respect to inactive retailers-shareholders
tendering their stock pursuant to the Company's repurchase policy as set forth
in its Prospectus, that policy will remain in force in accordance with its
current terms except that shares will be repurchased pursuant to that policy
only if the request for repurchase is received during a window period as
described above. Once such a request has been received, the established terms
of the repurchase policy will govern the repurchase of and payment for the
shares in question.
With regard to so-called "hardship" redemptions, the Company will
continue its existing policy of considering such requests on an individual basis
in light of the specific circumstances involved in "hardship" redemptions may be
made at any time, without regard to the window periods discussed above, but the
Company will reserve the right to decline any such request (even if the
"hardship" standards are otherwise met) if in the judgment of the Company's
management it would be inadvisable for the Company to engage in repurchases of
its stock at such time.
(2) NUMBER OF SHARES WHICH MAY BE TENDERED FOR REDEMPTION. Consistent
with the Company's past practices, the number of shares which may be
repurchased from any shareholder at any time will be limited by the Company's
capacity to redeem shares under its existing loan agreements. This available
capacity will be applied to redemption requests on a "first come, first served"
basis. Subject to the Company's policy regarding repurchases of it
shareholders, as contained in its Prospectus, the Company may also decline to
redeem or repurchase shares at any time, or limit the number of shares which it
will redeem from any shareholder, if in the discretion of management or the
Board of Directors such a limitation is in the best interests of the Company.
(3) SHAREHOLDERS ELIGIBLE TO TENDER THEIR SHARES. These policies apply
to all shareholders of the Company.
(4) PRICE AT WHICH SHARES WILL BE REDEEMED. Shares will be redeemed
pursuant to this policy at a price equal to their book value as of the fiscal
year end preceding the date on which the redemption request is received.
(5) AUTHORITY OF THE BOARD TO SUSPEND OR DEVIATE FROM THIS POLICY. The
Board of Directors reserves at all times the authority to alter, suspend or
deviate from this policy, in its discretion, to the extent it determines such
action to be appropriate.
<PAGE>
(6) EFFECTIVE DATE. These policies will be effective commencing
January 1, 1994.
POLICY REGARDING ISSUANCE AND SALES OF ROUNDY'S, INC. STOCK
-----------------------------------------------------------
(As Adopted By the Board of Directors on December 7, 1993)
Roundy's, Inc. will make shares of its Class B Common Stock ("Stock")
available for purchase from time to time on the following terms and conditions:
(1) PERSONS TO WHOM SHARES WILL BE ISSUED. Shares of the Company's Stock
will be made available for purchase by:
- the Company's existing shareholders who are active retailers doing
business with the Roundy's Cooperative ("Retailers");
- new Retailers; and
- employees of Roundy's, Inc. ("Employees"), upon the recommendation
of the Chief Executive Officer and the approval of the Board of
Directors or the Compensation Committee of the Board.
Stock will not be made available to "inactive" retailers, even if
they have not yet tendered their stock for repurchase pursuant to the inactive
shareholder repurchase policy.
(2) TIMES AT WHICH STOCK WILL BE MADE AVAILABLE FOR PURCHASE. Stock will
be made available for purchase by eligible purchasers during three (3) "window"
periods each year -- after the first, second and third fiscal quarters of the
Company consisting of the first two weeks of May, August and November,
respectively. These "window" periods are subject to closure or modification by
management or the Board of Directors if, in the best judgment of management or
the Board, it would be inappropriate for the Company to be engaged in the
purchase or sale of its shares at such time.
(3) PRICE AT WHICH SHARES WILL BE ISSUED. When issued pursuant to this
policy, shares will be issued at a price equal to their book value as of the
preceding fiscal year end.
(4) NUMBER OF SHARES WHICH ANY PURCHASER SHALL BE ELIGIBLE TO PURCHASE.
The terms set out in this Paragraph 4 are subject at all times to the
restrictions and limitations with respect to timing of purchases as set out in
Section 2 above.
(i) RETAILERS. The number of shares a Retailer will be eligible to
purchase will depend in part on the number of shares already held by such
Retailer relative to the number of shares which such Retailer would be expected
to hold under Roundy's "Buying Deposit" policy. Roundy's encourages each of its
Retailers to purchase and hold shares of the Company's Stock having a total
"book value" equal to not less than twice the average amount of such Retailer's
weekly purchases from Roundy's. This amount is referred to as the Retailer's
"Buying Deposit." These shares are pledged to Roundy's to secure the Retailer's
accounts receivable due Roundy's, as well as any other indebtedness of the
Retailer to Roundy's. The excess (if any) of a Retailer's Buying Deposit over
the number of shares of Stock which such Retailer holds at any time is referred
to herein as such Retailer's "Buying Deposit Deficit." For purposes of this
policy, each Retailer's Buying Deposit Deficit will be redetermined as of the
first day of each of the Company's fiscal years, based on purchases by such
Retailer during the immediately preceding fiscal year.
<PAGE>
(A) CURRENT ACTIVE RETAILERS WHICH HAVE A BUYING DEPOSIT
DEFICIT. Existing active Retailers which have a
Buying Deposit Deficit (other than an "Incremental
Buying Deposit Deficit" or an "Initial Buying Deposit
Deficit" as defined in paragraphs (b) and (c) below)
(referred to herein in as a "Regular Buying Deposit
Deficit") will be entitled to purchase, in each
"window" period described in Section 2 above, shares
equal to five percent (5%) of their Regular Buying
Deposit Deficit.
(B) CURRENT ACTIVE RETAILERS WHICH CREATE OR INCREASE
THEIR BUYING DEPOSIT DEFICIT THROUGH EXPANSION OR
ADDITION OF NEW STORE FACILITIES. In the case of a
Retailer which expands its store facilities or adds
new facilities, and thereby creates a Buying Deposit
Deficit or increases its Buying Deposit Deficit over
its Regular Buying Deposit Deficit (referred to
herein as an "Incremental Buying Deposit Deficit"),
such Retailer will be entitled to purchase (in
addition to shares which may be purchased under the
preceding paragraph A) shares up to but not greater
than fifty percent (50%) of its Incremental Buying
Deposit Deficit, but only if such shares are
purchased in the first "window" period, as described
in Section 2 above, following the date on which the
new or expanded store facility first opens, or in the
immediately following "window" period (unless the
Company does not authorize the sale of its shares
during either of such "window" periods, in which
event such shares must be purchased at the earliest
time thereafter at which the Company authorizes sales
of its shares). The remainder of such Retailer's
Incremental Buying Deposit Deficit will become part
of its Regular Buying Deposit Deficit, and will be
subject to the provisions of Paragraph A above.
Notwithstanding the foregoing, a Retailer to which
Roundy's or any of its subsidiaries has loaned funds
(other than extensions of trade credit in the
ordinary course of business) or with respect to which
Roundy's or any of its subsidiaries has guaranteed
indebtedness (other than a guaranty or other
contingent liability for rentals due under leases of
store facilities or the equipment therein) will not
be eligible to purchase shares up to fifty percent of
the Incremental Buying Deposit Deficit as described
above. In that event, all of such Retailer's
Incremental Buying Deposit Deficit will become part
of its Regular Buying Deposit Deficit, and will be
subject to the provisions of Paragraph A above.
<PAGE>
(C) NEW RETAILERS. New Retailers (those who do not, as
of January 1, 1994, do business with the Roundy's
Cooperative, either directly or through an affiliated
entity) will be eligible to purchase, in each
"window" period described in Section 2 above, shares
equal to 10% of their Buying Deposit at the level at
which it is initially established ("Initial Buying
Deposit"). If such Retailer's Buying Deposit Deficit
increases in any subsequent fiscal year to a level
greater than its Initial Buying Deposit Deficit, such
increase will constitute a Regular Buying Deposit
Deficit, and will be subject to the provisions of
Paragraph A, above.
(D) RETAILERS WITH NO BUYING DEPOSIT DEFICIT. A Retailer
which has no Regular Buying Deposit Deficit and no
Incremental Buying Deposit Deficit, and which is not
a new Retailer eligible to purchase shares equal to
its Initial Buying Deposit under the preceding
paragraph (c), will be eligible to purchase in each
year shares having a total book value equal to five
percent (5%) of its Buying Deposit (as such Buying
Deposit is determined as of the first day of each
fiscal year); provided that such shares must be
purchased in the first "window" period of each fiscal
year (unless the Company does not authorize the sale
of its shares during such "window" period, under
Section 2 above, in which event such shares must be
purchased at the earliest time thereafter at which
the Company authorizes sales of its shares).
Notwithstanding the foregoing, a Retailer to which
Roundy's or any of its subsidiaries has loaned funds
(other than extensions of trade credit in the
ordinary course of business) or with respect to which
Roundy's or any of its subsidiaries has guaranteed
indebtedness (other than a guaranty or other
contingent liability for rentals due under leases of
store facilities or the equipment therein) will not
be eligible to purchase shares if it has no Regular
Buying Deposit Deficit, Incremental Buying Deposit
Deficit, or Initial Buying Deposit Deficit.
(ii) INACTIVE RETAILER-SHAREHOLDERS. Inactive Retailers will not be
permitted to acquire any additional shares.
(iii) EMPLOYEES. An Employee may purchase shares in such amount as may
be authorized by the Board of Directors or the Compensation Committee of the
Board, upon the recommendation of the Chief Executive Officer; provided, that
any employee desiring to purchase shares shall advise the Company of his or her
desire to do so prior to the end of the first fiscal quarter of any year, and,
if approval for the purchase of such shares is granted, such shares shall be
purchased in three approximately equal installments in each of the three
"window" periods occurring during such year.
<PAGE>
(5) DISCRETION OF THE BOARD TO DEVIATE FROM OR MODIFY THE POLICY. The
Board of Directors of the Company at all times retains the discretion to alter,
suspend, or deviate from the above policy, in its discretion, to the extent
that it determines such action to be appropriate. However, it is not
anticipated that any such deviations from, modifications to, or suspensions of
this policy will be made except in the case of significant transactions or
events outside the ordinary course of the Company's business.
(6) EFFECTIVE DATE. These policies will be effective commencing
January 1, 1994.
AMENDMENT NO. 5
dated as of December 13, 1993
to
CREDIT AGREEMENT
dated as of March 6, 1989
among
ROUNDY'S, INC.
the BANKS signatory thereto
and
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
<PAGE>
AMENDMENT NO. 5 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 5 dated as of December 13, 1993 among ROUNDY'S, INC.,
the BANKS signatory hereto and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Agent.
W I T N E S S E T H
-------------------
WHEREAS, the parties hereto have entered into a Credit Agreement dated
as of March 6, 1989, as amended by Amendment No. 1 dated as of April 13, 1990,
as amended by Amendment No. 2 dated as of October 9, 1991, as amended by
Amendment No. 3 dated as of December 9, 1991 and as amended by Amendment No. 4
dated as of December 14, 1992 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement in certain
respects, as more fully set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions.
------------
Unless otherwise specifically defined herein, each term used herein
which is defined in the Agreement shall have the meaning assigned to such
term in the Agreement.
SECTION 2. Amendment of the Definition of Commitment.
------------------------------------------
The definition of Commitment in Section 1.01 of the Agreement is
amended to read as follows:
"'Commitment' means, at any time, collectively, with respect to each
Bank, the obligation of such Bank to make its Loans under this Agreement
through and including the Banking Day immediately preceding the Termination
Date, in the aggregate principal amounts following with respect to the periods
indicated, as such amounts may be reduced from time to time pursuant to
Subsection 2.05(b)(ii) or Section 2.07:
- ---------------------- ------------
THE CHASE MANHATTAN BANK $19,500,000
(NATIONAL ASSOCIATION)
BANK ONE, MILWAUKEE, N.A. 16,250,000
BANCOHIO NATIONAL BANK 9,750,000
NBD BANK, N.A. 9,750,000
PNC BANK, NATIONAL ASSOCIATION 9,750,000
-----------
Total $65,000,000"
<PAGE>
SECTION 3. Amendment of the Definition of Margin.
--------------------------------------
The definition of Margin in Section 1.0l of the Agreement is amended to
read as follows:
"'Margin' means, for any fiscal quarter, for each type of Loan or for
the commitment fee, as applicable, the amount listed below under such type of
Loan or commitment fee, as applicable, and opposite the Leverage Ratio
computed by the Agent for such quarter and based on the financial statements
delivered during the previous quarter pursuant to
Subsection 6.08(a) or 6.08(b), as applicable:
- ------------------ -------
Leverage Ratio Base Rate Loan Eurodollar Loan Commitment Fee
- -------------- -------------- --------------- --------------
greater than or
equal to 5.0 .25% 1.500% .3750%
less than 5.0 but
greater than or
equal to 4.5 0% 1.250% .3750%
less than 4.5 but
greater than or
equal to 4.0 0% 1.000% .3750%
less than 4.0 but
greater than or
equal to 3.0 0% .750% .3125%
less than 3.0 but
greater than or
equal to 2.0 0% .625% .3125%
less than 2.0 0% .500% .3125%"
SECTION 4. Amendment of the Definition of Termination Date.
------------------------------------------------
The definition of Termination Date in Section 1.01 of the Agreement is
amended to read as follows:
"'Termination Date' means March 6, 1997; provided that if such date is
not a Banking Day, the Termination Date shall be the next succeeding Banking
Day (or, if such next succeeding Banking Day falls in the next calendar month,
the next preceding Banking Day)."
SECTION 5. Deletion of Certain Definitions.
--------------------------------
The definitions of "Base Rate Leverage Discount" and "Eurodollar
Rate Leverage Discount" in Section 1.01 of the Agreement are deleted in
their entirety.
<PAGE>
SECTION 6. Amendment of Section 2.11 of the Agreement.
-------------------------------------------
Section 2.11 of the Agreement is amended to read as follows:
"Section 2.11. Commitment Fees. The Borrower shall pay to the Agent
for the account of each Bank a commitment fee on such Bank's daily average
Unused Commitment from time to time for the period from and including the
date hereof to the earlier of the date the Commitments are terminated or the
Revolving Credit Termination Date at a rate per annum equal to the applicable
Margin, calculated on the basis of a year of 365 (or, in a leap year, 366)
days for the actual number of days elapsed. The accrued commitment fee shall
be due and payable in arrears upon any reduction or termination of the
Commitments and on the last day of each March, June, September and December
of each year, commencing on the first such date after the Closing Date."
SECTION 7. Amendment of Section 7.02 of the Agreement.
-------------------------------------------
Section 7.02 of the Agreement is amended to read as follows:
"Section 7.02. Guaranties, Etc. Assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable, or
permit any of its Subsidiaries to assume, guarantee, endorse or otherwise
be or become directly or indirectly responsible or liable (including, but
not limited to, pursuant to an agreement to purchase any obligation, stock,
assets, goods or services or to supply or advance any funds, assets, goods
or services, or pursuant to an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth or otherwise to assure the
creditors of any Person against loss) for the obligations of any Person,
except (a) guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business,
(b) guaranties of lease obligations of, and loans to, customers not to exceed
$17,500,000 in the aggregate outstanding at any time, (c) guaranties of the
obligations of members of the Consolidated Group, which obligations are
permissible under Section 7.01 and (d) guaranties of loans to officers of the
Borrower not to exceed $2,000,000 in the aggregate outstanding at any time so
long as the proceeds of such loans are used only to fund the purchase by such
officers of stock of the Borrower pursuant to the exercise by such officers
of stock options granted by the Borrower."
SECTION 8. Waiver.
-------
(a) The Banks hereby waive compliance by the Borrower with the
provisions of Section 7.01 of the Agreement to the extent necessary to
permit the Borrower to incur and suffer to exist Debt in the amount of
$45,000,000 substantially in accordance with the terms set forth in the
term sheet attached hereto as Annex A.
(b) The waiver granted pursuant to paragraph (a) above does not
constitute a waiver of any other provisions of the Agreement or a waiver
of any other right, power or privilege of the Banks or of any present or
future breach of the Agreement.
<PAGE>
SECTION 9. Representations.
----------------
The Borrower represents and warrants:
(a) Except as disclosed in writing to the Banks prior to the date
of this Amendment, each of the representations and warranties contained in
Article 5 of the Agreement is true and correct on the date hereof as though
made on and as of the date hereof and as if each reference in such Article 5
to "this Agreement" and "the Notes" included reference to this Amendment and
no event has occurred and is continuing which constitutes a Default or Event
of Default.
(b) The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of the Agreement, as amended hereby, have
been duly authorized by all necessary corporate action.
(c) Upon the effectiveness of this Amendment pursuant to Section 10,
the Agreement, as amended hereby, will constitute a valid and binding
obligation of the Borrower.
SECTION 10. Effectiveness.
--------------
This Amendment shall be effective as of the date hereof when the
parties hereto shall have each executed a counterpart hereof and delivered
the same to the Agent.
SECTION 11. Effect of Amendment on Agreement; Ratification and
Confirmation of Agreement, as Amended.
--------------------------------------------------
On and after the effective date of this Amendment each reference in
the Agreement to "this Agreement", "hereunder", "hereof", or words of like
import referring to the Agreement, and each reference in the Notes referring
to "the Agreement", "thereunder", "thereof", or words of like import
referring to the Agreement, shall mean the Agreement as amended by this
Amendment. The Agreement, as amended by this Amendment, is and shall continue
to be in full force and effect and is hereby in all respects ratified and
confirmed.
SECTION 12. Counterparts.
-------------
This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 13. Section Headings.
-----------------
The Section headings in this Amendment are inserted for convenience only
and shall not be part of this instrument.
SECTION 14. Governing Law.
--------------
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
SECTION 15. Entire Agreement.
-----------------
This Amendment and the Agreement as amended hereby constitute the
entire agreement and understanding between the parties hereto and supersede
any and all prior agreements and understandings relating to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed as of the date first above written.
ROUNDY'S, INC.
By: EDWARD G. KITZ
-----------------------
Title: V.P. & TREASURER
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent
By:
-----------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
-----------------------
Title:
BANK ONE, MILWAUKEE, NA
By:
-----------------------
Title:
<PAGE>
SECTION 13. Section Headings.
-----------------
The Section headings in this Amendment are inserted for convenience only
and shall not be part of this instrument.
SECTION 14. Governing Law.
--------------
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 15. Entire Agreement.
-----------------
This Amendment and the Agreement as amended hereby constitute the
entire agreement and understanding between the parties hereto and supersede
any and all prior agreements and understandings relating to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed as of the date first above written.
ROUNDY'S, INC.
By:
-----------------------
Title: V.P. & TREASURER
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent
By: THOMAS DANIELS
-----------------------
Title: V.P.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: THOMAS DANIELS
-----------------------
Title: V.P.
BANK ONE, MILWAUKEE, NA
By:
-----------------------
Title:
<PAGE>
SECTION 13. Section Headings.
-----------------
The Section headings in this Amendment are inserted for convenience only
and shall not be part of this instrument.
SECTION 14. Governing Law.
--------------
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 15. Entire Agreement.
-----------------
This Amendment and the Agreement as amended hereby constitute the
entire agreement and understanding between the parties hereto and supersede
any and all prior agreements and understandings relating to the subject
matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed as of the date first above written.
ROUNDY'S, INC.
By:
-----------------------
Title: V.P. & TREASURER
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent
By:
-----------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
-----------------------
Title:
BANK ONE, MILWAUKEE, NA
By: ERIC L. THOMAS
-----------------------
Title: V.P.
<PAGE>
NATIONAL CITY BANK
By: SUSAN M. BOTTIGGI
-----------------------
Title: V.P.
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------
Title:
NBD BANK, NA
By:
-----------------------
Title:
ACKNOWLEDGED AND CONSENTED
TO AS OF THE DATE FIRST
ABOVE WRITTEN:
CARDINAL FOODS, INC.
By:
----------------------
Title:
SCOT LAD FOODS, INC.
By:
----------------------
Title:
SHOP-RITE, INC.
By:
----------------------
Title:
<PAGE>
NATIONAL CITY BANK
By:
-----------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By: RICHARD T. JANDER
-----------------------
Title: COMMERCIAL BANKING OFFICER
NBD BANK, NA
By:
-----------------------
Title:
ACKNOWLEDGED AND CONSENTED
TO AS OF THE DATE FIRST
ABOVE WRITTEN:
CARDINAL FOODS, INC.
By:
----------------------
Title:
SCOT LAD FOODS, INC.
By:
----------------------
Title:
SHOP-RITE, INC.
By:
----------------------
Title:
<PAGE>
NATIONAL CITY BANK
By:
-----------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------
Title:
NBD BANK, NA
By: THOMAS H. GORDY
-----------------------
Title:
ACKNOWLEDGED AND CONSENTED
TO AS OF THE DATE FIRST
ABOVE WRITTEN:
CARDINAL FOODS, INC.
By:
----------------------
Title:
SCOT LAD FOODS, INC.
By:
----------------------
Title:
SHOP-RITE, INC.
By:
----------------------
Title:
<PAGE>
NATIONAL CITY BANK
By:
-----------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
-----------------------
Title:
NBD BANK, NA
By:
-----------------------
Title:
ACKNOWLEDGED AND CONSENTED
TO AS OF THE DATE FIRST
ABOVE WRITTEN:
CARDINAL FOODS, INC.
By: ROBERT G. TURCOTT
----------------------
Title: V.P.
SCOT LAD FOODS, INC.
By: ROBERT G. TURCOTT
----------------------
Title: V.P.
SHOP-RITE, INC.
By: ROBERT G. TURCOTT
----------------------
Title: V.P.
<PAGE>
ANNEX A
SUMMARY OF TERMS
- -----------------------------------------------------------------------
ISSUER: Roundy's, Inc. (the "Company").
ISSUE: $45 million Senior Notes.
SUBSEQUENT SERIES: The Notes will be issued pursuant to a Master Note
Agreement and will be structured to provide for
additional series of Notes ("Series B, C, D," etc.).
All subsequent series of Notes will be issued upon
presentation of appropriate "bring-down" certificates
demonstrating compliance to the terms, conditions
representations, warranties and covenants of such
Master Note Agreement.
$Mil
----
NOTEHOLDERS: American General Corporation . . . . . . . . $20
The Life Insurance Company of Virginia . . . 10
Phoenix Mutual Life Insurance Company. . . . 10
Washington National Insurance Company. . . . 3
Mutual Group . . . . . . . . . . . . . . . . 2
----
Total. . . . . . . . . . . . . . . . . . . $45
FINAL MATURITY: Ten years.
AVERAGE LIFE: Seven years.
RANKING/PRIORITY: The Notes will rank pari passu with all other Senior
indebtedness of the Company.
PRICE: 100% of principal amount.
USE OF PROCEEDS: To refinance existing indebtedness.
INTEREST RATE: 6.94%, payable semi-annually.
TAKEDOWN: As soon as practicable but not later than January
1994.
<PAGE>
INTEREST PAYMENTS: Interest will be payable semi-annually calculated on
twelve 30 day months, 360 day year basis.
MANDATORY REDEMPTION: Seven equal annual principal repayments commencing on
the fourth anniversary of the issuance of the Notes.
OPTIONAL PREPAYMENT: The Notes may be prepaid at any time at the greater
of, (a) par plus accrued interest, or (b) a price
determined by discounting the remaining scheduled
payment of principal and interest on the Notes at a
rate equal to the then existing yield to maturity on
the U.S. Treasury Notes with a maturity closest to
that of the remaining average life of the Notes, plus
60 basis points ("Make-Whole").
PREPAYMENT UPON
CHANGE OF CONTROL: Upon a Change of Control, the Noteholders have the
right to put the Notes back to the Company at par
plus accrued interest together with a Make-Whole
premium.
COMPANY COVENANTS:
- ------------------
CONSOLIDATED TANGIBLE
NET WORTH: The Company will at all times keep and maintain
Consolidated Tangible Net Worth at an amount not less
than $65,000,000.
CURRENT RATIO: The Company will at all times keep and maintain the
ratio of Consolidated Current Assets to Consolidated
Current Liabilities at not less than 1.25 to 1.0.
LIMITATIONS ON
FUNDED DEBT: The Company will at all times keep and maintain during
the respective fiscal periods describe below the ratio
of Adjusted Consolidated Fund Debt to Stockholders'
Equity at not greater than the ratio set forth opposite
such fiscal period (such ratio to be calculated as of
the last day of each fiscal quarter occurring within
such fiscal periods):
<PAGE>
Fiscal Period Ratio
------------- -------
Closing through December 31, 1994 2.00 to 1.0
January 1, 1995 and thereafter 1.70 to 1.0
LIMITATIONS ON
PRIORITY DEBT: The Company will not, and will not permit any
Restricted Subsidiary to create or incur or suffer
to be incurred or to exist, Priority Debt in an amount
exceeding 10% of Tangible Assets.
FIXED CHARGE COVERAGE: The Company will keep and maintain the ratio of Net
Income Available for Fixed Charges to Fixed Charges
for each period of four consecutive fiscal quarters
at not less than 1.40 to 1.0.
LIMITATION ON LIENS: The Company, and its Restricted Subsidiaries, will
not create or incur any Lien on its property or
assets, whether now owned or hereafter acquired, or
upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the
payment of obligations in priority to the payment of
its or their general creditors, or acquire any
property or assets upon conditional sales agreements
or other title retention devices, except:
(1) Liens for property taxes and assessments or
governmental charges or levies and Liens securing the
demands or mechanics and materialmen;
(2) Liens incidental to the conduct of business or the
ownership of properties and assets and Liens to secure
the performance of bids, tenders or trade contracts,
or other Liens of like general nature incurred in the
ordinary course of business and not in connection with
borrowing of money;
(3) Liens resulting from any judgment or award;
<PAGE>
(4) Minor survey exceptions or minor encumbrances,
easements or reservations which are necessary for the
conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist;
(5) Liens securing indebtedness of a Restricted
Subsidiary to the Company or to another Restricted
Subsidiary;
(6) Liens existing at the time of the closing of
these Notes;
(7) Liens created or extended in connecting with
renewing, extending, or refunding Indebtedness secured
by Liens permitted by the preceding (1) through (6);
provided (i) the principal amount of Indebtedness
shall not be increased; (ii) such Liens shall not
attach to any property other than property encumbered
immediately prior to such renewal, extension or
refunding, and (iii) all Consolidated Fund Debt
secured thereby could then be incurred pursuant to
the Limitation on Funded Debt and Priority Debt,
Covenants, above; and
(8) Liens on fixed assets incurred in addition to
those permitted by the foregoing paragraphs (1)
through (7) used or intended to be used in carrying
on the business of the Company or a Restricted
Subsidiary and securing Funded Debt incurred within
the Limitation on Funded Debt and Priority Debt
Covenants, above.
RESTRICTED PAYMENTS: Neither the Company nor any Restricted Subsidiary
will declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any
class, or set apart any sum for such purpose;
purchase, redeem, or retire any shares of its capital
stock or any warrants, rights or options to purchase
or acquire any shares of its capital stock; or make
any payment or distribution in respect of its capital
stock; provided, however, that the Company may;
<PAGE>
(a) purchase, redeem or retire in accordance with the
provisions of the By-Laws of the Company as in effect
on the date of the Closing of the Notes contemplated
herein shares of its capital stock owned by any
current or former employee, customer or director;
(b) sell or exchange shares of capital stock of the
Company to or with any wholly-owned subsidiary; and
(c) pay Patronage Dividends in accordance with the
By-Laws of the Company as in effect on the date of the
Closing of the Notes contemplated herein, if (i) the
book value per share of the Company and its
Subsidiaries, on a consolidated basis, is at least 10%
greater than such book value on the last day of the
immediately preceding fiscal year, and (ii) not more
than 40% of the aggregate payments of Patronage
Dividends during any fiscal year shall be made cash.
The Company will not declare any dividend which
constitutes a Restricted Payment payable more than 60
days after the date of declaration thereof or make any
Restricted Payments pursuant to items (a) through (c)
above if, after giving effect thereto, an Event of
Default would occur.
INVESTMENTS: The Company will not, and will not permit any
Restricted Subsidiary to, make any Investments,
except:
(a) Investments by the Company and its Restricted
Subsidiaries in and to Restricted Subsidiaries,
including any corporation which concurrently with
such investment becomes a Restricted Subsidiary;
<PAGE>
(b) Investments by any wholly-owned Subsidiary
in the capital stock of the Company;
(c) Investments in commercial paper maturing not
more than 270 days from the date of issuance which
is given a rating not lower than the highest rating
by Moody's Investors Service, Inc. or other nationally
recognized credit rating agency or one of the two
highest ratings by Standard & Poors Corporation;
(d) Investments in direct obligations of the United
States of America, or any of its agencies or obligations
fully guaranteed by the United States of America,
provided that such obligations mature within one year
from the date acquired;
(e) Investments in certificates of deposit maturing
within one year from the date of issuance and issued
by a bank or trust company organized under the laws of
the United States, and having capital, surplus and
undivided profits aggregating at least $100,000,000,
and whose long term certificates of deposit are, at the
time of acquisition by the Company, rated AA or better
by Standard & Poors Corporation or Aa or better by
Moody's Investor Service, Inc.;
(f) Investments in overnight Eurodollar obligations
issued by commercial banks or trust companies which
meet the requirements set forth in e) and are purchased
in the United States;
(g) Investments in mutual funds which invest solely in
money market securities or instruments of types
described in the preceding clause c) but which may have
maturities of no longer than three years from the date
of acquisition;
<PAGE>
(h) all investments owned by the Company or its
Subsidiaries as of the date of this Agreement;
(i) loans or advances in the usual and ordinary
course of business in an amount not to exceed $1,000,000
at any one time outstanding and made to officers,
directors and employees for expenses incidental to
carrying on the business of the Company or any
Restricted Subsidiary;
(j) receivables arising from the sale of goods and
services in the ordinary course of business; and
(k) other investments, in addition to those permitted
in a) through j) above, provided that the aggregate
amount of other investments permitted shall not exceed
10% of Tangible Assets.
CONSOLIDATION/MERGER
AND SALE OF ASSETS: The Company will not, and will not permit any Restricted
Subsidiary to, consolidate with or be a party to a
merger with any other corporation or sell, lease or
otherwise dispose of all or any substantial part of the
assets of the Company and its Restricted Subsidiaries,
provided that the Company, may merge or consolidate
with any other corporation if the surviving corporation
is (a) organized under the laws of the United States
or a jurisdiction thereof; (b) expressly assumes the
covenants and obligations of the Notes by written
agreement which agreement shall be satisfactory to the
holders of 66 2/3% in aggregate principal amount of the
outstanding Notes; (c) is engaged in substantially the
same line of business in which the Company was engaged
immediately prior thereto; (d) at the time of such
consolidation or merger no Default or Event of Default
shall have occurred and be continuing; and (e) the
surviving corporation shall be able to, immediately
after giving effect to the transaction, incur at least
$1.00 of additional Consolidated Funded Debt.
<PAGE>
Any Restricted Subsidiary may merge or consolidate with
or into the Company or any other Wholly-owned Restricted
Subsidiary so long as the Company shall be the surviving
corporation. Further, any Restricted Subsidiary may
sell, lease or otherwise dispose of all or any
substantial part of its assets to the Company or any
other Wholly-owned Restricted Subsidiary.
The Company will not permit any Restricted Subsidiary
to issue or sell any shares of stock of any class other
than to the Company or any other Wholly-owned Restricted
Subsidiary except for the purpose of qualifying directors,
or except in satisfaction of pre-existing preemptive
rights of minority shareholders in connection with the
simultaneous issuance of stock to the Company.
The Company will not sell, transfer or otherwise dispose
of any shares of stock of any Restricted Subsidiary or
any Indebtedness of any Restricted Subsidiary unless
simultaneously with such sale, transfer or disposition
all shares of stock and all Indebtedness of such
Restricted Subsidiary shall be sold, transferred or
disposed of an an entirety, and (i) the Board of
Directors shall have determined that the proposed sale,
transfer or disposition is in the best interests of the
Company; (ii) said shares of stock and Indebtedness are
sold, transferred or disposed for a cash consideration
and on terms reasonably deemed by the Board of Directors
to be adequate and satisfactory; (iii) the Restricted
Subsidiary being disposed of shall not have any
continuing investment in the Company; and (iv) the book
value of the assets of such sale or other disposition
does not, when added to the book value of all other
assets sold, leased or disposed of by the Company during
the 12 month period ending with the date of such sale,
lease or disposition, exceed 10% of Tangible Assets,
determined as of the end of the immediately preceding
fiscal year.
<PAGE>
GUARANTIES: The Company will not, and will not permit any Restricted
Subsidiary to become liable in respect of any Guaranty
except Guaranties (a) by the Company which are limited
in amount to a stated maximum dollar exposure and (b) of
lease obligations of and loans to, customers of the
Company which are limited to a stated maximum dollar
exposure.
TRANSACTIONS
WITH AFFILIATES: Neither the Company nor any Restricted Subsidiary will
enter into any transaction (including the purchase, sale
or exchange of property or the rendering of any service)
with any Affiliate except upon fair and reasonable
terms which are at least as favorable to the Company or
any Restricted Subsidiary as would be obtained in a
comparable arms length with a non-Affiliate.
NATURE OF
BUSINESS: The Company will not, and will not permit any subsidiary
to, engage in any line of business in which it is not
currently engaged if as a result thereof the business
as a whole would be substantially changed from the
general nature of the business engaged in by the Company
on the closing date of the Notes.
FINANCIAL STATEMENTS: The Company shall provide the Purchaser(s) of the Notes
with audited annual consolidated and consolidating
financial statements within 120 days after each fiscal
year end and unaudited consolidated and consolidating
financial statements within 60 days after the end of
each quarterly fiscal period.
OFFICER
CERTIFICATES: At the end of each quarterly and annual reporting period
the Company will provide officer certificates setting
forth computations to establish whether the Company was
in compliance with the Notes at the end of the period
covered and whether there existed, to the best of such
officer's knowledge any Default or Event of Default
over the period.
<PAGE>
ACCOUNTANT'S
CERTIFICATES: At the end of each fiscal period, the Company's
accountants will provide certificates stating that
such accountants have reviewed the note agreement and
are aware of any Default or Event of Default under the
note agreement.
EVENTS OF DEFAULT: Any one or more of the following shall constitute an
"Event of Default" as such term is used herein:
a. Default shall occur in the payment of interest on
any Note when the same shall have become due and such
default shall continue for more than five days; or
b. Default shall occur in the making of any required
prepayment on any of the Notes as provided in the
agreement; or
c. Default shall occur in the making of any other
payment of the principal of any Notes or premium, if
any, thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
d. Default shall be made in the payment when due
(whether by lapse or time, by declaration, by call for
redemption or otherwise) of the principal of or interest
on any Funded Debt or current debt (other than the
Notes) of the Company or any Restricted Subsidiary and
such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
e. Default shall occur in the performance under any
Funded Debt or current debt of the Company or any
Restricted Subsidiary outstanding thereunder; or
f. Default shall occur in the observance or
performance of the following covenants: Current Ratio,
Consolidated Tangible Net Worth, Limitations on Funded
and Priority Debt, Fixed Charge Coverage, Limitation on
Liens, Restricted Payments, Investments and Mergers,
Consolidations and Sales of Assets; or
<PAGE>
g. Default shall occur in the observance or
performance of any other provision of this agreement
which is not remedied within 30 days after the earlier
of (i) the day on which the Company first obtains
knowledge of such default, or (ii) the day on which
written notice thereof is given to the Company by the
holder of any Note; or
h. Any representation or warranty made by the Company
herein, or made by the Company in any statement or
certificate furnished by the Company in connection
with the consummation of the issuance and delivery of
the Notes or furnished by the Company pursuant hereto,
is untrue in any material respect as of the date of the
issuance or making thereof; or
i. the Guaranty or any guaranty delivered to the
holders of the Notes in accordance with the agreement
shall not be valid and enforceable or shall be
repudiated in whole or in part by any guarantor of the
Notes thereunder; or
j. Final judgment or judgments for the payment of
money aggregating in excess of $500,000 is or are
outstanding against the Company or any Restricted
Subsidiary or against any property or assets of either
and any one of such judgments has remained unpaid,
unvacated, unbonded or unstayed by appeal or otherwise
for a period of 30 days from the date of its entry; or
k. A custodian, liquidator, trustee or receiver is
appointed for the Company and any Restricted Subsidiary
or for the major part of the property of either and is
not discharged within 30 days after such appointment;
or
<PAGE>
l. The Company or any Restricted Subsidiary becomes
insolvent or bankrupt, is generally not paying its
debts as they become due or makes an assignment for the
benefit of creditors, or the Company or any Restricted
Subsidiary applies for or consents to the appointment
of a custodian, liquidator, trustee or receiver for
the Company or such Restricted Subsidiary or for the
major part of the property of either; or
m. Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for
relief under any bankruptcy or similar law or laws for
the relief of debtors, are instituted by or against the
Company or any Restricted Subsidiary and, if instituted
against the Company or any Restricted Subsidiary, are
consented to or are not dismissed within 60 days after
such institution.
DEFINITIONS:
ADJUSTED CONSOLIDATED
FUNDED DEBT: Shall mean Consolidated Funded Debt minus Guaranties of
lease obligations of, and loans to, customers of the
Company in aggregate amount not exceeded $17,500,000.
ADJUSTED RENTALS: Shall mean all rentals minus sublease rental income.
<PAGE>
CHANGE OF CONTROL: Shall mean any event by which any person or group of
persons which (i) is not the beneficial owner of any
outstanding Voting Stock of the Company or, if such
person is a beneficial owner, it is the beneficial
owner of less than 5% of the Voting Stock of the
Company or is not a Control Person and (ii) becomes,
by way of any transaction, to hold more than 40% of
the Voting Stock of the Company.
CONSOLIDATED
CURRENT ASSETS: Shall mean current assets of the Company and its
Restricted Subsidiaries on a consolidated basis.
CONSOLIDATED
CURRENT LIABILITIES: Shall mean liabilities of the Company and its
Restricted Subsidiaries on a consolidated basis.
CONSOLIDATED
FUNDED DEBT: Shall mean Funded Debt of the Company, determined
on a consolidated basis eliminating intercompany items.
CONSOLIDATED TANGIBLE
NET WORTH: Shall mean as of any date Stockholders' Equity less
goodwill and other intangible assets.
CONTROL PERSON: Shall mean (a) any Person who is both the beneficial
owner of 5% or more of the Voting Stock of the Company
and an officer or director of the Company and (b) any
spouse or descendant of a Person named in clause (a)
who receives from such Person described in clause (a)
5% or more of the Voting Stock by gift, inheritance or
laws of intestacy.
FIXED CHARGES: Shall mean for any such period the sum of a) all
Adjusted Rentals other than Rentals of Capitalized
Leases, and b) all Interest Charges on all Indebtedness
(including the interest component of Rentals on
Capitalized Leases) of the Company.
<PAGE>
FUNDED DEBT: Shall mean (i) indebtedness for borrowing money or
which has been incurred in connection with the
acquisition of assets in each case having a final
maturity of one or more than one year from the date of
origin thereof (or which is renewable or extendible at
the option of the obligor for a period or periods more
than one year from the date of origin), not including
payments in respect thereof that are required to be
made within one year from the date of any determination
of Funded Debt; (ii) all Capitalized Rentals
(Capitalized Rentals shall mean the amount at which the
aggregate Rentals due and to become due under all
Capitalized Leases of which the Company is a lessee
would be reflected as a liability on the Consolidated
Balance Sheet of the Company); and (iii) all Guaranties
of the Company of Funded Debt of others (Guaranties
shall mean all obligations guaranteeing any
indebtedness, dividend, or other obligation in any
manner, whether directly or indirectly).
INTEREST CHARGES: Shall mean all interest and amortization of debt
discount on any particular Indebtedness.
NET INCOME AVAILABLE
FOR FIXED CHARGES: Shall mean for any such period the sum of (a)
Consolidated Net Income; (b) all provisions for income
taxes; (c) Patronage Dividends; and (d) all Fixed
Charges of the Company during such period.
PRIORITY DEBT: Shall mean the sum of (a) all unsecured current Debt
and Funded Debt of Restricted Subsidiaries plus (b)
Funded Debt of the Company and its Restricted
Subsidiaries secured by Liens.
RESTRICTED SUBSIDIARY: Shall mean (a) any Subsidiary which is organized and
conducts substantially all of its business within the
United States and of which more than 80% of the Voting
Stock is beneficially owned by the Company and (b)
Badger Assurance, Ltd.
STOCKHOLDERS' EQUITY: Shall mean "Stockholders' Equity" as shown on the
consolidated balance sheet of the Company and its
Restricted Subsidiaries.
<PAGE>
TANGIBLE ASSETS: Shall mean the total amount of all assets of the
Company and its Restricted Subsidiaries after deducting
goodwill and other intangible assets.
VOTING STOCK: Shall mean securities of any class or classes, the
holders of which are ordinary, in the absence of
contingencies, entitled to elect a majority of the
corporate directors.
WHOLLY-OWNED: Shall mean a subsidiary of which all of the issued and
outstanding shares of stock and all Funded Debt and
Current Debt shall be owned by the Company and/or one
or more of its Wholly-owned subsidiaries.
ROUNDY'S, INC.
NOTE AGREEMENT
Dated as of December 22, 1993
Re: $45,000,000 6.94% Senior Notes
Due December 15, 2003
TABLE OF CONTENTS
(Not a part of the Agreement)
Page
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.. . . . . . . . . . . 1
Section 1.1 Description of Notes . . . . . . . . . . . . . . . . 1
Section 1.2 Commitment, Funding Date . . . . . . . . . . . . . . 2
Section 1.3 Other Agreements . . . . . . . . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Required Prepayments . . . . . . . . . . . . . . . . 2
Section 2.2 Optional Prepayment with Premium . . . . . . . . . . 3
Section 2.3 Prepayment Upon Change of Control. . . . . . . . . . 3
Section 2.4 Notice of Optional Prepayments . . . . . . . . . . . 4
Section 2.5 Application of Prepayments . . . . . . . . . . . . . 5
Section 2.6 Direct Payment . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1 Representations of the Company . . . . . . . . . . . 5
Section 3.2 Representations of the Purchaser . . . . . . . . . . 5
<PAGE>
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . 6
Section 4.1 Conditions . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Waiver of Conditions . . . . . . . . . . . . . . . . 8
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . 8
Section 5.1 Corporate Existence, Etc.. . . . . . . . . . . . . . 8
Section 5.2 Insurance. . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Taxes, Claims for Labor and Materials, Compliance with
Laws . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.4 Maintenance, Etc. . . . . . . . . . . . . . . . . . 9
Section 5.5 Nature of Business . . . . . . . . . . . . . . . . . 9
Section 5.6 Current Ratio. . . . . . . . . . . . . . . . . . . . 9
Section 5.7 Consolidated Tangible Net Worth. . . . . . . . . . . 10
Section 5.8 Limitations on Indebtedness. . . . . . . . . . . . . 10
Section 5.9 Fixed Charges Coverage Ratio . . . . . . . . . . . . 10
Section 5.10 Limitation on Liens. . . . . . . . . . . . . . . . . 10
Section 5.11 Restricted Payments. . . . . . . . . . . . . . . . . 12
Section 5.12 Investments. . . . . . . . . . . . . . . . . . . . . 13
Section 5.13 Mergers, Consolidations and Sales of Assets. . . . . 14
Section 5.14 Guaranties . . . . . . . . . . . . . . . . . . . . . 16
Section 5.15 Repurchase of Notes. . . . . . . . . . . . . . . . . 16
Section 5.16 Transactions with Affiliates . . . . . . . . . . . . 16
Section 5.17 Termination of Pension Plans . . . . . . . . . . . . 17
Section 5.18 Reports and Rights of Inspection . . . . . . . . . . 17
Section 5.19 Additional Guaranties. . . . . . . . . . . . . . . . 20
Section 5.20 Covenant to Secure Notes Equally . . . . . . . . . . 20
Section 5.21. ERISA. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.22. Compliance with Environmental Laws . . . . . . . . . 21
Section 5.23. Restricted Subsidiaries. . . . . . . . . . . . . . . 21
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . 21
Section 6.1 Events of Default. . . . . . . . . . . . . . . . . . 21
Section 6.2 Notice to Holders. . . . . . . . . . . . . . . . . . 23
Section 6.3 Acceleration of Maturities . . . . . . . . . . . . . 23
Section 6.4 Rescission of Acceleration . . . . . . . . . . . . . 24
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS. . . . . . . . . . . . . 25
Section 7.1 Consent Required . . . . . . . . . . . . . . . . . . 25
Section 7.2 Solicitation of Holders. . . . . . . . . . . . . . . 25
Section 7.3 Effect of Amendment or Waiver. . . . . . . . . . . . 25
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . 26
Section 8.1 Definitions. . . . . . . . . . . . . . . . . . . . . 26
Section 8.2 Accounting Principles; Construction. . . . . . . . . 35
Section 8.3 Directly or Indirectly . . . . . . . . . . . . . . . 35
<PAGE>
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1 Registration and Transfer of Notes . . . . . . . . . 35
Section 9.2 Loss, Theft, Etc. of Notes . . . . . . . . . . . . . 36
Section 9.3 Expenses, Stamp Tax Indemnity. . . . . . . . . . . . 36
Section 9.4 Powers and Rights Not Waived; Remedies Cumulative. . 37
Section 9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.6 Successors and Assigns . . . . . . . . . . . . . . . 37
Section 9.7 Survival of Covenants and Representations. . . . . . 38
Section 9.8 Maximum Interest Payable . . . . . . . . . . . . . . 38
Section 9.9 Severability . . . . . . . . . . . . . . . . . . . . 38
Section 9.10 Governing Law. . . . . . . . . . . . . . . . . . . . 39
Section 9.11 Jurisdiction; Venue; Service of Process. . . . . . . 39
Section 9.12 Captions . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.13 Additional Indebtedness. . . . . . . . . . . . . . . 40
<PAGE>
ATTACHMENTS TO NOTE AGREEMENT
Schedule I - Names and Addresses of Note Purchasers and Amounts of
Commitments
Schedule II - Investments as of December 22, 1993
Exhibit A - Form of 6.94% Senior Note, due December 15, 2003
Exhibit B - Representations and Warranties of the Company
Exhibit C - Description of Special Counsel's Closing Opinion
Exhibit D - Description of Closing Opinion of General Counsel of the Company
Exhibit E - Form of Guaranty
<PAGE>
ROUNDY'S, INC.
23000 Roundy Drive
Pewaukee, Wisconsin 53072
NOTE AGREEMENT
Re: $45,000,000 6.94% Senior Notes
Due December 15, 2003
Dated as of
December 22, 1993
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, ROUNDY'S, INC., a Wisconsin corporation (the
Company", as further defined hereinafter), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1 Description of Notes. The Company will authorize
the issue and sale of $45,000,000 aggregate principal amount of its 6.94%
Senior Notes (the "Notes") to be dated the date of issue, to bear interest from
such date at the rate of 6.94% per annum to be expressed to mature on December
15, 2003, and to be substantially in the form attached hereto as Exhibit A.
The term "Notes" as used herein shall include each Note delivered pursuant to
this Agreement and the separate agreements with the other purchasers named in
Schedule I hereto and each Note delivered in substitution or exchange for any
such Note pursuant to this Agreement or any of such agreements. Interest on
the Notes shall be payable semi-annually on the fifteenth day of each June and
December in each year (commencing June 15, 1994) and at maturity and shall bear
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest at the Overdue Rate
(hereinafter defined) after the date due, whether by acceleration or otherwise,
until paid, and shall be computed on the basis of a 360-day year of twelve
30-day months. The Notes are not subject to prepayment or redemption at the
option of the Company prior to their expressed maturity dates except on the
terms and conditions, in the amounts and with the premium, if any, set forth in
2 of this Agreement. You and the other purchasers named in Schedule I hereto
are hereinafter sometimes referred to as the "Purchasers". Capitalized terms
used herein have the meanings specified in 8.1.
The payment of the principal and premium, if any, and interest on the
Notes will be severally guaranteed by Scot Lad Foods, Inc., a Wisconsin
corporation, Cardinal Foods, Inc., a Delaware corporation, and Shop-Rite, Inc.,
a Wisconsin corporation, and each a Subsidiary (collectively, the "Guarantors")
for the benefit of the Purchasers pursuant to a Guaranty Agreement dated as of
December 22, 1993 (as the same may be amended, restated, supplemented, extended
or otherwise modified from time to time, the "Guaranty") from the Guarantors.
<PAGE>
Section 1.2 Commitment, Funding Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price of 100% of the principal
amount thereof on the Funding Date.
Delivery of the Notes will be made at the offices of Baker & Botts,
L.L.P., 885 Third Avenue, New York, New York 10022, against payment therefor in
Federal Reserve or other funds current and immediately available at the
principal office of Bank One, Milwaukee, N.A., Milwaukee, Wisconsin 53201, ABA
Number 075-000019 for deposit to the Company's Account Number 0000-2011 in the
amount of the purchase price at 10:00 A.M., New York City time, on December 29,
1993 (the "Funding Date"). The Notes delivered to you on the Funding Date will
be delivered to you in the form of a single registered Note in the form
attached hereto as Exhibit A for the full amount of your purchase (unless
different denominations are specified by you), registered in your name or in
the name of your nominee, all as you may specify at any time prior to the date
fixed for delivery.
Section 1.3 Other Agreements. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar agreements
with the other Purchasers under which such other Purchasers agree to purchase
from the Company the principal amount of Notes set opposite such Purchasers'
names in Schedule I hereto, and your obligation and the obligations of the
Company hereunder are subject to the execution and delivery of such similar
agreements by the other Purchasers. This Agreement and such similar agreements
with the other Purchasers are herein collectively referred to as the
"Agreements". The obligations of each Purchaser shall be several and not joint
and no Purchaser shall be liable or responsible for the acts or omissions of
any other Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1 Required Prepayments. Except as set forth in 2.2
and 2.3, the Notes are not subject to any prepayment or redemption prior to
their express maturity date. The Company agrees that it will prepay and apply
and there shall become due and payable on the principal indebtedness evidenced
by the Notes, on December 15, in each year, commencing December 15, 1997 and
ending December 15, 2002, an amount equal to the lesser of (i) $6,428,571.43 or
(ii) the principal amount of the Notes outstanding. The entire remaining
principal amount of the Notes shall become due and payable on December 15,
2003. No premium shall be payable in connection with any required prepayment
made pursuant to this 2.1. For purposes of this 2.1, any prepayment of less
than all of the outstanding Notes pursuant to 2.2 shall be applied first to
the amount of principal scheduled to remain unpaid on the maturity date of the
Notes, and then to the remaining scheduled principal prepayments for the Notes
in inverse chronological order.
Section 2.2 Optional Prepayment with Premium. In addition to the
prepayments required by 2.1, upon compliance with 2.4 the Company shall have
the privilege, at any time and from time to time, of prepaying the outstanding
Notes, either in whole or in part (but if in part then in a minimum principal
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof)
by payment of the principal amount of the Notes, or portion thereof to be
prepaid, and accrued interest thereon to the date of such prepayment, together
with a premium equal to the Make-Whole Amount, determined as of five Business
Days prior to the date of such prepayment pursuant to this 2.2.
<PAGE>
Section 2.3 Prepayment Upon Change of Control. In the event the
Company has knowledge of a Change of Control or an impending Change of Control,
the Company will give written notice (a "Control Change Notice") of such fact
to the holder of each Note. The Control Change Notice shall be given not later
than three Business Days after the earlier of (a) receipt of knowledge by the
Company of a Change of Control or impending Change of Control and (b) the
Change of Control Date. The Control Change Notice shall (i) describe the facts
and circumstances of such Change of Control in reasonable detail (including the
Change of Control Date or proposed Change of Control Date), (ii) make reference
to this 2.3 and the rights of the holder of each Note to require the Company
to prepay its Notes on the terms and conditions provided for herein, (iii)
state that such holder may provide written notice to the Company of its intent
not to have the Notes held by it prepaid (a "Declaration Notice"), (iv) specify
the date by which such holder must respond to such Control Change Notice
pursuant to this 2.3 in order to make such declaration which shall be a date
not less than 50 days after the date of the Control Change Notice, and (v)
specify the date upon which all Notes for which a Declaration Notice shall not
have been received pursuant to the proceeding clause (iv) shall be immediately
due and payable pursuant to the terms of this 2.3, which date shall he no less
than 50 days, and no more than 60 days, after the date of the Control Change
Notice (the "Change of Control Payment Date").
The Company covenants and agrees to provide copies of each Declaration
Notice received by the Company to each other holder of a Note immediately upon
the Company's receipt of such Declaration Notice and to prepay in full on the
Change of Control Payment Date all Notes held by each holder which shall not
have delivered a Declaration Notice to the Company. In the event that a
Control Change Notice is given and a holder of Notes fails to provide a
Declaration Notice within the time period set forth above, the Notes held by
such holder shall become due and payable as a result of such Change of Control.
As used herein, the term "Acquiring Person" shall mean any person or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder as in effect
on the date of this Agreement (the "Exchange Act")) who or which, together with
all affiliates and associates (as defined in Rule 12b-2 under the Exchange Act)
(i) is on the date of this Agreement not the beneficial owner of any
outstanding Voting Stock of the Company or, if such person or group is the
beneficial owner of such stock, it is either a Major Holder, the beneficial
owner of less than 5% of the outstanding Voting Stock of the Company, or is not
a Control Person and (ii) becomes the beneficial owner of more than 40% of the
Voting Stock of the Company.
As used herein, the term "Change of Control" shall mean any event by
which an Acquiring Person has become such.
As used herein, the term "Change of Control Date" shall mean any date
upon which a Change of Control shall occur.
As used herein, the term "Control Person" shall mean (a) any Person
who on the date of this Agreement is both (i) the beneficial owner of 5% or
more of the Voting Stock of the Company and (ii) an officer or director of the
Company and (b) any spouse or descendant of a Person named in clause (a) who
receives from such Person described in clause (a) 5% or more of such Voting
Stock by gift, inheritance, the laws of intestacy or otherwise (except for any
such spouse or descendant that receives such Voting Stock in a bona fide
purchase at fair market value).
<PAGE>
All prepayments of the Notes pursuant to this 2.3 shall be made by
the payment of the aggregate principal amount remaining unpaid on the Notes to
be prepaid and accrued interest thereon to the date of such prepayment together
with a premium equal to the Make-Whole Amount determined as of five Business
Days prior to the date of such prepayment pursuant to this 2.3. Any prepayment
of less than all of the outstanding Notes made pursuant to this 2.3 shall be
applied to the payment in full of the Notes held by the holders not providing a
Declaration Notice, and each scheduled prepayment pursuant to the provisions of
2.1 coming due thereafter shall be reduced by an amount which bears the same
relationship to such payment as the aggregate amount being so applied pursuant
to this 2.3 bears to the unpaid principal amount of the Notes immediately
prior to such application, so that the amounts of the scheduled payments on
each Note remaining outstanding after such application shall be unchanged by
such application.
Section 2.4 Notice of Optional Prepayments. The Company will give
notice of any prepayment of the Notes pursuant to 2.2 to each holder thereof
not less than 30 days nor more than 60 days before the date fixed for such
optional prepayment specifying (i) such date, (ii) the principal amount of the
holder's Notes to be prepaid on such date, (iii) that a premium may be payable,
(iv) the estimated premium, and (v) the accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts, if any,
which are conditions precedent to any such prepayment. Notice of prepayment
having been so given, the aggregate principal amount of the Notes specified in
such notice, together with accrued interest thereon and the premium, if any,
payable with respect thereto shall become due and payable on the prepayment
date specified in such notice. Not later than two Business Days prior to the
prepayment date specified in such notice, the Company shall provide the holder
of each Note written notice of the premium, if any, payable in connection with
such prepayment and, whether or not any premium is payable, a reasonably
detailed computation of the Make-Whole Amount.
Section 2.5 Application of Prepayments. All partial prepayments
made in accordance with 2.1 and 2.2 shall be applied on all outstanding Notes
ratably in accordance with the unpaid principal amounts thereof.
Section 2.6 Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, in the case of any Note
owned by you or your nominee or owned by any subsequent Institutional Holder
which has given written notice to the Company requesting that the provisions of
this 2.6 shall apply, the Company will punctually pay when due the principal
thereof, interest thereon and premium, if any, due with respect to said
principal, without any presentment thereof, directly to you, to your nominee or
to such subsequent Institutional Holder at your address or your nominee's
address set forth in Schedule I hereto or such other address as you, your
nominee or such subsequent Institutional Holder may from time to time
designate in writing to the Company or, if a bank account with a United States
bank is designated for you or your nominee on Schedule I hereto or in any
written notice to the Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such payments in
immediately available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account in any United
States bank as you, your nominee or any such subsequent Institutional Holder
may from time to time direct in writing.
<PAGE>
SECTION 3. REPRESENTATIONS.
Section 3.1 Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit B
hereto are true and correct as of December 22, 1993 and are incorporated herein
by reference with the same force and effect as though herein set forth in full.
Section 3.2 Representations of the Purchaser. You represent, and
in entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the distribution
thereof, and that you have no present intention of selling, negotiating or
otherwise disposing of the Notes; it being understood, however, that the
disposition of your property shall at all times be and remain within your
control. You further represent that you are acquiring the Notes for your own
account and with your general corporate assets and not with the assets of any
separate account in which any employee benefit plan has any interest. As used
in this 3.2 the terms "separate account" and "employee benefit plan" shall have
the respective meanings assigned to them in ERISA.
SECTION 4. CLOSING CONDITIONS.
Section 4.1 Conditions. Your obligation to purchase the Notes
proposed to be sold to you on the Funding Date shall be subject to the
performance by the Company of its agreements hereunder which by the terms
hereof are to be performed at or prior to the time of delivery of the Notes
and to the following further conditions precedent:
(a) Documents and Agreements. You shall have received the following:
(i) Notes. The Notes to be purchased by you.
(ii) Company's Closing Certificate. A certificate dated the
Funding Date, signed by the President or a Vice President of the
Company, the truth and accuracy of which shall be a condition to
your obligation to purchase the Notes proposed to be sold to you,
to the effect that
(A) the representations and warranties of the Company set
forth in Exhibit B hereto are true and correct on and with
respect to the Funding Date,
(B) the Company has performed all of its obligations
hereunder and under the other Agreements which are to be
performed on or prior to the Funding Date, and
(C) no Default or Event of Default has occurred and is
continuing.
(iii) Legal Opinions. From Baker & Botts, L.L.P., who
are acting as your special counsel in this transaction, and from
Robert G. Turcott, Esq., Vice President, Secretary and General
Counsel of the Company, their respective opinions dated the
Funding Date, in form and substance satisfactory to you, and
covering the matters set forth in Exhibits C and D hereto,
respectively.
(iv) Guaranty. A counterpart of the Guaranty substantially
in the form of Exhibit E hereto, executed by each of the
Guarantors.
<PAGE>
(v) Guarantors' Closing Certificate. A certificate dated
the Funding Date, signed by the President or a Vice President of
each of the Guarantors, the truth and accuracy of which shall be
a condition to your obligation to purchase the Notes proposed to
be sold to you, to the effect that the representations and
warranties of the Guarantors set forth in Section 3 of the
Guaranty are true and correct on and with respect to the Funding
Date.
(vi) Company's Resolutions. Copies of the resolutions of
the Board of Directors of the Company approving the Agreements
and the Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect
to the Agreements and the Notes, certified by the Secretary of
the Company as of the Funding Date.
(vii) Company's Secretary Certificate. A certificate of
the Secretary of the Company, dated as of the Funding Date,
certifying the names and true signatures of the officers of the
Company authorized to sign the Agreements and the Notes and the
other documents to be delivered hereunder.
(viii) Company's Charter. Copies of the Articles of
Incorporation of the Company (dated as of a date within fifteen
days prior to the Funding Date) certified by the Secretary of
State of the State of Wisconsin and copies of the bylaws of the
Company.
(ix) Guarantors' Resolutions. Copies of the resolutions of
the Board of Directors of each Guarantor approving the Guaranty,
and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the
Guaranty, certified by the Secretary of such Guarantor as of the
Funding Date.
(x) Guarantors' Secretary Certificate. A certificate of
the Secretary of each Guarantor, dated as of the Funding Date,
certifying the names and true signatures of the officers of such
Guarantor authorized to endorse the Notes, as guarantor under
the Guaranty and to sign the Guaranty and the other documents
to be delivered thereunder.
(xi) Guarantors' Charter. Copies of the Articles of
Incorporation of each Guarantor (dated as of a date within
fifteen days prior to the Funding Date) certified by the
Secretary of State of the State of such Guarantor's incorpora-
tion and copies of the bylaws of each Guarantor.
(xii) Downdate Certificate. A certificate of the
Secretary of the Company and each Guarantor, dated as of the
Funding Date, certifying the prior incumbency of the officers of
the Company and the Guarantors referred to in clauses (vii) and
(x) above, respectively, and as to the accuracy, as of December
22, 1993, of the bylaws of the Company and the Guarantors and,
as of the Funding Date, of the charter documents of the Company
and the Guarantors, referred to in clauses (viii) and (xi) above,
respectively.
<PAGE>
(b) Related Transactions. The Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
Funding Date pursuant to this Agreement and the other agreement referred to in
1.3.
(c) Consent of Holders of Other Indebtedness. On or prior to
December 22, 1993, any notice, consent or approval required to be obtained from
any holder or holders of any outstanding Indebtedness of the Company and any
amendments of agreements pursuant to which any Indebtedness may have been is-
sued which shall be necessary to permit the consummation of the transactions
contemplated hereby shall have been obtained and all such notices, consents or
amendments shall be reasonably satisfactory in form and substance to you and
your special counsel.
(d) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
Section 4.2 Waiver of Conditions. If on the Funding Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in 4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in 4.1 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this 4.2
shall operate to relieve the Company of any of its obligations hereunder or to
waive any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after December 22, 1993 and continuing so long as any amount
remains unpaid on any Note:
Section 5.1 Corporate Existence, Etc. The Company will preserve
and keep in full force and effect, and will cause each Restricted Subsidiary to
preserve and keep in full force and effect, its corporate existence and all
licenses and permits necessary to the proper conduct of its business; provided,
however, that the foregoing shall not prevent any transaction permitted by
5.13.
Section 5.2 Insurance. The Company will maintain, and will cause
each Restricted Subsidiary to maintain, insurance coverage with financially
sound and reputable insurers in such forms and amounts and against such risks
as are customary for corporations of established reputation engaged in the same
or a similar business and owning and operating similar properties. The Company,
upon the request of any Institutional Holder, will furnish to such
Institutional Holder a summary setting forth the nature and extent of the
insurance maintained pursuant to this 5.2.
Section 5.3 Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will pay and discharge, and will cause each Restricted
Subsidiary to pay and discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon the Company or such Restricted Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Restricted Subsidiary, all trade accounts
payable, and all claims for work, labor or materials, which if unpaid might
<PAGE>
become a Lien upon any property of the Company or such Restricted Subsidiary al
l prior to such taxes, assessments, charges, levies, accounts payable or claims
becoming delinquent or past due and before any penalties accrue thereon;
provided, however, that the Company or such Restricted Subsidiary shall not be
required to pay or discharge any such tax, assessment, charge, levy, account
payable or claim for so long as (i) the validity, applicability or amount
thereof is being contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of any property ofthe Company or such
Restricted Subsidiary or any material interference with the use thereof by the
Company or such Restricted Subsidiary, and (ii) the Company or such Restricted
Subsidiary shall set aside on its books, reserves deemed by it to be adequate
(which shall be greater than or equal to the amount of reserves,if any required
under GAAP) with respect thereto. The Company will promptly comply and will
cause each Subsidiary promptly to comply with all laws, ordinances or
governmental rules and regulations to which it is subject including, without
limitation, the Occupational Safety and Health Act of 1970, as amended, ERISA
and all laws, ordinances, governmental rules and regulations relating to
environmental protection in all applicable jurisdictions, the violation of
which, individually or in the aggregate, could materially and adversely affect
the properties, business, prospects, profits or condition of the Company or the
Company and the Restricted Subsidiaries, taken as a whole, or would result in
any Lien not permitted under 5.10.
Section 5.4 Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Restricted Subsidiary to maintain, preserve and
keep, its properties which are used or useful in the conduct of its business
(whether owned in fee or a leasehold interest) in good repair and working order
and from time to time will make all necessary repairs, replacements, renewals
and additions so that at all times the efficiency thereof shall be maintained.
Section 5.5 Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in bythe Company and the Restricted Subsidiaries would be substantially
changed from the general nature of the business engaged in by the Company and
the Restricted Subsidiaries on the date of this Agreement, and as described in
the Memorandum.
Section 5.6 Current Ratio. The Company will at all times keep and
maintain the ratio of Consolidated Current Assets to Consolidated Current
Liabilities at not less than 1.25 to 1.0.
Section 5.7 Consolidated Tangible Net Worth. The Company will at
all times keep and maintain Consolidated Tangible Net Worth at an amount not
less than $65,000,000.
Section 5.8 Limitations on Indebtedness.
(a) Funded Debt. The Company will at all times keep and maintain,
during the respective fiscal periods described below,the ratio of Adjusted
Consolidated Funded Debt to Stockholders' Equity at not greater than the
ratio set forth opposite such fiscal period(such ratio to be calculated as
of the last day of each fiscal quarter of the Company occurring within
such fiscal periods):
FISCAL PERIOD RATIO
December 23, 1993 through December 31, 1994 2.00 to 1.0
January 1, 1995 and thereafter 1.70 to 1.0
<PAGE>
(b) Priority Debt. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur or suffer to be incurred or to
exist, at any time, Priority Debt in an aggregate amount exceeding an
amount equal to 10% of Tangible Assets.
(c) Subordination. The Company shall cause all Funded Debt that is
represented or governed by a note, bond or other instrument or document
owing by the Company to any Subsidiary or by any Guarantor to the Company
or to any other Subsidiary, to be subordinate to the Indebtedness
represented by the Notes or the Guaranty, as applicable, upon terms
acceptable to more than 50% in outstanding aggregate principal amount of
the Notes.
Section 5.9 Fixed Charges Coverage Ratio. The Company will keep
and maintain the ratio of Net Income Available for Fixed Charges to Fixed
Charges for each period of four consecutive fiscal quarters of the Company,
commencing with the fiscal quarter of the Company ending April 2, 1994, at not
less than 1.40 to 1.0.
Section 5.10 Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create, incur,or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same tothe payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire or agree to acquire,
any property or assets upon conditional sales agreements or other title
retention devices, except:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided payment thereof is not at the time required by 5.3;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired,or in
respect of which the Company or a Restricted Subsidiary shall at any time
in good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding for
review shall have been secured;
(c) Liens incidental to the Company's or such Restricted Subsidiary's
conduct of business or the ownership of its properties and assets
(including Liens in connection with worker's compensation, unemployment
insurance and other like laws, warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other Liens of like general nature incurred inthe ordinary
course of business and not in connection with the borrowing of money;
provided in each case, the obligation secured thereby is not overdue or,if
overdue, is being contested in good faith by appropriate actions or
proceedings and for which the Company or such Restricted Subsidiary shall
have set aside on its books, reserves deemed by it to be adequate (which
shall be greater than or equal to the amount of reserves,
if any, required by GAAP);
<PAGE>
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company or such Restricted Subsidiary or which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in the
operation of the business of the Company or such Restricted Subsidiary;
(e) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to a Wholly-owned Restricted Subsidiary;
(f) Liens existing as of the date of this Agreement and reflected in
Annex B to Exhibit B hereto;
(g) Liens created or extended in connection with renewing, extending
or refunding Indebtedness secured by Liens permitted by the preceding
subsections (a) through (f); provided (i) the principal amount of
Indebtedness so secured shall not be increased, (ii) no such Lien shall
attach to any property other than the property encumbered by such Lien
immediately prior to such renewal, extension or refunding, and (iii) all
Consolidated Funded Debt and all Current Debt secured thereby could then
be incurred within the limitations provided in 5.8; and
(h) in addition to Liens permitted by subsections (a) through (g) of
this 5.10, Liens on fixed assets used or intended to be used in carrying
on the business of the Company or such Restricted Subsidiary incurred
after December 22, 1993 and securing Funded Debt or Current Debt of the
Company or such Restricted Subsidiary incurred within the limitations
provided by 5.8.
Section 5.11 Restricted Payments. The Company will not, and will
not permit any Restricted Subsidiary to:
(a) declare or pay any dividends, either in cash or property, on any
shares of its capital stock of any class, or set apart any sum for such
purpose;
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock (other than in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock); or
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments or distributions being herein collectively called "Restricted
Payments"); provided, however that, so long as no Default or Event of Default
shall have occurred and be continuing, the Company may (i) purchase, redeem or
retire, in accordance with the provisions of Article VII,Section 7.11(B) of the
By-laws of the Company as in effect on the date of this Agreement, shares of its
capital stock owned by any current or former employee, customer, or director,
(ii) sell or exchange shares of capital stock of the Company to or with any
Wholly-owned Subsidiary, and (iii) pay Patronage Dividends in accordance with
Article V of the By-laws of the Company as in effect on the date of this
<PAGE>
Agreement if (y) after giving effect to such payment, the book value per share
of the Company and the Subsidiaries, on a consolidated basis, is at least 10%
greater than such book value on the last day ofthe immediately preceding fiscal
year of the Company, and (z) after giving effect to such Patronage Dividend not
more than 40% of the aggregate payments of Patronage Dividends during any
fiscal year of the Company shall have been made in cash.
The Company will not perform any act or thing, or commence any
corporate action to permit any act or thing, set forth in clause (a),(b) or (c)
above if after giving effect thereto a Default or Event of Default exists or
would result therefrom or which would constitute a Restricted Payment(permitted
by the proviso of the immediately preceding paragraph) payable more than 60
days after the date of declaration or announcement thereof.
For the purposes of this 5.11, the amount of any Restricted Payment
permitted by the proviso of the second preceding paragraph) declared, paid or
distributed in property shall be deemed to be the greater of the book value or
fair market value (as determined in good faith by the Board of Directors of the
Company) of such property at the time of the making of the Restricted Payment
in question.
Section 5.12 Investments. The Company will not, and will not permit
any Restricted Subsidiary to, make any Investments,
(a) Investments by the Company or such Restricted Subsidiary in and
to a Wholly-owned Restricted Subsidiary, including any Investment in a
corporation which, after giving effect to such Investment, will become a
Wholly-owned Restricted Subsidiary;
(b) Investments by any Wholly-owned Subsidiary in capital stock of
the Company;
(c) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the Company
or such Restricted Subsidiary, is accorded the highest rating by Moody's
Investors Service, Inc. or one of the two highest ratings by Standard &
Poor's Corporation;
(d) Investments in direct obligations of the United States of
America or any agency or instrumentality of the United States of America,
the payment or guarantee of which constitutes a full faith and credit
obligation of the United States of America, in either case maturing in
twelve months or less from the date of acquisition thereof;
(e) Investments in certificates of deposit maturing within one year
from the date of issuance thereof, issued by a bank or trust company
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregated and whose long-term
certificates of deposit are, at the time of acquisition thereof by the
Company or such Restricted Subsidiary, rated AA or Standard & Poor's
Corporation or Aa or better by Moody's Investors Service, Inc.;
(f) Investments in overnight Eurodollar obligations which are (i)
purchased in the United States and (ii) issued by a commercial bank that
meets the requirements set forth in 5.12(e);
<PAGE>
(g) Investments in any publicly traded mutual fund, the assets of
which consist of either (i) money market securities or (ii) securities of
the type described in 5.12(c) but which may have maturities of three years
or less from the date of acquisition thereof;
(h) Investments existing as of the date of this Agreement and
reflected in Schedule II hereto;
(i) loans or advances in the usual and ordinary course of business in
an aggregate principal amount of not more than $1,000,000 at any one time
outstanding and made to officers, directors or employees of the Company or
such Restricted Subsidiary for expenses (including moving expenses related
to a transfer) incidental to carrying on the business of the Company or
such Restricted Subsidiary;
(j) receivables arising from the sale of goods and services in the
ordinary course of business of the Company or such Restricted Subsidiary;
and
(k) Investments (in addition to those permitted by the foregoing
provisions of this 5.12), provided that the aggregate amount of
Investments permitted by this 5.12(k) shall not exceed 10% of Tangible
Assets at any time.
In valuing any Investments for the purpose of applying the limitations
set forth in this 5.12, such Investments shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal.
For purposes of this 5.12, at any time when a corporation becomes a
Restricted Subsidiary,all Investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Restricted Subsidiary, at
such time.
Section 5.13 Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Restricted Subsidiary to, (i)
consolidate with or be a party to a merger with any other Person or (ii) sell,
lease or otherwise dispose of, whether in one transaction or a series of
related transactions, all or any substantial part (as defined in subsection (d)
of this 5.13) of the assets of the Company and the Restricted Subsidiaries;
provided, however, that:
(1) any Restricted Subsidiary may merge or consolidate with or
into the Company or any Wholly-owned Restricted Subsidiary so long as
in any merger or consolidation involving the Company, the Company
shall be the surviving or continuing corporation;
(2) the Company may consolidate or merge with any other
corporation if (i) the surviving or continuing corporation is
organized under the laws of the United States or any state thereof,
(ii) at the time of such consolidation or merger and after giving
effect thereto no Default or Event of Default shall have occurred and
be continuing, (iii) after giving effect to such consolidation or
merger, the surviving or continuing corporation shall be engaged in
substantially the same line of business in which the Company was
engaged immediately prior thereto, (iv) the surviving or continuing
corporation (if other than the Company) shall expressly assume the
covenants and obligations in the Notes and the Agreements by written
agreement which agreement shall be satisfactory in form and substance
to the holders of at least 66-2/3% in aggregate principal amount of
<PAGE>
the outstanding Notes, and (v) after giving effect to such
consolidation or merger the surviving or continuing corporation would
be permitted to incur at least$1.00 of additional Consolidated Funded
Debt under the provisions of 5.8(a); and
(3) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company or
any Wholly-owned Restricted Subsidiary.
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the
purposes of this 5.13, any warrants, rights or options to purchase or
otherwise acquire stock or other Securities exchangeable for or
convertible into stock) of such Restricted Subsidiary to any Person other
than the Company or a Wholly-owned Restricted Subsidiary, except for the
purpose of qualifying directors, or except in satisfaction of the validly
preexisting preemptive rights of minority shareholders in connection with
the simultaneous issuance of stock to the Company or a Restricted
Subsidiary whereby the Company or such Restricted Subsidiary maintain at
least their same proportionate interest in such Restricted Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Restricted Subsidiary (except to qualify directors)
or any Indebtedness of any Restricted Subsidiary, and will not permit any
Restricted Subsidiary to sell, transfer or otherwise dispose of (except to
the Company or a Wholly-owned Restricted Subsidiary)any shares of stock or
any Indebtedness of any other Restricted Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition,all
shares of stock and all Indebtedness of such Restricted Subsidiary at
the time owned by the Company and by every other Restricted Subsidiary
shall be sold, transferred or disposed of as an entirety in a
transaction permitted under this 5.13;
(2) the Board of Directors of the Company shall have determined,
as evidenced by a resolution thereof, that the proposed sale, transfer
or disposition of said shares of stock and Indebtedness is in the best
interests of the Company;
(3) said shares of stock and Indebtedness are sold, transferred
or otherwise disposed of to a Person, for consideration entirely in
the form of cash and on terms reasonably deemed by the Board of
Directors of the Company to be adequate and satisfactory;
(4) the Restricted Subsidiary being disposed of shall not have
any continuing investment in the Company or any other Restricted
Subsidiary not being simultaneously disposed of, and
(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the Company
and the Restricted Subsidiaries.
(d) As used in this 5.13, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the
Company and the Restricted Subsidiaries if the book value of such assets,
when added to the book value of all other assets, including, without
limitation, shares of stock or Indebtedness, sold, leased or otherwise
disposed of by the Company and the Restricted Subsidiaries during the
12-month period ending with the date of such sale, lease or other
disposition, exceeds 10% of Tangible Assets, determined as of the end of
the immediately preceding fiscal year of the Company.
<PAGE>
Section 5.14 Guaranties. The Company will not, and will not permit
any Restricted Subsidiary to, become or be liable in respect of any Guaranties
except the Guaranty and Guaranties (a) by the Company which are limited in
amount to a stated maximum dollar exposure or which constitute Guaranties of
obligations incurred by any Restricted Subsidiary in compliance with the
provisions of this Agreement, (b) by the Guarantors or any Subsidiary hereafter
becoming a Guarantor pursuant to 5.19, of Funded Debt of the Company which
Funded Debt is otherwise permitted by this Agreement and (c) of lease
obligations of, and loans to, customers of the Company or such Restricted
Subsidiary which are limited in amount to a stated maximum dollar exposure.
Section 5.15 Repurchase of Notes. Neither the Company nor any
Restricted Subsidiary or Affiliate, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless an offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases or otherwise acquires any
Notes, such Notes shall immediately thereafter be cancelled and no Notes shall
be issued in substitution therefor. Without limiting the foregoing, upon the
repurchase or other acquisition of any Notes by the Company, any Restricted
Subsidiary or any Affiliate, such Notes shall no longer be outstanding for
purposes of any section of this Agreement relating to the taking by the holders
of the Notes of any actions with respect hereto, including, without limitation,
6.3, 6.4 and 7.1.
Section 5.16 Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into or be a party to
any transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of property with, or the
rendering of any service by or for, any Affiliate), except in a manner
materially consistent with past practices and in the ordinary course of and
pursuant to the reasonable requirements of the Company's or such Restricted
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Restricted Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.17 Termination of Pension Plans. The Company will not
and will not permit any Subsidiary to withdraw from any Multiemployer Plan or
permit any employee benefit plan maintained by it to be terminated if such
withdrawal or termination could result in withdrawal liability (as described in
Part I of Subtitle E of Title IV of ERISA) or the imposition of a Lien on any
property of the Company or any Subsidiary pursuant to Section 4068 of ERISA.
Section 5.18 Reports and Rights of Inspection. The Company will
keep, and will cause each Restricted Subsidiary to keep, proper books of record
and account in which full and correct entries will be made of all dealings or
transactions of, or in relation to, the business and affairs of the Company or
such Restricted Subsidiary, in accordance with GAAP consistently applied
(except for changes disclosed in the financial statements furnished to you
pursuant to this 5.18 and concurred in by the independent public accountants
referred to in 5.18(b) hereof), and will furnish to you so long as you are the
holder of any Note and to each other Institutional Holder of the then
outstanding Notes (in duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the
last) of each fiscal year of the Company, copies of unaudited:
<PAGE>
(1) consolidated and consolidating balance sheets of the
Company and the Restricted Subsidiaries as of the close of such
quarterly fiscal period, setting forth in comparative form the
consolidated and consolidating figures for the fiscal year of the
Company then most recently ended,
(2) consolidated and consolidating statements of earnings of
the Company and the Restricted Subsidiaries for such quarterly fiscal
period and for the portion of the fiscal year of the Company ending
with such quarterly fiscal period, in each case setting forth in
comparative form the consolidated and consolidating figures for the
corresponding periods of the preceding fiscal year of the Company,
and
(3) consolidated statements of cash flows of the Company and the
Restricted Subsidiaries for the portion of the fiscal year of the
Company ending with such quarterly fiscal period, setting forth in
comparative form the consolidated and consolidating figures for the
corresponding period of the preceding fiscal year of the Company,
all in reasonable detail and certified by the chief financial officer of the
Company as complete and correct and as conforming to the requirements of
quarterly reports to the Securities and Exchange Commission on Form 10Q
promulgated thereby;
(b) Annual Statements. As soon as available and in any event within
120 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the
Company and the Restricted Subsidiaries as of the close of such
fiscal year, and
(2) consolidated and consolidating statements of earnings and
stockholders' equity and consolidated statements of cash flows of the
Company and the Restricted Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated and
consolidating figures for the preceding fiscal year of the Company, all in
reasonable detail and (i) in the case of the consolidated statements
referred to above, accompanied by a an unqualified report thereon of a firm
of independent public accountants of recognized national standing selected
by the Company, to the effect that the consolidated financial statements
present fairly, in all material respects, the consolidated financial
position of the Company and the Restricted Subsidiaries as of the end of
the fiscal year being reported on and the consolidated results of the
operations and cash flows for said year in conformity with GAAP and that
the examination of such accountants in connection with such financial
statements has been conducted in accordance with generally accepted
auditing standards and included such tests of the accounting records and
such other auditing procedures as said accountants deemed necessary in the
circumstances and (ii) in the case of the consolidating statements referred
to above, accompanied by a certificate of the chief financial officer of
the Company, to the effect that such consolidating statements present
fairly, in all material respects, the consolidating financial position of
the Company and the Restricted Subsidiaries as of the end of the fiscal
year being reported on in (i), above, and the consolidating results of the
operations for said year in conformity to GAAP;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Restricted Subsidiary and any management letter received
from such accountants;
<PAGE>
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement or prospectus, filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any investigation or proceeding to which the Company or any of the
Subsidiaries is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company or any of the Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC or
any other person to terminate any Plan; (iii) the institution of any steps
by the Company, any ERISA Affiliate or to the Company's knowledge any
substantial employer (within the meaning of Section 4063 of ERISA) to
withdraw from any Plan; (iv) a non-exempt "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Code in
connection with any Plan; (v) any material increase in the contingent
liability of the Company or any Restricted Subsidiary with respect to any
post-retirement or post-employment welfare liability; or (vi) the taking of
any action by, or the threatening of the taking of any action by, the
Internal Revenue Service, the Department of Labor or the PBGC with respect
to any of the foregoing;
(f) Officer's Certificates. Together with each of the financial
statements required under subsections (a) and (b) above, a certificate of
an authorized financial officer of the Company stating that such officer
has reviewed the provisions of this Agreement and setting forth: (i) the
information and, in the case of 5.6 through 5.9, 5.10(g) and (h),
5.12(k) and 5.13(d) computations (in sufficient detail) required in order
to establish whether the Company was in compliance with the requirements of
5.6 through 5.17 and 5.19 at the end of the period covered by the financial
statements then being furnished, and (ii) whether there existed as of the
of the date of such financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the certificate or existed
at any time during the period covered by such financial statements any
Default or Event of Default and, if any such condition or event exists on
the date of the certificate, specifying the nature and period of existence
thereof and the action the Company is taking and proposes to take with
respect thereto;
(g) Accountant's Certificates. Together with each of the financial
statements required under subsection (b) above, a certificate of the
accountants who render an opinion with respect to such financial
statements, stating that they have reviewed this Agreement and stating
further whether, in making their audit, such accountants have become aware
of any Default or Event of Default under any of the terms or provisions of
this Agreement insofar as any such terms or provisions pertain to or
involve accounting matters or determinations, and if any such condition or
event then exists, specifying the nature and period of existence thereof;
(h) Unrestricted Subsidiaries. Together with each of the financial
statements required under subsections (a) and (b) above, financial
statements of the character and for the dates and periods as in said
subsections (a) and (b) covering each Unrestricted Subsidiary (or groups of
Unrestricted Subsidiaries on a consolidated basis); and
(i) Requested Information. With reasonable promptness, such other
data and information as you or any such Institutional Holder may reasonably
request.
<PAGE>
Without limiting the foregoing, the Company will permit you, so long as you are
the holder of any Note, and each Institutional Holder of the then outstanding
Notes (or such Persons as either you or such Institutional Holder may
designate), to visit and inspect, under the Company's guidance, any of the
properties of the Company or any Restricted Subsidiary, to examine all of their
books of account, records, reports and other papers, to make copies and
extracts therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with you the finances and affairs of the Company and the Restricted
Subsidiaries), all at such reasonable times and as often as may be reasonably
requested. The Company shall not be required to pay or reimburse you or any
such Institutional Holder for expenses which you or any such Institutional
Holder may incur in connection with any such visitation or inspection unless
such visitation or inspection is made by you or any such Institutional Holder
in response to the occurrence of a Default or an Event of Default.
Section 5.19 Additional Guaranties. The Company will, not later
than any date on which any Subsidiary delivers a guaranty to any bank signatory
to the Credit Agreement, cause such Subsidiary to join the Guaranty by
executing and delivering a Joinder Agreement substantially in the form of
Annex I to Exhibit E hereto. Concurrently with the delivery of any such joinder
by a Subsidiary, the Company will deliver to you an opinion of counsel
satisfactory to you in form and substance to the effect that the Guaranty has
been duly authorized, executed and delivered by such Subsidiary and constitutes
a legal, valid and binding contract of such Subsidiary enforceable in
accordance with its terms, and covering such other legal matters as you may
reasonably request.
Section 5.20 Covenant to Secure Notes Equally. If the Company or
any Restricted Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by 5.10 (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to 7.1) it will make or cause to be
made effective provision whereby the Notes will be secured by such Lien equally
and ratably with any and all other Indebtedness thereby secured so long as any
such other Indebtedness shall be so secured.
Section 5.21. ERISA. Each of the Company and the Subsidiaries will
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed might result in the imposition of
a Lien against any of its properties or assets, and the Company will promptly
notify the holder of each Note of (i) the occurrence of any reportable event
(as defined in ERISA) with respect to a Plan, other than any such event as to
which the PBGC has waived notice by regulation, (ii) receipt of any notice from
the PBGC of its intention to seek termination of any Plan or appointment of a
trustee therefor, (iii) its, any Subsidiary's, or, to the extent the Company
has knowledge thereof, any of its ERISA Affiliates' intention to terminate or
withdraw from any Plan, and (iv) the occurrence of any event with respect to
any employee benefit plan as defined in Section 3(3) of ERISA which would
reasonably be expected to result in the incurrence by the Company or any
Subsidiary of any material liability, fine or penalty, or any material increase
in the contingent liability of the Company or any Subsidiary with respect to
any post-retirement on post-employment welfare benefit liability.
Section 5.22. Compliance with Environmental Laws. The Company will,
and will cause each of the Subsidiaries and each of their respective Affiliates
that are controlled by the Company or any of the Subsidiaries to, comply in a
timely fashion with, or operate pursuant to valid waivers of the provisions of,
all federal, state and local environmental or pollution-control laws,
regulations, orders and decrees governing, without limitation, the emission of
<PAGE>
wastewater effluent, solid and hazardous waste and air pollution, together with
any other applicable requirements for conducting, on a timely basis, periodic
tests and monitoring for contamination of ground water, surface water, air and
land and for biological toxicity of the aforesaid, and diligently comply with
the regulations(except to the extent such regulations are waived by appropriate
governmental authorities) of the Environmental Protection Agency or other
relevant federal, state or local governmental authority except where
noncompliance would not materially adversely affect the business, financial
condition or results of operations of the Company or the Company and the
Restricted Subsidiaries, taken as a whole.
Section 5.23. Restricted Subsidiaries. The Company will not permit
any Restricted Subsidiary to become an Unrestricted Subsidiary.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1 Events of Default. Any one or more of the following
shall constitute an "Event of Default" as such term is used herein:
(a) default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five days; or
(b) default shall occur in the making of any required prepayment on
any of the Notes as provided in 2.1; or
(c) default shall occur in the making of any other payment of the
principal of any Note or premium, if any, thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(d) default shall be made in the payment when due (whether by lapse
of time, by declaration, by call for redemption or otherwise) of the
principal of or interest on, any Funded Debt or Current Debt (other than
the Notes) of the Company or any Restricted Subsidiary and such default
shall continue beyond the period of grace, if any, allowed with respect
thereto; or
(e) default or the happening of any event shall occur under any
indenture,agreement or other instrument under which any Funded Debt or
Current Debt (other than the Notes) of the Company or any Restricted
Subsidiary shall be outstanding or may be issued andsuch default or event
shall continue for a period of time sufficient to permit the acceleration
of the maturity of any Funded Debt or Current Debt of the Company or any
Restricted Subsidiary outstanding thereunder; or
(f) default shall occur in the observance or performance of any
covenant or agreement contained in 5.6 through 5.13, 6.2 or the final
paragraph of 5.18; or
(g) default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of (i) the day on which any officer of the Company first
obtains knowledge of such default, or (ii) the day on which written notice
thereof is given to the Company by the holder of any Note; or
(h) any representation or warranty made by the Company herein, or
made by or on behalf of the Company in any statement or certificate
furnished by the Company in connection with the consummation of the
issuance and delivery of the Notes or furnished by or on behalf of the
Company pursuant hereto, is untrue in any material respect as of the date
of the issuance or making thereof, or
<PAGE>
(i) any representation or warranty made by any of the Guarantors in
the Guaranty,or made by or on behalf of such Guarantor in any statement or
certificate furnished by such Guarantor in connection with the
consummation of the execution and delivery of the Guaranty, is untrue in
any material respect as of the date of the issuing or making thereof; or
(j) the Guaranty or any guaranty delivered to the holders of the
Notes in accordance with the provisions of 5.19 shall not be valid and
enforceable or shall be repudiated in whole or in part by any guarantor of
the Notes thereunder; or
(k) final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company or any
Restricted Subsidiary or against any property or assets of either and any
one of such judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 30 days from the date of
its entry; or
(l) a custodian, liquidator, trustee or receiver is appointed for
the Company or any Restricted Subsidiary or for the major part of the
property of either and is not discharged within 30 days after such
appointment; or
(m) the Company or any Restricted Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes
an assignment for the benefit of creditors, or the Company or any
Restricted Subsidiary applies for or consents to the appointment of a
custodian, liquidator, trustee or receiver for the Company or such
Restricted Subsidiary or for the major part of the property of either; or
(n) bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Restricted Subsidiary and, if instituted
against the Company or any Restricted Subsidiary, are consented to or are
not dismissed within 60 days after such institution.
Section 6.2 Notice to Holders. When (a) any Default or Event of
Default has occurred, (b) the holder of any Note or of any other evidence of
Funded Debt or Current Debt of the Company gives any notice or takes any other
action with respect to a claimed default, (c) any officer of the Company shall
become aware of any action, suit, investigation or proceeding, pending or
threatened, of the kind described in paragraph 8 of Exhibit B hereto, or (d) a
material adverse change shall occur in the properties, business, prospects,
profits or condition (financial or otherwise) of the Company or the Company and
the Restricted Subsidiaries, taken as a whole, the Company agrees to give
notice within three Business Days of such event to all holders of the Notes
then outstanding.
Section 6.3 Acceleration of Maturities. (a) When any Event of
Default described in subsection (a), (b) or (c) of 6.1 has occurred and is
continuing, the holder of any Note (other than the Company, any Subsidiary or
any of their respective Affiliates) that is the subject of such Event of
Default may at its option, by notice in writing to the Company, declare such
Note to be, and such Note shall thereupon be and become, immediately due and
payable, together with premium, if any, equal to the Make-Whole Amount with
respect to each such Note, and together with interest accrued thereon, without
presentment, demand, protest or other notice of any kind (including, without
limitation, notice of intent to accelerate and notice of acceleration of
maturity), all of which are hereby waived by the Company, (b) if such event is
an Event of Default specified in clauses (l) through (n) of 6.1 with respect
to the Company, all of the Notes at the time outstanding shall automatically
become immediately due and payable together with premium, if any, equal to the
<PAGE>
Make-Whole Amount with respect thereto, and together with interest accrued
thereon, without presentment, demand, protest or notice of any kind (including,
without limitation, notice of intent to accelerate and notice of acceleration
of maturity), all of which are hereby waived by the Company, and (c) if such
event is any Event of Default, other than those described in clause (b) above,
the holder or holders of at least 25% of the aggregate outstanding principal
amount of the Notes at such time may at its or their option, by notice in
writing to the Company, declare all of the Notes to be, and all of the Notes
shall thereupon be and become, immediately due and payable together with
interest accrued thereon and, to the maximum extent permitted by applicable
law, together with the premium, if any, equal to the Make-Whole Amount with
respect to each Note, without presentment, demand, protest or other notice of
any kind (including, without limitation, notice of intent to accelerate and
notice of acceleration of maturity), all of which are hereby waived by the
Company.
Section 6.4 Rescission of Acceleration. The provisions of 6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in subsections (a)
through (k), inclusive, of 6.1 or the occurrence of any Event of Default
described in subsection (l) through (n) with respect to one or more Restricted
Subsidiaries only, the holders of more than 50% in aggregate principal amount
of the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or any of the Agreements;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under the Agreements (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under 6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
Section 6.5 Other Remedies. If any Default or Event of Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement, the Guaranty and exercising such
remedies as are available to such holder in respect thereo under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or the Guaranty or in aid of the exercise of any power granted
in this Agreement or the Guaranty. No remedy conferred in this Agreement or
the Guaranty upon the holder of any Note is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be
in addition to every other remedy conferred herein or now or hereafter existing
at law or in equity or by statute or otherwise.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1 Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company shall have
<PAGE>
obtained the consent in writing of the holders of more than 50% in aggregate
outstanding principal amount of the Notes; provided that without the written
consent of the holders of all of the Notes then outstanding, no such amendment
or waiver shall be effective (i) which will change the time of payment
(including any prepayment required by 2.1 or 2.3) of the principal of or the
interest on any Note or change the principal amount thereof or change the rate
of interest thereon or the calculation of premium relating thereto, (ii) which
will change any of the provisions with respect to optional prepayments, (iii)
which will change the percentage of holders of the Notes specified in 5, 6 or
7, or (iv) which will effect the release of any of the Guarantors.
Section 7.2 Solicitation of Holders. So long as there are any
Notes outstanding, the Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement or the Notes unless each holder of a Note (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with sufficient information to enable it to make an informed
decision with respect thereto. The Company will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of a Note as consideration
for or as an inducement to entering into by any holder of a Note of any waiver
or amendment of any of the terms and provisions of this Agreement or the Notes
unless such remuneration is concurrently offered, on the same terms, ratably to
the holders of all Notes then outstanding.
Section 7.3 Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1 Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions, unless otherwise specified, shall be
equally applicable to both the singular and plural forms of any of the terms
herein defined:
"Acquiring Person" shall have the meaning set forth in 2.3.
"Adjusted Consolidated Funded Debt" shall mean (i) Consolidated
Funded Debt minus (ii) Guaranties, to the extent such Guaranties constitute
Funded Debt, of rentals or lease obligations of, and loans to, customers of the
Company or customers of any Restricted Subsidiary in an aggregate amount not
exceeding $17,500,000 of obligations thereunder over the term of such
Guaranties.
"Adjusted Rentals" shall mean Rentals minus Sublease Rental Income.
"Affiliate" shall mean any Person (other than a Restricted
Subsidiary) (i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company,
(ii) which beneficially owns or holds 5% or more of any class of the Voting
Stock of the Company or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of
which is beneficially owned or held by the Company or a Subsidiary. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.
<PAGE>
"Agreement" shall mean this Note Agreement and "Agreements"shall have
the meaning set forth in 1.3.
"Business Day" shall mean any day other than a Saturday, a Sunday or
any other day on which banks in New York City are required by law to close, or
are customarily closed.
"Capitalized Lease" shall mean any lease the obligation for rentals
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its consolidated subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"Change of Control" shall have the meaning set forth in 2.3.
"Change of Control Date" shall have the meaning set forth in 2.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Roundy's, Inc., a Wisconsin corporation, and any
Person who succeeds to all, or substantially all, of the assets and business
thereof under the terms of 5.13(a)(2).
"Consolidated Current Assets" and "Consolidated Current Liabilities"
shall mean as of the date of any determination thereof such assets and
liabilities of the Company and the Restricted Subsidiaries on a consolidated
basis as shall be determined in accordance with GAAP to constitute current
assets and current liabilities, respectively.
"Consolidated Funded Debt" shall mean all Funded Debt of the Company
and the Restricted Subsidiaries, determined on a consolidated basis after
eliminating intercompany items.
"Consolidated Net Income" shall mean for any period the gross
revenues of the Company and the Restricted Subsidiaries for such period less
all expenses and other proper charges (including taxes on income), determined
on a consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets which sale or other disposition is not
in the ordinary course of business, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(c) net earnings and losses of any Person (other than a Restricted
Subsidiary), substantially all the assets of which have been acquired in any
manner by the Company or any Restricted Subsidiary, realized by such Person,
prior to the date of such acquisition;
(d) net earnings and losses of any Person (other than a
Restricted Subsidiary) with which the Company or a Restricted Subsidiary shall
have consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary, prior to the date of such consolidation or merger;
<PAGE>
(e) net earnings of any Person (other than a Restricted Subsidiary)
in which the Company or any Restricted Subsidiary has an ownership interest
unless such net earnings shall have actually been received by the Company or
such Restricted Subsidiary in the form of cash distributions;
(f) any portion of the net earnings of any Restricted Subsidiary
which for any reason is unavailable for payment of dividends to the Company or
any other Restricted Subsidiary having an equity interest therein;
(g) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary; and
(i) any gain arising from the acquisition of any Securities of the
Company or any Restricted Subsidiary.
"Consolidated Tangible Net Worth" shall mean as of the date of any
determination thereof Stockholders' Equity minus Intangible Assets.
"Control Change Notice" shall have the meaning set forth in 2.3
"Control Change Payment Date" shall have the meaning set forth in
2.3.
"Control Person" shall have the meaning set forth in 2.3
"Credit Agreement" shall mean the Credit Agreement dated as of
March 6, 1989 among the Company, the banks signatories thereto and The Chase
Manhattan Bank (National Association) as Agent, as amended by an Amendment No.
1 dated as of April 13, 1990, an Amendment No. 2 dated as of October 9, 1991,
an Amendment No. 3 dated as of December 9, 1991 and an Amendment No. 4 dated as
of December 14, 1992 and as the same may hereafter be amended, restated,
supplemented, extended or otherwise modified from time to time, together with
any refinancing thereof or any other note or agreement representing or
governing Indebtedness of the Company similar to the Indebtedness governed by
such Credit Agreement.
"Current Debt" of any Person shall mean as of the date of any
determination thereof (i) all Indebtedness of such Person other than Funded
Debt of such Person and (ii) Guaranties by such Person of Current Debt of
others.
"Declaration Notice" shall have the meaning set forth in 2.3.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
the regulations promulgated thereunder, in each case as in effect from time to
time. References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
<PAGE>
"Event of Default" shall have the meaning set forth in 6.1.
"Exchange Act" shall have the meaning set forth in 2.3.
"Fixed Charges" for any period shall mean on a consolidated basis the
sum of (i) all Adjusted Rentals (other than Rentals on Capitalized Leases)
payable during such period by the Company and the Restricted Subsidiaries, and
(ii) all Interest Charges on all Indebtedness (including the interest component
of Rentals on Capitalized Leases) of the Company and the Restricted
Subsidiaries payable or recognizable during such period.
"Funded Debt" of any Person shall mean (i) all Indebtedness of such
Person for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible
at the option of the obligor for a period or periods more than one year from
the date of origin), not including payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, (ii) all Indebtedness of such Person evidenced by notes, bonds,
debentures or similar instruments, not including payments in respect thereof
that are required to be made within one year from the date of any determination
of Funded Debt, (iii) all Capitalized Rentals of such Person, and (iv) all
Guaranties by such Person of obligations of others of the kind set forth in
clauses (i) through (iii) above.
"Funding Date" shall have the meaning set forth in 1.2.
"GAAP" shall mean at any time generally accepted accounting
principles as in effect at such time in the United States.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or any other balance sheet
condition or otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, (iii) to lease property or to
purchase Securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purposes of all computations
made under this Agreement, any Guaranties in respect of Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to the principal amount
of such Indebtedness for borrowed money which has been guaranteed, and any
Guaranties in respect of any other obligation or liability or any dividend
shall be deemed to be Indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend.
"Guarantors" shall have the meaning set forth in 1.1.
"Guaranty" shall have the meaning set forth in 1.1.
"Indebtedness" of any Person shall mean and include all obligations
of such Person which in accordance with GAAP would be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include (i) obligations of such Person for borrowed money or which have been
<PAGE>
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of
such obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capitalized Rentals of such
Person and (v) Guaranties of such Person of obligations of others of the
character referred to in this definition.
"Institutional Holder" shall mean any insurance company, bank,savings
and loan association, trust company, investment company, charitable foundation,
employee benefit plan (as defined in ERISA) or other institutional investor or
financial institution.
"Intangible Assets" shall mean as of the date of any determination
thereof the total amount of all assets of the Company and the Restricted
Subsidiaries which are not Tangible Assets.
"Interest Charges" for any period shall mean all interest and
amortization of debt discount and expense on each particular item of
Indebtedness for which such calculations are being made. Computations of
Interest Charges on a pro forma basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.
"Investments" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
"Lien" shall mean any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, including but
not limited to the security interest or lien arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements, buy-
ack agreements and all similar arrangements) affecting property. For the
purposes of this Agreement, the Company or a Restricted Subsidiary shall be
deemed to be the owner of any property which it has acquired or holds subject
to a conditional sale agreement, Capitalized Lease or other arrangement
pursuant to which title to the property has been retained by or vested in some
other Person for security purposes and such retention or vesting shall
constitute a Lien.
"Long-Term Lease" shall mean any lease of real or personal property
(other than a Capitalized Lease) having an original term, including any period
for which the lease may be renewed or extended at the option of the lessor, of
more than three years.
"Major Holders" shall have the meaning set forth in Paragraph 20 of
Exhibit B hereto.
"Make-Whole Amount" shall mean in connection with any prepayment or
acceleration of the Notes the excess, if any, of (i) the aggregate present
value as of the date of such payment of each dollar of principal being prepaid
<PAGE>
(taking into account the application of such prepayment required by 2.1) and
the amount of interest (exclusive of interest accrued to the date of payment)
that would have been payable in respect of such dollar if such payment had not
been made, determined by discounting such amounts at the Reinvestment Rate from
the respective dates on which they would have been payable, over (ii) 100% of
the principal amount of the outstanding Notes being prepaid. If the
Reinvestment Rate is equal or higher than 6.94%, the Make-Whole Amount shall
be zero. For purposes of any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean 0.6% plus the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York City time)
on the Business Day next preceding the date upon which payment of premium
is required hereunder with respect to the outstanding principal amount of
the Notes to be prepaid or accelerated, on the display designated as "Page
8004" on the Telerate Service (or such other display as may replace Page
8004 on the Telerate Service) for actively traded U.S. Treasury securities
having a maturity equal to the Weighted Average Life to Maturity of such
outstanding principal as of such date upon which the payment of premium is
required hereunder, or if such yields shall not be reported as of such
time or the yields reported as of such time shall not be ascertainable,
(ii) the Treasury Constant Maturity Series yields reported, for the latest
day for which such yields shall have been so reported as of the Business
Day next preceding the date upon which the payment of premium is required
hereunder with respect to such outstanding principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Weighted Average Life to Maturity of such outstanding
principal as of such date upon which the payment of premium is required
hereunder. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"Weighted Average Life to Maturity" of the principal amount of
the Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have become due on each scheduled payment date if
such prepayment had not been made, less (2) the amount of principal on the
Notes scheduled to become due on such date after giving effect to such
prepayment and the application thereof in accordance with the provisions
of 2.1, by (y) the number of years (calculated to the nearest one-twelfth)
which will elapse between the date of determination and such scheduled
payment date, and (ii) totalling the products obtained in (i).
"Memorandum" shall have the meaning set forth in paragraph 4 of
Exhibit B hereto.
"Minority Interests" shall mean any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company or one or more of the Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, and by valuing Minority
Interests constituting common stock at the book value of capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of valuing Minority
Interests in preferred stock.
<PAGE>
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Income Available for Fixed Charges" for any period shall mean
the sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and the Restricted
Subsidiaries during such period, (iii) Patronage Dividends recognized by the
Company during such period and (iv) Fixed Charges of the Company and the
Restricted Subsidiaries during such period.
"Note Register" shall have the meaning set forth in 9.1.
"Notes" shall have the meaning set forth in 1.1.
"Other Liens" shall have the meaning set forth in 5.20.
"Overdue Rate" shall mean the lesser of (i) the maximum rate
permitted by applicable law and (ii) the greater of (A) 8.94% or (B) 2% above
the rate of interest publicly announced by The Chase Manhattan Bank (National
Association) from time to time as its Prime Rate, effective as of the effective
date of the change of such Prime Rate, in either case calculated from the date
each overdue payment was due until paid in full.
"Patronage Dividends" means "patronage dividends" as such term is
defined in Section 1388(a) of the Code which patronage dividends may be
excluded from taxable income pursuant to Section 1382(b) of the Code.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Debt" shall mean the sum of (a) all unsecured Current Debt
and Funded Debt of Restricted Subsidiaries plus (b) all Funded Debt and Current
Debt of the Company and the Restricted Subsidiaries secured by Liens described
in 5.10(h); provided that Guaranties by Restricted Subsidiaries of Funded Debt
of the Company existing on the date of this Agreement (including without
limitation, the Guaranty) shall be deemed not to be Priority Debt.
"Purchasers" shall have the meaning set forth in 1.1.
The term "rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such all payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the property) payable by any Person, as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by such Person (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues. The term "Rentals"
shall mean rentals payable by the Company or a Restricted Subsidiary.
<PAGE>
"Reportable Event" shall have the same meaning as in ERISA.
"Restricted Payments" shall have the meaning set forth in 5.11.
"Restricted Subsidiary" shall mean (a) any Subsidiary (i) which is
organized under the laws of any State of the United States; (ii) which conducts
substantially all of its business and has substantially all of its assets
within the United States; and (iii) of which more than 80% (by number of votes)
of the Voting Stock is beneficially owned, directly or indirectly, by the
Company and (b) Badger Assurance, Ltd., a Bermuda corporation, so long as a
majority of each class of its capital stock is legally and beneficially owned
by the Company and the Restricted Subsidiaries.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Section" shall refer to sections of this Agreement unless
otherwise specified.
"Stockholders' Equity" shall mean "Stockholders' Equity" as shown on
the consolidated balance sheet of the Company and the Restricted Subsidiaries.
"Sublease Rental Income" shall mean all rentals received by the
Company and the Restricted Subsidiaries from the sublease by the Company or any
Restricted Subsidiary, as sublessor, of any real or personal property leased by
the Company or any Restricted Subsidiary, as lessee, to any Person that is not
the Company or a Restricted Subsidiary.
The term "subsidiary" shall mean as to any particular parent
corporation any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be beneficially owned, directly or indirectly, by such
parent corporation. The term "Subsidiary" shall mean a subsidiary of the
Company.
"Tangible Assets" shall mean as of the date of any determination
thereof the total amount of all assets of the Company and the Restricted
Subsidiaries (less depreciation, depletion and other properly deductible
valuation reserves) after deducting good will, patents, trade names, trade
marks, copyrights, franchises, experimental expense, organization expense,
unamortized debt discount and expense, deferred assets other than prepaid
insurance and prepaid taxes, the excess of cost of shares acquired over book
value of related assets, and such other assets as are properly classified as
"intangible assets" in accordance with GAAP.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Funded Debt and
Current Debt shall be owned by the Company or one or more of its Wholly-owned
Subsidiaries.
Section 8.2 Accounting Principles; Construction. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, the same shall be
<PAGE>
done in accordance with GAAP, to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement. Unless
otherwise expressly provided herein, the term "or" shall mean "and/or".
Section 8.3 Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1 Registration and Transfer of Notes. The Notes are
issuable as registered notes without coupons in denominations of at least
$1,000,000, except as may be necessary to reflect any principal amount not
evenly divisible by $1,000,000. The Company shall keep at its principal office
a register (the "Note Register") in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Notes of
like tenor and of a like aggregate principal amount, registered in the name of
such transferee or transferees. At the option of the holder of any Note, such
Note may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes that the holder making the exchange is entitled to receive.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in
writing. Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to accrue that
were carried by the Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange.
The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes of
this Agreement. Payment of or on account of the principal, premium, if any, and
interest on any registered Note shall be made to or upon the written order of
such registered holder.
Section 9.2 Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Purchaser or any subsequent Institutional
Holder is theowner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of such Note at the time of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
Section 9.3 Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of your out-of-pocket expenses in connection with the
preparation, execution, delivery and administration (expenses in connection
with such administration to be limited to $50,000 in the aggregate) of this
Agreement, the <PAGE>
Guaranty, the Notes and each of the other documents and agreements contemplated
hereby or thereby and the transactions contemplated by any of the foregoing,
including but not limited to the reasonable charges and disbursements of Baker
& Botts, L.L.P., your special counsel, duplicating and printing costs and
charges for shipping the Notes, adequately insured to you at your home office
or at such other place as you may designate, expenses incurred in obtaining a
Private Placement Number from Standard & Poor's Corporation with respect to the
Notes being purchased by you, and all such expenses relating to any amendment,
waiver or consent relating to the provisions hereof, of the Guaranty or the
Notes or of any other document or agreement contemplated hereby or thereby,
including, without limitation, any amendment, waiver, or consent resulting from
anywork-out, renegotiation or restructuring relating to the performance by the
Company or the Guarantors of its or their obligations under this Agreement,
the Guaranty, the Notes or any other document or agreement contemplated hereby
or thereby. The Company also agrees that it will pay and save you harmless
against any and all liability with respect to stamp and other taxes, if any,
which may be payable or which may be determined to be payable in connection
with the execution and delivery of this Agreement, the Guaranty, the Notes or
any other document or agreement contemplated hereby or thereby, whether or not
any Notes are then outstanding. The Company agrees to protect and indemnify
you against any liability for any and all brokerage fees and commissions
payable or claimed to be payable to any Person in connection with the
transactions contemplated by this Agreement, the Guaranty, the Notes or any
other document or agreement contemplated hereby or thereby.
Section 9.4 Powers and Rights Not Waived; Remedies Cumulative.
No delay or failure on the part of the holder of any Note in the exercise of
any power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
Section 9.5 Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered by overnight air courier or by
facsimile communication, in each case addressed to you at your address
appearing on Schedule I hereto or such other address as you or the subsequent
holder of any Note initially issued to you may designate to the Company in
writing, and if to the Company, delivered by overnight air courier or by
facsimile communication, to the Company at 23000 Roundy Drive, Pewaukee,
Wisconsin 53072, Attention: Treasurer or to such other address as the Company
may in writing designate to you or to a subsequent holder of the Note or Notes
initially issued to you; provided, however, that a notice to you by overnight
air courier shall only be effective if delivered to you at a street address
designated for such purpose in Schedule I hereto, and a notice to you by
facsimile communication shall only be effective if made by confirmed
transmission to you at a telephone number designated for such purpose in
Schedule I hereto, or, in either case, as you or a subsequent holder of any
Note initially issued to you may designate to the Company in writing and also
provided that any notice provided by facsimile communication must also be
provided within three days thereafter by overnight air courier, provided
further that if such notice provided by facsimile communication is not also
provided as required by the immediately preceding proviso, such notice provided
by facsimile communication shall only be effective as of the date and to the
extent actually received.
Section 9.6 Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Note.
<PAGE>
Section 9.7 Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Funding Date, shall survive the closing and the delivery of this Agreement and
the Notes and all such covenants, representations and warranties with respect
to 9.3 shall survive the payment of the Notes.
Section 9.8 Maximum Interest Payable. The Company, you and any
other holders of the Notes specifically intend and agree to limit contractually
the amount of interest payable under this Agreement, and all other instruments
and agreements related hereto and thereto to the maximum amount of interest
lawfully permitted to be charged under applicable law. Therefore, none of the
terms of this Agreement, the Notes, the Guaranty or any instrument pertaining
to or relating to this Agreement, the Guaranty or the Notes shall ever be
construed to create a contract to pay interest at a rate in excess of the
maximum rate permitted to be charged under applicable law, neither the Company,
the Guarantors nor any other party liable or to become liable hereunder, under
the Guaranty, under the Notes or under any other instruments and agreements
related hereto and thereto shall ever be liable for interest in excess of the
amount determined at such maximum rate, and the provisions of this 9.8 shall
control over all other provisions of this Agreement, the Guaranty, the Notes,
or any other instrument pertaining to or relating to the transactions herein
contemplated. If any amount of interest taken or received by you or any holder
of a Note shall be in excess of said maximum amount of interest which, under
applicable law, could lawfully have been collected by you or such holder
incident to such transactions, then such excess shall be deemed to have been
the result of a mathematical error by all parties hereto and shall be refunded
promptly by the Person receiving such amount to the party paying such amount,
or, at the option of the recipient, credited ratably against the unpaid
principal amount of the Note or Notes held by you or such holder, respectively.
All amounts paid or agreed to be paid in connection such transactions which
would under applicable law be deemed "interest" shall, to the extent permitted
by such applicable law, be amortized, prorated, allocated and spread throughout
the full stated term of this Agreement. "Applicable law" as used in this 9.8
means that law in effect from time to time which permits the charging and
collection of the highest permissible lawful, nonusurious rate of interest on
the transactions herein contemplated including but not limited to laws of the
State of New York and of the United States of America, and "maximum rate" as
used in this 9.8 means, with respect to each of the Notes, the maximum lawful,
nonusurious rates of interest which under applicable law may be charged to the
Company from time to time with respect to such Notes.
Section 9.9 Severability. Should any part of this Agreement for
any reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any remaining portion, which remaining
portion shall remain in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion thereof eliminated and it is
hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid or unenforceable.
Section 9.10 Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with New York
law.
Section 9.11 Jurisdiction; Venue; Service of Process. To the extent
permitted by applicable law, the Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and any State Court sitting in New York City for the purposes of all
<PAGE>
legal proceedings arising out of or relating to this Agreement or any note or
the transactions contemplated hereby or thereby. The Company agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The Company further waives any objection to venue in such
state and any objection to any action or proceeding in such state on the basis
of forum non conveniens. Nothing in this 9.11 shall affect the right of any
holder of a Note to bring any action or proceeding against the Company or its
properties in the courts of any other jurisdiction.
(a) In the case of the courts of the State of New York or of the
United States sitting in New York City,New York, the Company hereby irrevocably
designates, appoints, and empowers CT Corporation System (the "Process Agent")
(which has consented thereto) with offices on December 22, 1993 at 1633
Broadway, New York, New York 10019,as agent to receive for and on behalf of the
Company service of process in the State of New York. The Company further agrees
that such service of process may be made on the Process Agent by personal
service of a copy of the summons and complaint or other legal process in any
such legal suit, action or proceeding on the Process Agent, or by any other
method of service provided for under the applicable laws in effect inthe County
of New York, State of New York, and the Process Agent hereby is authorized and
directed to accept such service for and on behalf of the Company, and to admit
service with respect thereto.
(b) Upon service of process being made on the Process Agent as
aforesaid, a copy of the summons and complaint or other legal process served
shall be mailed by the Process Agent to the Company by air courier, at its
address set forth at the top of page 1 of this Agreement, or to such other
address as the Company may notify the Process Agent in writing. Service upon
the Process Agent as aforesaid shall be deemed to be personal service on the
Company and shall be legal and binding upon the Company for all purposes,
notwithstanding any failure of the Process Agent to mail copies of such legal
process thereto, or any failure on the part of the Company to receive the same.
(c) The Company agrees that it will at all times continuously main-
tain an agent to receive service of process in the County of New York on its
behalf. In the event that for any reason the Process Agent or any successor
thereto shall no longer serve as agent for the Company to receive service of
process in the County of New York on its behalf or the Company shall have
changed its address without notification thereof to the Process Agent, the
Company, immediately after having knowledge thereof, will irrevocably designate
and appoint a substitute agent in New York City, New York and advise you,or any
subsequent holder of a Note, thereof, or shall notify the Process Agent of its
then current correct address.
(d) Nothing contained in this section shall preclude you, or any
subsequent holder of a Note, from bringing any legal suit, action or proceeding
against the Company in the courts of any jurisdiction where the Company or any
of its property or assets may be found or located.
Section 9.12 Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof;
Section 9.13 Additional Indebtedness. Subject to the terms and
provisions hereof, the Company may, from time to time,issue and sell additional
senior promissory notes and may, in connection with the documentation thereof,
incorporate by reference various provisions of this Agreement. Such
incorporation by reference shall not modify, dilute or otherwise affect the
terms and provisions hereof or of the Guaranty including, without limitation,
the priority of the Notes and the percentage of the Notes required to approve
<PAGE>
an amendment or effectuate a waiver under the provisions of 7 or the
percentages of the Notes required to accelerate the Notes or rescind such an
acceleration under the provisions of 6.
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
ROUNDY'S, INC.
By: /s/ Edward G. Kitz
----------------------------
Name: Edward G. Kitz
Title: Vice President & Treasurer
Accepted as of December 22, 1993.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By: /s/ Julia S. Tucker
----------------------------
Name: Julia S. Tucker
Title: Investment Officer
Accepted as of December 22, 1993.
THE LIFE INSURANCE COMPANY OF
VIRGINIA
By: /s/ James F. Walters
------------------------------
Name: James F. Walters
Title: Assistant Vice President
Accepted as of December 22, 1993.
PHOENIX HOME LIFE MUTUAL
INSURANCE COMPANY
By: /s/ Nelson Correa, CFA
-----------------------------
Name: Nelson Correa, CFA
Title: Managing Director
Accepted as of December 22, 1993.
PHOENIX AMERICAN LIFE
INSURANCE COMPANY
By: /s/ Nelson Correa, CFA
----------------------------
Name: Nelson Correa, CFA
Title: Managing Director
<PAGE>
Accepted as of December 22, 1993.
WASHINGTON NATIONAL
INSURANCE COMPANY
By: /s/ C. Bruce Dunn
---------------------------
Name: C. Bruce Dunn
Title: Director of Investments
Accepted as of December 22, 1993.
TMG LIFE INSURANCE COMPANY
By: The Mutual Group (U.S.), its Agent
By: /s/ Michael J. Steppe
--------------------------
Name: Michael J. Steppe
Title: Vice President
By: /s/ Michael J. Carew
----------------------------
Name: Michael J. Carew
Title: Assistant Vice President
<PAGE>
SCHEDULE I
SCHEDULE OF PURCHASERS
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
The Variable Annuity Life
Insurance Company $20,000,000 $20,000,000
(1) All payments on account of Notes
held by such Purchaser shall be made
by wire transfer (excluding from the
terms "wire transfer", transfers
conducted through any Automated
Clearing House) of immediately
available fund for credit to:
ABA # 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life
Insurance Company
Account No. 0125-821-9
OBI = Description of Payment
Fund Number PA 54
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of the
Notes and the amounts to be applied
to principal, interest and premium.
(2) Address for all notices relating
to payments:
The Variable Annuity Life Insurance
Company and PA 54
c/o State Street Bank & Trust
Company
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
North Quincy, MA 02171
Facsimile Number:
(617) 985-4923
<PAGE>
with a copy to:
The Variable Annuity Life Insurance
Company
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attn: Private Placements A37-01
Facsimile Number:
(713) 831-1366
(3) Address for all other
communications and notices:
The Variable Annuity Life Insurance
Company
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attn: Private Placements A37-01
Facsimile Number:
(713) 831-1366
(4) Tax Identification No.:
74-1625348
<PAGE>
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
The Life Insurance Company of
Virginia $10,000,000 $10,000,000
(1) All payments on account of
Notes held by such Purchaser shall
be made by wire transfer (excluding
from the terms "wire transfer",
transfers conducted through any
Automated Clearing House) of
immediately available fund for
credit to: ABA # 051000020
Crestar Bank
919 East Main Street
Richmond, VA 23230
Re: The Life Insurance Company of
Virginia
Account No. 10-00-527
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of
the Notes and the amounts to be
applied to principal, interest and
premium.
(2) Address for all notices
relating to payments:
The Life Insurance Company of
Virigina
P.O. Box 27601
Richmond, VA 23231
Attention: Treasurer
Facsimile Number:
(804) 281-6398
(3) Address for all other
communications and notices:
The Life Insurance Company of
Virginia
P.O. Box 27424
Richmond, VA 23261
Attention: Fixed Income Division
Facsimile Number:
(804) 281-6398
(4) Tax Identification No.:
54-0283385
<PAGE>
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
Phoenix Home Life Mutual Insurance
Company $5,000,000 $5,000,000
(1) All payments on account of Notes
held by such Purchaser shall be made
by wire transfer (excluding from the
terms "wire transfer", transfers
conducted through any Automated
Clearing House) of immediately
available fund for credit to:
ABA # 021000021
The Chase Manhattan Bank (National
Association)
New York, New York
BNF = SSG Private Income
Processing/AC-9009000200
Re: Phoenix Home Life
Account No. G05689143
OBI = Description of Security
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of the
Notes and the amounts to be applied
to principal, interest and premium.
(2) Address for all notices relating
to payments:
Phoenix Home Life Mutual Insurance
Company
One American Row
Hartford, CT 06115
Attention: Private Placements
Facsimile Number:
(203) 725-5451
(3) Address for all other
communications and notices:
Phoenix Home Life Mutual Insurance
Company
One American Row
Hartford, CT 06115
Attention: Private Placements
Facsimile Number:
(203) 725-5451
(4) Tax Identification No.:
06-0493340
<PAGE>
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
Phoenix American Life Insurance
Company $5,000,000 $5,000,000
(1) All payments on account of Notes
held by such Purchaser shall be made
by wire transfer (excluding from the
terms "wire transfer", transfers
conducted through any Automated
Clearing House) of immediately
available fund for credit to:
ABA # 021000021
The Chase Manhattan Bank (National
Association)
New York, New York
BNF = SSG Private Income
Processing/AC-90090000200
Re: Phoenix American Life
Account No. G05465
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of the
Notes and the amounts to be applied
to principal, interest and premium.
(2) Address for all notices relating
to payments:
Phoenix American Life Insurance
Company
c/o Phoenix Home Life Mutual
Insurance Company
One American Row
Hartford, CT 06115
Attention: Private Placements
Facsimile Number:
(203) 725-5451
(3) Address for all other
communications and notices:
Phoenix American Life Insurance
Company
c/o Phoenix Home Life Mutual
Insurance Company
One American Row
Hartford, CT 06115
Attention: Private Placements
Facsimile Number:
(203) 725-5451
<PAGE>
(4) Tax Identification No.:
06-0893662
<PAGE>
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
Washington National Insurance
Company $3,000,000 $3,000,000
(1) All payments on account of Notes
held by such Purchaser shall be made
by wire transfer (excluding from the
terms "wire transfer", transfers
conducted through any Automated
Clearing House) of immediately
available fund for credit to:
ABA # 071000039
Continental Bank
Trust Securities
Level A Clark - Window 41
231 South La Salle Street
Chicago, Illinois 60697
Re: Washington National Insurance
Company
Account No. 303010001773
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of the
Notes and the amounts to be applied
to principal, interest and premium.
(2) Address for all notices relating
to payments:
Continental Bank
Trust Securities
Level A Clark - Window 41
231 South La Salle Street
Chicogo, Illinois 60697
With a copy to:
Washington National Insurance
Company
Attention: Investment Department
300 Tower Parkway
Lincolnshire, Illinois 60069
Facsimile Number:
(708) 793-3636
(3) Address for all other
communications and notices:
Washington National Insurance
Company
<PAGE>
Attention: Investment Department
300 Tower Parkway
Lincolnshire, Illinois 60069
Facsimile Number:
(708) 793-3636
(4) Tax Identification No.:
36-1933760
<PAGE>
AGGREGATE
PRINCIPAL
AMOUNT OF
NOTES TO BE NOTE
PURCHASED DENOMINATION
--------------- ---------------
PURCHASER
- ---------
TMG Life Insurance Company $2,000,000 $2,000,000
(1) All payments on account of Notes
held by such Purchaser shall be made
by wire transfer (excluding from the
terms "wire transfer", transfers
conducted through any Automated
Clearing House) of immediately
available fund for credit to:
ABA # 091000019
Federal Reserve Bank Minneapolis
Norwest Bank MN/Trust
Credit Account # 08-40-245
For Credit to TMG Life Universal
Account No. 12250600
Contact: Jane Busch
Each such wire transfer shall set
forth the name of the Company, the
full title (including the coupon
rate and final maturity date) of the
Notes and the amounts to be applied
to principal, interest and premium.
(2) Address for all notices relating
to payments:
The Mutual Group (U.S.)
401 Executive Drive
Brookfield, WS 53008
Attention: Lisa Harris
Facsimile Number:
(414) 797-3988
(3) Address for all other
communications and notices:
The Mutual Group (U.S.)
401 Executive Drive
Brookfield, WS 53008
Attention: Lisa Harris
Facsimile Number:
(414) 797-3988
(4) Tax Identification No.:
45-0208990
<PAGE>
SCHEDULE II
INVESTMENTS AS OF December 22, 1993
ATTACHED
<PAGE>
INVESTMENTS AS OF DECEMBER 22, 1993
- ----------------------------------------------------------------------------
INVESTMENTS OF THE COMPANY AND SUBSIDIARIES
A. ROUNDY'S, INC.
1. COMMON STOCK OF SUBSIDIARIES
HOLT PUBLIC STORAGE, INC. 1,000
SUPER MARKETING PRODUCTIONS, INC. 1,000
SCOT LAD FOODS, INC. 5,000,000
OLD TIME, INC. 1,000
R.P.D., INC. 100
KEE WHOLESALE, INC. 10,000
ROPAK, INC. 225,000
JONDEX CORP. 250,000
WFC FOODS, INC. 9,187,500
BADGER ASSURANCE, LTD. 1,920,000
CEDARBURG DAIRY, INC. 5,301,206
KEE TRANS, INC. 1,000
I.T.A., INC. 1,000
MIDLAND GROCERY OF MICHIGAN, INC. 500
2. DIRECT LOANS AND FINANCING LEASES:
AGGREGATE AMOUNT OF 32 LOANS AND FINANCE LEASES WITH CUSTOMERS (AND
OTHERS) AT 12-22-93: $9,331,800
3. GURANTEES OF CUSTOMER LOANS AND LEASES:
AGGREGATE AMOUNTOF 14 GUARANTEES AT 12--22-93: $4,394,800
B. ROPAK, INC.
1. COMMON STOCK OF SUBSIDIARIES:
SHOP-RITE, INC. 50,100
INSURANCE PLANNERS, INC. 30,000
BILLRD AVE. SHOP-RITE, INC. 10,000
PICK 'N SAVE WAREHOUSE FOODS, INC. 10,000
W. MARKETING, INC. 10,000
BOSTON MARKETING, INC. 10,000
ADAMS WINE & LIQUOR, LTD. 1,000
C. INSURANCE PLANNERS, INC.
1. COMMON STOCK OF SUBSIDIARIES:
I.P. INSURANCE AGENCY, INC. 3,725
D. SHOP-RITE
1. COMMON STOCK OF SUBSIDIARIES:
UNITED FOODS OF HARTFORD, INC. 80,000
UNITED FOODS OF WEST BEND, INC. 75,000
<PAGE>
E. SCOT LAD FOODS, INC.
1. COMMON STOCK OF SUBSIDIARIES:
SPRING LAKE MECHANDISE, INC. 500,000
BONNIE BAKING CO., INC. 1,000
CARDINAL FOODS, INC. 5,628,895
SCOT LAD-LIMA, INC. 500
2. DIRECT LOANS AND FINANCING LEASES:
AGGREGATE AMOUNT OF 81 LOANS AND FINANCE LEASES WITH CUSTOMERS (AND
OTHERS) AT 12-22-93: $11,083,100
3. GUARANTEES OF CUSTOMER LOANS AND LEASES:
AMOUNT OF ONE GUARANTEE AT 12-22-93: $466,500
F. MIDLAND GROCERY OF MICHIGAN, INC.:
1. COMMON STOCK OF SUBSIDIARIES:
PNS CADILLAC, INC. 1,000
PNS ST. JOHN'S, INC. 1,000
PNS #4, INC. (BONSER) 10,000
PNS LUDINGTON, INC. (MOR FOR LESS) 1,000
2. DIRECT LOANS AND FINANCE LEASES:
AGGREGATE AMOUNT OF 10 LOANS AND FINANCE LEASES WITH CUSTOMERS (AND
OTHERS) AT 12-22-93: $2,053,300
G. JONDEX CORP.
1. DIRECT FINANCE LEASES:
AGGREGATE AMOUNT OF 8 LOANS AND FINANCE LEASES WITH CUSTOMERS (AND
OTHERS) AT 12-22-93: $4,067,800
2. INVESTMENT IN ONE LIMITED PARTNERSHIP AT 12-22-93: $190,900
H. BADGER ASSURANCE, LTD.
1. BANK TIME DEPOSITS: $ 536,900
I. CARDINAL FOODS, INC.
1. COMMON STOCK OF SUBSIDIARIES:
MR. MONEYSWORTH, INC. 5,035,768
MIDLAND GROCERY COMPANY (20%) 62,400
COLUMBUS LEASING GROUP, INC. 216,438
PNS VAN WERT, INC. 100,000
ENGLEWOOD CARDINAL SUPERMARKET, INC. 500
2. DIRECT LOANS AND FINANCING LEASES:
AGGREGATE AMOUNT OF 12 LOANS AND FINANCE LEASES WITH CUSTOMERS (AND
OTHERS) AT 12-22-93: $1,973,900
3. GUARANTEES OF CUSTOMERS LOANS AND LEASES:
AGGREGATE AMOUNT OF 9 GUARANTEES AT 12-22-93: $2,903,100
J. MR. MONEYSWORTH, INC.
1. COMMON STOCK OF SUBSIDIARIES:
MIDLAND GROCERY COMPANY (80%) 249,600
<PAGE>
EXHIBIT A
ROUNDY'S, INC.
6.94% Senior Note
Due December 15, 2003
PPN:
No.
$ --------,---
Roundy's, Inc., a Wisconsin corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the fifteenth day of December, 2003
the principal amount of
DOLLARS($ )
---------------
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months)on the principal amount from time to time remaining unpaid hereon at the
rate of 6.94% per annum from the date hereof until maturity, payable semi-
annually on the fifteenth day of each June and December in each year(commencing
on the first of such dates after the date hereof) and at maturity. The Company
agrees to pay interest on overdue principal (including any overdue required or
optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable)on any overdue installment of interest,at the Overdue Rate
(as defined in the Note Agreements hereinafter referred to) after the due date,
whether by acceleration or otherwise, until paid. Both the principal hereof,
premium,if any,and interest hereon are payable at the main office of The Chase
Manhattan Bank (National Association) in lawful money of the United States of
America.
This Note is one of the 6.94% Senior Notes, due December 15, 2003, of
the Company in the aggregate principal amount of $45,000,000 (collectively,the
"Notes"), issued under and pursuant to the terms and provisions of the six
separate Note Agreements, each dated as of December 22, 1993 (the"Agreements"),
entered into by the Company with the original Purchasers therein referred to
and this Note and the holder hereof are entitled equally and ratably with the
holders of all other Notes outstanding under the Agreements to all the benefits
provided for thereby or referred to therein. Reference is hereby made to the
Agreements for a statement of such rights and benefits.
This Note and the other Notes outstanding under the Agreements may be
declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Agreements.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Agreements.
<PAGE>
The payment of the principal of, premium, if any, and interest on this
Note has been severally guaranteed by Scot Lad Foods, Inc., a Wisconsin
corporation, Cardinal Foods, Inc., a Delaware corporation, and Shop-Rite, Inc.,
a Wisconsin corporation, pursuant to a Guaranty Agreement dated as of December
22, 1993.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note shall be governed by and construed in accordance with New
York law.
ROUNDY'S, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
FOR VALUE RECEIVED, the undersigned Guarantor hereby unconditionally
guarantees severally and not jointly with any other person the payment of the
principal of, the premium (if any) and the interest on the Note to which this
Guaranty is attached when due under the terms thereof or of the Note Agreements
referred to therein all as more fully provided in such Note Agreements. The
Guarantor hereby agrees that the Note Agreements and such Note may be modified,
amended, and supplemented in any manner, including the renewal or extension of
any kind of such Note, without consent of the Guarantor, and that no such
modification, amendment, supplement, renewal or extension and no invalidity of
the Note Agreements or of such Note shall release, affect or impair the
liability of the undersigned hereunder.
SCOT LAD FOODS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
FOR VALUE RECEIVED, the undersigned Guarantor hereby unconditionally
guarantees severally and not jointly with any other person the payment of the
principal of, the premium (if any) and the interest on the Note to which this
Guaranty is attached when due under the terms thereof or of the Note Agreements
referred to therein all as more fully provided in such Note Agreements. The
Guarantor hereby agrees that the Note Agreements and such Note may be modified,
amended, and supplemented in any manner, including the renewal or extension of
any kind of such Note, without consent of the Guarantor, and that no such
modification, amendment, supplement, renewal or extension and no invalidity of
the Note Agreements or of such Note shall release, affect or impair the
liability of the undersigned hereunder.
CARDINAL FOODS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
FOR VALUE RECEIVED, the undersigned Guarantor hereby unconditionally
guarantees severally and not jointly with any other person the payment of the
principal of, the premium (if any) and the interest on the Note to which this
Guaranty is attached when due under the terms thereof or of the Note Agreements
referred to therein all as more fully provided in such Note Agreements. The
Guarantor hereby agrees that the Note Agreements and such Note may be modified,
amended, and supplemented in any manner, including the renewal or extension of
any kind of such Note, without consent of the Guarantor, and that no such
modification, amendment, supplement, renewal or extension and no invalidity of
the Note Agreements or of such Note shall release, affect or impair the
liability of the undersigned hereunder.
SHOP-RITE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to you as follows:
1. Subsidiaries. Annex 1 attached hereto states the name of each of the
Company's Subsidiaries, its jurisdiction of incorporation and the percentage of
its Voting Stock owned by the Company or the Subsidiaries. Those Subsidiaries
listed in Section 1 of said Annex 1 constitute Restricted Subsidiaries. The
Company and each Subsidiary has good and marketable title to all of the shares
it purports to own of the stock of each Subsidiary, free and clear in each case
of any Lien. All such shares have been duly issued and are fully paid and non-
assessable.
2. Corporate Organization and Authority. The Company, and each Restricted
Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary licenses
and permits to own and operate its properties and to carry on its business
as now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes
such licensing or qualification necessary.
3. Cooperative Status. The Company is an organization operating on a
cooperative basis within the meaning of Subchapter T of the Code and as such
may exclude from its taxable income amounts paid as patronage dividends
pursuant to Section 1382(b) of the Code.
4. Business and Property. You have heretofore been furnished with a copy
of the Memorandum dated October, 1993 (the "Memorandum") prepared by the
Company, SPP Hambro & Co. and NBD Bank, N.A. which generally sets forth the
business conducted and proposed to be conducted by the Company and the
Subsidiaries and the principal properties of the Company and the Subsidiaries.
5. Financial Statements. (a) The consolidated balance sheets of the
Company and its consolidated Subsidiaries as of the Saturday nearest to
December 31 for each of the years 1988 to 1992, both inclusive, and the
statements of earnings and stockholder's equity and cash flows for the fiscal
years ended on said dates, each accompanied by a report thereon containing an
opinion unqualified as to scope limitations imposed by the Company and
otherwise without qualification except as therein noted, by Deloitte & Touche
or Deloitte,Haskins & Sells, have been prepared in accordance with GAAP
consistently applied except as therein noted, are correct and complete and
present fairly the financial position of the Company and its consolidated
Subsidiaries as of such dates and the results of their operations and changes
in their financial position or cash flows for such periods. The unaudited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
of October 2, 1993, and the unaudited statements of earnings and stockholders'
equity and cash flows for the 39-week period ended on such date prepared by the
Company have been prepared in accordance with GAAP consistently applied, are
correct and complete and present fairly the financial position of the Company
and its consolidated Subsidiaries as of such date and the results of their
operations and changes in their financial position or cash flows for such
period.
<PAGE>
(b) Since January 2, 1993, there has been no change in the condition,
financial or otherwise, of the Company and its consolidated Subsidiaries as
shown on the consolidated balance sheet as of such date except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse.
6. Indebtedness. Annex 2 attached hereto correctly describes all Current
Debt, Funded Debt, Liens securing Indebtedness,Capitalized Leases and Long-Term
Leases of the Company and the Restricted Subsidiaries outstanding on the date
of the Agreements.
7. Full Disclosure. Neither the financial statements referred to in
paragraph 5 hereof nor the Agreements, the Memorandum (except for certain
industry information contained on pages 1, 10, 41 through 43, and 51 through 57
of the Memorandum and Exhibits 4, 5 and 6 to the Memorandum, none of which the
Company participated in preparing) or any other written statement furnished by
or on behalf of the Company to you in connection with the negotiation of the
sale of the Notes, contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact peculiar to the Company or the Subsidiaries which
the Company has not disclosed to you in writing which materially affects
adversely nor, so far as the Company can now foresee, will materially affect
adversely the properties, business, prospects, profits or condition (financial
or otherwise) of the Company or the Company and the Restricted Subsidiaries,
taken as a whole.
8. Pending Litigation. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Restricted Subsidiary,or any property or rights of
the Company or any Restricted Subsidiary, in any court or before any
governmental authority or arbitration board or tribunal which involves the
possibility of materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of the Company or the
Company and the Restricted Subsidiaries. There is no action, suit,
investigation or proceeding pending or threatened against or affecting the
Company or any Restricted Subsidiary that purports to affect the validity or
enforceability of this Agreement, the Guaranty or any Note.
9. Title to Properties. The Company and each Restricted Subsidiary has
good and marketable title in fee simple(or its equivalent under applicable law)
to all material parcels of real property and has good title to all the other
material items of property it purports to own, including those reflected in the
most recent balance sheet referred to in paragraph 5 hereof, except as sold or
otherwise disposed of in the ordinary course of business and except for Liens
permitted by the Agreements. All leases necessary for the conduct of the
respective businesses of the Company and the Restricted Subsidiaries are valid
and subsisting and are in full force and effect.
10. Patents and Trademark. The Company and each Restricted Subsidiary owns
or possesses all the patents, trademarks, trade names, service marks,copyright,
licenses,permits, franchises and rights with respect to the foregoing necessary
for the present and planned future conduct of its business, without any known
conflict with the rights of others. No violation or default (or waiver thereof
that is conditional or limited in duration)exists under any of the foregoing or
of any agreement related thereto.
11. Sale Is Legal and Authorized. The sale of the Notes and compliance by
the Company with all of the provisions of the Agreements and the Notes:
(a) are within the corporate powers of the Company;
<PAGE>
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default (whether or not such default shall have been waived)
under the Articles of Incorporation or By-laws of the Company or any
indenture or other agreement or instrument to which the Company is a party
or by which it may be bound or result in the imposition of any Liens or
encumbrances on any property of the Company; and
(c) have been duly authorized by proper corporate action on the part
of the Company (no action by the stockholders of the Company being required
by law, by the Articles of Incorporation or By-laws of the Company or
otherwise),executed and delivered by the Company and the Agreements and the
Notes constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable in accordance with their respective
terms.
12. No Defaults. No Default or Event of Default has occurred and is
continuing. Neither the Company nor any Restricted Subsidiary is in default in
the payment of principal or interest on any Funded Debt or Current Debt. There
exists no default (or waiver thereof that is conditional or is limited in
duration) under any instrument or agreement under any Funded Debt or Current
Debt, or subject to which any Funded Debt or Current Debt has been issued, and
no event has occurred and is continuing under the provisions of any such
instrument or agreement which with the lapse of time or the giving of notice,or
both, would constitute an event of default thereunder.
13. Governmental Consent. No approval, consent or withholding of objection
on the part of any regulatory body, state, Federal or local, is necessary in
connection with the execution and delivery by the Company of the Agreements or
the Notes or compliance by the Company with any of the provisions of the
Agreements or the Notes.
14. Taxes. All tax returns required to be filed by the Company or any
Restricted Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company or any
Restricted Subsidiary or upon any of their respective properties, income or
franchises, which are shown to be due and payable in such returns have been
paid. For all taxable years ending on or before December 31, 1988, the Federal
income tax liability of the Company and the Restricted Subsidiaries has been
satisfied and either the period of limitations on assessment of additional
Federal income tax has expired or the Company and the Restricted Subsidiaries
have entered into an agreement with the Internal Revenue Service closing
conclusively the total tax liability for the taxable year. The Company does not
know of any proposed additional tax assessment against it or any Restricted
Subsidiary for which adequate provision has not been made on its accounts, and
no material controversy in respect of additional Federal or state income taxes
due since such date is pending or to the knowledge of the Company threatened.
The provisions for taxes on the books of the Company and each Restricted
Subsidiary are adequate for all open years, and for its current fiscal period.
15. Use of Proceeds. The net proceeds from the sale of the Notes will be
used to reduce outstanding Indebtedness under the Credit Agreement. None of the
transactions contemplated in the Agreements (including, without limitation
thereof, the use of proceeds from the issuance of the Notes) will violate or
result in a violation of Section 7 of the Exchange Act,or any regulation issued
pursuant thereto, neither will any of such transactions violate or result in a
violation of, or constitute this transaction a "purpose credit" within the
meaning of, Regulations G, T or X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter III. Neither the Company nor any Subsidiary
owns or intends to carry or purchase any "margin stock" within the meaning of
<PAGE>
said Regulation G. None of the proceeds from the sale of the Notes will be used
to purchase, or refinance any borrowing the proceeds of which were used to
purchase, any "security" within the meaning of the Exchange Act.
16. Private Offering. Neither the Company, directly or indirectly,nor any
agent on its behalf has offered or will offer the Notes, the Guaranty or any
Security similar to either of them or has solicited or will solicit an offer to
acquire the Notes, the Guaranty or any Security similar to either of them from
or has otherwise approached or negotiated or will approach or negotiate in
respect of the Notes, the Guaranty or any Security similar to either of them
with any Person other than the Purchasers and not more than 93 other
institutional investors, each of whom was offered the Guaranty and a portion of
the Notes at private sale for investment. Neither the Company, directly or
indirectly, nor any agent on its behalf has offered or will offer the Notes,the
Guaranty or any Security similar to either of them or has solicited or will
solicit an offer to acquire the Notes, the Guaranty or any Security similar to
either of them from any Person so as to bring the issuance and sale of the
Notes or the Guaranty within the provisions of Section 5 of the Securities Act
of 1933, as amended, or the Blue Sky laws of any applicable jurisdiction.
17. ERISA. The consummation of the transactions provided for in the
Agreements and compliance by the Company with the provisions thereof and the
Notes issued thereunder will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code. Each employee benefit plan
complies in all material respects with all applicable statutes and governmental
rules and regulations, and (a) no Reportable Event has occurred and is
continuing with respect to any Plan, (b) neither the Company, any ERISA
Affiliate nor, to the knowledge of the Company, any substantial employer(within
the meaning of Section 4063 of ERISA) has withdrawn from any Plan or
Multiemployer Plan or instituted steps to do so, and (c) no steps have been
instituted to terminate any Plan. No condition exists or event or transaction
has occurred in connection with any employee benefit plan which could result in
the incurrence by the Company or any ERISA Affiliate of any material liability,
fine or penalty. No Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" as defined in Section 302 of ERISA and Section
412 of the Code nor does the present value of all benefits vested under all
Plans exceed, as of the last annual valuation date, the value of the assets of
the Plans allocable to such vested benefits. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post- retirement or
post-employment "welfare benefit plan" (as such term is defined in ERISA)except
as has been disclosed in writing to the Purchasers in footnote 7 to the
Company's consolidated financial statements for the fiscal year ended January
2, 1993. For purposes of this paragraph, the term "employee benefit plan"
shall have the meaning assigned such term under Section 3(3) of ERISA.
18. Compliance with Law. Neither the Company nor any Restricted Subsidiary
(a) is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (b) has failed to obtain any license,
permit,franchise or other governmental authorization necessary to the ownership
of its property or to the conduct of its business. Neither the Company nor any
Restricted Subsidiary is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
19. Compliance with Environmental Laws. The Company is not in violation of
any applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum,crude oil or any
<PAGE>
fraction thereof, or other hydrocarbons), pollutants or contaminants, to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances which violation could have a material adverse effect on the busi-
ness,prospects,profits, properties or condition (financial or otherwise) of the
Company or the Company and the Restricted Subsidiaries, taken as a whole. The
Company does not know of any liability or class of liability of the Company or
any Restricted Subsidiary under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 69001 et seq.).
20. Stockholders. No single Person, or group (as defined in the Exchange
Act), is the beneficial owner of 5% or more of the Voting Stock of the Company
other than Martin's Super Markets, Inc. (which owns 8.4% of such Voting Stock)
and Mega Marts, Inc. (which owns 7.7% of such Voting Stock) (collectively, the
"Major Holders").
21. Insurance. The Company and each Restricted Subsidiary currently
maintains insurance coverage with financially sound and reputable insurers in
such forms and amounts and against such risks as are customary for corporations
of established reputation engaged in the same or a similar business and owning
and operating similar properties.
22. Public Utility Holding Company Act; Investment Company Act. Neither
the Company nor any Restricted Subsidiary is a "holding company" or a
"subsidiary company" of a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. Neither the Company nor any Restricted Subsidiary is or is directly or
indirectly controlled by or acting on behalf of any Person that is, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
23. Brokerage. All negotiations relative to this Agreement and the tran-
sactions contemplated hereby have been carried on by the Company without the
intervention of any Person that might give rise to a valid claim against you
for a brokerage commission or other like payment(other than SPP Hambro & Co.and
NBD Bank, N.A., the claims of which shall be solely for the account of the
Company); and the Company agrees to indemnify and hold you harmless from and
against any such claims.
24. Labor Matters. No material work stoppage affecting the Company or any
of the Restricted Subsidiaries is pending or threatened. There is no pending or
threatened labor dispute, arbitration, lawsuit, or administrative proceeding
relating to labor matters or alleged Occupational Safety and Health Act
violations involving the employees of the Company or any Restricted Subsidiary
(excluding routine workers' compensation claims)that could materially adversely
affect the properties, business, prospects, profits or condition (financial or
otherwise) of the Company or the Company and the Restricted Subsidiaries taken
as a whole.
<PAGE>
ANNEX 1
SUBSIDIARIES OF THE COMPANY
ATTACHED
SUBSIDIARIES OF THE COMPANY
---------------------------
1. RESTRICTED SUBSIDIARIES:
PERCENTAGE OF VOTING STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
-------------------- -------------------- --------------------------
Badger Assurance, Ltd. Bermuda 100% for all subsidiaries
listed.
Cedarburg Dairy, Inc. Wisconsin
Holt Public Storage, Inc. Wisconsin
I.T.A., Inc. Wisconsin
Jondex Corp. Wisconsin
Kee Trans, Inc. Wisconsin
Kee Wholesale,Inc. Wisconsin
Old Time, Inc. Wisconsin
Ropak, Inc. Wisconsin
R.P.D. of Wisconsin, Inc. Wisconsin
Scot Lad Foods, Inc. Wisconsin
Super Marketing Productions,
Inc. Wisconsin
Midland Grocery of Michigan,
Inc. Michigan
WFC Foods, Inc. Illinois
Adams WIne & Liquor, Ltd. Wisconsin
Boston Marketing, Inc. Wisconsin
Insurance Planners Wisconsin
Pick 'n Save Warehouse
Foods, Inc. Wisconsin
Shop-Rite, Inc. Wisconsin
<PAGE>
Villard Avenue Shop-Rite,
Inc. Wisconsin
W. Marketing, Inc. Wisconsin
Pick 'n Save-Ludington,
Inc. Michigan
PNS Cadillac, Inc. Michigan
PNS St. John's, Inc. Michigan
PNS #4, Inc. Michigan
I.P. Insurance Agency,Inc. Ohio
United Foods of Hartford,
Inc. Wisconsin
United Foods of West Bend,
Inc. Wisconsin
Spring Lake Merchandise,
Inc. Ohio
Bonnie Baking Co., Inc. Indiana
Scot Lad Lima, Inc. Ohio
Cardinal Foods, Inc. Delaware
Mr. Moneysworth, Inc. Ohio
PNS Van Wert, Inc. Ohio
The Midland Grocery
Company Ohio
Columbus Leasing Group,Inc. Ohio
Englewood Cardinal
Supermarket, Inc. Ohio
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):
None
<PAGE>
ANNEX 2
DESCRIPTION OF DEBT, LIENS AND
LEASES OF THE COMPANY
ATTACHED
DESCRIPTION OF DEBT, LIENS AND
LEASES OF THE COMPANY
-------------------------------
1. Current Debt of the Company and its Restricted Subsidiaries outstanding on
December 22, 1993, is as follows: see attached
2. Funded Debt (other than Capitalized Rentals) of the Company and its
Restricted Subsidiaries outstanding on December 22, 1993, is as follows:
see attached
3. Liens securing indebtedness of the Company and its Restricted Subisidiaries
outstanding December 22, 1993, is as follows: see attached
4. Capitalized Leases of the Company and its Restricted Subsidiaries
outstanding December 22, 1993, is as follows: see attached
5. Long-Term Leases of the Company and its Restricted Subsidiaries outstanding
December 22, 1993, is as follows: see attached
<PAGE>
ROUNDY'S, INC. & SUBSIDIARIES
RENTAL PAYMENTS AND SUBLEASING RENTALS
DECEMBER 22, 1993
RENTAL PAYMENTS
--------------------------- SUBLEASE
DIVISION MINIMUM CONTINGENT RENTALS
- ------------------- ----------- ------------- ------------
MILWAUKEE 42,489
HOLT-MILW 428,487
MAZOMANIE 737,440 33,515
WESTVILLE 2,064,664
LIMA 291,043 216,801
ELDORADO 18,985 26,000
SOUTH BEND 154,054
CARDINAL FOODS 2,097,674 169,675
MIDLAND-WV 160,266
SPRING LAKE 507,377 17,000
LAKE END 248,820
AMA-EVANSVILLE 206,597
MIDLAND-MI 373,737 67,657
CDI 83,733
OLD TIME 53,100
RDY'S RETAIL 677,346 91,814
CARDINAL RETAIL 561,145 583,201
CARDINAL FOOD GALLERIES 389,316 205,815
CARDINAL-WILSON 22,167
MICHIGAN RETAIL 591,234
CORPORATE 1,248,715
KEE TRANS 2,240,170
JONDEX 3,232,007 2,430,942
JONDEX 19,011,285 13,478,080
JONDEX 1,086,284 271,554 346,486
JONDEX 965,655
JONDEX 250,000 49,483
------------- ------------ ------------
TOTAL 36,778,135 363,368 18,590,310
============= ============ ============
<PAGE>
<TABLE>
Roundy's, Inc.
Schedule of Long-Term Debt
<CAPTION>
----------------------------------------------------------------------------------------------
LTD
Current 1995 1996 1997 1998 Thereafter Total Less Current
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roundy's:
1997 10.31 Sr unsecured notes (TIAA) 2,000,000 2,000,000 2,000,000 2,000,000 9,750,000 7,750,000
1999 10.31 Sr unsecured notes (TIAA) 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 9,000,000 7,500,000
1999 11.26 Sr unsecured notes (TIAA) 7,000,000 4,000,000 4,000,000 4,000,000 4,000,000 2,000,000 25,000,000 18,000,000
1995 4.88%-Chase Revolver 47,000,000 47,000,000 47,000,000
6.00%
2008 7.57%-Connecticut Mutual 700,000 700,000 700,000 1,200,000 1,200,000 18,500,000 23,000,000 22,300,000
8.26%
2001 9.26% Mass Mutual & Mutual
of Mutual 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 7,500,000 20,000,000 17,500,000
Jondex:
1995 9.00% J.B. McQuestion-Note 750,000 750,000 750,000
Ohio:
1997 73.26%
of PR Ohio IRB-Star Bank 208,472 208,472 208,472 104,234 729,650 521,178
Midland-Michigan:
1995 9.75% J. Hancock Mortgage 81,699 1,504,122 1,585,821 1,504,122
1995 7.00% Notes to Individuals 14,284 14,284
2006 10.0% Bonser's 18,781 21,030 23,111 25,531 27,971 316,746 433,170 414,389
----------------------------------------------------------------------------------------------
Total Long-Term Debt excl. Cap
Leases 14,023,236 59,433,624 11,681,583 13,079,765 9,227,971 29.816.746 137,262,925 123,239,389
Capital Leases:
Jondex Total 164,426 604,752 440,326
Cardinal Total 202,931 1,165,105 962,174
---------- -----------------------
Total Capitalized Leases 367,357 1,769,857 1,402,500
---------- -----------------------
Total per Balance Sheet 14,390,593 Total Long-Term Debt 139,032,782 124,642,189
========== ===========
Less: Current Portion (14,390,593)
------------
LTD per Balance Sheet 124,642,189
============
</TABLE>
<PAGE>
EXHIBIT C
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Baker & Botts, L.L.P., special counsel to the
Purchasers, called for by 4.1 of the Agreements, shall be dated the Funding
Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of Wisconsin and has the corporate
power and the corporate authority to execute and deliver the Agreements and
to issue the Notes.
2. Each of the Guarantors is a corporation, validly existing and in
good standing under the laws of its state of incorporation. Each of the
Guarantors has the corporate power and the corporate authority (i) to
execute and deliver the Guaranty and (ii) to execute the guaranty attached
to the Notes.
3. The Agreements have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
5. The Guaranty has been duly authorized by all necessary corporate
action on the part of each Guarantor, has been duly executed by an
authorized officer of each Guarantor and delivered and constitutes the
legal, valid and binding obligation of each Guarantor enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
6. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreements does not, under existing law,
require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act
of 1939, as amended.
The opinion of Baker & Botts, L.L.P. shall also state that the opinion of
Robert G. Turcott, Esq. is satisfactory in scope and form to Baker & Botts,
L.L.P. and that, in their opinion, the Purchasers are justified in relying
thereon.
In rendering the opinions set forth in paragraphs 1 and 2 above, Baker &
Botts, L.L.P. may rely solely upon the opinion of Robert G. Turcott, Esq. and
<PAGE>
an examination of the respective charters of the Company and each Guaranto
r certified by, and a certificate of good standing of each such Person from,the
Secretary of State of the state of such Person's incorporation, and upon the
By-laws of the Company and each Guarantor. In rendering the opinions set forth
above, Baker & Botts, L.L.P. may rely solely upon the opinion of Robert G.
Turcott, Esq. with respect to those matters governed by the laws of the State of
Wisconsin.
With respect to matters of fact upon which such opinion is based, Baker &
Botts, L.L.P. may rely on appropriate certificates of public officials and
officers of the Company upon the representations and warranties contained in
the Note Agreement (including all Exhibits and Schedules thereto) and upon the
letters of the placement agents to Baker & Botts, L.L.P., relating to the
offering of the Notes and the Guaranty.
EXHIBIT D
DESCRIPTION OF CLOSING OPINION
OF COUNSEL TO THE COMPANY
The closing opinion of Robert G. Turcott, Esq., Vice President, Secretary
and General Counsel of the Company, which is called for by 4.1 of the
Agreements, shall be dated the Funding Date and addressed to the Purchasers,
shall be satisfactory in scope and form to the Purchasers and shall be to the
effect that:
1. The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Wisconsin, has corporate
power and authority and is duly authorized to enter into, deliver and
perform the Agreements and to issue the Notes and incur the Indebtedness to
be evidenced thereby and has full corporate power and authority to conduct
the activities in which it is now engaged and is duly licensed or qualified
and is in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned or leased by it or the nature
of the business transacted by it makes such licensing or qualification
necessary.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and
is duly licensed or qualified and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or the na-
ture of the business transacted by it makes such licensing or qualification
necessary and all of the issued and outstanding shares of capital stock of
each such Subsidiary have been duly issued, are fully paid and non-
assessable and are owned by the Company, by one or more Subsidiaries, or by
the Company and one or more Subsidiaries.
3. Each Agreement has been duly authorized by all necessary corporate
action on the part of the Company,executed and delivered by the Company and
if Wisconsin law were to be applied thereto, notwithstanding the choice of
law provisions contained therein, would constitute the legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
<PAGE>
4. Under Wisconsin choice of law principles, in a properly presented
case, the courts of the State of Wisconsin, and the courts of the United
States of America sitting in the State of Wisconsin and applying the
principles of conflicts of laws applied by the courts of the State of
Wisconsin, would give effect to the governing law provisions found in 9.10
of the Agreements, in the Note and in Section 11 of the Guaranty.
5. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed by authorized
officers of the Company,have been delivered and if Wisconsin law were to be
applied thereto, notwithstanding the choice of law provisions contained
therein, would constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
6. The Guaranty has been duly authorized by all necessary corporate
action on the part of each Guarantor, has been duly executed by an
authorized officer of each Guarantor, has been delivered and if Wisconsin
law were to be applied thereto,notwithstanding the choice of law provisions
contained therein, would constitute the legal, valid and binding obligation
of each Guarantor enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a proceeding
in equity or at law).
7. No approval, consent, license, authorization or withholding of
objection on the part of, or filing, registration or qualification with,
any governmental body, Federal, state or local, or any other Person, is
necessary in connection with the execution and delivery of the Agreements or
the Notes or the performance by the Company of its obligations thereunder or
the execution and delivery of the Guaranty by the Guarantors or the
performance of their obligations thereunder.
8. The issuance and sale of the Notes and the execution,delivery and
performance by the Company of the Agreements do not conflict with or result
in any breach of any of the provisions of or constitute a default (whether
or not waived) under or result in the creation or imposition of any Lien
upon any of the property of the Company pursuant to the provisions of the
Articles of Incorporation or By-laws of the Company or any agreement or
other instrument known to such counsel, after due inquiry, to which the
Company is a party or by which the Company may be bound.
9. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreements constitutes an exempt
transaction under the registration provisions of the Securities Act of 1933,
as amended, and do not, under existing law, require the registration of the
Notes under the Securities Act of 1933, as amended, or the qualification of
an indenture under the Trust Indenture Act of 1939, as amended.
10. The execution, delivery and performance by each of the Guarantors
of the Guaranty do not conflict with or result in any breach of any of the
provisions of or constitute a default (whether or not waived) under or
result in the creation or imposition of any Lien upon any of the property of
such Guarantor pursuant to the provisions of the Articles of Incorporation
or By-laws of such Guarantor or any agreement or other instrument known to
such counsel, after due inquiry, to which such Guarantor is a party or by
which such Guarantor may be bound, other than those certain Note Agreements
<PAGE>
dated as of December 15, 1991, between the Company and each of the
Purchasers listed on Schedule I thereto, respectively; those certain Note
Agreements dated as of December 15, 1992, between the Company and each of
the Purchasers listed on Schedule I thereto, respectively; and the Credit
Agreement, the applicable provisions of each of which have been waived.
11. The execution and delivery of the Guaranty under the circumstances
contemplated by the Agreements constitutes an exempt transaction under the
registration provisions of the Securities Act of 1933, as amended, and does
not, under existing law, require the registration of the Guaranty under the
Securities Act of 1933, as amended, or the qualification of an indenture
under the Trust Indenture Act of 1939, as amended.
12. Neither the Company nor any Restricted Subsidiary is a "holding
company" or a "subsidiary company" of a "holding company" or a "public
utility company" as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. Neither the Company nor any Restricted
Subsidiary is or is directly or indirectly controlled by or acting on behalf
of any Person that is, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
13. To the best of such counsel's knowledge after due inquiry, there
are no actions, suits or proceedings pending or threatened against the
Company or any Restricted Subsidiary at law or in equity, before any
arbitrator or before or by any governmental department, commission, board,
bureau, agency or instrumentality (a) that, if determined adversely and
considered in the aggregate, would adversely affect any action taken or to
be taken by the Company under the Agreements or the Notes, or by any
Guarantor under the Guaranty, or that, if determined adversely and
considered in the aggregate, could materially and adversely affect the
properties, business, prospects, profits or condition (financial or
otherwise) of the Company or the Company and the Restricted Subsidiaries,
taken as a whole, or (b) that purport to affect the validity or
enforceability of the Agreements, the Guaranty or any Note.
14. On the basis of the first,third and fourth sentences of Paragraph
15 of Exhibit B to the Agreements, the extension, arranging and obtaining of
the credit represented by the Notes do not result in any violation of
Regulation G, T or X of the Board of Governors of the Federal Reserve
System.
15. Except for the availability of Section 1382(b) of the United
States Internal Revenue Code and the limitations associated therewith,
neither the laws of the State of Wisconsin nor the Federal laws of the
United States of America imbue the Company with any rights, remedies,
privileges, constraints or liabilities, as a result of the Company's status
as a cooperative under the Code, not otherwise applicable to corporations
organized under the laws of the State of Wisconsin.
The opinion of Robert G. Turcott, Esq. shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request.
With respect to matters of fact on which such opinion is based, such counsel
shall be entitled to rely on appropriate certificates of public officials and
officers of the Company.
<PAGE>
Guaranty Agreement
Dated as of December 22, 1993
of
Scot Lad Foods, Inc.
Cardinal Foods, Inc.
And
Shop-Rite, Inc.
Re: $45,000,000 6.94% Senior Notes
Due December 15, 2003
of
Roundy's, Inc.
<PAGE>
Exhibit E to Note Agreement
TABLE OF CONTENTS
Page
SECTION 1. NOTE AGREEMENTS; ETC. . . . . . . . . . . . . . . . . . . 1
SECTION 2. GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1. Guaranty of Payment. . . . . . . . . . . . . . . . . 1
Section 2.2. Obligations Not Affected . . . . . . . . . . . . . . 3
Section 2.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.4. Waiver of Subrogation. . . . . . . . . . . . . . . . 4
Section 2.5. Continuation of Guaranty, Etc. . . . . . . . . . . . 5
Section 2.6. Legend . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 6
Section 3.1. Organization and Qualification . . . . . . . . . . . 6
Section 3.2. Litigation . . . . . . . . . . . . . . . . . . . . . 6
Section 3.3. No Violations, Etc.. . . . . . . . . . . . . . . . . 6
Section 3.4. Governmental Authorizations. . . . . . . . . . . . . 6
Section 3.5. Solvency . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.6. Benefit. . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.7. Private Offering . . . . . . . . . . . . . . . . . . 7
SECTION 4. TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. EXPENSES, ETC.. . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . 8
SECTION 7. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . 8
SECTION 8. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 9. WAIVER OF ACCEPTANCE. . . . . . . . . . . . . . . . . . . 9
SECTION 10. JURISDICTION; VENUE; SERVICE OF PROCESS . . . . . . . . . . 9
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 10
ANNEX 1 - JOINDER AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 12
GUARANTY AGREEMENT
<PAGE>
Re: $45,000,000 6.94% Senior Notes
Due December 15, 2003
of Roundy's, Inc.
GUARANTY AGREEMENT, dated as of December 22, 1993 (this "Agreement"),
from the undersigned corporations (the "Guarantors"), each a wholly-owned
subsidiary of ROUNDY'S, INC., a Wisconsin corporation (the "Company"), for the
benefit of THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, THE LIFE INSURANCE
COMPANY OF VIRGINIA, PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY, PHOENIX
AMERICAN LIFE INSURANCE COMPANY, WASHINGTON NATIONAL INSURANCE COMPANY AND TMG
LIFE INSURANCE COMPANY (the "Purchasers") and all other Persons (as
Hereinafter defined) who shall from time to time become holders of any of the
Notes referred to below (collectively, the "Holders").
In order to induce the Purchasers to purchase and maintain their
investment in the Notes and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, each Guarantor agrees
severally with the Holders as follows:
SECTION 1. NOTE AGREEMENTS; ETC.
The Company has entered into separate Note Agreements, each dated as
of December 22, 1993 (as the same from time to time may be amended, restated,
supplemented, extended or otherwise modified, the "Note Agreements"), between
the Company and the respective Purchasers providing for the issue and sale to
the Purchasers of $45,000,000 in aggregate principal amount of the Company's
6.94% Senior Notes, due December 15, 2003 (together with all renewals,
extensions, modifications and amendments thereof and all notes delivered in
substitution or exchange therefor, the "Notes"). This Agreement is being
entered into pursuant to the Note Agreements and each of the Guarantors
acknowledges that the purchase of the Notes on the terms set forth in the Note
Agreements is and will be of direct and indirect benefit to such Guarantor.
Capitalized terms used herein without definition have the respective meanings
set forth in the Note Agreements.
SECTION 2. GUARANTY.
Section 2.1. Guaranty of Payment. (a) Each Guarantor hereby
severally, unconditionally and irrevocably guarantees to each Holder from time
to time of any Notes, the due and punctual payment of the principal of and the
premium, if any, and interest on the Notes, and any additional amounts payable
to any such Holder under the Note Agreements (including interest at the Overdue
Rate on any overdue principal, premium or interest), when the same shall become
due and payable (whether at the expressed or any accelerated maturity date, at
any date fixed for prepayment or otherwise) and at all times thereafter (the
"Guaranteed Amount"). Such guaranty is an absolute, unconditional, present and
continuing guaranty of payment and not of collectability and is in no way
conditioned or contingent upon any attempt to collect from the Company or upo
n any other condition or contingency. If the Company shall fail to pay
punctually any Guaranteed Amount, when and as the same shall become due and
payable, the Guarantors will upon demand immediately pay the same to the
Holders of the Notes to whom such payment is payable. Each of the Guarantors
additionally hereby unconditionally and irrevocably guarantees to each Holder
the timely performance of all other obligations of the Company under the Note
Agreements.
(b) As between the Guarantors, each Guarantor agrees that if any
other Guarantor (or any other Subsidiary of the Company which shall guaranty
the Notes pursuant to 5.19 of the Note Agreements) shall pay any sums on
account of the Guaranteed Amount in excess of such Guarantor's Pro Rata Share
<PAGE>
(as hereinafter defined) of such sums paid (an "Excess Funding Guarantor"),
each other Guarantor shall, on demand (but subject to the immediately following
sentence), pay to the Excess Funding Guarantor its proportionate share of such
excess amount. The payment obligation to the Excess Funding Guarantor is
subordinate and subject in right of payment to the prior payment in full of the
obligations of the other Guarantors to the Holders of the Notes under Section
2.1(a) above, and the Excess Funding Guarantor shall not exercise any right or
remedy with respect to such excess amount until all the Notes shall have been
fully paid, indefeasibly, and all obligations of the Company under the Notes
and the Note Agreements shall have been duly performed.
The term "Pro Rata Share" shall mean, as of any date of determination,
the percentage of the Guaranteed Amount equal to the amount that such
Guarantor's or such other Subsidiary's Net Assets bears to the amount of the
aggregate Net Assets of all Guarantors and other guaranteeing Subsidiaries.
The term "Net Assets" of any Person shall mean, as at any date of
determination, the excess of the present fair salable value of such Person's
assets over the amount that would be required to pay the probable liability of
such Person on all of its debts (excluding any amounts payable under this
Agreement) as the same shall become absolute and matured.
(c) In any action or proceeding involving any state corporate law, or
any state or Federal bankruptcy, insolvency, reorganization or other law
affecting the rights of creditors generally,if the obligations of any Guarantor
or other Subsidiary hereunder would otherwise be held or determined to be void,
invalid or unenforceable on account of the amount of its liability under this
Agreement, then, notwithstanding any other provision of this Agreement to the
contrary, the amount of such liability shall,without any further action by such
Guarantor or other Subsidiary, the Holders of the Notes or any other Person, be
automatically limited and reduced to the highest amount which is valid and
enforceable as determined in such action or proceeding.
Section 2.2. Obligations Not Affected. The obligations of the
Guarantors under this Agreement shall remain in full force and effect without
regard to, and shall not be impaired or affected by:
(a) any extension or indulgence in respect of the payment of any
Guaranteed Amount or any prepayment of any part of the principal of any
Note or any purchase of any Note; or
(b) any renewal, extension, refunding, amendment or modification of
or addition or supplement to or deletion from any of the terms of any Note
or the Note Agreements, or any other agreement which may be made relating
to any such instruments; or
(c) any amendment, compromise, release or consent or other action or
inaction in respect of any of the terms of any Note or the Note Agreements;
or
(d) any exercise or non-exercise by any Holder of any right, power,
privilege or remedy under or in respect of any Note, the Note Agreements or
this Agreement or any waiver of any such right, power, privilege or remedy
or of any default in respect of any Note, the Note Agreements or this
Agreement, or any receipt of any security, failure to perfect a security
interest in, or any release of, any security; or
(e) any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, liquidation, or the like of the Company or any of
its Subsidiaries (including without limitation any of the Guarantors); or
<PAGE>
(f) any limitation of the liability or recourse of the Company under
any of the Notes or of any other Guarantor hereunder which may now or
hereafter be imposed by any statute, regulation or rule of law, or any
invalidity or unenforceability, in whole or in part, of any of the Notes or
the Note Agreements, or any term thereof, or
(g) any merger or consolidation of the Company or any of its
Subsidiaries into or with any other Person, or any sale, lease or transfer
of any or all of the assets of the Company or any of its Subsidiaries to
any other Person; or
(h) absence of any notice to, or knowledge by, any of the Guarantors
of the existence or occurrence of any of the matters or events set forth in
the foregoing subdivisions (a) through (g); or
(i) any sale, transfer or other disposition by the Company of any
stock of any of the Guarantors; or
(j) the taking or accepting of any other security or guaranty for, or
right or recourse with respect to, any or all of the Guaranteed Amount; or
(k) any partial release of the liability of any Guarantor hereunder
or of the Company or any other Person liable, directly or indirectly, for
payment or performance of any or all of the Guaranteed Amount; or
(l) the unenforceability of all or any part of the Guaranteed Amount
against the Company; or
(m) any other circumstance.
Section 2.3. Waiver. The Guarantors unconditionally waive:
(a) notice of any of the matters referred to in Section 2.2 hereof;
(b) all notices which may be required by statute, rule of law or
otherwise, to preserve intact any rights of any Holder against the
Guarantors, including, without limitation, any demand, presentment and
protest, proof of notice of nonpayment under any of the Notes or the Note
Agreements, notice of intent to accelerate, notice of acceleration, and
notice of any failure on the part of the Company to perform and comply with
any covenant, agreement, term or condition of the Notes or the Note
Agreements;
(c) any right to the enforcement, assertion or exercise by any Holder
of any right, power, priviege or remedy conferred in the Notes or the Note
Agreements, or otherwise;
(d) any requirement of diligence on the part of any Holder;
(e) any requirement on the part of any Holder to mitigate the damages
resulting from any default under the Notes or the Note Agreements; and
(f) any notice of any sale, transfer or other disposition of any
Notes by any Holder.
Section 2.4. Waiver of Subrogation. In the event any of the
Guarantors shall at any time pay any sums on account ofthe Guaranteed Amount or
take any other action in performance of its obligations under this Agreement,
such Guarantor shall have no subrogation or other rights as the holder of a
Note, and each of the Guarantors hereby waives all such rights of subrogation
and all rights of reimbursement or indemnity whatsoever and all rights of
<PAGE>
recourse to any security for any Note until such time as all the Notes shall
have been fully paid, indefeasibly, and all of the obligations of the Company
under the Notes and the Note Agreements shall have been duly performed. After
such payment and performance in full, the Guarantors may have and exercise any
or all such rights as may be available to them.
Section 2.5. Continuation of Guaranty, Etc. The obligations of the
Guarantors shall continue to be effective, or be reinstated, asthe case may be,
if at any time any payment of any Guaranteed Amount, is rescinded or must
otherwise be restored or returned by any Holder upon the bankruptcy,
insolvency, reorganization, arrangement, adjustment, composition, liquidation
or the like of the Company or any of its Subsidiaries, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Company or any of its Subsidiaries or any substantial
part of the property thereof, or otherwise, all as though such payments had not
been made.
Section 2.6. Legend. Each Guarantor agrees that upon the request of
any Holder it will execute and attach to the Notes held by such Holder and on
any Note issued in exchange, transfer or replacement of any Note, a Guaranty in
the following form:
"FOR VALUE RECEIVED, the undersigned Guarantor hereby
unconditionally guarantees severally and not jointly with
any other person the payment of the principal of, the premium
(if any) and the interest on the Note to which this Guaranty
is attached when due under the terms thereof or of the Note
Agreements referred to therein all as more fully provided
in such Note Agreements. The Guarantor hereby agrees that
the Note Agreements and such Note may be modified, amended,
and supplemented in any manner, including the renewal or
extension of any kind of such Note, without consent of the
Guarantor, and that no such modification, amendment,
supplement, renewal or extension and no invalidity of the
Note Agreements or of such Note shall release, affect or
impair the liability of the undersigned hereunder."
Notwithstanding any provision hereof to the contrary, no failure of
any Holder so to request that a Guaranty be executed and attached to any Note,
and no failure of a Guarantor to honor any such request, shall diminish or
impair the obligations of any Guarantor hereunder in any respect.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Each of the Guarantors severally represents and warrants:
Section 3.1. Organization and Qualification. Such Guarantor is a
corporation duly organized, validly existing andin good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own and operate its properties, to carry on its business as
now conducted and as proposed to be conducted, to enter into this Agreement and
to perform all of its obligations hereunder. Such Guarantor is duly qualified
and in good standing as a foreign corporation duly authorized to do business in
all jurisdictions (other than the jurisdiction of its corporation) where its
ownership, lease or operation of property or the conduct of its business
requires such qualification. Such Guarantor has by all necessary corporate
action (all action of shareholders, if any, having been duly taken) duly
authorized the execution and delivery of this Agreement and the performance of
its obligations under this Agreement. This Agreement constitutes the legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
<PAGE>
Section 3.2. Litigation. There is no action, proceeding or
investigation pending or threatened (or any basis therefor known to such
Guarantor) which questions the validity or legality of or seeks damages in
connection with this Agreement, or any action taken or to be taken pursuant to
this Agreement, which might result, either in any one case or in the aggregate,
in an impairment of such Guarantor's ability to perform its obligations under
this Agreement or in a material adverse change in the business, operations,
properties, or condition (financial or otherwise) of such Guarantor or of such
Guarantor and its subsidiaries, taken as a whole.
Section 3.3. No Violations, Etc. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
nor the performance by such Guarantor with its obligations hereunder will
result in any violation of or be in conflict with or constitute a default
(whether or not waived) under any term of the articles of incorporation or by-
aws of such Guarantor or any agreement or instrument to which it is a party or
by which it or any of its properties or assets is bound or any applicable law,
ordinance, rule or regulation or any applicable order of any court, arbitrator
or governmental authority or result in the creation of (or impose any
obligation on such Guarantor to create) any Lien upon any of the properties or
assets of such Guarantor or any of its subsidiaries.
Section 3.4. Governmental Authorizations. No consent, approval or
authorization of, or registration, declaration or filing with, any governmental
body is required on the part of such Guarantor for the valid execution and
delivery of this Agreement by such Guarantor or the consummation of the
transactions contemplated hereby, including fulfillment of, or compliance by
such Guarantor with, the terms and provisions of this Agreement.
Section 3.5. Solvency. As of December 22, 1993, and after giving
effect to the execution and delivery of this Agreement by each Guarantor, (a)
the aggregate value of all assets of such Guarantor, whether valued as a going
concern, at fair valuation or at their fair present salable value, exceeds the
amount of all debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Guarantor, (b) such Guarantor
has and shall have sufficient assets to pay its existing obligations and
liabilities and all other currently contemplated obligations and liabilities
when due, and (c) such Guarantor's assets, property and capital are reasonably
adequate for the business in which such Guarantor is engaged or proposes to
engage. The obligations incurred by such Guarantor under or pursuant to this
Agreement are not being incurred with actual intent to hinder, delay or defraud
existing or future creditors of the Company or such Guarantor.
Section 3.6. Benefit. The capital stock of each Guarantor is owned
100 hundred percent by the Company, either directly or through one or more
Wholly-owned Subsidiaries of the Company, and each Guarantor will derive
substantial benefit, directly and indirectly, from the purchase of the
initially delivered Notes by the Purchasers and from the making of the
guaranties set forth in this Agreement by the Guarantors.
Section 3.7. Private Offering. Neither such Guarantor, directly or
indirectly, nor any agent on its behalf has offered or will offer this
Agreement
or any similar Security or has solicited or will solicit an offer to acquire
this Agreement or any similar Security from or has otherwise approached or
negotiated or will approach or negotiate in respect of this Agreement or any
similar Security with any Person other than the Purchasers and not more than 93
other institutional investors, each of whom was offered this Agreement at
private sale for investment. Neither such Guarantor, directly or indirectly,
nor any agent on its behalf has offered or will offer this Agreement or any
similar Security or has solicited or will solicit an offer to acquire this
Agreement or any similar Security from any Person so as to bring the issuance
<PAGE>
and sale of this Agreement within the provisions of Section 5 of the Securities
Act of 1933, as amended, or the Blue Sky laws of any applicable jurisdiction.
SECTION 4. TERM OF AGREEMENT.
This Agreement and all guaranties, covenants and agreements contained
herein shall continue in full force and effect and shall not be discharged
until such time as all the Notes shall have been fully paid, indefeasibly, and
all of the obligations of the Company under the Notes and the Note Agreements
guaranteed hereunder shall have been duly performed; provided that this
Agreement and all of such guaranties, covenants and agreements with respect to
the obligations of the Company under 9.3 of the Note Agreements shall survive
the payment of the Notes.
SECTION 5. EXPENSES, ETC.
Each of the Guarantors agrees to pay, and save each Holder harmless
against liability for the payment of, all costs and expenses (including,
without limitation, attorneys' fees and expenses) reasonably incurred by or on
behalf of such Holder in enforcing the obligations of the Guarantors under this
Agreement. Each of the Guarantors agrees, at its own expense, to promptly
execute and deliver to each Institutional Holder of the Notes upon such
Institutional Holder's request, all such other and further documents, agree-
ments, and instruments in compliance with or accomplishment of the agreements
of such Guarantor under this Agreement.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties contained in this Agreement or made
in writing by or on behalf of the Guarantors in connection with the
transactions contemplated by this Agreement shall survive the execution and
delivery of this Agreement, any investigation at any time made by any Purchaser
or on its behalf, the purchase of the Notes under the Note Agreements and any
disposition or payment of the Notes.
SECTION 7. AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of each of the Guarantors and the Holders of more than 50% in aggregate
outstanding principal amount of the Notes, excluding any Notes directly or
indirectly owned by the Company or any of its Subsidiaries or Affiliates;
provided that no such amendment or waiver shall, without the prior written
consent of the Holders of all Notes outstanding, (a) change the time of payment
(including any prepayment required by 2.1 of the Note Agreements) or reduce the
amount of any amount payable hereunder,or (b) change the Guaranteed Amount, (c)
place any conditions or limitations on the obligations of the Guarantors under
this Agreement or in any way render such obligations revocable by the
Guarantors, or (d) reduce the percentage of the principal amount of the Notes
the Holders of which are required to consent to any such amendment or waiver.
Any amendment or waiver effected in accordance with this Section 7 shall be
binding upon all Holders of the Notes at the time outstanding, each future
Holder of any such Note, and the Guarantors.
SECTION 8. NOTICES, ETC.
Except as otherwise provided in this Agreement, notices and other
communications under this Agreement shall be in writing and shall be given in
the manner provided in 9.5 of the Note Agreements:
<PAGE>
(a) if to the Purchasers or any subsequent Holder of any Note at its
address appearing in Schedule I to the Note Agreements or such other
address as a Holder may designate to the Company in writing;
(b) if to the Company at its address set forth in the Note Agreements
or to such other address as the Company may designate in writing; and
(c) if to any Guarantor, c/o Roundy's Inc., 23000 Roundy Drive,
Pewaukee, Wisconsin 53072, Attention: Treasurer or such other address as
such Guarantor may designate in writing.
SECTION 9. WAIVER OF ACCEPTANCE.
Each of the Guarantors hereby waives notice of acceptance by the
Purchasers or by any other Holder of the covenants and agreements of the
Guarantors contained herein.
SECTION 10. JURISDICTION; VENUE; SERVICE OF PROCESS.
To the extent permitted by applicable law, each Guarantor hereby
submits to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and any State court sitting in New York
City for the purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each Guarantor agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each Guarantor further waives any objection to venue
in such state and any objection to any action or proceeding in such state on
the basis of forum non conveniens. Nothing in this Section 10 shall affect
the right of any Holder to bring any action or proceeding against such
Guarantor or its properties in the courts of any other jurisdiction.
(a) In the case of the courts of the State of New York or of the
United States sitting in New York City, New York, each Guarantor hereby
irrevocably designates, appoints, and empowers CT Corporation System (the
"Process Agent") (which has consented thereto) with offices on December 22,
1993 at 1633 Broadway, New York, New York 10019, as agent to receive for and on
behalf of such Guarantor service of process in the State of New York. Each
Guarantor further agrees that such service of process may be made on the
Process Agent by personal service of a copy of the summons and complaint or
other legal process in any such legal suit, action or proceeding on the Process
Agent, or by any other method of service provided for under the applicable laws
in effect in the County of New York, State of New York, and the Process Agent
hereby is authorized and directed to accept such service for and on behalf of
such Guarantor and to admit service with respect thereto.
(b) Upon service of process being made on the Process Agent as
aforesaid, a copy of the summons and complaint or other legal process served
shall be mailed by the Process Agent to the Guarantor for whom such service was
performed by air courier, at its address set forth in Section 8 hereof, or to
such other address as such Guarantor may notify the Process Agent in writing.
Service upon the Process Agent as aforesaid shall be deemed to be personal
service on the Guarantor for whom such service was performed and shall be legal
and binding upon such Guarantor for all purposes,notwithstanding any failure of
the Process Agent to mail copies of such legal process thereto, or any failure
on the part of such Guarantor to receive the same.
(c) Each Guarantor agrees that it will at all times continuously
maintain an agent to receive service of process in the County of New York on
its behalf. In the event that for any reason the Process Agent or any
successor thereto shall no longer serve as agent for such Guarantor to receive
<PAGE>
service of process in the County of New York on its behalf or such Guarantor
shall have changed its address without notification thereof to the Process
Agent, such Guarantor, immediately after having knowledge thereof, will
irrevocably designate and appoint a substitute agent in New York City, New York
and advise you, or any subsequent holder of a Note, thereof, or shall notify
the Process Agent of its then current correct address.
(d) Nothing contained in this section shall preclude you, or any
subsequent holder of a Note, from bringing any legal suit, action or proceeding
against any Guarantor in the courts of any jurisdiction where such Guarantor or
any of its property or assets may be found or located.
SECTION 11. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of and
be enforceable against the respective successors and assigns of the parties
hereto, whether so expressed or not, and shall inure to the benefit of and be
enforceable by any Holder. This Agreement embodies the entire agreement and
understanding between the Guarantors and the Purchasers and supersedes all
prior agreements and understandings relating to the subject matter hereof. 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction or any other provision of this Agreement. This Agreement
shall be construed and enforced in accordance with and governed by the law of
the State of New York. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
Scot Lad Foods, Inc.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Cardinal Foods, Inc.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
Shop-Rite, Inc.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
ANNEX 1
JOINDER AGREEMENT
WHEREAS, the undersigned is a subsidiary of Roundy's Inc., a Wisconsin
corporation (the "Company"), which is a party to separate Note Agreements, each
dated as of December 22, 1993 (the "Note Agreements"), between the Company and
The Variable Annuity Life Insurance Company, The Life Insurance Company of
Virginia, Phoenix American Life Insurance Company, Phoenix Home Life Mutual
Insurance Company, Washington National Insurance Company and TMG Life Insurance
Company (collectively, the "Purchasers").
WHEREAS, pursuant to 5.19 of the Note Agreements, the Company has
agreed to cause the undersigned to join in a certain Guaranty Agreement dated
as of December 22, 1993 (the "Guaranty Agreement") from the Persons (as defined
in the Note Agreements) listed on the signature page thereof for the benefit of
the Purchasers and the Holders (as defined therein), as the same may have been
amended, restated, supplemented or otherwise modified from time to time; and
WHEREAS, the undersigned understands that execution of this Joinder
Agreement is required by 5.19 of the Note Agreements, and the
undersigned has agreed to join in the Guaranty Agreement by the
execution hereof.
NOW, THEREFORE, in order that the Company may comply with 5.19 of the
Note Agreements, the undersigned agrees as follows:
1. The undersigned hereby joins in the Guaranty Agreement and agrees
to be bound by all of the terms and provisions thereof as if the undersigned
was an original party thereto and was included in the definition of "Guarantor"
as used therein.
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
day of ____________________, _____.
[Name]
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
CHUBB EXECUTIVE PROTECTION POLICY
- -------------------------------------------------------------------------------
DECLARATIONS
EXECUTIVE LIABILITY
INDEMNIFICATION COVERAGE SECTION
Item 1. Parent Organization:
ROUNDY'S,INC.
Item 2. Limits of Liability:
(A) Each Loss $10,000,000.
(B) Each Policy Period $10,000,000.
Note that the limits of liability and any deductible or
retention are reduced or exhausted by Defense Costs.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 350,000.
Item 5. Insured Organization:
ROUNDY'S, INC.
AND ITS SUBSIDIARIES
Item 6. Insured Persons:
Any person who has been, now is, or shall become a duly elected
director or a duly elected or appointed officer of the insured
organization
Item 7. Extended Reporting Period:
(A) Additional Premium: 25% OF THE ANNUAL PREMIUM
(b) Additional Period: 90 DAYS
Item 8. Pending or Prior Date: 11-01-92
Item 9. Continuity Date: 11-01-92
PREMIUM $113,325.00
ROUNDY'S, INC.
1993 ANNUAL REPORT
Table of Contents
- ------------------
FEATURES
Selected Financial Data
Message to Stockholders
Board of Directors
ROUNDY'S OPERATIONS
Milwaukee
Mazomanie
Lima
Spring Lake Merchandise - Van Wert
Cardinal Foods - Columbus
Midland Grocery - Westville
Midland Grocery of Michigan
South Bend / Redi-Froz
Eldorado / Evansville
FINANCIAL REVIEW
Financial and Operational Review
Independent Auditors' Report
Statements of Consolidated Earnings
Consolidated Balance Sheets
Statements of Consolidated Stockholders' Equity
Statements of Consolidated Cash Flows
Notes to Financial Statements
MANAGEMENT STRUCTURE & MAP
Board of Directors, Elected Corporate Officers,
Advisory Committee and Trustees
Roundy's Divisional Map
<PAGE>
Selected Financial Data
($000 omitted except for
per share data and ratios)
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------
Net sales and
service fees .........$2,480,254 $2,491,293 $2,534,418 $2,501,465 $2,331,091
Net earnings ............ 8,028 7,353 6,813 6,507 6,053
Patronage dividends...... 5,301 5,135 3,305 5,549 5,007
Total assets............. 380,092 390,148 390,797 390,356 371,221
Long-term debt........... 113,045 135,420 139,283 140,435 149,349
Stockholders' equity..... 86,066 78,573 70,917 65,236 59,389
Book value per share..... 71.65 65.10 58.75 53.10 47.35
Working capital.......... 113,643 119,153 116,940 106,428 110,058
Current ratio............ 1.64:1 1.70:1 1.66:1 1.59:1 1.69:1
.Earnings before patronage
dividends as a percent of
net sales and service fees .81% .66% .58% 67% .67%
<PAGE>
Message to Stockholders
To simply state that 1993 was a year of change and challenge for Roundy's
would be an understatement. Within the grocery industry this past year margins
continued to decline due to competition and promotional allowance reductions by
manufacturers and alternative format stores continued to expand within our
markets. During this period, Roundy's took significant steps directed at
meeting these challenges and strengthening the company for the future.
The Year In Review
Net sales and service fees in 1993 were $2.48 billion, which represents a
0.4% decline from 1992. However, net sales and service fees on a comparable
basis were $61 million greater in 1993 than in 1992 or a 2.4% increase. The
reasons for this include:1992 contained 53 weeks while 1993 contained 52 weeks;
in August of 1993, the company sold the Cedarburg Dairy and Old Time Ice Cream
operations, which resulted in a sales reduction of approximately $15 million;
and finally, a major tobacco company reduced its sales price on cigarettes for
competitive reasons in 1993, which resulted in a sales reduction of
approximately $10 million. We anticipate recouping a large portion of the dairy
and ice cream sales in 1994 through central bill and new warehouse programs.
Also, the opportunities offered by the business we acquired from Bay City
Milling & Grocer Company in the second half of 1993 and the addition of several
new customers in both our Ohio and Milwaukee Divisions provide excellent growth
potential. Equally exciting is the continued success of our Pick 'n Save stores
in the Metro-Milwaukee market. The Milwaukee Journal 1993 Consumer Analysis
Survey reported that Pick 'n Save increased its market share to 47% in 1993,
compared to 44% in 1992. We remain optimistic for 1994.
Net earnings for 1993 were $8.0 million, the highest in the history of the
company. Although this is an excellent trend, we need to analyze the underlying
factors contributing to the growth in earnings. As was mentioned, the food
wholesaling industry is undergoing significant changes.The most critical change
is the continued pressure on gross margins at the wholesale and retail levels.
Roundy's believes that we have begun the process of neutralizing these de-
clines. We have identified many challenges and have compiled several management
committees directed at improving efficiencies and reducing costs. Analyses are
in progress or have been completed on how to eliminate inefficiencies within
divisions, control health care and workers' compensation costs, standardize
buying systems in all Roundy's divisions, reduce daily inventory levels,
increase our private label program with the goal of expanding the Roundy's
label throughout our service territory and reduce operating and administrative
costs. e believe the results in 1993 indicate that the company is moving in the
proper direction.
For example, 1993 operating and administrative costs were 8.3% of net sales
and service fees compared to 8.5% in 1992. Also, interest expense decreased
$1.0 million compared to 1992, dropping to .49% of net sales and service fees
versus .53% in 1992.
The last two major factors affecting our 1993 earnings were the $3.2
million pretax gain on the sale of the dairy and ice cream operations and the
$1.3 million pretax expense incurred to retire high interest rate debt.
Management and your Board,after a long and involved study, elected to sell both
manufacturing operations because the long-term capital expenditures required to
maintain the physical plants would have caused a major demand on the company's
resources and would have created a significant negative impact on the grocery
wholesale operations. The early retirement of debt allowed the company to
significantly reduce future interest expense. Our improved balance sheet and
positive earnings trend enabled us to secure interest rates below 7% and retire
debt with interest rates in excess of 11%.
<PAGE>
Patronage dividends grew modestly in 1993 compared to 1992. It should be
noted that 1993 patronage dividends of $5.3 million are the second highest in
the history of the company. Your company continues to pay patronage dividends
from earnings and not penalize the capital needs of the company.
Other significant financial highlights include: Long-term debt declined
$22.4 million or 16.5%;the long-term debt to equity ratio decreased from 1.72:1
in 1992 to 1.31:1 in 1993; stockholders' equity increased by $7.5 million; book
value per share increased $6.55 per share or 10.1%; and return on assets
employed was 8.8%, the highest since 1990.
The Future
The future for our company should be viewed with excitement and enthusiasm.
It goes without saying that there will be challenges, but there will also be
opportunities.We feel confident that the company will meet those challenges and
capitalize on the opportunities.
In order to meet those challenges, the following programs will be
implemented in 1994:
- Standardization of both the buying and inventory control systems in all
divisions.
- Construction of state-of-the-art banana rooms in the Milwaukee Division
designed to meet future growth needs.
- Expansion of the Roundy's private label program into all divisions.
- Identification of the opportunities for consolidating functions and
facilities throughout all divisions.
- Development of the new business acquired from the Bay City Milling &
Grocer Company in Michigan.
- Renovation of several corporate-owned stores within the metro-Milwaukee
market.
We recognize that 1994 and beyond will require change. Our goal is to make
such changes for the long range benefit of the company. Currently, there is a
window of opportunity for Roundy's during which we must take bold steps to
insure the future growth of your company. Roundy's is prepared to take those
steps as management's actions in 1993 have demonstrated.
We would like to thank our stockholders, customers and employees for their
contribution to the success your company has experienced in this past year and
we look forward to 1994 and the future. We recognize the challenges and we
welcome them because we know Roundy's will succeed working together as a team.
<PAGE>
Picture of Gerald F. Lestina
President and Chief Operating Officer
Picture of John R. Dickson
Chairman and Chief Executive Officer
Picture of Board of Directors:
John R. Dickson
Gerald F. Lestina
Robert A. Farrell
Robert R. Spitzer
George E. Prescott
George C. Kaiser
Brenton H. Rupple
Robert D. Ranus
Gary N. Gundlach
<PAGE>
Roundy's Operations
- -------------------
Milwaukee. Record-setting sales and higher than budgeted profits were the
1993 results for the Milwaukee Division. Although the spiraling manufacturers'
trend of "every day low pricing" continued to have a negative impact, we were
able to improve profit through the re-engineering of our internal operations.
Procedures and policies were fine-tuned, work systems and processes streamlined
and dynamic new programs introduced...all to provide increased service and
support to our retailers and keep them on the leading edge.
In 1993, our goal in the area of warehouse operations was to continually
improve the efficiency of our operations to keep costs low and prices right.
As part of this process, we reracked both the East and West Grocery Warehouses,
providing approximately 375 slots for new items. We expanded radio frequency
terminal usage for forklift putaway and replenishment to the freezer, meat and
dairy areas. As a result, we improved our scheduling process and maximized
employee productivity. In addition, we moved outside storage for grocery
inventory from Holt to Superior Storage, effectively reducing the total miles
traveled and saving both time and money.
We also witnessed a significant decrease in overall operating costs in the
area of transportation in 1993. Detailed route analysis and new equipment - 29
fuel efficient tractors and 34 new 53 foot refrigerated trailers - resulted in
decreased mileage logged and reduced fuel consumption.
After the sale of Cedarburg Dairy and Old Time Ice Cream we leased
additional space at Mohawk Cold Storage, enhancing service to our retailers.
Because we offer over 300 ice cream and novelty SKUs, our retailers are able to
sell a full assortment of top quality branded and private label items.
Spearheading a move to drive inventory levels down, our purchasing area
undertook initial discussions with vendors regarding "Efficient Consumer
Response." In addition, the completed installation of Roundy's Automated
Purchasing System ("RAPS")increased our ability to measure buyers' performances
while balancing and controlling inventory levels. Overall, the division
maintained service levels to our customers throughout 1993 exceeding 98%.
Consumer trends reveal an increasing desire to switch to private label
items that offer value and quality. In 1993, the introduction of new Roundy's
and Super Choice label items fueled the success of Roundy's own private label
program. Over 26,000 cases were sold due to these new introductions. Roundy's
private label items offer our retailers a strong competitive advantage. No
other private label in Wisconsin enjoys the national brand status of Roundy's.
The Merchandising Department increased the Savers Club discount card
program from a handful of stores at the beginning of 1993, to more than 70 by
the year's end. The Savers Club generated over three million dollars in vendor
discounts that were passed along to the consumer, making our retailers more
competitive. In fact, our two innovative card programs, Roundy's Savers Club
and Pick 'n Save Advantage Plus Savers Club, propelled the stores to record
sales and profits in 1993.
The dynamic technology used for Savers Club enabled the development and
implementation of our new Roundy's Scanning Coupon Accounting Network("RSCAN").
Roundy's, one of the nation's largest redeemers of in-ad coupons, now redeems
all in-ad coupons using scanner data. This means more and more stores are
receiving a higher rebate, no billbacks and a three week credit turnaround.
The Marketing Department continued to explore ways to utilize technology to
advance their efforts. In 1993, they experimented with targeting individual
Savers Club customers through specific individualized ads matched to their
<PAGE>
purchasing behaviors. As these marketing and technology uses are developed,
Roundy's serviced stores will enjoy the benefits of having a direct insight to
their individual customer preferences.
In response to the competitive threats of warehouse club stores and mass
merchandising, Pick 'n Save actively promoted the Super Choice program through
large club pack sections in a majority of stores. Merchandising tests are also
being performed at key Pick 'n Save locations to identify the marketing
potential of matching deep discount pricing in HBC/GM. Although the tests are
not yet complete, it is evident that overall department gross margins will
increase over the long run. In addition, this strategy greatly contributes to
establishing HBC/GM as a "destination department" for Pick 'n Save.
Because the pace of change quickened in 1993, we intensified our focus on
training and development. This is evident by the development and opening of the
Specialized Management and Retail Training("S.M.A.R.T.") Center, where we offer
specialized management and retail training. In 1994, seminars, workshops and
specialized training will be offered in the areas of customer service, human
resources and management development.
In addition to training, Roundy's provides a number of other retailer
services. A Retail Sanitation Consultation Program helps retailers maintain
strict sanitary practices in their stores. General Accounting offers a drop
ship/central bill software package developed by Roundy's. Retail Accounting
provides full service accounting and coupon clearing services. Roundy's
retailers can customize the service package that best fits their operational
needs.
During 1993, Roundy's retailers built and opened four new super stores.
Among them were three state-of-the-art Pick 'n Save stores opened in the
Greater Milwaukee area:
* Bob and Helga Gold's 40,000 square foot East Pointe Marketplace Pick 'n
Save,located on the east side of Milwaukee, brought a unique, upscale format to
this market.With an open food preparation design in all perishable departments,
the store has a distinctive outdoor market decor.
* Mega Mart's Bay View Pick 'n Save, a 115,000 square foot operation in
Milwaukee, offers a pharmacy, full service floral with delivery, a 3,000 square
foot Club Mega multi-pack, deep discount section and an innovative in-store
tortilla factory.
* Bob Farrell's Pick 'n Save in Franklin is a 72,000 square foot facility
that incorporates all in-store preparation into a distinctive single, two-sided
corridor. Through this unique store layout, customers can experience the sight
sound and smell of fresh foods being prepared for them daily.
In addition, Ron & Lloyd's Family Food Center replaced an older facility in
Neenah, Wisconsin. The new 60,000 square foot store features a hot prepared
food island, an in-store A&W Restaurant, a full service floral operation and
more. It also uses the new Roundy's Quality Decor Package throughout the store.
Our competitors were also busy opening new stores in 1993. Fourteen new
format stores opened, changing the competitive landscape considerably.However,
our competition has been unsuccessful in capturing a significant portion of the
Pick 'n Save market share in the Greater Milwaukee area. According to the
Milwaukee Journal 1993 Consumer Analysis Survey, Pick 'n Save has increased its
market share in the metro-Milwaukee area from 44% in 1992 to 47% in 1993.
Pick 'n Save has evolved from a "bare bones" warehouse concept to the
modern, dynamic low price leader of today. More emphasis is placed on variety
<PAGE>
and freshness in all perishable departments. In fact, Pick 'n Save recently
announced its new "200% Quality Guarantee." This innovative program guarantees
the quality of any fresh product, or the item will be exchanged along with a
refund of the purchase price.
To further enhance quality and variety - essential elements for customer
satisfaction -Roundy's enlisted the services of a consulting firm, "Team 2000."
This firm is working closely with our produce and meat departments to enhance
the quality image of our products, as well as the quality of services in all
operational areas. We're convinced we cannot rest on the laurels of our "low
price" philosophy. So, our retailers are breaking new ground as they work to
improve quality and variety in perishables, enhance overall presentation and
improve in-store service levels.
One of the great strengths of Roundy's has been our ability to face up to
change. As a result of the restructuring we've undertaken in 1993, we're able
to provide more service and support to our retailers - and do it more
cost-effectively than ever before. We'll continue to strengthen that ability in
1994.
Mazomanie. Customer satisfaction is our constant goal and a main
ingredient in our ongoing success. In fact, despite growing competition, 1993
was another record-setting year for Roundy's General Merchandise Division
("RGMD"). We witnessed an 8.5% increase in sales over 1992. Plus, RGMD
continues to earn notice from around the nation for its customer-driven
merchandising and sales programs.
In 1993, RGMD added 1,800 SKUs of specialty foods, bringing the specialty
foods total to 2,500 at the warehouse facility. Additional warehouse racking,
implementation of the PROMPT purchase order matching system and improved use of
RAPS resulted in greater service to our customers. We also were able to reduce
warehouse inventory levels by more effective use of existing technology. The
combination of these factors resulted in better meeting our customers' needs
while positively impacting cash flow throughout 1993.
More efficiency changes are in store for 1994. RGMD will install and
implement the Roundy's Automated Inventory and Labor System ("RAILS"). This new
program provides the warehouse with improved inventory management and control,
while also giving it the tools necessary to successfully absorb new business in
a cost-effective manner.
The Merchandising Department continues to meet the challenges of our
changing industry with new and improved merchandising concepts and department
upgrades. In 1994, the strengthening of vendor support for new programs and
line extensions will help our retailers more aggressively pursue market share.
Implementation of category buying by the RGMD buying staff will offer
additional competitive advantages.
In 1994, RGMD will continue to place strong emphasis on training and staff
education. We realize that our key to success lies with our people. It's their
talent,dedication to quality and commitment to customers that allows us to meet
and exceed our customers' expectations.
Lima. The only constant we can expect in this world is inconstancy. At
the Lima Division,we strive to be flexible enough to react positively to change
and maximize its opportunities. Over the past two years, as the nature and
strength of our competition changed, our response was an aggressive one. The
results have been new and remodeled stores, greater productivity and a
confident attitude toward the future.
<PAGE>
To help us remain highly competitive, the division undertook a number of
improvements in 1993. Efficiencies were strengthened through the installation
of a new buying system, the startup of a corporate accounts payable system at
the division level and several new in-house computer applications that allow
employees to enter data directly into the computer as part of their normal work
routine. In addition, operating expenses were decreased through new automatic
data collection time clocks, a new warehouse productivity reporting system,
accounts receivable on-line cash applications and reduced paper usage through
the archiving of computer reports.
We started a major reracking and reslotting project which will be completed
in 1994. The reracking already accomplished has resulted in our ability to
greatly reduce the amount of outside storage required. Once this project is
complete,our need for outside storage will be eliminated except during seasonal
peaks.
To offer our retailers increased service, the Advertising Department
upgraded its computer system to more quickly and efficiently meet specific
customer needs. We now offer retailers a full-service advertising program,
including in-house printing of shelf labels and signs. In addition, we
announced our new Frequent Shopper program, which will be available in
February, 1994.
Other improvements are also underway that will benefit our retailers in
1994. The installation of an advanced computer network represents an increased
commitment to our retailers to provide them with even more effective
communication in the future. We are also conducting special test projects with
several of our customers. We expect these test projects to tell us more about
how we can improve Efficient Consumer Response through areas like category
management and use of scan data for retail reordering of product.
In 1993, increased competition moved us to make significant changes. These
changes were aimed at making us more flexible and more responsive to customers'
needs and to the marketplace. These changes and the resulting ability to
respond more quickly and competitively make the outlook for 1994 very exciting.
Spring Lake Merchandise - Van Wert. The year 1993 saw us extend ourselves
beyond what we had done before and to grow beyond the niche we had established.
As such,we witnessed improved sales and profitability along with a reduction in
inventory levels. Other improvements included a major line consolidation,
expansion of our Spring Lake private label program to include Old Time candy
and plan-o-gramming of all departments.
To provide total customer satisfaction, the reliability of our work
processes is as important as that of our products. In 1993, we undertook the
development of a number of innovative programs designed to enhance our work
systems.
The Spring Lake Sizzler program gives our retailers the ability to compete
with deep discount formats through very competitive pricing on key items. We
also implemented a fully automated Temporary Price Reduction program and the
Discontinued Newsletter program. Retailers receive our computerized newsletter
along with their invoices. The newsletter details discontinued items, the
reason for discontinuance and replacement items. It also automatically
triggers a shelf label for the new items and provides retailers with a total
figure for the lost sales from that invoice.
Efficient Consumer Response became a reality for Spring Lake in the fourth
quarter of 1993. Working with a chain group, we were able to use scan data
to place orders and manage categories. To date, the program has been very
successful, and we plan to add additional customers in 1994.
<PAGE>
As part of our commitment to make our retailers more competitive and
profitable, Spring Lake maintains a complete service program offering
merchandise on a "cost plus" basis. Retailers establish their own fee
structures based on the amount of service they require. Services offered
include prepricing, ordering, store merchandising, sales counseling and
advertising.
Spring Lake's strong, long-lasting customer relationships bear witness to
our customer-focused orientation. In 1994, we will undertake an aggressive
campaign to acquire even more customers. As we continue our focus on improving
customer relations, sales and profitability, we anticipate another year of
continued growth.
Cardinal Foods - Columbus. As the competition crowded in on us, emotions
ran high among our customers. The year saw the continued influx of major mega
store competitors. Our challenge has been to provide our retailers with the
expertise and tools essential for improving operations, to help them set
realistic goals and objectives and to offer experienced advice and
recommendations on how to compete and corner their share of the market.
Although this is an ongoing project, we have made good headway in improving the
positions of our customers. In large part, this is due to the efforts and
dedication of the entire staff of Cardinal Foods, as well as the willingness
and ability of our customers to adapt and change to meet the demands of today's
marketplace.
We gained a number of new customers in 1993, most notably from the
introduction of the Price Less Foods format. We now have seven stores flying
this banner. The format is still in its infancy, but shows great promise for
the future, especially in rural areas. Mor For Less continues to be a viable
format for the lower income areas, particularly in West Virginia and Eastern
Kentucky.
The outlook for 1994 is as bright as any we have seen in years. A stronger
economy will bring more consumer spending and greater retail sales. We will
increase efficiencies through the installation of RAILS and RAPS. Continued
development of Price Less Foods and Mor For Less, along with aggressive
conventional store promotions, promises to strengthen our position in the
competitive marketplace and will make for a highly successful 1994.
Midland Grocery - Westville. In 1993, we took bold steps to implement
greater efficiencies in our operations, to control expenses and improve
profits. We effectively built on our inherent advantages while strengthening
our level of flexibility and responsiveness through innovative use of
technology.
The Procurement Department installed RAPS, a purchasing system designed to
enhance buying, assist with managing inventory, monitor the flow of product
through the distribution center and, ultimately, lead to improved service
levels and increased productivity. An Electronic Bulletin Board System for our
customers was also implemented.
The quality and value offered in perishable departments continue to head
the list of reasons that people shop at their current supermarket, according to
national surveys. In 1993, Westville renewed its focus on improving its
perishable operations. The conversion of 65,000 square feet of cooler space to
freezer space enabled us to handle frozen meat and expand bakery/deli items,
allowing retailers to enhance their perishable departments. The implementation
of new procurement programs and Customer Specific Marketing led to a 17 percent
increase in produce business.
The first Meat/Deli Seminar Food Show was held and was well attended by
retailers. As part of our ongoing effort to help our customers compete,
<PAGE>
Westville plans to continue the presentation of perishables at future food
shows.
Support for our retailers was also shown through eleven training seminars.
Plus, Westville took a leadership role in promoting the first companywide Roto.
More than 80 stores participated, representing 75 percent of division volume.
As the popularity of private labels continues to grow, Westville
implemented aggressive marketing of its three lines. Our efforts were rewarded
with increased retail sales and the award of Federated Foods Distributor of the
Year Award for merchandising excellence on behalf of Scot Lad Brands.
Westville's customer base was improved by the addition of five new
accounts. Expense control was the main focus of the Accounting Department. To
reduce costs and improve services, the retail accounting function was
transferred to Midland Grocery of Michigan. Our credit invoice was modified to
provide more detailed information to the customer. This resulted in a
considerable reduction of the number of credit inquiries. Plans are underway to
redesign other accounting forms and implement an automated routing system to
further help our customers save time and money.
In 1994, our focus will continue to be on sales growth, both from existing
customers and new accounts; maximizing operating efficiencies and reducing
operating costs.
Midland Grocery of Michigan. In 1993, we gave our competition a solid
indication of our commitment to become a stronger force in our marketplace.
Through an aggressive business strategy, we strengthened and expanded our
customer base. Our most notable event was the addition of the Bay City Milling
& Grocer Company stores. These additional stores will double our sales volume.
Our overall customer base increased by 50 retail outlets. The majority of
these are a chain named Giant Supermarkets, which is well known throughout
Michigan.
We also welcomed some other new members into our family. Glen's Markets,
centered in Gaylord, Michigan, bought stores in Petoskey, East Tawas, and
Alpena, along with a Pick +n Save in Cadillac. Tom's Markets purchased the
Giant Supermarket in Traverse City, Michigan. After extensive remodeling, it
will re-open in February, 1994.
Existing customers also benefited from this opportunity to expand.
Witbeck's of Clare, Michigan, solidified their market presence with the
purchase of a Giant store. Dick and Andy Woodrick also bought a store in
Hemlock, Michigan.
The division's overall growth increased with the addition of several other
new customers as well. These include Ralph Fahner's store in Hopkins, David
and Del Underwood's Big Foods in Alma, and Dave Hansen's store in Suttons Bay.
The Housemans, longtime customers, continued to expand their retail base
with the acquisition of a supermarket in White Cloud, Michigan. This brings
the total of their retail outlets to three.
In 1993, we welcomed the opportunity to provide perishable products to D&W
Food Stores. To effectively meet this commitment, the handling of frozen foods
was transferred to Roundy's Redi-Froz Division. This allowed us the necessary
product space to efficiently supply the needs of D&W.
A year of such tremendous growth is both exciting and extremely demanding.
With increased incoming and outgoing stock nearly colliding, even routine tasks
<PAGE>
such as efficient storage became arduous. We made a number of improvements in
our inventory management technology to meet the new demands.
To increase accuracy of merchandise selection, the warehouse installed a
stock locator system. This has dramatically increased warehouse efficiency. In
1994, the installation of RAPS will be completed. This innovative automated
purchasing system will enhance our service level while keeping our inventory
investment at an economically advantageous level.
By mid-1994, our ordering system will be centralized. All product orders
will then be processed in Pewaukee. These orders will be electronically
distributed to the various divisions of Roundy's, making ordering merchandise
at the store level faster and less complicated. The overall goal is to
substantially reduce errors in the ordering/delivery system.
As the consumer trend toward private label goods continues to grow, our
Shurfine label will help our retailers remain as competitive as possible.
In 1994, we plan to reinstate the Retail Advisory Board. This board,
comprised of several retailers, is designed to maintain consistent first-hand
communication with, and to obtain feedback from, our customers.
Overall, we have much to be pleased with and proud of regarding the year
just past. In 1994, we will continue on our charted course of continued growth
and performance in the service of our customers.
South Bend/Redi-Froz. With more than 40 years under our belts, we've
learned that long-term superiority in performance requires superior capability
in all functions.
Our network of employees is made up of highly trained, professional and
motivated individuals. From merchandisers to stockers, they're trained to
understand that the key to earning and keeping customers is the right
combination of product quality, product availability and service.
At Redi-Froz, we take a customer-focused approach, linking our people and
customers to develop creative solutions for complex tasks. In 1993, we put a
major emphasis on improving work processes. Our goal was to merchandise our
customers' stores for maximum profits and minimum out-of-stocks. As a result,
our customers achieved greater cost savings due to more efficient order
selection and inventory handling systems.
Innovative programs were implemented to promote maximum feature sales and
promotional activity. Dynamic displays and ads were produced to help customers
build store traffic and capture sales. Shelf prices were monitored to help
customers remain competitive. Our inventory was expanded to some 3,000 items
to minimize out-of-stocks and meet consumer demands for variety.
In addition, we increased sales volume by adding a new account, Bay City
Milling & Grocer Company. We will provide cross dock service to all of their
stores.
The commitment and quality of our people have always been key ingredients
in our success. Our employees have always worked hard. Each year, we ask them
to help us find even more new ways to work "smarter." Because of this ongoing
commitment to customer satisfaction, we anticipate many more successful years
ahead.
Eldorado/Evansville. There are many components to a successful
organization. Among them is a steady stream of innovative ideas, backed with
uncompromising support and service in the field. It was this level of service
<PAGE>
from both our customer and divisional support personnel that helped our
retailers meet the increasing competitive challenge and made 1993 a successful
year.
The Price Less Foods and Mor For Less store formats proved to be highly
effective programs, meeting the needs of the limited format customer. In 1993,
we witnessed an ongoing growth in these programs, particularly the Price Less
format. All states serviced by the Eldorado and Evansville Divisions now have
Price Less Foods stores. The upcoming year promises even more growth for both
programs.
Overall, our divisions continued to grow in 1993. We added 28 stores,
representing more than 400,000 square feet of retail selling space. Our goal
is to continue this strong growth trend in 1994.
In 1993, we undertook a number of steps to streamline our work systems and
improve efficiencies, offering our customers a greater level of service in the
process. Both Eldorado and Evansville began preliminary steps to implement
RAPS and RAILS. Once implemented, these programs will greatly enhance the
efficiencies and performance of our procurement and warehouse areas. A number
of our retailers have installed the Roundy's Delta Net Program, providing their
customers with a variety of payment options. The installation of Novell
hardware and software demonstrates our commitment for more effective
communication with our retailers. When complete, more efficient transmittal of
information from warehouse mainframe to customer personal computer will be a
reality. This will allow retailers to greatly reduce paperwork and enhance
speed and accuracy of information.
The ideas for these new products and processes are born from an
understanding of our customers' needs. Creating innovative products to meet
these needs starts with the ideas and expertise of our people, and becomes a
reality through technology. In 1994, we will continue to work closely with our
customers to anticipate, understand and meet their needs, and offer them the
level of support that will help them stay in front of their competition.
<PAGE>
FINANCIAL and OPERATIONAL REVIEW
- --------------------------------
LIQUIDITY AND CAPITAL RESOURCES
During 1993, the company continued to improve its capital structure through
increased stockholders' equity, lower debt and refinancing of high interest
rate debt with lower interest rate long-term debt. The combination of an
excellent capital market and low interest rates together with the company's
improved debt ratios, enabled Roundy's to access the long-term debt market at
very favorable rates. The company, in December 1993, replaced $25 million of
11.26% notes with $45 million of 6.94% notes with a ten year term and used the
remaining proceeds to reduce its borrowings under its revolving credit
agreement. The company plans to prepay $9.75 million of its 10.31% senior notes
on the first available prepayment date in late 1994.
The company's goal is to continue to reduce its long-term debt to equity ratio
which was 1.31:1 in 1993 and 1.72:1 in 1992, yet keep all options for providing
capital resources, available to management. With the additional reduction in
floating rate debt, the company continued to minimize its exposure to major
fluctuations in interest rates. The percentage of floating rate debt to total
long-term debt declined to approximately 9% in 1993 from 30% in 1992.
As a result of the long-term refinancing, there was a need to modify a portion
of the company's revolving credit agreement which was due to expire in March,
1995. The entire agreement was modified and extended until March, 1997. The
revised agreement includes a provision for a lower spread on interest rates
indexed to the London Interbank Offered Rate ("LIBOR"). Management views
the extension and the positive modification as an indication of the banking
community's support for Roundy's during a turbulent time within the grocery
industry. It is management's intention to continue to use this type of
borrowing vehicle, particularly when it provides a low cost option as it did
during the last two years.
The Capital Structure table illustrates the growing percentage of stockholders'
equity to total capital which is 43.2% in 1993 compared to 36.7% in 1992. This
positive trend was primarily the result of the $22.4 million decline in total
long-term debt in 1993 and $7.5 million increase in stockholders' equity.
Roundy's average daily borrowings declined $2.6 million in 1993 compared to
1992 and $4.2 million compared to 1991. The more significant factors which
contributed to both the improvement in Roundy's capital structure in 1993 and
the decline in borrowing requirements include an $11.6 million reduction in
inventories, a $7.9 million increase in proceeds from the sale of property and
equipment and other productive assets versus 1992 proceeds and a reduction in
operating and administrative expenses as a percentage of net sales and service
fees from 8.5% in 1992 to 8.3% in 1993. Net cash flows provided by operations
increased $14.5 million in 1993 compared to 1992. This improvement demonstrated
the commitment of management to reduce inventory and receivables and take costs
out of the system directed at reducing borrowing levels. From 1990 to 1993,
management has reduced average daily borrowings by $8.0 million.
Although capital expenditures declined approximately $2.0 million from 1992,
they exceeded 1991 levels by $1.5 million.Management is committed to continuing
to invest in physical facilities, its transportation fleet and customer related
systems. In this regard, 1994+s capital expenditure budget has been set at $17
million. The largest portion of the expenditures is directed at new
transportation equipment, retail store renovations and facility modernization.
<PAGE>
Management continues to emphasize the necessity to monitor and control working
capital levels. Our goal is to maintain working capital necessary to meet debt
covenant requirements, but to avoid investing significant funds in nonearning
assets. In this regard, total working capital declined $5.5 million. The key
factors affecting this change were an $11.6 million reduction in inventory, a
$5.9 million increase in cash, an increase in accounts payable of $2.4 million
and an increase in accrued expenses of $2.9 million. During 1993, management
implemented new programs directed at lowering inventory levels and days sales
outstanding in accounts receivable.These continue to be areas of high scrutiny.
Management believes strongly that the continued emphasis on controlling these
areas are important factors in lowering borrowing levels.
Book value per share increased to $71.65 or 10.1%. Since 1990, book value per
share has increased $18.55 per share or 34.9%. Patronage dividends paid during
this same three year period exceeded $13.7 million.It is important to note that
1991 earnings and patronage dividends were reduced by the costs incurred during
the labor dispute at our largest wholesale division. During the period of 1991
through 1993, stockholders' equity increased $20.8 million. This represents a
32% growth in the net worth of the company during a very competitive period
within the industry.
RESULTS OF OPERATIONS
- ---------------------
Net sales and service fees declined $11.0 million in 1993 from 1992 and $54.2
million from 1991. The 0.4% decline from 1992 can be attributed to several
factors, including the loss of $15 million in sales resulting from the sale of
Roundy's dairy and ice cream operations in the early Fall of 1993; secondly,
1992 was a 53 week year for Roundy's compared to 52 weeks for 1993;and finally,
a $10 million reduction in sales created by a major price decline in cigarettes
in 1993. After adjusting for these factors, 1993 net sales and service fees
increased in 1993 versus 1992 by $61 million or 2.4%. The decline from 1991 is
attributable to the loss of a major customer who sold his entire retail
operation to another wholesaler. Management believes, in view of events
happening in our market area that 1994 net sales and service fees will increase
due to the addition of new customers and increased concentration from our
existing customer base.
With the industry's continuing trend toward an "every day low price" (EDLP)
concept, there has been continuing pressure on margins. The company has
experienced a decline in gross profit margins as a percentage of net sales and
service fees from 9.6% in 1991 and 1992 to 9.4% in 1993. It is management's
belief that the pressures on margins will continue in 1994 and wholesalers will
have to seek alternative methods to replace the declines in gross profit
margins.
Operating and administrative expenses continued to decline in 1993, both in
dollars and as a percent of net sales and service fees. In 1993, these expenses
were 8.3% of net sales and service fees compared to 8.5% in 1992 and 8.6% in
1991.Management continues to look at this category for further reductions which
will help offset projected future declines in gross profit margins.Accordingly,
a major effort was undertaken during the past year to review and modify all
compensation and health care benefit programs, to evaluate possible
consolidation of functions within divisions, to consider further reductions in
inventory and thereby reduce related handling costs and to implement new
systems directed at improving efficiencies and the faster flow of information
at all levels within the company. In this regard, management members are active
participants in the industry studies currently being conducted on Efficient
<PAGE>
Consumer Response ("ECR") as they relate to inventory. It is believed that all
or some portion of this concept will benefit the company in lowering operating
costs and benefit our customers in enabling us to continue to provide them with
the lowest cost of goods available.
Management continued to seek opportunities to reduce debt, strengthen its
balance sheet and reduce interest expense. As mentioned, the company took
several steps to achieve these goals including reduced inventory levels,
implementing automatic clearing house ("ACH") payment programs to reduce
receivables,seeking extended terms from vendors and looking at charging vendors
fees for poor performance. A major step was taken in December 1993, when
Roundy's elected to retire early, $25 million of 11.26% notes. The financial
impact of this early retirement was an extraordinary loss of $1.3 million,which
was reflected in the 1993 Statement of Consolidated Earnings. Interest expense
as a result of both a decline in average daily borrowings and an improvement in
rates declined $1.0 million in 1993 compared to 1992 and $3.4 million compared
to 1991. At the end of 1993, Roundy's average cost of long-term debt was 7.9%
compared to 8.6% in 1992 and 9.2% in 1991.
Effective income tax rates for 1993, 1992 and 1991 were 40.5%, 41.3% and 40.9%,
respectively. The 1993 effective income tax rate reflects increases resulting
from President Clinton's new tax program as well as the impact of the various
state tax rates and jobs and other tax credits. In 1992, the company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," issued by the Financial Accounting Standards Board. The $660,000
cumulative effect of adopting this statement is included in 1992 earnings.
Net earnings of Roundy's were the highest in the history of the company. Net
earnings in 1993 were .32% of net sales and service fees compared to .30% for
1992 and .27% for 1991. Net earnings in 1993 were positively impacted by the
gain from the sale of the company's dairy and ice cream operations. Management
made the decision that these businesses were not part of the "core" business in
which the company wanted to concentrate future capital and management energies.
It is believed that these resources could be better deployed in retail and
wholesale operations to strengthen the company for the future. Offsetting the
gain was the cost of the early retirement of debt. Management believes that the
recent influx of new business, coupled with the major emphasis on cost
reduction and control, will offset the continuing decline in margins and
increase net earnings in 1994.
- -------------------------------------------------------------------------------
Capital Structure (in millions) 1993 1992
- -------------------------------------------------------------------------------
Long-term debt $111.7 56.1% $133.7 62.5%
Capitalized lease obligations 1.3 0.7% 1.7 0.8%
- -------------------------------------------------------------------------------
Total long-term debt 113.0 56.8% 135.4 63.3%
Stockholders' equity 86.1 43.2% 78.6 36.7%
- -------------------------------------------------------------------------------
Total capital $199.1 100.0% $214.0 100.0%
- -------------------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of Roundy's, Inc.:
We have audited the accompanying consolidated balance sheets of Roundy's, Inc.
and its subsidiaries as of January 1, 1994 and January 2, 1993 and the related
statements of consolidated earnings, stockholders' equity and cash flows for
each of the three years in the period ended January 1, 1994. 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 the companies at January 1, 1994
and January 2, 1993 and the results of their operations and their cash flows
for each of the three years in the period ended January 1, 1994 in conformity
with generally accepted accounting principles.
As discussed in Notes 1 and 9 to the financial statements, the companies
changed their method of accounting for income taxes effective December 29,
1991, to conform with Statement of Financial Accounting Standards No. 109.
DELOITTE & TOUCHE
Milwaukee, Wisconsin
February 28, 1994
<PAGE>
STATEMENTS OF CONSOLIDATED EARNINGS
As of January 1, 1994 and January 2, 1993
1993 1992 1991
-------------- -------------- --------------
Revenues:
Net sales and service fees ..$2,480,254,200 $2,491,292,900 $2,534,418,400
Other-net ................... 6,526,600 3,290,100 5,047,300
-------------- -------------- --------------
2,486,780,800 2,494,583,000 2,539,465,700
-------------- -------------- --------------
Costs and Expenses:
Cost of sales ............... 2,248,336,000 2,252,976,400 2,291,962,200
Operating and administrative 206,253,600 211,949,500 217,096,400
Interest .................... 12,138,100 13,128,900 15,580,800
-------------- -------------- --------------
2,466,727,700 2,478,054,800 2,524,639,400
-------------- -------------- --------------
Earnings Before Patronage
Dividends ................ 20,053,100 16,528,200 14,826,300
Patronage Dividends ......... 5,300,700 5,134,700 3,304,600
-------------- -------------- --------------
Earnings Before Income Taxes 14,752,400 11,393,500 11,521,700
-------------- -------------- --------------
Provision (Credit) for
Income Taxes:
Current-Federal ........ 5,797,000 4,521,500 4,027,800
-Jobs and other
tax credits .. (485,500) (452,100) (485,100)
-State .......... 1,740,200 1,237,000 1,174,700
-Deferred ....... (1,078,000) (606,000) (9,000)
-------------- -------------- --------------
5,973,700 4,700,400 4,708,400
-------------- -------------- --------------
Earnings Before Extraordinary
Item and Cumulative Effect
of Accounting Change ..... 8,778,700 6,693,100 6,813,300
Extraordinary Loss on Early
Extinguishment of Long-
Term Debt (Net of Income
Tax Benefit of $511,000).. (751,000)
Cumulative Effect of
Accounting Change ....... 660,000
-------------- -------------- --------------
Net Earnings.................$ 8,027,700 $ 7,353,100 $ 6,813,300
============== ============== ==============
[FN]
See notes to financial statements.
<PAGE>
CONSOLIDATED BALANCE SHEETS
As of January 1, 1994 and January 2, 1993
ASSETS 1993 1992
------------ ------------
CURRENT ASSETS:
Cash and short-term investments $ 25,845,600 $ 19,912,000
Notes and accounts receivable,
less allowance for losses,
$8,766,500 and $7,578,200.... 99,826,500 96,420,200
Merchandise inventories......... 153,169,500 164,719,900
Prepaid expenses ............... 6,956,800 4,347,400
Future income tax benefits...... 4,281,800 4,576,800
------------ ------------
Total current assets......... 290,080,200 289,976,300
------------ ------------
OTHER ASSETS:
Notes receivable................ 14,894,700 19,497,200
Other real estate............... 7,343,000 6,540,700
Deferred expenses and other..... 7,885,100 8,654,500
------------ ------------
Total other assets........... 30,122,800 34,692,400
------------ ------------
PROPERTY AND EQUIPMENT:
Land............................ 5,100,600 4,647,200
Buildings....................... 39,668,000 40,529,900
Equipment....................... 71,508,900 76,275,100
Capitalized equipment leases.... 2,300,000 2,300,000
Leasehold improvements.......... 11,939,300 16,005,900
------------ -----------
130,516,800 139,758,100
Less accumulated depreciation
and amortization:
Owned....................... 68,721,000 72,602,300
Leased...................... 1,906,700 1,676,600
------------ ------------
Property and equipment-net 59,889,100 65,479,200
------------ ------------
$380,092,100 $390,147,900
============ ============
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY:
1993 1992
------------ ------------
CURRENT LIABILITIES:
Notes payable...................$ 139,600 $ 502,400
Current maturities of
long-term debt............... 8,920,700 7,542,800
Accounts payable................ 130,187,600 127,775,500
Accrued expenses................ 36,778,500 33,867,100
Income taxes.................... 410,900 1,135,300
------------ ------------
Total current liabilities.... 176,437,300 170,823,100
Long-Term Debt, Less Current
Maturities...................... 113,044,700 135,420,100
Deferred Income Taxes.............. 600,000 2,184,000
Other Liabilities.................. 3,944,000 3,147,800
------------ ------------
Total liabilities ........... 294,026,000 311,575,000
Commitments and Contingencies (Note 10)
STOCKHOLDERS' EQUITY:
Common stock:
Voting (Class A)............. 19,400 20,100
Non-voting (Class B)......... 1,425,400 1,427,000
----------- -----------
Total common stock....... 1,444,800 1,447,100
Amount related to recording
minimum pension liability.... (308,700)
Patronage dividends payable in
common stock................. 3,263,000 3,210,000
Additional paid-in capital...... 20,388,900 16,867,000
Reinvested earnings............. 61,278,100 57,048,800
------------ ------------
Total stockholders' equity.... 86,066,100 78,572,900
------------ ------------
$380,092,100 $390,147,900
============ ============
<PAGE>
<TABLE>
STATEMENTS of CONSOLIDATED STOCKHOLDERS' EQUITY
For the years ended January 1, 1994, January 2, 1993 and December 28, 1991
<CAPTION>
Common Stock
------------------------------------- Patronage
Class A Class B Dividends Additional
-------------------------------------- Payable in Paid-in Reinvested
Shares Amount Shares Amount Common Stock Capital Earnings
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 29, 1990 17,200 $21,500 1,146,745 $1,433,400 $3,414,000 $11,682,600 $48,684,200
Net earnings........... 6,813,300
Common stock issued..... 1,100 1,400 75,845 94,800 (3,414,000) 3,910,600
Common stock purchased..(2,300) (2,900) (69,106) (86,300) (852,400) (2,995,600)
Patronage dividends
payable in common stock 2,212,000
---------------------------------------------------------------------------
Balance, December 28, 1991 16,000 20,000 1,153,484 1,441,900 2,212,000 14,740,800 52,501,900
Net earnings............ 7,353,100
Common stock issued..... 1,200 1,500 52,184 65,200 (2,212,000)
Common stock purchased..(1,100) (1,400) (64,110) (80,100) (903,100) (2,806,200)
Patronage dividends
payable in common stock 3,210,000
---------------------------------------------------------------------------
Balance, January 2, 1993 16,100 20,100 1,141,558 1,427,000 3,210,000 16,867,000 57,048,800
Net earnings............ 8,027,700
Common stock issued..... 700 900 82,193 102 700 (3,210,000) 5,058,100
Common stock purchased..(1,300) (1,600) (83,449) (104,300) (1,536,200) (3,798,400)
Patronage dividends
payable in common stock 3,263,000
---------------------------------------------------------------------------
Balance, January 1, 1994 15,500 $19,400 1,140,302 $1,425,400 $3,263,000 $20,388,900 $61,278,100
===========================================================================
<FN>
See notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS of CONSOLIDATED CASH FLOWS
For the years ended January 1, 1994, January 2, 1993 and December 28, 1991
1993 1992 1991
------------ ------------ ------------
Cash Flows From Operating
Activities:
Net earnings.................$ 8,027,700 $ 7,353,100 $ 6,813,300
Adjustments to reconcile
net earnings to net
cash flows provided by
operating activities:
Depreciation and
amortization............. 12,913,200 13,350,100 12,892,700
Extraordinary loss on
early extinguishment
of debt.................. 751,000
Cumulative effect of
accounting change........ (660,000)
Allowance for losses....... 6,738,600 5,772,900 4,030,300
Gain on sale of property
and equipment and other
productive assets........ (3,680,300) (1,105,700) (1,804,800)
Patronage dividends payable
in common stock.......... 3,263,000 3,210,000 2,212,000
(Increase) decrease in operating
assets, net of the effects
of disposition:
Accounts receivable....... (13,819,500) (3,462,100) (6,676,200)
Merchandise inventories... 11,038,700 (2,273,400) (1,789,000)
Prepaid expenses.......... (2,105,000) (219,900) (359,800)
Future income tax benefits 295,000 (1,218,000) (293,000)
Other real estate......... (802,300) 245,200 456,300
Deferred expenses and other
assets.................... (27,700) (330,700) (38,000)
Increase (decrease) in operating
liabilities, net of the
effects of disposition:
Accounts payable.......... 7,715,000 (4,432,700) (5,528,100)
Accrued expenses.......... 772,900 1,893,000) 1,982,900
Income taxes.............. (724,400) (16,700) 432,300
Deferred income taxes..... (1,373,000) 232,000 157,000
Other liabilities......... 796,200 757,800 (1,325,300)
------------ ------------ ------------
Net cash flows provided by
operating activities 29,779,100 15,308,900 11,162,600
------------ ------------ ------------
Cash Flows From Investing Activities:
Capital expenditures......... (13,354,800) (15,332,300) (11,894,000)
Proceeds from sale of property
and equipment and other
productive assets.......... 11,017,900 3,096,800 14,574,300
(Increase) decrease in notes
receivable................. 4,602,500 (3,976,500) (7,034,400)
------------ ------------ ------------
Net cash flows provided by
(used in) investing activities 2,265,600 (16,212,000) (4,354,100)
<PAGE> ------------ ------------ ------------
Cash Flows From Financing Activities:
Proceeds from long-term
borrowings................. 45,000,000 48,000,000 8,475,000
Principal payments and
defeasance of long-term
debt....................... (68,637,400) (51,862,400) (9,627,600)
Increase in notes payable and
current maturities of long-
term debt.................. 1,015,100 909,200 194,100
Proceeds from sale of common
stock...................... 1,951,700 884,000 870,000
Common stock purchased....... (5,440,500) (3,790,800) (4,214,400)
------------ ------------ ------------
Net cash flows (used in)
financing activities....... (26,111,100) (5,860,000) (4,302,900)
------------ ------------ ------------
Net Increase (Decrease) in Cash
and Short-Term Investments... 5,933,600 (6,763,100) 2,505,600
Cash And Short-Term Investments,
Beginning Of Year............ 19,912,000 26,675,100 24,169,500
------------ ------------ ------------
Cash And Short-Term Investments,
End Of Year..................$ 25,845,600 $ 19,912,000 $ 26,675,100
============ ============ ============
Cash Paid During The Year For:
Interest.....................$ 13,100,200 $ 14,482,100 $ 14,918,900
Income Taxes................. 7,805,700 5,703,300 4,478,200
[FN]
See notes to financial statements.
<PAGE>
NOTES to FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Description of business-The company is primarily engaged in the distribution of
food products and related non-food items through retail supermarkets, many of
which are owned by stockholder-customers or the company.
Fiscal year-The company's fiscal year is the 52 or 53 week period ending the
Saturday nearest to December 31. The years ended January 1, 1994 and December
28, 1991 included 52 weeks. The year ended January 2, 1993 included 53 weeks.
Consolidation practice-The financial statements include the accounts of the
company and its subsidiaries. Significant intercompany balances and
transactions are eliminated.
Short-term investments-Short-term investments (maturing within three months)
are recorded at cost which approximates market value.
Inventories-Inventories are recorded at the lower of cost, on the first-in,
first-out method, or market.
Depreciation-Depreciation and amortization of property and equipment are
computed primarily on the straight-line method over their estimated useful
lives, which are generally thirty-one years for buildings, three to ten years
for equipment and five to twenty years for leasehold improvements. Equipment
under capitalized leases are amortized over the terms of the respective leases.
Income Taxes-Prior to 1992, the company provided deferred income taxes in
accordance with Statement of Financial Accounting Standards No. 96. Effective
December 29, 1991, the company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income.
2. DISPOSITION
On August 28, 1993, the company completed the sale of its dairy and ice cream
operations. The sale price of $14,976,500 consisted of cash of $9,649,600 and
liabilities assumed by the purchaser of $5,326,900. The sale resulted in a
pretax gain of $3,254,100 which is included in other revenues in the 1993
Statement of Consolidated Earnings.
3. PATRONAGE DIVIDENDS
The company's By-Laws require that for each of the last three fiscal years, to
the extent permitted by the Internal Revenue Code, patronage dividends are to
be paid out of earnings from business done with stockholder-customers in an
amount which will reduce the net earnings of the company to an amount which
will result in a 10% increase in the book value of its common stock. The
dividends are payable at least 20% in cash and the remainder in Class B common
stock. Dividends for the last three fiscal years were payable 30% in cash.
4. NOTES RECEIVABLE
The company extends long-term credit to certain independent retailers it serves
to be used primarily for store expansion or improvements. Loans to independent
retailers are primarily collateralized by the retailer's inventory and
equipment.Interest rates are generally in excess of the prime rate and terms of
the notes are up to 10 years. Included in current notes and accounts receivable
are amounts due within one year totalling $9,661,400 and $10,755,200 at January
<PAGE>
1, 1994 and January 2, 1993, respectively. Long-term notes receivable at
January 1, 1994 and January 2, 1993 are net of an allowance for losses of
$1,483,000.
5. LONG-TERM DEBT
Long-term debt, exclusive of current maturities, consists of the following at
the respective year-ends:
1993 1992
------------ ------------
Mortgage note payable at 9.75%, due 1994...... $ 1,579,200
Other long-term debt, 9% to 10%, due 1995
to 2006.......................................$ 1,162,700 2,741,800
Obligations under capitalized leases........... 1,310,800 1,738,400
Industrial development bonds, 73% of the
prime rate, due 1995 to 1997.................. 521,200 1,610,700
Senior unsecured notes payable:
10.31%, due 1995 to 1999...................... 15,250,000 18,750,000
11.26%, due 1995 to 1999...................... 25,000,000
9.26%, due 1995 to 2001...................... 17,500,000 20,000,000
7.57% to 8.26%, due 1995 to 2008............. 22,300,000 23,000,000
6.94%, due 1997 to 2003...................... 45,000,000
Notes payable under revolving credit
agreements at 6%, due 1997.................... 10,000,000 41,000,000
----------- ------------
Total..................................$113,044,700 $135,420,100
============ ============
Interest rates noted above are at January 1, 1994. The prime interest rate was
6.0% at January 1, 1994 and January 2, 1993.
At January 1, 1994, $60,000,000 was available to the company under its
revolving credit agreements. Certain property and equipment aggregating
approximately $3,000,000 are pledged as collateral to long-term debt and other
obligations at January 1, 1994. The loan agreements include, among other
provisions, minimum working capital and net worth requirements and limit stock
repurchases and total debt outstanding.
In December 1993, the company completed a private placement of $45,000,000 of
6.94% Senior Unsecured Notes. Proceeds were used to prepay the $25,000,000 of
11.26% outstanding Senior Unsecured Notes and to reduce notes payable under
revolving credit agreements.Proceeds used to prepay the 11.26% Senior Unsecured
Notes were placed in an irrevocable trust and, as a result, this debt is
considered to be defeased and the liability has been removed from the
consolidated financial statements. The extraordinary loss on the early
extinguishment of the 11.26% Senior Unsecured Notes totalled $1,262,000, before
applicable income tax benefit of $511,000.
Repayment of principal on long-term debt outstanding, excluding obligations
under capitalized leases (see Note 10), is as follows:
1994............................................................$ 8,512,500
1995............................................................ 6,929,400
1996............................................................ 7,681,600
1997............................................................ 25,508,300
1998............................................................ 11,656,800
Thereafter...................................................... 59,957,800
<PAGE>
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The company's financial instruments, as defined in Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments," consist primarily of accounts and notes receivable, accounts
payable, notes payable and long-term debt. The carrying amounts for accounts
and notes receivable, accounts payable and notes payable approximate their fair
values. Based on the borrowing rates currently available to the company for
long-term debt with similar terms and maturities, the fair value of long-term
debt, including current maturities, is approximately $126,700,000.
7. COMMON STOCK
The authorized capital stock of the company is 60,000 shares of Class A common
stock and 2,400,000 shares of Class B common stock with a par value of $1.25 a
share. Inactive customers are required to exchange Class A voting stock held
for Class B non-voting stock.
The issuance and redemption of common stock is based on the book value thereof
as of the preceding year-end. The year-end book value was $71.65, $65.10 and
$58.75 for 1993, 1992 and 1991, respectively. The company is obligated, upon
request, to repurchase common stock held by inactive customers or employees.The
amount available for such repurchases in any year is subject to limitations
under certain loan agreements.
Effective November 1991, the Board of Directors adopted the 1991 Stock
Incentive Plan (the "Plan") under which up to 75,000 shares of Class B common
stock may be issued pursuant to the exercise of stock options. The Plan also
authorizes the grant of up to 25,000 stock appreciation rights ("SARs").
Options and SARs may be granted to senior executives and key employees of the
company by the Executive Compensation Committee of the Board of Directors. No
options or SARs may be granted under the Plan after November 30, 2001.
Option and SAR transactions are as follows:
Options SARs Price
------- -------- -------------
Outstanding, December 29, 1990..... 0 0 -
Granted......................... 30,000 10,000 $53.10
------- -------- -------------
Outstanding, December 28, 1991..... 30,000 10,000 53.10
Granted......................... 15,000 5,000 58.75
------- -------- -------------
Outstanding, January 2, 1993....... 45,000 15,000 53.10-58.75
Granted......................... 15,000 5,000 65.10
Exercised....................... (15,333) 53.10-65.10
Cancelled....................... (1,500) (1,500) 53.10-58.75
------- -------- -------------
Outstanding, January 1, 1994....... 43,167 18,500 $53.10-$65.10
======= ======== =============
Available for grant after
January 1, 1994................. 16,500 6,500
======= ========
Options granted become exercisable based on the vesting rate which ranges from
20% at the date of grant to 100% eight years from the date of grant. As of
January 1, 1994, options were exercisable for 21,015 shares at $53.10-$65.10
per share.
<PAGE>
SAR holders are entitled, upon exercise of a SAR, to receive cash in an
amount equal to the excess of the book value per share of the company's common
stock as of the last day of the company's fiscal year immediately preceding the
date the SAR is exercised over the base price of the SAR. SARs granted become
exercisable based on the vesting rate which ranges from 20% on the last day of
the fiscal year of the grant to 100% eight years from the last day of the
fiscal year of the grant. Compensation expense was not material in 1993, 1992
and 1991. As of January 1, 1994, 5,950 SARs were exercisable at $53.10-$65.10
per SAR.
In the event of a change in control of the company, all options and SARs
previously granted and not exercised, become exercisable.
8. EMPLOYEE BENEFIT PLANS
Substantially all non-union employees of the company and employees of its
subsidiaries are covered by defined benefit pension plans.Benefits are based on
either years of service and the employee's highest compensation during five of
the most recent ten years of employment or on stated amounts for each year of
service. The company intends to annually contribute only the minimum
contributions required by applicable regulations.
The following sets forth the funded status of the plans at January 1, 1994 and
January 2, 1993:
1993 1992
----------------------------------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
Benefits Assets Benefits Assets
----------------------------------------------------
Actuarial present value of:
Vested benefit obligation $18,843,000 $3,234,100 $14,475,700 $2,126,900
=========== ========== =========== ==========
Accumulated benefit
obligation............ $21,103,200 $3,425,600 $15,400,500 $2,186,500
=========== ========== =========== ==========
Projected benefit
obligation............ $25,118,300 $3,425,600 $17,815,300 $2,186,500
Plan assets (primarily
listed stocks and bonds)
at market value........ 25,688,200 1,978,300 21,775,800 1,772,500
----------- ---------- ----------- ----------
Projected benefit obligation
(in excess of) or less
than plan assets....... 569,900 (1,447,300) 3,960,500 (414,000)
Unrecognized net (gain)
or loss................ (688,100) 519,700 (3,920,800) (337,700)
Prior service cost not yet
recognized in net
periodic pension cost.. 595,700 73,100 639,700 3,000
Unrecognized net asset.... (1,404,300) (1,575,500)
Adjustment required to
recognize minimum
liability................. (592,800)
----------- ----------- ----------- ----------
Accrued pension cost...... $ (926,800)$(1,447,300) $ (896,100) $ (748,700)
=========== =========== =========== ==========
<PAGE>
The assumptions used in the accounting were as follows:
1993 1992
-------- --------
Discount rate.......................................... 7.5% 9.5%
Rate of increase in compensation levels................ 4.0% 5.0%
Expected long-term rate of return of assets............ 9.0% 9.5%
The changes in actuarial assumptions in 1993 resulted in a $6,047,000 increase
in the projected benefit obligation in 1993, and is expected to result in an
increase in the 1994 pension expense of approximately $750,000. In 1993, in
accordance with Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," the company has recorded a minimum pension liability
of which $308,700, net of income taxes, is reflected as a reduction of
stockholders' equity.
Net pension cost for the foregoing defined benefit plans includes the following
components:
1993 1992 1991
----------- ----------- -----------
Service cost-benefits earned during
the year...............................$ 1,314,800 $ 1,263,200 $ 1,217,300
Interest on projected benefit obligation 1,881,000 1,658,900 1,583,500
Actual return on plan assets............ (2,251,200) (2,007,400) (1,573,400)
Net amortization and deferral........... (247,500) (321,200) (134,700)
----------- ----------- ----------
Net pension cost........................$ 697,100 $ 593,500 $ 1,092,700
=========== =========== ===========
The company and its subsidiaries also participate in various multi-employer
plans which provide defined benefits to employees under collective bargaining
agreements. Amounts charged to pension expense for such plans were $3,437,500,
$3,500,400 and $3,465,800 in 1993, 1992 and 1991, respectively. Also, the
company has a defined contribution plan covering substantially all salaried and
hourly employees not covered by a collective bargaining agreement. Total
expense for the plan amounted to $513,700, $508,200 and $480,000 in 1993, 1992
and 1991, respectively.
Effective January 3, 1993, the Company adopted the provisions of the Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which covers health care and
other welfare benefits provided to retirees and Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" issued by the Financial Accounting Standards Board. The adoption of
these statements, using the immediate recognition basis, did not have an effect
on the accompanying consolidated financial statements.
9. INCOME TAXES
Effective December 29, 1991, the company adopted Statement of Financial
Standards No. 109, "Accounting for Income Taxes." The company elected to
reflect the effect of this accounting principle change as a cumulative effect
adjustment as of December 29, 1991.
<PAGE>
Federal income tax at the statutory rates of 35% in 1993 and 34% in 1992 and
1991 and income tax expense as reported, are reconciled as follows:
1993 1992 1991
---------- ---------- ------------
Federal income tax at
statutory rates.........$5,163,300 $3,873,800 $ 3,917,400
State income taxes,
net of federal tax
benefits................ 1,131,100 816,400 775,300
Jobs and other tax
credits................. (485,500) (452,100) (485,100)
Other-net................ 164,800 462,300 500,800
---------- ---------- -----------
Income tax expense.......$5,973,700 $4,700,400 $4,708,400
========== ========== ===========
Deferred (prepaid) taxes on earnings result from the recognition of certain
items in different periods for tax and financial reporting purposes. The
sources and tax effects of these differences are as follows:
1993 1992 1991
------------ ------------ -----------
Depreciation and amortization..$ (423,000) $ 251,000 $1,065,000
Inventory valuation methods.... 59,000 91,000 (202,000)
Disposal of property and
equipment..................... (114,000) (47,000) (520,000)
Allowance for doubtful accounts 697,000 (1,215,000) 42,000
Loss contingencies............. (261,000) (213,000) (105,000)
Employee benefits.............. (1,015,000) 651,000 (224,000)
Other-net...................... (21,000) (124,000) (65,000)
------------ ----------- -----------
Total..........................$(1,078,000) $ (606,000) $ (9,000)
============ =========== ===========
<PAGE>
The approximate tax effects of temporary differences at January 1, 1994 and
January 2, 1993 are as follows:
<TABLE>
<CAPTION>
1993 1992
----------------------------------- ------------------------------------
Assets Liabilities Total Assets Liabilities Total
---------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts..............$1,652,000 $1,652,000 $2,349,000 $ 2,349,000
Inventories ........... $ (466,200) (466,200) $ (407,200) (407,200)
Employee benefits...... 2,296,000 2,296,000 1,954,000 1,954,000
Accrued expenses not
currently deductible.. 799,000 799,000 538,000 538,000
Other.................. 1,000 1,000 143,000 143,000
---------- ------------ ------------ ---------- ------------ - ----------
Current................ 4,748,000 (466,200) 4,281,800 4,984,000 (407,200) 4,576,800
---------- ------------ ------------ ---------- ------------ - ----------
Allowance for doubtful
accounts.............. 582,000 582,000 582,000 582,000
Depreciation and
amortization.......... (2,998,000) (2,998,000) (3,502,000) (3,502,000)
Employee benefits...... 1,745,000 1,745,000 668,000 668,000
Other.................. 71,000 71,000 68,000 68,000
---------- ------------ ------------ ---------- ------------ -----------
Noncurrent............. 2,398,000 (2,998,000) (600,000) 1,318,000 (3,502,000) (2,184,000)
---------- ------------ ------------ ---------- ------------ -----------
Total..................$7,146,000 $(3,464,200) $3,681,800 $6,302,000 $ (3,902,200) $ 2,392,800
========== ============ ============ ========== ============= =========== ========== ==
</TABLE>
<PAGE>
10. LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under operating leases are as
follows:
RENTAL PAYMENTS
------------------------ SUBLEASING
MINIMUM CONTINGENT RENTALS
----------- ------------ ------------
1991........................... $40,735,700 $ 403,000 $17,326,800
1992........................... 36,778,100 363,400 18,590,300
1993........................... 36,675,800 398,800 18,985,200
Contingent rentals may be paid under certain store leases on the basis of the
store's sales in excess of stipulated amounts.
Future minimum rental payments under long-term leases are as follows at
January 1, 1994:
OPERATING CAPITALIZED
LEASES LEASES
------------ ---------
1994......................................... $ 35,161,300 $ 566,100
1995......................................... 33,253,900 566,100
1996......................................... 29,355,800 460,300
1997......................................... 25,424,900 160,300
1998......................................... 23,748,400 84,300
Thereafter................................... 224,569,100 282,200
------------ ---------
Total........................................ $371,513,400 2,119,300
Amount representing interest...................................400,300
---------
Present value of net minimum lease payments................. 1,719,000
Current portion.............................................. 408,200
---------
Long-term portion......................................... $1,310,800
==========
Total minimum rentals to be received in the future under non-cancelable
subleases as of January 1, 1994 are approximately $275,335,000.
The company has guaranteed customer bank loans and customer leases amounting to
$4,600,100 and $1,170,300, respectively, at January 1, 1994.
11. EARNINGS PER SHARE
Earnings per share are not presented because they are not deemed to be
meaningful. See Notes 3 and 7 relating to patronage dividends and common stock
repurchase requirements.
<PAGE>
Board of Directors
John R. Dickson
CHAIRMAN AND CEO
Gerald F. Lestina
PRESIDENT AND COO
Robert D. Ranus
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Robert A. Farrell
ULTRA MART, INC.
MENOMONEE FALLS, WI
Gary N. Gundlach
PICK 'N SAVE - STOUGHTON
STOUGHTON, WI
George E. Prescott
PRESCOTT'S SUPERMARKETS, INC
WEST BEND, WI
George C. Kaiser
MILWAUKEE, WI
Brenton H. Rupple
MILWAUKEE, WI
Robert R. Spitzer
PRESIDENT EMERITUS
MILWAUKEE SCHOOL OF ENGINEERING
MILWAUKEE, WI
Elected Corporate Officers
John R. Dickson
CHAIRMAN AND CEO
Gerald F. Lestina
PRESIDENT AND COO
Robert D. Ranus
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
David C. Busch
VICE PRESIDENT
OF ADMINISTRATION
Edward G. Kitz
VICE PRESIDENT AND
TREASURER
Michael J. Schmitt
VICE PRESIDENT,
NORTHERN REGION
Robert G. Turcott
VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL
<PAGE>
Advisory Committee
Lloyd Coppersmith
RON & LLOYD'S
409 WOLF RIVER PLAZA
NEW LONDON, WI 54961
Sam Gilberto, Sr.
SAM'S SHOP-RITES
91 W22950 MILWAUKEE AVE.
BIG BEND, WI 53103
Bob Gold
PICK 'N SAVE - BROWN DEER
9200 NORTH GREEN BAY ROAD
BROWN DEER, WI 53209
Russ Rindt
RINDT ENTERPRISES
1317 NORTH 25TH STREET
SHEBOYGAN, WI 53081
Dave Ruehlman
THE GRAND FOOD CENTER
606 GREEN BAY ROAD
WINNETKA, IL 60093
Dave Spiegelhoff
PICK 'N SAVE - BURLINGTON
1120 MILWAUKEE AVENUE
BURLINGTON, WI 53105
Mark Stinebrink
PICK 'N SAVE - LAKE GENEVA
100 EAST GENEVA SQUARE
LAKE GENEVA, WI 53147
John Stone
PICK 'N SAVE - BARABOO
615 HIGHWAY 136
WEST BARABOO, WI 53913
Rick Walker
PICK 'N SAVE - EAU CLAIRE
2717 BIRCH STREET
P.O. BOX 1508
EAU CLAIRE, WI 54703
Trustees
Gerald F. Lestina
PRESIDENT AND COO
Robert G. Turcott
VICE PRESIDENT, SECRETARY AND
GENERAL COUNSEL
Charles R. Bonson
BONSON'S FINE FOODS
EAGLE RIVER, WI
<PAGE>
John A. McAdams
PICK 'N SAVE - OCONOMOWOC
OCONOMOWOC, WI
Duane G. Tate
PICK 'N SAVE - FRANKLIN
FRANKLIN, WI
Charles E. Stenicka
PRESIDENT, MRA
THE MANAGEMENT ASSOCIATION, INC.
BROOKFIELD, WI
<PAGE>
DIVISIONAL MAP
1. Corporate Office - Roundy's, Inc.
23000 Roundy Drive, Pewaukee, WI 53072
2. Milwaukee Division
11300 W. Burleigh Street, Wauwatosa, WI 53222
3. Roundy's General Merchandise Division
410 Walter Road, Mazomanie, WI 53560
4. Eldorado Division
Route 45 South, Eldorado, IL 62930
5. Evansville Perishable Division
4501 Peters Road, Evansville, IN 47711
6. The Midland Grocery Company
6500 South U.S. 421, Westville, IN 46391
7. South Bend Perishable Division
2107 Western Avenue, South Bend, IN 46619
8. Midland Grocery of Michigan, Inc.
1764 Creston Street, Muskegon, MI 49443
9. Spring Lake Merchandise, Inc.
1200 N. Washington, Van Wert, OH 45891
10.Lima Division
1100 Prosperity Road, Lima, OH 45802
11.Cardinal Foods, Inc.
4700 Fisher Road, Columbus, OH 43228
12.The Midland Grocery Company
1300 Grand Central Avenue, Parkersburg, WV 26101
Roundy's, Inc.
23000 Roundy Drive
Pewaukee, Wisconsin 53072
(414) 547-7999
<PAGE>
ROUNDY'S, INC. EXHIBIT 21
Subsidiaries
Roundy's, Inc. has fourteen wholly-owned first-tier subsidiaries, each a
Wisconsin corporation (except as otherwise noted) doing business under
their corporate names. These subsidiaries are:
Badger Assurance, Ltd.(1) Midland Grocery of Michigan, Inc.(6)
CD of Wisconsin, Inc. Old Time, Inc.
Holt Public Storage, Inc. Ropak, Inc.
I.T.A., Inc. R.P.D. of Wisconsin, Inc.
Jondex Corp. Scot Lad Foods, Inc.
Kee Trans, Inc. Super Marketing Productions, Inc.
Kee Wholesale, Inc. WFC Foods, Inc.(2)
Five Wisconsin corporations doing business under their corporate names
are wholly-owned subsidiaries of Ropak, Inc. These corporations are:
Adams Wine & Liquor, Ltd. Shop-Rite, Inc.
Insurance Planners, Inc. Villard Avenue Shop-Rite, Inc.
Pick 'n Save Warehouse Foods, Inc.
Four corporations doing business under their corporate names are wholly-
owned subsidiaries of Midland Grocery of Michigan, Inc. These
corporations are:
Pick 'n Save-Ludington, Inc.(6) PNS #4, Inc.(6)
PNS Cadillac, Inc.(6) PNS St. John's, Inc.(6)
Four corporations doing business under their corporate names are wholly-
owned subsidiaries of Scot Lad Foods, Inc. These corporations are:
Bonnie Baking Co., Inc.(3) Cardinal Foods, Inc.(5)
Spring Lake Merchandise, Inc.(4) Scot Lad-Lima, Inc.(4)
Four corporations doing business under their corporate names are wholly-
owned subsidiaries of Cardinal Foods, Inc. These corporations are:
Columbus Leasing Group, Inc.(4) Mr. Moneysworth, Inc.(4)
Englewood Cardinal Supermarket, PNS Van Wert, Inc.(4)
Inc.(4)
One corporation doing business under its corporate name is a wholly-
owned subsidiary of Mr. Moneysworth, Inc. The corporation is:
The Midland Grocery Company(4)
_____________
(1) A Bermuda corporation. (4) A Ohio corporation.
(2) An Illinois corporation. (5) A Delaware corporation.
(3) An Indiana corporation. (6) A Michigan corporation.
<PAGE>
