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 December 28, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission file number: 33-57505
--------
Roundy's, Inc.
- ---------------------------------------------------------------------
(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
- ---------------------------------------------------------------------
(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 December 28, 1996, 13,000 shares of Class A (voting)
Common Stock and 1,112,824 shares of Class B (non-voting)
Common Stock were outstanding. All of the outstanding
shares of Class A Common Stock on December 28, 1996 were
held of record by the Roundy's, Inc. Voting Trust which may
be deemed an affiliate of the registrant. There is no
established public trading market for either class of such
stock.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Form 10-K Reference
--------- -------------------
Annual Report to Stockholders Part II, Items 6, 7, 8
for the year ended December 28, 1996
PART I
The discussions in the Company's 1996 Annual Report to
stockholders incorporated herein by reference contain
forward-looking statements. Terms such as "anticipate,"
"believe," "estimate," "expect," "indicate," "may be,"
"objective," "plan," "predict," "should," and "will" are
intended to identify such statements. Forward-looking
statements are subject to certain risks, uncertainties and
assumptions which could cause actual results to differ
materially from those predicted. See "Cautionary Factors"
at the end of Item 1, below.
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, Kentucky, Missouri, Arkansas,
Pennsylvania, Tennessee and West Virginia. The Company also
owns and operates 13 retail warehouse food stores under the
name "Pick 'n Save" or "Park & Save," three limited
assortment food stores under the name "Mor For Less" and 11
conventional food stores under the name "Cardinal Foods,"
"Village Market," "Park & Shop," "Price Less" or "Buy Low
Foods." The Company offers its retail customers a complete
line of nationally-known name brand merchandise, as well as
a number of its own private and controlled labels. The
Company services 890 retail grocery 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 has historically operated its food wholesale
business on a cooperative basis, and therefore determined
its Federal income tax liabilities under Subchapter T of the
Internal Revenue Code, which governs the taxation of
corporations operating on a cooperative basis.
Substantially all of Roundy's outstanding Class A (Voting)
Common Stock is owned by the owners ("stockholder-
customers") of 130 retail grocery stores serviced by
Roundy's. These stockholder-customers, who own
approximately 70% of the combined total of Class A Common
and Class B Common, may receive patronage dividends from
Roundy's based on the sales of Roundy's to such stockholder-
customers. The patronage dividend is payable at least 20%
in cash and the remainder in Class B Common. Patronage
dividends for the years ended December 28, 1996 and December
30, 1995 were payable 30% in cash and 70% in Class B Common.
There were no patronage dividends paid for the year ended
December 31, 1994 because the Company did not meet the
requirement imposed under its By-Laws which provides that
the book value per share of its common stock must increase
by 10% before any patronage dividends may be paid. Under
Subchapter T of the Internal Revenue Code, patronage
dividends are deducted by Roundy's in determining taxable
income, and are generally taxable to the stockholder-
customers (including the value of the Class B Common), for
Federal income tax purposes.
Roundy's anticipates that in the future it will continue to
operate on a cooperative basis in substantially this manner,
although it is not required to do so and its operation on
this basis, as well as its practice of paying patronage
dividends, could be terminated at any time by action of the
Board of Directors.
The applicable laws, regulations, rulings and judicial
decisions affecting the determination of whether a
corporation is operating on a cooperative basis for Federal
income tax purposes under Subchapter T of the Internal
Revenue Code are subject to interpretation. Although
management believes that Roundy's qualifies as a cooperative
for such purposes, Roundy's has not obtained, and does not
intend to seek a ruling or other assurance from the IRS that
this is the case. 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
reflected as tax deductions by Roundy's. Roundy's
thereafter might incur significantly increased consolidated
Federal income tax liabilities in future tax years.
The subsidiaries of Roundy's do not operate as cooperatives.
The customers serviced by these subsidiaries are independent
grocers, operating 760 retail stores. They do not receive
patronage dividends. In addition, approximately 30% of the
outstanding combined Class A Common and Class B Common Stock
is held by employees or former customers of Roundy's and,
although they participate in the accumulation of equity in
the Company, they do not receive patronage dividends and do
not own any Class A Common.
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 nonfood products. 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 1996.
The Company sells brand name merchandise of unrelated
manufacturers, including most nationally advertised brands.
In addition, the Company sells numerous products under
private and controlled labels, including but not limited to
"Roundy's," "Old Time," "Shurfine" and "Buyers' Choice."
Private label product sales for the Company accounted for
$175,459,000, $166,045,000 and $153,699,000 of the Company's
sales during the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994, respectively.
As described above, Roundy's, exclusive of its subsidiaries,
has historically operated on a cooperative basis with
respect to its wholesale food distribution business.
Roundy's cooperative operations accounted for approximately
37% of the Company's consolidated net sales and service fees
for each of fiscal 1996, 1995 and 1994. At December 28,
1996, Roundy's had 70 stockholder-customers actively engaged
in the retail grocery business, operating a total of 130
retail grocery stores. Roundy's cooperative wholesale food
business is focused primarily in Wisconsin, where all but 6
of the 130 retail grocery stores are located (6 are in
Illinois). At December 28, 1996 the Company (including its
subsidiaries) had 760 independent retail food store
customers. Sales by the Company to the independent retail
food stores accounted for 52%, 54% and 54% of the Company's
consolidated net sales and service fees for fiscal 1996,
1995 and 1994, respectively.
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 130 retail grocery stores operated by its
stockholder-customers, 760 retail stores operated by non-
stockholders and 27 Company-owned and operated retail stores
during fiscal 1996. Of the Company's consolidated net sales
and service fees for this period, $582,278,000 or 22.6% were
attributable to five customers, with one customer accounting
for $242,679,000 or 9.4% of such sales. Approximately 80%
or 733 retail stores purchased less than $3,000,000 each
from the Company in fiscal 1996. 116 customers owned more
than one retail food store, with one customer owning 14
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 services, ordering
assistance, point-of-sale host-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 December 28, 1996 are as follows:
Outstanding
Number Balance Range of Range of
of Original as of Interest Maturity
Loans Amount Dec. 28,1996 Rates Dates
------- ---------- ------------ ---------- ---------
Inventory,
Equipment
Loans 145 $38,263,000 $28,152,500 Variable(1) 1997-2011
________________
(1) Variable rates based on the Company's cost of borrowing.
The Company has guaranteed customer bank loans and customer
leases amounting to $645,700 and $983,500, respectively at
December 28, 1996.
The Company has a lease program under which it may in its
discretion lease store sites and equipment for sublease to
qualified customers. This enables customers to compete with
large grocery store chains for store sites at favorable
rates. The Company presently has such real estate and
equipment leases with lease terms from 1997 to 2018.
Aggregate lease rentals received under this program were
$21,628,300, $22,045,500 and $22,329,500 in fiscal 1996,
1995 and 1994, respectively.
Marketing and Distribution of Products
The Company generally distributes its various product lines
by a fleet of 280 tractor cabs and 670 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 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. The majority of accounts
are collected via the Automated Clearing House ("ACH")
system. 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 .38% of sales. In 1996, 1995 and
1994, the Company's bad debt expense was $5,302,600,
$5,871,500 and $9,166,600, 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 or $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 stores and conventional retail
stores). The high volume-limited service warehouse stores
are designated as "Pick 'n Save" or "Park & Save" which
generally offer, at discount prices, complete food and
general merchandise lines to the customer, emphasizing
higher demand items, with stores ranging from 33,000 to
73,000 square feet per store. The high value-limited
assortment retail stores are designated as "Mor For Less"
which emphasize low cost, high value lines to the customer,
with stores ranging from 12,800 to 24,000 square feet per
store. Conventional retail stores operated under the name
"Cardinal Foods," "Village Market," "Park & Shop," "Price
Less" or "Buy Low Foods" generally emphasize full service to
the customer at competitive prices. These stores range from
9,000 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:
Type of Store 1996 1995 1994
------------- ---- ---- ----
High Value-Limited Assort-
ment and High Volume-Limited
Service Stores (Warehouse
food stores)..................... 16 15 11
Conventional Retail Stores....... 11 7 4
Sales of Company-operated stores during the three most
recent fiscal years were $275,761,000, $226,513,000 and
$231,364,000 for fiscal 1996, 1995 and 1994, 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 December 28, 1996, the Company had employed full-time
1,144 executive, administrative and clerical employees,
1,324 warehouse and processing employees and drivers and 813
retail employees and had employed 2,200 part-time employees.
Substantially all of the Company's warehouse employees,
drivers and retail employees are represented by unions, with
contracts expiring in 1997 through 2001. The Company
considers its employee relations to be normal. There have
been no 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
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. The Company's customers and the Company's
corporate stores also compete at the retail level 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 to compete with larger grocery store chains.
In the Milwaukee area, the "Pick 'n Save" group, which
consists of both independently-owned and Company-owned
stores, continues to be the market share leader with 50% of
households in the Milwaukee metropolitan statistical area
purchasing "most of their groceries" from "Pick 'n Save" as
reported in the Milwaukee Journal Consumer Analysis Survey
taken in the Fall of 1996.
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.
CAUTIONARY FACTORS
This report and other documents or oral statements which
have been and will be prepared or made in the future contain
or may contain forward-looking statements by or on behalf of
the Company. Such statements are based on management's
expectations at the time they are made. In addition to the
assumptions and other factors referred to specifically in
connection with such statements, the following factors,
among others, could cause actual results to differ
materially from those contemplated. These factors are in
addition to any other cautionary statements, written or
oral, which may be made or referred to in connection with
any such forward-looking statement.
Factors that could cause actual results to differ materially
from those contemplated include:
Wholesale Business Risks - The Company's sales and earnings
at wholesale are dependent on the Company's ability to
retain existing customers and attract new customers, as well
as its ability to control costs. Certain factors could
adversely impact the Company's results, including: decline
of its independent retailer customer base due to competition
and other factors; loss of corporate retail sales due to
increased competition and other risks detailed more fully below;
consolidations of retailers or competitors; increased self-
distribution by chain retailers; increase in operating
costs; the possibility that the Company will incur
additional costs and expenses due to further rationalization
or consolidation of distribution centers; entry of new or
non-traditional distribution systems into the industry.
Retail Business Risks - The Company's retail segment faces
risks which may prevent the Company from maintaining or
increasing retail sales and earnings including: competition
from other retail chains, supercenters, non-traditional
competitors, and emerging alternative formats; operating
risks of certain strategically important retail operations;
and adverse impact from the entry of other retail chains,
supercenters and non-traditional or emerging competitors
into markets where the Company has a retail concentration.
Litigation - While the Company believes that it is currently
not subject to any material litigation, the costs and other
effects of legal and administrative cases and proceedings
and settlements are impossible to predict with certainty.
The current environment for litigation involving food
wholesalers may increase the risk of litigation being
commenced against the Company. The Company would incur the
costs of defending any such litigation whether or not any
claim had merit.
THE FOREGOING SHOULD NOT BE CONSTRUED AS EXHAUSTIVE AND THE
COMPANY DISCLAIMS ANY OBLIGATION SUBSEQUENTLY TO REVISE ANY
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS OR TO
REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED
EVENTS.
ITEM 2. Properties.
The Company's principal executive offices are located in
Pewaukee, Wisconsin. These offices are on a 5-acre site. A
portion of these facilities are owned by Roundy's and the
remainder are leased from a third party.
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 (O)
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
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 believes its current properties are well
maintained and, in general, are adequately sized to house
existing operations. 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.
Transportation
The Company's transportation fleet for distribution
operations as of December 28, 1996 consisted of 280 tractor
cabs, 670 trailers and 10 straight delivery trucks. In
addition, the Company owns 45 automobiles. Approximately
93% 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.
The Company 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 fiscal 1996.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The transfer of shares of Roundy's Class A Common and
Roundy's Class B Common is substantially restricted and
there is no established public trading market for Roundy's
stock. As of December 28, 1996, all of the outstanding
shares of Roundy's Class A (voting) Common Stock were held
of record by the Roundy's, Inc. Voting Trust. Further
information on the Voting Trust is found in Item 12 of this
report. There is also no established public trading market
for Roundy's Voting Trust Certificates and there were 70
holders of such Certificates on December 28, 1996. On
December 28, 1996 an aggregate of 214 persons held shares of
Roundy's Class B Common Stock and/or Voting Trust
Certificates. 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 December 28, 1996
(the "Annual Report") under the caption "Selected Financial
Data."
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation.
The information required by this Item is incorporated by
reference from the Annual Report under the caption
"Financial and Operational Review."
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 and Executive Officers 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
- --------------------- ---- -------------------------------
Gerald F. Lestina 54 President and Chief Executive Officer
since 1995; President and Chief Operating
Officer 1993-1995; Vice President of
Wisconsin Region 1992-1993; President of
Milwaukee Division 1986-1993; Director
since 1991 (term expires 1999)
Roger W. Alswager 48 Vice President of Real Estate since 1989
Londell J. Behm 46 Vice President of Advertising since 1987
Ralph D. Beketic 50 Vice President-Wholesale since 1996;
Vice President-Wisconsin Region 1996;
President of Milwaukee Division since
1993; Vice President of Sales-Milwaukee
Division 1991-1993
David C. Busch 48 Vice President of Administration since
1993; Vice President of Human Resources
1990-1993
Edward G. Kitz 43 Vice President, Secretary & Treasurer
since 1995; Vice President & Treasurer
since 1989
Charles H. 54 Vice President of Logistics and Planning
Kosmaler, Jr. since 1993; Vice President of Adminis-
trative Efficiencies 1992-1993
Debra A. Lawson 41 Vice President of Human Resources since
1997; Vice President Administration-
Milwaukee Division 1994-1996; Director of
Consumer Affairs, Training and Development
1991-1993
John E. Paterson 49 Vice President-Distribution since 1997;
Vice President of Operations-Milwaukee
Division 1993-1996; Vice President of
Distribution for Quincy, Florida Division
of Super Value Stores, Inc. 1991-1993
Robert D. Ranus 56 Vice President and Chief Financial Officer
since 1987; Director since 1987 (term
expires 1997)
Michael J. Schmitt 48 Vice President-Sales and Development since
1995; Vice President, Northern Region
1992-1995
Marion H. Sullivan 50 Vice President of Marketing since 1989
Robert E. Bartels 59 Director since 1994 (term expires 1997);
President and Chief Executive Officer of
Martin's Super Markets, Inc., South Bend,
Indiana
Charles R. Bonson 50 Director since 1994 (term expires 1997);
President of Bonson's Foods, Inc., Eagle
River, Wisconsin
Lloyd E. Coppersmith 56 Director since 1995 (term expires 1998);
President of Ron & Lloyd's, Inc., New
London, Wisconsin
Gary N. Gundlach 53 Director since 1990 (term expires 1999);
Owner of Pick 'n Save retail grocery
stores in Columbus, DeForest, McFarland,
Stoughton and Sun Prairie, Wisconsin
George C. Kaiser 64 Director since 1986 (term expires 1998);
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
Henry Karbiner, Jr. 56 Director since 1995 (term expires 1998);
President and Chief Operating Officer, Tri
City National Bank; Vice President and
Chief Financial Officer and Director, Tri
City Bankshares Corporation, Oak Creek,
Wisconsin
Patrick D. McAdams 47 Director since 1995 (term expires 1998);
General Manager and Treasurer of McAdams,
Inc., Oconomowoc, Wisconsin
Brenton H. Rupple 72 Director since 1993 (term expires 1999);
Retired Chairman of Robert W. Baird & Co.,
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 ten current members of the Board of Directors, two are
currently Executive Officers of Roundy's (Messrs. Lestina and Ranus) and
four are "Retailer Directors" (Messrs. Bonson, Coppersmith, Gundlach and
McAdams). 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; however, the Roundy's, Inc. Voting
Trust provides that in every third year, Voting Trust Certificate
Holders will choose two Retailer Directors. Therefore, at any time
there should be four Retailer Directors serving.
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
Annual Compensation Long-Term
Other Compensation
Annual Securities All Other
Name and Compen- Underlying Compen-
Principal sation (A)Options sation
Position Year Salary Bonus (1)(2) (B)SARs (3)
- ------------------- ----- -------- ------ --------- ------------ --------
(A) (B)
----- -----
Gerald F. Lestina 1996 $338,000 $95,316 - - - $8,645
President and Chief 1995 304,231 93,600 - 6,000 - 8,138
Executive Officer 1994 235,000 - $10,148 - - 7,697
Robert D. Ranus 1996 213,000 60,066 - - - 9,812
Vice President and 1995 207,000 59,616 - - - 9,659
Chief Financial 1994 200,000 - 14,668 - - 9,604
Officer
Marion H. Sullivan 1996 146,000 41,172 - - - 7,211
Vice President of 1995 135,846 40,320 - - 500 7,105
Marketing 1994 125,000 15,625 7,298 - - 7,181
Michael J. Schmitt 1996 138,174 39,010 - - - 7,093
Vice President of 1995 125,846 37,440 - - - 7,068
Sales & Development 1994 115,000 - 7,049 - - 7,114
Ralph D. Beketic 1996 137,096 38,775 - - - 1,937
Vice President- 1995 120,000 35,280 - 1,500 500 1,797
Wholesale 1994 110,000 38,750 - - - 1,879
(1) Shown in this column are amounts reimbursed during the
fiscal year for the payment of income taxes for Messrs.
Lestina, Ranus, Sullivan and Schmitt.
(2) Pursuant to applicable SEC regulations, perquisites and
other personal benefits are omitted because they did
not exceed the lesser of either $50,000 or 10% of the
total of salary and bonus.
(3) The amounts shown in this column for 1996, 1995, and
1994, respectively, were derived from the following
figures. Term life insurance premiums paid by Roundy's
and Roundy's contributions to the 401(k) plan,
respectively, for the named executive officers are
shown below. For 1996 - Mr. Lestina: $6,270 and
$2,375. Mr. Ranus: $7,732 and $2,080. Mr. Sullivan:
$5,851 and $1,360. Mr. Schmitt: $5,911 and $1,182.
Mr. Beketic: $666 and $1,271. For 1995 - Mr. Lestina:
$5,828 and $2,310. Mr. Ranus: $7,589 and $2,070. Mr.
Sullivan: $5,747 and $1,358. Mr. Schmitt: $5,810 and
$1,258. Mr. Beketic: $597 and $1,200. For 1994 - Mr.
Lestina: $5,518 and $2,179. Mr. Ranus: $7,425 and
$2,179. Mr. Sullivan: $5,667 and $1,514. Mr. Schmitt:
$5,721 and $1,393. Mr. Beketic: $546 and $1,333.
The executive officers of Roundy's are each covered by
$250,000 of executive equity life insurance. In addition,
executives 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. 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 $2,000,000. There were no employee guarantees
outstanding as of December 28, 1996.
The Company has Deferred Compensation Agreements with
certain executive officers, including Messrs. 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.
The Company established a Deferred Compensation Plan,
applicable to the Officers who have been elected by the
Board of Directors, ("Elected Officers"), to assist the
Elected Officers in deferring income until their retirement,
death, or other termination of employment. The Plan
participants may make deferral commitments that are not less
than $10,000 over a period of not more than 7 years and not
less than $2,000 in any one year. The aggregate annual
deferral may not exceed $100,000 per calendar year for all
participants combined unless the Company's Board of Director
approves an amount in excess of that limit. For 1996, the
Board of Directors approved an annual deferral of $108,000.
Monthly interest is credited to each participant's account
based on the Moody's Long Term Bond Rate in effect on
January 1 of each year plus 2%. The Company established a
Trust to hold assets to be used to pay benefits under the
Plan, however, the rights of any participant, beneficiary or
estate to benefits under the Plan are solely those of an
unsecured creditor of the Company. Upon death of a
participant prior to termination of employment and before
any periodic payments have started, the Company will pay to
the participant's Designated Beneficiary a pre-retirement
death benefit equal to five times the total aggregate
deferral commitment of the participant payable in equal
annual installments over a ten-year period. The Company has
purchased life insurance policies on the lives of the
participants to fund its liabilities under the Plan.
Roundy's has a severance and non-competition agreement with
Gerald F. Lestina. This agreement continues in effect until
October 10, 2007. Upon Roundy's termination of Mr.
Lestina's employment (other than for "good cause" as defined
in the agreement), or Mr. Lestina's termination of his
employment (for "good reason" as defined in the agreement),
Roundy's will pay Mr. Lestina pro rata over the non-compete
period, an "applicable benefit." The "applicable benefit"
shall mean the "monthly benefit amount" times the greater of
(A) the number of months remaining between the termination
date and June 1, 1998, and (B) twelve (12). The "monthly
benefit amount" means the sum of: (i) 1/12 of the amount
of Mr. Lestina's current salary; (ii) 1/12 of the amount of
Mr. Lestina's bonus paid or payable; and the fair value of
any health and/or life insurance benefits, on a monthly basis,
to which Mr. Lestina is entitled. If Mr. Lestina ceases to
be employed by Roundy's (including by reason of his death)
at any time after attaining age 55 and while he is then an
officer and a director of Roundy's (unless employment is
terminated for "good cause"), Roundy's will provide coverage
for Mr. Lestina and his spouse under the employee health,
medical and life insurance plans maintained by Roundy's for
its executive personnel, until, in addition to other parameters,
Mr. Lestina attains age 65. For a period of one year following
the termination of employment of Mr. Lestina, which occurs
under circumstances giving rise to Roundy's obligation to pay
the severance benefit under this agreement, Mr. Lestina agrees
not to compete with Roundy's in the states of Wisconsin,
Michigan, Illinois, Indiana and Ohio, plus to the extent not
included in those states, the area encompassed within a
radius of 400 miles of any warehouse or distribution
facility operated by Roundy's, or any affiliate of Roundy's,
as of the termination date.
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
Compen-sation 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 a
vesting schedule 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 table provides information on the Named
Executive Officers' option and SAR exercises in 1996 and the
value of unexercised options at December 28, 1996.
Aggregated Option/SAR Exercises in 1996
and 1996 Year-End Option Values
Number of
Unexercised
Shares (A)Options Value ($) of
Acquired (B)SARs Unexercised In-The-
on Exercise at 12/28/96 Money (A)Options
(A)Options Value($) Exercisable/ (B)SARs at 12/28/96
Name (B)SARs Realized Unexercisable Exercisable/Unexercisable
- ------------------ ---------- -------- ------------- -------------------------
Gerald F. Lestina (A) - - 15,500/2,000 $479,278/$33,797
(B) - - - -
Robert D. Ranus (A) - - 10,500/ - 382,475/ -
(B) - - - -
Marion H. Sullivan (A) - - 1,000/500 39,505/19,470
(B) - - 1,583/917 52,433/29,592
Michael J. Schmitt (A) - - 2,000/1,500 68,705/48,670
(B) - - 1,000/500 39,505/19,470
Ralph D. Beketic (A) - - 1,300/700 27,566/15,559
(B) - - 1,133/867 30,893/24,532
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 December 28, 1996, 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
$100,000 $30,000 $40,000 $50,000 $55,000 $60,000
125,000 37,500 50,000 62,500 68,800 75,000
150,000 43,700 58,200 72,800 80,100 87,300
175,000 45,300 60,400 75,500 83,100 90,700
200,000 50,500 67,700 85,000 94,300 103,000
225,000 55,600 75,100 94,500 105,600 115,300
250,000 60,700 82,300 103,900 116,600 120,000
300,000 61,600 83,500 105,500 118,500 120,000
400,000 61,600 83,500 105,500 119,100 120,000
450,000 61,600 83,500 105,500 120,000 120,000
500,000 61,600 83,500 115,100 120,000 120,000
All of the Named Executive Officers are covered by the
Roundy's, Inc. Retirement Plan. Their average annual
compensation would be the combined amount listed under
Salary and Bonus shown in the Summary Compensation Table.
The estimated credited years of service for each of the
Named Executive Officers is as follows: Mr. Lestina: 27
years, Mr. Ranus: 10 years, Mr. Sullivan: 9 years, Mr.
Schmitt: 19 years, and Mr. Beketic: 6 years.
Directors who are employees of Roundy's receive no fees for
serving as Directors. Customer-directors each received $500
per meeting during 1996; outside Directors each received
$12,500, prorated on an annual basis, plus $500 per Board of
Directors meeting plus $250 per committee meeting not held
the same day as a Board of Directors meeting for their
services during 1996.
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, $1.25 par value, and
2,400,000 shares of Class B Common, $1.25 par value. On
December 28, 1996, 13,000 shares of Class A Common and
1,112,824 shares of Class B Common were outstanding.
Roundy's has a Voting Trust (the "Trust") which was
established in August, 1971 (was amended and restated in
1983 and was further amended in 1986 and 1995), as the
successor to an initial voting trust created at the time of
the organization of Roundy's. The Trust has an indefinite
term, although it may be terminated upon the vote of the
Voting Trust Certificate Holders as provided therein. 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 December 28, 1996, all of the outstanding shares of
Roundy's Class A Common held by current stockholder-
customers were on deposit in the 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 four of the Directors (there are
currently ten Directors). On other matters submitted to a
vote of stockholders (including the election of one Director
each year), the Trustees are required to vote the shares
deposited in the Trust as a block as directed by a vote of
the holders of outstanding Voting Trust Certificates (with
each share of Class A Common in the Trust entitling the
depositor thereof to one vote).
The Trustees of the Trust currently are Robert S. Gold,
Edward G. Kitz, Gerald F. Lestina, Gary R. Sarner, Robert R.
Spitzer and David A. Ulrich. Mr. Lestina is President and
Chief Executive Officer of Roundy's, Inc., and is a member
of Roundy's Board of Directors. Mr. Kitz is Vice President,
Secretary and Treasurer of Roundy's, Inc. Mr. Gold is
President and Stockholder of B. & H. Gold Corporation, a
stockholder-customer of Roundy's. Mr. Sarner is President
and Chief Operating Officer of Christiana Companies, Inc.
and President and Chief Executive Officer of its subsidiary,
Total Logistic Control, Inc. (see Item 13.). Mr. Ulrich is
President and Stockholder of Mega Marts, 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. There is currently one trustee position
vacant.
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 102,930
shares (or 9.25%) of the Roundy's Class B Common outstanding
on December 28, 1996. 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
68,051 shares (or 6.12%) of the Roundy's Class B Common
outstanding on December 28, 1996. Voting and investment
power over the shares owned by McAdams, Inc. is solely held
by its owner, John A. McAdams. Mega Marts, Inc. (6312 South
27th Street, Oak Creek, Wisconsin 53154) is owner of 1,400
shares (or 10.77%) of the Roundy's Class A Common and 90,365
shares (or 8.12%) of the Roundy's Class B Common outstanding
on December 28, 1996. Voting and investment power over the
shares owned by Mega Marts, Inc. is solely held by its
owner, David A. Ulrich. Ultra Mart, Inc. (W173 N9170 St.
Francis Drive, Menomonee Falls, Wisconsin 53051) is owner of
700 shares (or 5.38%) of the Roundy's Class A Common
outstanding on December 28, 1996. Voting and investment
power over the shares owned by Ultra Mart, Inc. is solely
held by its owner, Robert A. Farrell. Except as set
forth above or in the table below, no other 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 Mega Marts, Inc.
and Ultra Mart, 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 December
28, 1996, 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 Gerald F. Lestina 18,606 shares (2) 1.65%
Class B Common Robert D. Ranus 14,875 shares (3) 1.32
Class B Common George C. Kaiser 3,500 shares (4) 0.31
Class B Common Robert E. Bartels 4,749 shares (5) 0.43
Class B Common Brenton H. Rupple 300 shares 0.03
Class A Common Lloyd E. Coppersmith 500 shares (6) 3.85
Class B Common Lloyd E. Coppersmith 16,336 shares (6) 1.47
Class A Common Gary N. Gundlach 500 shares (7) 3.85
Class B Common Gary N. Gundlach 19,722 shares (7) 1.77
Class A Common Charles R. Bonson 100 shares (8) 0.77
Class B Common Charles R. Bonson 19,196 shares (8) 1.72
Class A Common Patrick D. McAdams 600 shares (9) 4.62
Class B Common Patrick D. McAdams 68,051 shares (9) 6.12
Class A Common All Directors and
Officers as a Group
(4 persons, including
the above) 1,700 shares 13.08
Class B Common All Directors and
Officers as a Group
(19 persons, including
the above) 179,535 shares (10) 15.65
(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 options for 15,500 shares that are currently
exercisable but does not include options for an
additional 2,000 shares that have been granted.
(3) Includes options for 10,500 shares that are currently
exercisable.
(4) Includes 1,500 shares owned by First Wisconsin Trust
Company as Trustee of George Kaiser Profit Sharing
Plan.
(5) Includes 3,949 shares owned by Martin's Super Markets,
Inc., of which Mr. Bartels is President and
shareholder.
(6) Relates to shares owned by Ron & Lloyd's, Inc. of which
Mr. Coppersmith is the President and shareholder.
(7) Relates to shares owned by Gary N. Gundlach, as sole
proprietor and of G.E.M., Inc. of which Mr. Gundlach is
principal shareholder.
(8) Relates to shares owned by Bonson's Foods, Inc. of
which Mr. Bonson is principal shareholder.
(9) Relates to shares owned by McAdams, Inc. of which Mr.
McAdams is General Manager and Treasurer.
(10) Includes options for 34,633 shares that are currently
exercisable but does not include options for an
additional 6,867 shares that have been granted.
ITEM 13. Certain Relationships and Related Transactions.
Messrs. Bartels, Bonson, Coppersmith, Gundlach and McAdams,
directors of Roundy's, and Messrs. Gold and Ulrich, Trustees of
the Voting Trust, each own and/or operate retail food stores
which purchase merchandise from the Company as a supplier in
the ordinary course of business. Retail food stores owned
by directors or Retailer Trustees purchase from the Company
on the same basis and conditions as all other stockholder-
customers of Roundy's. During the last three years, the
aggregate amount of purchases from the Company for each of
the foregoing were as follows:
1996 1995 1994
------------ ------------ ------------
Robert E. Bartels $ 96,608,000 $ 81,542,000 $ 77,898,000
Charles R. Bonson 7,616,000 7,094,000 6,644,000
Lloyd E. Coppersmith 22,819,000 21,499,000 20,808,000
Robert S. Gold 48,212,000 46,770,000 44,090,000
Gary N. Gundlach 45,680,000 39,253,000 31,960,000
Patrick D. McAdams 63,003,000 63,598,000 64,185,000
David A. Ulrich 242,679,000 219,310,000 196,627,000
Woodman's Food Market, Inc., owner of 9.25% of Roundy's
Class B Common Stock, had aggregate purchases from Roundy's
of $52,805,000, $58,484,000 and $53,981,000 for 1996, 1995
and 1994, respectively.
Ultra Mart, Inc., owner of 5.38% of Roundy's Class A Common
Stock had aggregate purchases from Roundy's of $90,722,000,
$81,399,000 and $79,497,000 for 1996, 1995 and 1994,
respectively.
Ron & Lloyd's, Inc. agreed to sublease land and buildings
from the Company for a period of 17 years at one store site,
for an aggregate annual rental of approximately $457,000.
Gary N. Gundlach has agreed to sublease land and buildings
from the Company for periods of 12 to 18 years at four store
sites, for an aggregate annual rental of approximately
$935,000.
McAdams, Inc. agreed to sublease land and buildings from the
Company for periods of five to 14 years at three store
sites, for an aggregate annual rental of approximately
$624,000.
Mega Marts, Inc. agreed to sublease land and buildings from
the Company for periods of three to 18 years at ten store
sites and one additional storage site, for an aggregate
annual rental of approximately $3,792,000.
B. & H. Gold Corporation, Gold's Market, Inc., and Gold's,
Inc. have agreed to sublease land and buildings from the
Company for periods of nine to 22 years at three store
sites, for an aggregate annual rental of approximately
$1,184,000.
Ultra Mart, Inc. agreed to sublease land and buildings from
the Company for a period of seven to 17 years at seven store
sites, for an aggregate annual rental of approximately
$2,345,000.
In January, 1993, Ultra Mart, Inc. issued promissory notes
to Roundy's, Inc. in the amount of $393,600. The amount
outstanding as of February 22, 1997 was $78,700.
The Company has made payments in fiscal 1996 aggregating
$1,357,900 for handling, order selecting and storage of
frozen food, meat and ice cream to Total Logistic Control,
Inc. of which Mr. Sarner is President and Chief Executive
Officer.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports
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 December 28, 1996, filed
as an exhibit hereto:
Independent Auditors' Report
Statements of Consolidated Earnings for each of the three years
in the period ended December 28, 1996
Consolidated Balance Sheets at December 28, 1996 and
December 30, 1995
Statements of Consolidated Stockholders' Equity for each of
the three years in the period ended December 28, 1996
Statements of Consolidated Cash Flows for each of the three
years in the period ended December 28, 1996
Notes to Financial Statements
(a)(2) Financial Statement Schedules as of December 28, 1996
Page
Independent Auditors' Report....................... 23
Schedule VIII - Valuation and qualifying accounts.. 24
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 Registrant, 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, Commission File No. 2-66296.
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,
Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
3.6 Amendment to By-Laws Relating to Number of Directors,
adopted April 12, 1995, incorporated herein by
reference to Exhibit 3.6 of Registrant's Registration
Statement on Form S-2 (File No. 33-57505), dated May 1, 1995.
4.1 Policy Relating to Redemption of Stock by Inactive
Customer Shareholders and Former Employees. FILED
HEREWITH (included as Exhibit D to the prospectus
which forms a part of the Registration Statement).
4.2 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, Commission File No. 2-66296.
4.3 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,
Commission File No. 2-66296.
4.4 Policy Regarding Issuance and Sales of Roundy's, Inc.
Stock, incorporated herein by reference to Exhibit
4.11 of Registrant's Registration Statement on Form S-2
(File No. 33-57505) filed with the Commission on
January 30, 1995 (included as Exhibit E to the
prospectus which forms a part of the Registration
Statement).
4.5 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, incorporated
herein by reference to Exhibit 4.14 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, filed with the Commission on March
31, 1994, Commission File No. 2-66296.
4.6 Form of Subscription Agreement, incorporated by
reference to Exhibit 4.14 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit A to the prospectus which forms
a part of the Registration Statement).
4.7 Form of Buying Deposit Agreement, incorporated by
reference to Exhibit 4.15 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit B to the prospectus which forms
a part of the Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year
Accounting and Patronage Rebates," as amended on
December 12, 1989, incorporated by reference to
Exhibit 4.16 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505) filed with the
Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the
Registration Statement).
4.9 First Amendment dated May 1, 1996 to Note Agreements
dated December 15, 1991 and Note Agreements dated
December 15, 1992 and Note Agreements dated December
22, 1993, incorporated herein by reference to Exhibit
4.16 of Registrant's Form 10-Q for the quarterly
period ended June 29, 1996, filed with the Commission
on August 13, 1996, Commission File No. 33-57505.
4.10 Note Agreement dated May 15, 1996 between Roundy's,
Inc. and The Ohio National Life Insurance, Phoenix
American Life Insurance Company, Provident Mutual
Life Insurance, Providentmutual Life and Annuity
Company of America, United of Omaha Life Insurance
Company, John Alden Life Insurance Company, Oxford
Life Insurance Company, The Security Mutual Life
Insurance Company of Lincoln, Nebraska and Woodman
Accident and Life Company, incorporated herein by
reference to Exhibit 4.17 of Registrant's Form 10-Q
for the quarterly period ended June 29, 1996, filed
with the Commission on August 13, 1996, Commission
File No. 33-57505.
4.11 Credit Agreement dated December 13, 1996, between
Roundy's, Inc. and PNC Bank, NA (as agent). FILED
HEREWITH.
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, Commission File No.
2-66296.
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.
9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(c) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated May 1, 1995.
9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(d) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26, 1996.
10.1 Deferred Compensation Agreement plan between the
Registrant and certain executive officers including
Messrs. Lestina, Ranus 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, Commission File No. 2-66296.
10.2 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,
Commission File No. 2-66296.
10.2(a) Declarations page for renewal through November 1,
1997 of Directors and Officers Liability and
Corporation Reimbursement Policy.
10.3 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, Commission File No. 2-
66296.
10.4 Severance and Non-Competition Agreement between the
Registrant and Gerald F. Lestina, incorporated herein
by reference to Exhibit 10.4 of Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995, filed with the Commission on March
28, 1996, Commission File No. 33-57505.
10.5 Roundy's, Inc. Deferred Compensation Plan, effective
March 19, 1996, incorporated herein by reference to
Exhibit 10.5 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26, 1996.
13. 1996 Annual Report to Stockholders of Roundy's, Inc.
21. Subsidiaries of Roundy's, Inc.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the
last quarter of 1996.
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 December 28, 1996
and December 30, 1995, and for each of the three years in
the period ended December 28, 1996, and have issued our
report thereon dated February 21, 1997; such financial
statements and reports are included in your 1996 Annual
Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement
schedule of Roundy's, Inc., listed in Item 14(a)(2). This
financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such
consolidated financial statement schedule, when considered
in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 21, 1997
SCHEDULE VIII
ROUNDY'S, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
______________________________________________________________________________
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
______________________________________________________________________________
ADDITIONS
Balance (1) (2)
at Charged Charged Balance
Beginning to Costs to Other at End
Description of Period & Expenses Accounts Deductions(A) of Period
YEAR ENDED December 28, 1996:
Allowance for Losses:
Current receivables $8,431,300 $4,367,600 $6,484,200 $6,314,700
Notes receivable,
long-term .......... 4,641,000 935,000 - 5,576,000
YEAR ENDED December 30, 1995:
Allowance for Losses:
Current receivables $11,000,400 $2,146,500 $4,715,600 $8,431,300
Notes receivable,
long-term .......... 916,000 3,725,000 - 4,641,000
YEAR ENDED December 31, 1994:
Allowance for Losses:
Current receivables $8,766,500 $9,166,600 $6,932,700 $11,000,400
Notes receivable,
long-term .......... 1,483,000 - 567,000 916,000
(A) Amounts in Column D represent accounts written off less recoveries.
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.
GERALD F. LESTINA ROBERT D. RANUS
- ----------------------------- ---------------------
By: Gerald F. Lestina By: Robert D. Ranus
(Principal Executive Officer) (Principal Financial
Officer and Principal
Accounting Officer)
Date: March 21, 1997
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:
GERALD F. LESTINA PATRICK D. MCADAMS
- ------------------------ ----------------------
Gerald F. Lestina Patrick D. McAdams
March 21, 1997 March 21, 1997
(Director) (Director)
GEORGE C. KAISER ROBERT D. RANUS
- ------------------------ ----------------------
George C. Kaiser Robert D. Ranus
March 21, 1997 March 21, 1997
(Director) (Director)
BRENTON H. RUPPLE GARY N. GUNDLACH
- ------------------------ ----------------------
Brenton H. Rupple Gary N. Gundlach
March 21, 1997 March 21, 1997
(Director) (Director)
CHARLES R. BONSON
_______________________ ----------------------
Charles R. Bonson Robert E. Bartels
March 21, 1997 March 21, 1997
(Director) (Director)
LLOYD E. COPPERSMITH HENRY KARBINER, JR.
- ----------------------- ----------------------
Lloyd E. Coppersmith Henry Karbiner, Jr.
March 21, 1997 March 21, 1997
(Director) (Director)
SUPPLEMENTAL INFORMATION TO BE
FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d)
OF THE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
Registrant's annual report to securityholders for the year ended
December 28, 1996 is incorporated by reference in this report.
Registrant does not furnish proxy soliciting material to its
securityholders.
INDEX TO EXHIBITS
Exhibit Description
3.1 Articles of Incorporation of the Registrant, 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, Commission File No. 2-66296.
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,
Commission File No. 2-66296.
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, Commission File No. 2-66296.
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, Commission File No. 2-66296.
3.6 Amendment to By-Laws Relating to Number of Directors,
adopted April 12, 1995, incorporated herein by
reference to Exhibit 3.6 of Registrant's Registration
Statement on Form S-2 (File No. 33-57505), dated May 1, 1995.
4.1 Policy Relating to Redemption of Stock by Inactive
Customer Shareholders and Former Employees. FILED
HEREWITH (included as Exhibit D to the prospectus
which forms a part of the Registration Statement).
4.2 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, Commission File No. 2-66296.
4.3 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,
Commission File No. 2-66296.
4.4 Policy Regarding Issuance and Sales of Roundy's, Inc.
Stock, incorporated herein by reference to Exhibit
4.11 of Registrant's Registration Statement on Form S-
2 (File No. 33-57505) filed with the Commission on
January 30, 1995 (included as Exhibit E to the
prospectus which forms a part of the Registration
Statement).
4.5 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, incorporated
herein by reference to Exhibit 4.14 of Registrant's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994, filed with the Commission on March
31, 1994, Commission File No. 2-66296.
4.6 Form of Subscription Agreement, incorporated by
reference to Exhibit 4.14 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit A to the prospectus which forms
a part of the Registration Statement).
4.7 Form of Buying Deposit Agreement, incorporated by
reference to Exhibit 4.15 of Registrant's
Registration Statement on Form S-2 (File No. 33-
57505) filed with the Commission on January 30, 1995
(included as Exhibit B to the prospectus which forms
a part of the Registration Statement).
4.8 Article V of Registrant's By-Laws "Fiscal Year
Accounting and Patronage Rebates," as amended on
December 12, 1989, incorporated by reference to
Exhibit 4.16 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505) filed with the
Commission on January 30, 1995 (included as Exhibit C
to the prospectus which forms a part of the
Registration Statement).
4.9 First Amendment dated May 1, 1996 to Note Agreements
dated December 15, 1991 and Note Agreements dated
December 15, 1992 and Note Agreements dated December
22, 1993, incorporated herein by reference to Exhibit
4.16 of Registrant's Form 10-Q for the quarterly
period ended June 29, 1996, filed with the Commission
on August 13, 1996, Commission File No. 33-57505.
4.10 Note Agreement dated May 15, 1996 between Roundy's,
Inc. and The Ohio National Life Insurance, Phoenix
American Life Insurance Company, Provident Mutual
Life Insurance, Providentmutual Life and Annuity
Company of America, United of Omaha Life Insurance
Company, John Alden Life Insurance Company, Oxford
Life Insurance Company, The Security Mutual Life
Insurance Company of Lincoln, Nebraska and Woodman
Accident and Life Company, incorporated herein by
reference to Exhibit 4.17 of Registrant's Form 10-Q
for the quarterly period ended June 29, 1996, filed
with the Commission on August 13, 1996, Commission
File No. 33-57505.
4.11 Credit Agreement dated December 13, 1996, between
Roundy's, Inc. and PNC Bank, NA (as agent). FILED
HEREWITH.
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, Commission File No.
2-66296.
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.
9(c) Amendment 1995-1 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(c) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated May 1, 1995.
9(d) Amendment 1995-2 to the Roundy's, Inc. Voting Trust
Agreement, incorporated herein by reference to
Exhibit 9(d) of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26, 1996.
10.1 Deferred Compensation Agreement plan between the
Registrant and certain executive officers including
Messrs. Lestina, Ranus 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, Commission File No. 2-66296.
10.2 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,
Commission File No. 2-66296.
10.2(a) Declarations page for renewal through November 1,
1997 of Directors and Officers Liability and
Corporation Reimbursement Policy. FILED HEREWITH.
10.3 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, Commission File No. 2-
66296.
10.4 Severance and Non-Competition Agreement between the
Registrant and Gerald F. Lestina, incorporated herein
by reference to Exhibit 10.4 of Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995, filed with the Commission on March
28, 1996, Commission File No. 33-57505.
10.5 Roundy's, Inc. Deferred Compensation Plan, effective
March 19, 1996, incorporated herein by reference to
Exhibit 10.5 of Registrant's Registration Statement
on Form S-2 (File No. 33-57505), dated April 26, 1996.
13 1996 Annual Report to Stockholders of Roundy's, Inc.
FILED HEREWITH.
21 Subsidiaries of Roundy's, Inc. FILED HEREWITH.
27 Financial Data Schedule. FILED HEREWITH.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the
last quarter of 1996.
ROUNDY'S, INC. POLICY RELATING TO REDEMPTION OF STOCK
BY INACTIVE CUSTOMER SHAREHOLDERS AND FORMER EMPLOYEES
ARTICLE 1
Repurchase of Shares by Corporation
1.01 Agreement to Repurchase. Upon the terms and
subject to the conditions set forth in this Policy
(including the applicable provisions of Articles 2 and 3,
below), the Corporation shall be obligated to repurchase its
shares of Class A Common Stock and Class B Common Stock
after proper request by the holder thereof, or his or its
legal representative, at any time after the occurrence of a
Customer/Shareholder Termination with respect to such stock
or an Employee/Shareholder Termination with respect to such
holder.
1.02 Repurchase in Increments. The Corporation's
obligation to repurchase stock shall accrue, subject to the
other terms and conditions of this Policy, in annual 20%
increments during the five year period beginning on the
Repurchase Request Date with respect to such stock.
Beginning on the first anniversary date of the Repurchase
Request Date, the Corporation shall become obligated to
purchase in accordance herewith 20% of the aggregate number
of shares of Class A and Class B Common Stock as to which a
proper repurchase request has been received. Such
percentage shall be increased to 40% on the second
anniversary date of the Repurchase Request Date, 60% on the
third anniversary date, 80% on the fourth anniversary date
and 100% on the fifth anniversary date of the Repurchase
Request Date. Regardless of the foregoing, in the event
that a Customer/Shareholder Termination or an
Employee/Shareholder Termination occurs as a result of the
death of the shareholder and the estate of such shareholder
specifically so elects by written notice to the Secretary of
the Corporation within 180 days thereafter, the repurchase
of not more than the first $50,000 in value of stock shall
be accelerated to the date 180 days after receipt by the
Secretary of such written election. Each share shall
continue to be outstanding for all purposes until actually
repurchased.
1.03 Calculation of Repurchase Price. The repurchase
price for each share of stock of the Corporation shall be
the Book Value of such share at the date of repurchase.
1.04 Form of Repurchase Request. A proper repurchase
request for purposes hereof shall consist of a written
notification to the Secretary of the Corporation specifying
the number of shares to be repurchased, the reason for such
repurchase request, and the date or dates on which a
Customer/Shareholder Termination or Employee/Shareholder
Termination occurred with respect to the stock covered by
such repurchase request. Such repurchase request must be
made in accordance with the procedures specified in
Section 2.02, below.
1.05 Acknowledgment By Corporation of Repurchase
Request. Subject to the conditions set forth in the Policy
(including the applicable provisions of Articles 2 and 3,
below), the Secretary shall promptly acknowledge in writing
receipt of a repurchase request. Such acknowledgment shall
set forth, among other things, the Repurchase Target Dates
with respect to the shares covered by the repurchase request
and the Book Value of the shares at the Repurchase Request
Date, and shall enumerate such documents and instruments as
may be reasonably required to be delivered to assure the
Secretary that the Corporation will receive unencumbered
title to the shares to be repurchased. Neither such
acknowledgment nor any other communication made by the
Corporation pursuant to this Policy shall be deemed to be
an agreement to purchase shares for purposes of this
Policy, except subject to all the terms and conditions
hereof. After such acknowledgment has been given by the
Secretary, a stock repurchase request shall be irrevocable
except with the written consent of the Board of Directors.
1.06 Payment of Repurchase Price. Subject to the
terms and conditions of this Policy, the Corporation shall
repurchase shares subject to a proper repurchase request by
payment of the full purchase price in cash or by check
within 10 days after the later of the Repurchase Target Date
or the date on which the appropriate stock certificates have
been received, in negotiable form, together with any such
other documents or instruments as the Secretary shall have
requested in its acknowledgment notice given under Section
1.05, all in form reasonably acceptable to the Secretary;
provided, however, that in no event shall the Corporation be
obligated to repurchase shares within 90 days after the end
of its fiscal year. By mutual agreement of the Corporation
and the shareholder, such shares may be repurchased at any
time prior to the Repurchase Target Date, but only if no
other shareholder has been assigned an earlier Repurchase
Target Date and such shares have not yet been actually
repurchased.
1.07 Limitation on Corporation's Obligation to
Repurchase. The Corporation's obligation to repurchase
shares hereunder is subject to (i) all restrictions which
may be imposed by applicable law from time to time, and (ii)
the limitations (if any) on repurchases of shares contained
in any lending or other agreements of the Corporation in
force from time to time. In the event the Corporation is
precluded during a given period of time from repurchasing
shares which are the subject of a repurchase request because
of such limitations or if required repurchases are delayed
for any other reason (in either case, a "Suspension"),
repurchases shall be resumed promptly thereafter in the
order of the Repurchase Target Dates which occurred during
the period of the Suspension, regardless of the dates the
repurchase requests were received and such suspended
repurchases shall be made prior to repurchases becoming due
on any subsequent Repurchase Target Date. Notwithstanding
the foregoing provisions, stock having a repurchase price of
not in excess of $50,000 per shareholder may, in the sole
discretion of the Corporation, be repurchased on an
accelerated basis in cases of demonstrated hardship.
1.08 Authority Reserved.
(a) No provision of this Policy shall be
construed as limiting the Corporation's authority to
repurchase outstanding shares of its stock at the discretion
of the Board of Directors or the officers on any other terms
at any time; provided however, that no such discretionary
purchases shall occur if a Repurchase Target Date has passed
with respect to shares required to be repurchased under this
Policy and such shares have not yet been repurchased.
(b) No provision of this Policy shall be
construed as limiting the authority of the Board of
Directors to amend, revise or rescind this Policy. This
Policy does not create, and should not be understood as
creating, any vested rights or contractual obligations of
the Corporation except, and only to the extent, that no
amendment, revision or rescission shall reduce the
Repurchase Price payable by the Corporation for shares with
respect to which the Repurchase Request Date precedes the
date of the resolution of the Board of Directors effecting
such amendment, revision or rescission.
1.09 Adjustments. For all purposes hereof, in the
event of a stock split or similar capital change (excluding
regular stock issuances associated with the Corporation's
patronage dividends), equitable adjustment will be made to
the number of shares to be repurchased and the repurchase
price.
ARTICLE 2
Additional Conditions to Repurchase Obligations
2.01 Notification to Corporation of Certain
Termination Events. Each shareholder (or his or its legal
representative) shall, as soon as possible after the
occurrence of a Customer/Shareholder Termination or an
Employee/Shareholder Termination (occurring otherwise than
as a result of the death or retirement of the employee),
give written notice of the same to the Secretary of the
Corporation, stating the nature and date of such event. If
it shall come to the attention of the Corporation that such
an event has occurred and no such notice has been received,
the Secretary shall give written notice of the same to the
record holder of such shares. Any determination so made in
good faith by the Corporation, including any determination
as to the date upon which a retail food store became or
ceased to be an Active Customer, or upon which a
Customer/Shareholder Termination or an Employee/Shareholder
Termination occurred, shall be final and binding on all
persons.
2.02 Timing of Repurchase Requests. Requests by
shareholders to have their shares of stock redeemed or
repurchased pursuant to this policy will be accepted by the
Corporation when made in accordance with the following
procedures:
(a) When Repurchase Requests May Be Made.
Requests by a shareholder to have its stock repurchased or
redeemed will be accepted only if made during one of three
(3) "window" periods each year -- after the first, second
and third fiscal quarters of the Corporation, consisting of
the last 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 Corporation if,
in the best judgment of management or the Board, it would be
inappropriate for the Corporation 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 are received in writing at the Corporation's
Pewaukee office during the window period or, if received
thereafter, if they were postmarked during the window period.
(b) Authority Of The Board To Suspend Or Deviate
From These Requirements. The Board of Directors reserves at
all times the authority to alter, suspend or deviate from
the requirements of this Section 2.02, in its discretion, to
the extent it determines such action to be appropriate.
(c) Effective Date. The provisions of this
Section 2.02 will be effective commencing January 1, 1994.
2.03 Limitations on Ownership of Class A Common Stock.
(a) No person may directly or indirectly
beneficially own shares of Class A Common Stock except a
Person who or which directly or indirectly owns an Active
Customer or the trustees of a voting trust formed by and for
the benefit of such Persons. No Person may directly or
indirectly beneficially own more than 100 shares of Class A
Common Stock, except that (i) a Person owning and operating
(or controlling) more than one Active Customer at different
locations may own not more than 100 shares of Class A Common
Stock for each such Active Customer, and (ii) the trustees
of a voting trust as set forth in the preceding sentence may
be the record holders of such number of shares as may be
owned in the aggregate by the depositors thereof.
(b) Any holder of shares of Class A Common Stock
shall immediately present his or its certificate(s)
representing the same to the Secretary of the Corporation,
in negotiable form, upon the occurrence of a
Customer/Shareholder Termination with respect to an Active
Customer owned and operated (or controlled) by such
shareholder.
In the event such shareholder has theretofore owned more
than 100 shares of Class A Common Stock, there shall be
presented to the Corporation 100 of such shares for each
such Active Customer as to which a Customer/ Shareholder
Termination has occurred. Upon receipt of such
certificate(s), the Corporation shall issue to and in the
name of the record holder thereof a replacement certificate
for a like number of shares of Class B Common Stock. In the
event any holder shall fail to surrender such certificates
to the Corporation within thirty (30) days after the
Customer/Shareholder Termination, the Corporation may, at
any time thereafter, by written notice to the record holder
thereof, deem such shares of Class A Common Stock to have
been converted into a like number of shares of Class B
Common Stock; and thereafter, such shares of Class A Common
Stock shall not be deemed outstanding for any purpose and
the certificate(s) therefor shall evidence only the right to
receive a certificate representing a like number of shares
of Class B Common Stock upon proper presentation to the
Corporation in negotiable form. The obligations of a
shareholder hereunder to surrender and exchange shares of
Class A Common Stock shall be binding upon the legal
representatives or successors or such shareholder, any
purported transferee, and any nominee or trustee of a voting
trust holding shares of Class A Common Stock for the benefit
of such shareholder, upon notice from the Corporation or
otherwise that a Customer/Shareholder Termination has
occurred.
ARTICLE 3
Effective Date
3.01 Effective Date. The repurchase provisions set
forth in Article 1 of this Policy shall not apply to shares
as to which repurchase requests have been filed before
January 1, 1991, provided, however, that if the second,
third, fourth or fifth anniversary dates of a Repurchase
Request Date occur on or after January 1, 1991, the
repurchase provisions set forth in Article 1 shall apply to
the 20% increments which would be purchased on such
anniversary dates as if this Policy had been in effect on
the Repurchase Request Date.
3.02 Applicability.
(a) The repurchase provisions set forth in
Article 1 of this Policy shall not apply:
(1) With respect to the shares owned by any
person who directly, indirectly or beneficially owns shares
of Class A Common Stock in violation of the limitations on
ownership contained in Section 2.02(a), above (the
"Ownership Limitation") if the shares of Class A Common
Stock are determined by the Corporation to have been held in
violation of such Ownership Limitations for a period of
ninety (90) days or more.
(2) With respect to any shares owned by any
person who is a Claimant, as defined herein.
(b) In the event that a shareholder who filed a
repurchase request on or after January 1, 1991, subsequently
becomes subject to the provisions contained in Sections
3.02(a)(1) or (2), the Corporation shall be under no
obligation at any time thereafter to repurchase (or continue
to repurchase, if the repurchase in increments had already
commenced) any shares from such shareholder.
ARTICLE 4
Definitions
4.01 Whenever used in this Policy;
(a) "Active Customer" means a retail food store
whose principal source of supply is purchases from the
Corporation.
(b) "Book Value" at any given date means the Book
Value of a share of Common Stock (determined according to
the annual financial statements prepared by the Corporation,
as audited and certified by the Corporation's independent
auditors) as of the end of the fiscal year immediately
preceding the fiscal year in which such date occurs.
(c) "Claimant" means any shareholder of the
Corporation who has asserted and not irrevocably withdrawn
such assertion or is otherwise then asserting (in or in
anticipation of any litigation or other proceeding) a
challenge (1) to the authority of the Corporation or its
Board of Directors to adopt any pending Redemption Policy or
to have adopted the then current Redemption Policy or any
prior Redemption Policy or to amend or revise any of the
same or (2) to the enforceability or validity or the
Corporation's interpretation or application of any provision
of the then current or any prior Redemption Policy.
(d) "Customer/Shareholder Termination" occurs
whenever an Active Customer owned and operated (or
controlled) by a shareholder of the Corporation either (A)
ceases to be an Active Customer, or (B) ceases to be owned
and operated (or controlled) by such shareholder, whether by
reason of the death, adjudication of incompetency or com
plete retirement from business by reason of age or
disability of such shareholder (if an individual), the
dissolution or termination of such shareholder (if a Person
other than an individual), adjudication in bankruptcy,
transfer of the Active Customer or the entity owning or
controlling it, or otherwise. In the event the above shall
occur with respect to one or more but not all Active
Customers owned and operated (or controlled) by a single
shareholder of the Corporation, a Customer/Shareholder
Termination shall be deemed to have occurred with respect to
that fraction of each class of Common Stock owned by such
shareholder as is equal to the fraction produced by dividing
the number of Active Customers owned and operated (or
controlled) by such shareholder after such event(s) by the
number of Active Customers so owned and operated (or
controlled) immediately before such event(s).
(e) "Employee/Shareholder Termination" occurs,
with respect to a shareholder who is an employee of the
Corporation, upon the cessation of such person's employment
relationship with the Corporation for any reason.
(f) "Person" includes any individual, corporation,
partnership, joint venture, trust, estate or any other legal
entity.
(g) "Redemption Policy" means any written policy
adopted by the Board of Directors of the Corporation
pursuant to Section 3.4 of the Articles of Incorporation
setting forth terms, conditions or provisions under which
the Corporation will (during the term of such policy)
repurchase, redeem or otherwise acquire shares of the
Corporation's stock from shareholders of the Corporation.
(h) "Repurchase Request Date" with respect to a
share of stock means the date of actual receipt by the
Secretary of the Corporation of a written request for
repurchase of such share which complies with Section 1.04 of
this Policy.
(i) "Repurchase Target Date" with respect to a
share of stock means the date upon which the Corporation is
to become obligated to repurchase such share of stock in
accordance with Section 1.02 of this Policy. If such date
is not a day on which business is generally conducted in the
Corporation's main offices, then the "Repurchase Target
Date" shall be the next subsequent business day.
$55,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
ROUNDY'S, INC. AND THE GUARANTORS
PARTY HERETO
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent
Dated as of December 13, 1996
SECTION PAGE
- ------- ----
1. CERTAIN DEFINITIONS 1
1.1 Certain Definitions. 1
1.2 Construction. 19
1.2.1 Number; Inclusion. 19
1.2.2 Determination. 19
1.2.3 Agent's Discretion and Consent. 19
1.2.4 Documents Taken as a Whole. 19
1.2.5 Headings. 20
1.2.6 Implied References to this Agreement. 20
1.2.7 Persons. 20
1.2.8 Modifications to Documents. 20
1.2.9 From, To and Through. 20
1.2.10 Shall; Will. 20
1.3 Accounting Principles. 20
2. REVOLVING CREDIT AND SWING LOAN FACILITIES 21
2.1 Revolving Credit Commitments. 21
2.1.1 Revolving Credit Loans. 21
2.1.2 Swing Loan Commitment. 21
2.2 Nature of Banks' Obligations with Respect to
Revolving Credit Loans. 22
2.3 Facility Fees. 22
2.4 Revolving Credit Loan Requests and Swing Loan Requests. 22
2.4.1 Revolving Credit Loan Requests. 22
2.4.2 Swing Loan Requests. 23
2.4.3 Making Revolving Credit Loans. 23
2.4.4 Making Swing Loans. 23
2.4.5 Revolving Credit Notes. 24
2.4.6 Swing Loan Note. 24
2.4.7 Use of Proceeds. 24
2.4.8 Borrowings to Repay Swing Loans. 24
2.5 Bid Loan Facility. 25
2.5.1 Bid Loan Requests. 25
2.5.2 Bidding. 25
2.5.3 Accepting Bids. 26
2.5.4 Funding Bid Loans. 27
2.5.5 Several Obligations. 27
2.5.6 Bid Notes. 27
2.6 Letter of Credit Subfacility. 27
2.6.1 Issuance of Letters of Credit. 27
2.6.2 Letter of Credit Fees. 28
2.6.3 Disbursements, Reimbursement. 28
2.6.4 Repayment of Participation Advances. 29
2.6.5 Documentation. 30
2.6.6 Determinations to Honor Drawing Requests. 30
2.6.7 Nature of Participation and Reimbursement
Obligations. 30
2.6.8 Indemnity. 32
2.6.9 Liability for Acts and Omissions. 32
2.6.10 Duties of Issuing Bank. 33
3. REDUCTION IN COMMITMENTS 33
4. INTEREST RATES 33
4.1 Interest Rate Options. 33
4.1.1 Revolving Credit Interest Rate Options. 34
4.1.2 Swing Loan Interest Rate Option. 34
4.2 Revolving Credit Interest Periods. 34
4.2.1 Ending Date and Business Day. 34
4.2.2 Amount of Borrowing Tranche. 35
4.2.3 Termination Before Expiration Date. 35
4.2.4 Renewals. 35
4.3 Interest After Default. 35
4.3.1 Letter of Credit Fees, Interest Rate. 35
4.3.2 Other Obligations. 35
4.4 Euro-Rate Unascertainable; Illegality; Increased
Costs; Deposits Not Available. 35
4.4.1 Unascertainable. 35
4.4.2 Illegality; Increased Costs; Deposits Not Available 36
4.4.3 Agent's and Bank's Rights. 36
4.5 Selection of Interest Rate Options. 37
5. PAYMENTS 37
5.1 Payments. 37
5.2 Pro Rata Treatment of Banks. 38
5.3 Interest Payment Dates. 38
5.4 Voluntary Prepayments. 38
5.4.1 Right to Prepay. 38
5.4.2 Replacement of a Bank. 39
5.4.3 Change of Lending Office. 40
5.5 Additional Compensation in Certain Circumstances. 40
5.5.1 Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc. 40
5.5.2 Indemnity. 41
5.6 Settlement Date Procedures. 42
6. REPRESENTATIONS AND WARRANTIES 43
6.1 Representations and Warranties. 43
6.1.1 Organization and Qualification. 43
6.1.2 Subsidiaries. 43
6.1.3 Power and Authority. 43
6.1.4 Validity and Binding Effect. 44
6.1.5 No Conflict. 44
6.1.6 Litigation. 44
6.1.7 Title to Properties. 44
6.1.8 Financial Statements. 45
6.1.9 Use of Proceeds; Margin Stock. 45
6.1.10 Full Disclosure. 46
6.1.11 Taxes. 46
6.1.12 Consents and Approvals. 46
6.1.13 No Event of Default; Compliance with Instruments. 47
6.1.14 Patents, Trademarks, Copyrights, Licenses, Etc. 47
6.1.15 Insurance. 47
6.1.16 Compliance with Laws. 47
6.1.17 Material Contracts; Burdensome Restrictions. 47
6.1.18 Investment Companies; Regulated Entities. 48
6.1.19 Plans and Benefit Arrangements. 48
6.1.20 Employment Matters. 49
6.1.21 Environmental Matters. 49
6.1.22 Senior Debt Status. 51
6.2 Updates to Schedules. 51
7. CONDITIONS OF LENDING 51
7.1 First Loans and Letters of Credit. 52
7.1.1 Officer's Certificate. 52
7.1.2 Secretary's Certificate. 52
7.1.3 Delivery of Loan Documents. 52
7.1.4 Opinion of Counsel. 53
7.1.5 Legal Details. 53
7.1.6 Payment of Fees. 53
7.1.7 Consents. 53
7.1.8 Officer's Certificate Regarding MACs. 53
7.1.9 No Violation of Laws. 53
7.1.10 No Actions or Proceedings. 54
7.1.11 Lien Search Results. 54
7.1.12 Payoff Letter. 54
7.2 Each Additional Loan or Letter of Credit. 54
8. COVENANTS 54
8.1 Affirmative Covenants. 54
8.1.1 Preservation of Existence, Etc. 55
8.1.2 Payment of Liabilities, Including Taxes, Etc. 55
8.1.3 Maintenance of Insurance. 55
8.1.4 Maintenance of Properties and Leases. 55
8.1.5 Maintenance of Patents, Trademarks, Etc. 56
8.1.6 Visitation Rights. 56
8.1.7 Keeping of Records and Books of Account. 56
8.1.8 Plans and Benefit Arrangements. 56
8.1.9 Compliance with Laws. 57
8.1.10 Use of Proceeds. 57
8.1.11 Subordination of Intercompany Loans. 57
8.2 Negative Covenants. 57
8.2.1 Indebtedness. 58
8.2.2 Liens. 58
8.2.3 Guaranties. 58
8.2.4 Loans and Investments. 59
8.2.5 Dividends and Related Distributions. 60
8.2.6 Liquidations, Mergers, Consolidations, Acquisitions 60
8.2.7 Dispositions of Assets or Subsidiaries. 61
8.2.8 Affiliate Transactions. 62
8.2.9 Subsidiaries, Partnerships and Joint Ventures. 62
8.2.10 Continuation of or Change in Business. 63
8.2.11 Plans and Benefit Arrangements. 63
8.2.12 Fiscal Year. 64
8.2.13 Changes in Organizational Documents. 64
8.2.14 Minimum Fixed Charge Coverage Ratio. 64
8.2.15 Maximum Debt to Capital Ratio. 64
8.2.16 Minimum Tangible Net Worth. 65
8.3 Reporting Requirements. 65
8.3.1 Quarterly Financial Statements. 65
8.3.2 Annual Financial Statements. 65
8.3.3 Certificate of the Borrower. 66
8.3.4 Notice of Default. 66
8.3.5 Notice of Litigation. 66
8.3.6 Forecasts, Other Reports and Information. 66
8.3.7 Notices Regarding Plans and Benefit Arrangements. 67
9. DEFAULT 69
9.1 Events of Default. 69
9.1.1 Payments Under Loan Documents. 69
9.1.2 Breach of Warranty. 69
9.1.3 Breach of Negative Covenants or Visitation Rights. 69
9.1.4 Breach of Other Covenants. 69
9.1.5 Defaults in Other Agreements or Indebtedness. 69
9.1.6 Final Judgments or Orders. 70
9.1.7 Loan Document Unenforceable. 70
9.1.8 Uninsured Losses; Proceedings Against Assets. 70
9.1.9 Notice of Lien or Assessment. 70
9.1.10 Insolvency. 70
9.1.11 Events Relating to Plans and Benefit Arrangements. 71
9.1.12 Cessation of Business. 71
9.1.13 Change of Control. 71
9.1.14 Involuntary Proceedings. 72
9.1.15 Voluntary Proceedings. 72
9.2 Consequences of Event of Default. 72
9.2.1 Events of Default Other Than Bankruptcy, Insolvency
or Reorganization Proceedings. 72
9.2.2 Bankruptcy, Insolvency or Reorganization
Proceedings. 73
9.2.3 Set-off. 73
9.2.4 Suits, Actions, Proceedings. 73
9.2.5 Application of Proceeds. 74
9.2.6 Other Rights and Remedies. 74
9.3 Right of Competitive Bid Loan Banks. 74
10. THE AGENT 75
10.1 Appointment. 75
10.2 Delegation of Duties. 75
10.3 Nature of Duties; Independent Credit Investigation. 75
10.4 Actions in Discretion of Agent; Instructions from
the Banks. 76
10.5 Reimbursement and Indemnification of Agent by the
Borrower. 76
10.6 Exculpatory Provisions; Limitation of Liability. 77
10.7 Reimbursement and Indemnification of Agent by Banks. 77
10.8 Reliance by Agent. 78
10.9 Notice of Default. 78
10.10 Notices. 78
10.11 Banks in Their Individual Capacities. 79
10.12 Holders of Notes. 79
10.13 Equalization of Banks. 79
10.14 Successor Agent. 80
10.15 Agent's Fee. 80
10.16 Availability of Funds. 80
10.17 Calculations. 81
10.18 Beneficiaries. 81
11. MISCELLANEOUS 81
11.1 Modifications, Amendments or Waivers. 81
11.1.1 Increase of Commitment; Extension or Expiration
Date. 81
11.1.2 Extension of Payment; Reduction of Principal
Interest or Fees; Modification of Terms of Payment. 82
11.1.3 Release of Guarantor. 82
11.1.4 Miscellaneous 82
11.2 No Implied Waivers; Cumulative Remedies; Writing Required. 82
11.3 Reimbursement and Indemnification of Banks by the
Borrower; Taxes. 83
11.4 Holidays. 83
11.5 Funding by Branch, Subsidiary or Affiliate. 84
11.5.1 Notional Funding. 84
11.5.2 Actual Funding. 84
11.6 Notices. 84
11.7 Severability. 85
11.8 Governing Law. 85
11.9 Prior Understanding. 85
11.10 Duration; Survival. 85
11.11 Successors and Assigns. 86
11.12 Confidentiality. 87
11.13 Counterparts. 87
11.14 Agent's or Bank's Consent. 88
11.15 Exceptions. 88
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL. 88
11.17 Tax Withholding Clause. 88
11.18 Joinder of Guarantors. 89
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS AND ADDRESSES FOR
NOTICES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 6.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2 - SUBSIDIARIES
SCHEDULE 6.1.7 - OWNED AND LEASED REAL PROPERTY
SCHEDULE 6.1.12 - CONSENTS AND APPROVALS
SCHEDULE 6.1.19 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.21 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.2.1 - PERMITTED INDEBTEDNESS
SCHEDULE 8.2.4 - EXISTING LOANS TO CUSTOMERS
EXHIBITS
EXHIBIT 1.1(A)(1) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(A)(2) - CLOSING DATE CERTIFICATE
EXHIBIT 1.1(B) - BID NOTES
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1) - INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTES
EXHIBIT 1.1(S) - SWING LOAN NOTE
EXHIBIT 2.4.1 - REVOLVING CREDIT LOAN REQUEST
EXHIBIT 2.4.2 - SWING LOAN REQUEST
EXHIBIT 2.5.1 - BID LOAN REQUEST
EXHIBIT 7.1.4 - OPINION OF COUNSEL
EXHIBIT 8.2.6 ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of December 13, 1996 and
is made by and among ROUNDY'S, INC., a Wisconsin corporation (the
"Borrower"), each of the Guarantors (as hereinafter defined), the
BANKS (as hereinafter defined), and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks under this
Agreement (hereinafter referred to in such capacity as the
"Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide
(i) a revolving credit facility to the Borrower in an aggregate
principal amount not to exceed $55,000,000; and
WHEREAS, the revolving credit facility shall be used for
working capital and general corporate purposes; and
WHEREAS, the Banks are willing to provide such credit upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of
their mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, covenant and agree as
follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in
this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context hereof
clearly requires otherwise:
Adjusted Net Income for any period of
determination shall mean the sum of (i) net income, plus (ii) the
sum of interest expense, income tax expense, Net Operating Lease
Expense plus Patronage Dividends to the extent that such items
are included in such net income, in each case of the Borrower and
its Subsidiaries for such period determined and consolidated in
accordance with GAAP.
Affiliate as to any Person shall mean any other
Person (i) which directly or indirectly controls, is controlled
by, or is under common control with such Person, (ii) which
beneficially owns or holds 5% or more of any class of the voting
or other equity interests of such Person, or (iii) 5% or more of
any class of voting interests or other equity interests of which
is beneficially owned or held, directly or indirectly, by such
Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise, including the power to elect a majority of the
directors or trustees of a corporation or trust, as the case may
be.
Agent shall mean PNC Bank, National Association,
and its successors and assigns.
Agent's Fee shall have the meaning assigned to
that term in Section 10.15.
Agent's Letter shall have the meaning assigned to
that term in Section 10.15.
Agreement shall mean this Credit Agreement, as the
same may be supplemented or amended from time to time, including
all schedules and exhibits.
Annual Statements shall have the meaning assigned
to that term in Section 6.1.8(i).
Applicable Facility Fee Rate shall mean the
percentage rate per annum based on the Debt to Capital Ratio then
in effect according to the pricing grid on Schedule 1.1(A) below
the heading "Facility Fee." The Applicable Facility Fee Rate
shall be computed in accordance with the parameters set forth on
Schedule 1.1(A).
Applicable Margin shall mean, as applicable:
(A) the percentage spread to be added to Base
Rate under the Revolving Credit Base Rate Option based on the
Debt to Capital Ratio then in effect according to the pricing
grid on Schedule 1.1(A) below the heading "Revolving Credit Base
Rate Spread",
(B) the percentage spread to be added to Euro-
Rate under the Revolving Credit Euro-Rate Option based on the
Debt to Capital Ratio then in effect according to the pricing
grid on Schedule 1.1(A) below the heading "Revolving Credit Euro-
Rate Spread".
The Applicable Margin shall be computed in accordance with the
parameters set forth on Schedule 1.1(A).
Assignment and Assumption Agreement shall mean an
Assignment and Assumption Agreement by and among a Purchasing
Bank, a Transferor Bank and the Agent, as Agent and on behalf of
the remaining Banks, substantially in the form of Exhibit
1.1(A)(1).
Authorized Officer shall mean the Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer or
Treasurer of the Borrower and any other individuals, designated
by written notice to the Agent from the Borrower, authorized to
execute notices, reports and other documents on behalf of the
Loan Parties required hereunder. The Borrower may amend such
list of individuals from time to time by giving written notice of
such amendment to the Agent.
Banks shall mean the financial institutions named
on Schedule 1.1(B) and their respective successors and assigns as
permitted hereunder, each of which is referred to herein as a
Bank.
Base Rate shall mean the greater of (i) the
interest rate per annum announced from time to time by the Agent
at its Principal Office as its then prime rate, which rate may
not be the lowest rate then being charged commercial borrowers by
the Agent, or (ii) the Federal Funds Rate plus 1/2% per annum.
Base Rate Option shall mean the Revolving Credit
Base Rate Option.
Benefit Arrangement shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of
ERISA, which is neither a Plan nor a Multiemployer Plan and which
is maintained, sponsored or otherwise contributed to by any
member of the ERISA Group.
Bid shall have the meaning assigned to such term
in Section 2.5.2.
Bid Loan Borrowing Date shall mean, with respect
to any Bid Loan, the date for the making thereof which shall be a
Business Day.
Bid Loan Euro-Rate Rate Option shall mean the
option of the Borrower to request that the Banks submit Bids to
make Bid Loans bearing interest at a rate per annum quoted by
such Banks at the Euro-Rate in effect two Business Days before
the Borrowing Date of such Bid Loan plus a Euro-Rate Bid Loan
Spread.
Bid Loan Fixed Rate Option shall mean the option
of the Borrower to request that the Banks submit Bids to make Bid
Loans bearing interest at a fixed rate per annum quoted by such
Banks as a numerical percentage (and not as a spread over another
rate such as the Euro-Rate).
Bid Loan Interest Period shall have the meaning
assigned to such term in Section 2.5.1.
Bid Loan Request shall have the meaning assigned
to such term in Section 2.5.1.
Bid Loans shall mean collectively and Bid Loan
shall mean separately all of the Bid Loans or any Bid Loan made
by any of the Banks to the Borrower pursuant to Section 2.5.
Bid Notes shall mean collectively and Bid Note
shall mean separately all of the Bid Notes of the Borrower in the
form of Exhibit 1.1(B) evidencing the Bid Loans together with all
amendments, extensions, renewals, replacements, refinancings or
refunds thereof in whole or in part.
Borrower shall mean Roundy's, Inc., a Wisconsin
corporation.
Borrowing Date shall mean, with respect to any
Loan, the date for the making thereof or the renewal or
conversion thereof at or to the same or a different Interest Rate
Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of
Loans outstanding as follows: (i) any Loans to which either a
Euro-Rate Option or a Bid Loan Fixed Rate Option applies which
become subject to the same Interest Rate Option under the same
Loan Request by the Borrower and which have the same Interest
Period shall constitute one Borrowing Tranche, and (ii) all Loans
to which a Base Rate Option applies shall constitute one
Borrowing Tranche.
Business Day shall mean any day other than a
Saturday or Sunday or a legal holiday on which commercial banks
are authorized or required to be closed for business in
Pittsburgh, Pennsylvania and, if the applicable Business Day
relates to any Borrowing to which the Euro-Rate Option applies,
such day must also be a day on which dealings are carried on in
the London interbank market.
Capital shall mean as of any date of determination
the sum of (i) stockholders' equity, (ii) redeemable common stock
(if redeemable common stock is excluded from stockholders'
equity) and (iii) Indebtedness, in each instance of the Borrower
and its Subsidiaries as of such date determined and consolidated
in accordance with GAAP.
Closing Date shall mean the Business Day on which
the first Loan shall be made, which shall be December 13, 1996.
Commercial L/C shall mean any letter of credit
which is a commercial letter of credit issued in respect of the
purchase of goods or services.
Commitment shall mean as to any Bank the aggregate
of its Revolving Credit Commitment and in the case of the Agent
its Swing Loan Commitment, and Commitments shall mean the
aggregate of the Revolving Credit Commitments and Swing Loan
Commitment of all of the Banks.
Committed Loan shall mean either a Revolving
Credit Loan or a Swing Loan.
Consideration shall mean with respect to any
Permitted Acquisition, the aggregate, without duplication, of
(i) the cash paid by any of the Loan Parties, directly or
indirectly, to the seller in connection therewith, (ii) the
Indebtedness incurred or assumed by any of the Loan Parties,
whether in favor of the seller or otherwise and whether fixed or
contingent, (iii) any Guaranty given or incurred by any Loan
Party in connection therewith and (iv) any other consideration
given or obligation incurred by any of the Loan Parties in
connection therewith.
Consolidated Tangible Net Worth shall mean as of
any date of determination total stockholders' equity less
intangible assets plus redeemable common stock (if redeemable
common stock is excluded from stockholders' equity), in each
instance of the Borrower and its Subsidiaries as of such date
determined and consolidated in accordance with GAAP.
Debt to Capital Ratio shall mean as of any date of
determination, the ratio of Indebtedness of the Borrower and its
Subsidiaries to Capital on such date.
Dollar, Dollars, U.S. Dollars and the symbol $
shall mean lawful money of the United States of America.
Drawing Date shall have the meaning assigned to
that term in Section 2.6.3.2.
Environmental Complaint shall mean any written
complaint setting forth a cause of action for personal or
property damage or natural resource damage or equitable relief,
order, notice of violation, citation, request for information
issued pursuant to any Environmental Laws by an Official Body,
subpoena or other written notice of any type relating to, arising
out of, or issued pursuant to, any of the Environmental Laws or
any Environmental Conditions, as the case may be.
Environmental Conditions shall mean any conditions
of the environment, including the workplace, the ocean, natural
resources (including flora or fauna), soil, surface water,
groundwater, any actual or potential drinking water supply
sources, substrata or the ambient air, relating to or arising out
of, or caused by, the use, handling, storage, treatment,
recycling, generation, transportation, release, spilling,
leaking, pumping, emptying, discharging, injecting, escaping,
leaching, disposal, dumping, threatened release or other
management or mismanagement of Regulated Substances resulting
from the use of, or operations on, any Property.
Environmental Laws shall mean all federal, state,
local and foreign Laws and regulations, including permits,
licenses, authorizations, bonds, orders, judgments, and consent
decrees issued, or entered into, pursuant thereto, relating to
pollution or protection of human health or the environment or
employee safety in the workplace.
ERISA shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended or supplemented
from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in
effect.
ERISA Group shall mean, at any time, the Borrower
and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common
control and all other entities which, together with the Borrower,
are treated as a single employer under Section 414 of the
Internal Revenue Code.
Euro-Rate shall mean, with respect to Loans
comprising any Borrowing Tranche to which the Euro-Rate Option
applies for any Interest Period, the interest rate per annum
determined by the Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the Agent in accordance with its
usual procedures (which determination shall be conclusive absent
manifest error) to be the average London interbank offered rates
for U.S. Dollars set forth on Telerate display page 3750 or such
other display page on the Telerate System as may replace such
page to evidence the average of rates quoted by banks designated
by the British Bankers' Association (or appropriate successor or,
if the British Bankers' Association or its successor ceases to
provide such quotes, a comparable replacement determined by the
Agent) two (2) Business Days prior to the first day of such
Interest Period for an amount comparable to such Borrowing
Tranche and having a Borrowing Date and a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:
Telerate page 3750 quoted by British Bankers'
Euro-Rate = Association or appropriate successor
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate
Option outstanding on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The
Agent shall give prompt notice to the Borrower of the Euro-Rate
as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
Euro-Rate Bid Loan shall mean any Bid Loan that
bears interest under the Bid Loan Euro-Rate Option.
Euro-Rate Bid Loan Spread shall mean the spread
quoted by a Bank in its Bid to apply to such Bank's Bid Loan if
such Bank's Bid is accepted. The Euro-Rate Bid Loan Spread shall
be quoted as a percentage rate per annum and expressed in
multiples of 1/1000th of one percentage point to be either added
to (if it is positive) or subtracted from (if it is negative) the
Euro-Rate in effect two (2) Business Days before the Borrowing
Date with respect to such Bid Loan. Interest on Euro-Rate Bid
Loans shall be computed based on a year of 360 days and actual
days elapsed.
Euro-Rate Interest Period shall mean the Interest
Period applicable to a Euro-Rate Loan.
Euro-Rate Option shall mean either the Revolving
Credit Euro-Rate Option or the Bid Loan Euro-Rate Option.
Euro-Rate Reserve Percentage shall mean the
maximum effective percentage in effect on such day prescribed by
the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities").
Event of Default shall mean any of the events
described in Section 9.1 and referred to therein as an "Event of
Default."
Existing Credit Agreement shall mean that certain
Credit Agreement, dated as of March 6, 1989, among Roundy's,
Inc., the banks party thereto and The Chase Manhattan Bank
(National Association) as agent, as the same has been amended.
Expiration Date shall mean, with respect to the
Revolving Credit Commitments, March 6, 2002.
Facility Fee shall have the meaning assigned to
that term in Section 2.3.
Federal Funds Rate shall mean the annual rate
(rounded upward to the nearest 1/100 of 1%) determined by the
Agent in accordance with its usual procedures (which
determination shall b e conclusive absent manifest error) to be
the "offered" rate evidenced by Telerate page 5 (or appropriate
successor page) as quoted by Garvin Guy Butler (or appropriate
successor, or if Garvin Guy Butler or its successor cease to
provide such quote, a comparable replacement as determined by the
Agent) on the day of such advance.
Federal Funds Rate Option shall mean the option of
the Borrower to have Swing Loans bear interest at the rate and
under the terms and conditions set forth in Section 4.1.2(i).
Fixed Charge Coverage Ratio shall mean as of any
date of determination, the ratio of Adjusted Net Income to Fixed
Charges of the Borrower for the immediately preceding four fiscal
quarters of the Borrower ending on such date of determination.
Fixed Charges shall mean for any period of
determination the sum of interest expense and Net Operating Lease
Expense, in each case of the Borrower and its Subsidiaries for
such period determined and consolidated in accordance with GAAP.
Fixed Rate shall mean a fixed interest rate quoted
by a Bank in its Bid to apply to such Bank's Bid Loan over the
term of such Bid Loan if such Bank's Bid is accepted.
Fixed Rate Bid Loan shall mean a Bid Loan that
bears interest under the Bid Loan Fixed Rate Option.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time, subject to the
provisions of Section 1.3, and applied on a consistent basis both
as to classification of items and amounts.
Governmental Acts shall have the meaning assigned
to that term in Section 2.6.8.
Guarantor shall mean each of the parties to this
Agreement which is designated as a "Guarantor" on the signature
page hereof and each other Person which joins this Agreement as a
Guarantor after the date hereof pursuant to Section 11.18.
Guarantor Joinder shall mean a joinder by a Person
as a Guarantor under this Agreement, the Guaranty Agreement and
the other Loan Documents in the form of Exhibit 1.1(G)(1).
Guaranty of any Person shall mean any obligation
of such Person guaranteeing or in effect guaranteeing any
liability or obligation of any other Person in any manner,
whether directly or indirectly, including any agreement to
indemnify or hold harmless any other Person, any performance bond
or other suretyship arrangement and any other form of assurance
against loss, except endorsement of negotiable or other
instruments for deposit or collection in the ordinary course of
business.
Guaranty Agreement shall mean the Guaranty and
Suretyship Agreement in substantially the form of Exhibit
1.1(G)(2) executed and delivered by each of the Guarantors to the
Agent for the benefit of the Banks.
Historical Statements shall have the meaning
assigned to that term in Section 6.1.8(i).
Indebtedness shall mean, as to any Person at any
time and without duplication, any and all indebtedness,
obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect
of: (i) borrowed money, (ii) amounts raised under or liabilities
in respect of any note purchase or acceptance credit facility,
(iii) reimbursement obligations (contingent or otherwise) under
any letter of credit, (iv) the net unrealized loss position in
any currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, (v) any
other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the
commercial effect of a borrowing of money entered into by such
Person to finance its operations or capital requirements (but not
including trade payables and accrued expenses incurred in the
ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), or (vi) any Guaranty of
Indebtedness for borrowed money, excluding any Guaranty by a Loan
Party or Subsidiary of a Loan Party of Indebtedness of another
Loan Party or Subsidiary of a Loan Party.
Ineligible Security shall mean any security which
may not be underwritten or dealt in by member banks of the
Federal Reserve System under Section 16 of the Banking Act of
1933 (12 U.S.C. Section 24, Seventh), as amended.
Insolvency Proceeding shall mean, with respect to
any Person, (a) a case, action or proceeding with respect to such
Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now
or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of any Loan Party or otherwise
relating to the liquidation, dissolution, winding-up or relief of
such Person, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or
other, similar arrangement in respect of such Person's creditors
generally or any substantial portion of its creditors; undertaken
under any Law.
Intercompany Subordination Agreement shall mean a
Subordination Agreement among the Loan Parties in the form
attached hereto as Exhibit 1.1(I)(1).
Interest Period shall mean either a Revolving
Credit Interest Period or a Bid Loan Interest Period.
Interest Rate Option shall mean any Revolving
Credit Euro-Rate Option, Federal Funds Rate Option, Negotiated
Rate Option, Bid Loan Euro Rate Option, Bid Loan Fixed Rate
Option or Base Rate Option.
Interim Statements shall have the meaning assigned
to that term in Section 6.1.8(i).
Internal Revenue Code shall mean the Internal
Revenue Code of 1986, as the same may be amended or supplemented
from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in
effect.
Issuing Bank shall mean any Bank which the Agent
shall designate from time to time to issue Letters of Credit
hereunder pursuant to Section 2.6, provided that such Bank shall
agree to be the Issuing Bank. The Agent designates National City
Bank of Columbus as the Issuing Bank as of the date of this
Agreement and National City Bank of Columbus accepts such
designation. The Agent may in its discretion designate a
different Bank (including PNC Bank) as the Issuing Bank after the
date hereof and, subject to such Bank's acceptance of such
designation, such Bank shall be the Issuing Bank with respect to
all Letters of Credit issued after such designation.
Labor Contracts shall mean all employment
agreements, employment contracts, collective bargaining
agreements and other agreements among any Loan Party or
Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance,
opinion, release, ruling, order, injunction, writ, decree or
award of any Official Body.
Letter of Credit shall have the meaning assigned
to that term in Section 2.6.1.
Letter of Credit Borrowing shall mean an extension
of credit resulting from a drawing under any Letter of Credit
which shall not have been reimbursed on the date when made and
shall not have been converted into a Revolving Credit Loan under
Section 2.6.3.2.
Letter of Credit Fee shall have the meaning
assigned to that term in Section 2.6.2.
Letters of Credit Outstanding shall mean at any
time the sum of (i) the aggregate undrawn face amount of
outstanding Letters of Credit and (ii) the aggregate amount of
all unpaid and outstanding Reimbursement Obligations.
Lien shall mean any mortgage, deed of trust,
pledge, lien, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, whether
voluntarily or involuntarily given, including any conditional
sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of,
security and any filed financing statement or other notice of any
of the foregoing (whether or not a lien or other encumbrance is
created or exists at the time of the filing).
LLC Interests shall have the meaning given to such
term in Section 6.1.2.
Loan Documents shall mean this Agreement, the
Agent's Letter, the Guaranty Agreement, the Intercompany
Subordination Agreement, the Notes, and any other instruments,
certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or
therewith, as the same may be supplemented or amended from time
to time in accordance herewith or therewith, and Loan Document
shall mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the
Guarantors.
Loan Request shall mean either a Bid Loan Request
or a Revolving Credit Loan Request.
Loans shall mean collectively and Loan shall mean
separately all Revolving Credit Loans, Swing Loans, or Bid Loans
or any Revolving Credit Loan, Swing Loan, or Bid Loan.
Material Adverse Change shall mean any set of
circumstances or events which (a) has or could reasonably be
expected to have any material adverse effect whatsoever upon the
validity or enforceability of this Agreement or any other Loan
Document, (b) is or could reasonably be expected to be material
and adverse to the business, properties, assets, financial
condition, results of operations or prospects of the Loan Parties
taken as a whole, (c) impairs materially or could reasonably be
expected to impair materially the ability of the Loan Parties
taken as a whole to duly and punctually pay or perform its
Indebtedness, or (d) impairs materially or could reasonably be
expected to impair materially the ability of the Agent or any of
the Banks, to the extent permitted, to enforce their legal
remedies pursuant to this Agreement or any other Loan Document.
Material Subsidiary shall mean on any date of
determination any Subsidiary which meets the requirements set
forth in (i) or (ii) below:
(i) the gross revenues of such Subsidiary over
the twelve-months preceding the date of determination equals or
exceeds 5% of the consolidated gross revenues of the Borrower and
its Subsidiaries; or
(ii) the book value of the assets of such
Subsidiary on such date equals or exceeds 5% of the book value of
the consolidated assets of the Borrower and its Subsidiaries.
If Borrower acquires assets or stock or other ownership interests
of another business (the "Acquired Business") in a Permitted
Acquisition (whether by purchase, merger or otherwise) pursuant
to Section 8.2.6 Borrower shall determine whether each Subsidiary
of Borrower is a "Material Subsidiary" on the date of such
Permitted Acquisition after giving effect to such Permitted
Acquisition: Borrower shall treat the Acquired Business and any
Subsidiaries formed or acquired by Borrower in connection
therewith as having been owned by the Borrower throughout the 12-
months preceding the date of such Permitted Acquisition for
purposes of clause (i) above.
Month, with respect to an Interest Period under
the Euro-Rate Option, shall mean the interval between the days in
consecutive calendar months numerically corresponding to the
first day of such Interest Period. If any Euro-Rate Interest
Period begins on a day of a calendar month for which there is no
numerically corresponding day in the month in which such Interest
Period is to end, the final month of such Interest Period shall
be deemed to end on the last Business Day of such final month.
Multiemployer Plan shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA and to which the Borrower or any
member of the ERISA Group is then making or accruing an
obligation to make contributions or, within the preceding five
Plan years, has made or had an obligation to make such
contributions.
Multiple Employer Plan shall mean a Plan which has
two or more contributing sponsors (including the Borrower or any
member of the ERISA Group) at least two of whom are not under
common control, as such a plan is described in Sections 4063 and
4064 of ERISA.
Negotiated Rate Option shall mean the option of
the Borrower to have Swing Loans bear interest at the rate and
under the terms and conditions set forth in Section 4.1.2(ii).
Net Operating Lease Expense shall mean for any
period of determination, the greater of (i) $0, or (ii) the
difference between operating lease expenses and income from
subleases of the Borrower and its Subsidiaries on a consolidated
basis during such period.
Notes shall mean the Revolving Credit Notes, Swing
Note and Bid Notes.
Notices shall have the meaning assigned to that
term in Section 11.6.
Obligation shall mean any obligation or liability
of any of the Loan Parties to the Agent or any of the Banks,
howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or
due or to become due, under or in connection with this Agreement,
the Notes, the Letters of Credit, the Agent's Letter or any
other Loan Document.
Offered Amount shall have the meaning assigned to
such term in Section 2.5.2.
Official Body shall mean any national, federal,
state, local or other government or political subdivision or any
agency, authority, bureau, central bank, commission, department
or instrumentality of either, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic.
Participation Advance shall mean, with respect to
any Bank, such Bank's payment in respect of its participation in
a Letter of Credit Borrowing according to its Ratable Share
pursuant to Section 2.6.4.
Partnership Interests shall have the meaning given
to such term in Section 6.1.2.
Patronage Dividends means "patronage dividends" as
such term is defined in Section 1388(a) of the Internal Revenue
Code of 1986, as amended (the "Code") which Patronage Dividends
may be excluded from taxable income pursuant to Section 1382(b)
of the Code.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA or any successor.
Permitted Acquisitions shall have the meaning
assigned to such term in Section 8.2.6.
Permitted Investments shall mean:
(i) direct obligations of the United States
of America or any agency or instrumentality thereof or
obligations backed by the full faith and credit of the United
States of America maturing in twelve (12) months or less from the
date of acquisition;
(ii) commercial paper either (A) maturing in
180 days or less rated not lower than A-1, by Standard & Poor's
or P-1 by Moody's Investors Service, Inc. on the date of
acquisition or (B) maturing in 30 days or less which is not rated
but with respect to which the issuer has an unconditional line of
credit supporting the repayment of such paper with a commercial
bank whose obligations are rated A-1, A or the equivalent or
better by Standard & Poor's on the date of acquisition; and
(iii) demand deposits, time deposits or
certificates of deposit maturing within one year in commercial
banks whose obligations are rated A-1, A or the equivalent or
better by Standard & Poor's on the date of acquisition;
(iv) money market accounts or mutual fund
accounts investing solely in securities described in (i) through
(iii) above.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business and which
are not yet due and payable;
(ii) Pledges or deposits made in the ordinary
course of business to secure payment of workmen's compensation,
or to participate in any fund in connection with workmen's
compensation, unemployment insurance, old-age pensions or other
social security programs;
(iii) Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens, securing obligations
incurred in the ordinary course of business that are not yet due
and payable and Liens of landlords securing obligations to pay
lease payments that are not yet due and payable or in default;
(iv) Good-faith pledges or deposits made in
the ordinary course of business to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases, not in excess of the aggregate amount due
thereunder, or to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in
the ordinary course of business;
(v) Encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real
property, none of which materially impairs the use of such
property or the value thereof, and none of which is violated in
any material respect by existing or proposed structures or land
use;
(vi) Liens, security interests and mortgages
in favor of the Agent for the benefit of the Banks;
(vii) Liens on property leased by any
Loan Party or Subsidiary of a Loan Party under capital and
operating leases securing obligations of such Loan Party or
Subsidiary to the lessor under such leases;
(viii) Any Lien existing on the date of
this Agreement and described on Schedule 1.1(P), provided that
the principal amount secured thereby is not hereafter increased,
and no additional assets become subject to such Lien;
(ix) Purchase Money Security Interests in the
ordinary course of business, provided that the aggregate amount
of loans and deferred payments secured by such Purchase Money
Security Interests shall not exceed $25,000,000 (excluding for
the purpose of this computation any loans or deferred payments
secured by Liens described on Schedule 1.1(P)); and
(x) The following, (A) if the validity or
amount thereof is being contested in good faith by appropriate
and lawful proceedings diligently conducted so long as levy and
execution thereon have been stayed and continue to be stayed or
(B) if a final judgment is entered and such judgment is
discharged within thirty (30) days of entry or, in the aggregate,
do not materially impair the ability of any Loan Party to perform
its Obligations hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or
charges due and payable and subject to interest or
penalty, provided that the applicable Loan Party
maintains such reserves or other appropriate provisions
as shall be required by GAAP and pays all such taxes,
assessments or charges forthwith upon the commencement
of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and
defects of title to, real or personal property,
including any attachment of personal or real property
or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory
nonconsensual Liens; or
(4) Liens resulting from final judgments or
orders described in Section 9.1.6.
Person shall mean any individual, corporation,
partnership, limited liability company, association, joint-stock
company, trust, unincorporated organization, joint venture,
government or political subdivision or agency thereof, or any
other entity.
Plan shall mean at any time an employee pension
benefit plan (including a Multiple Employer Plan, but not a
Multiemployer Plan) which is covered by Title IV of ERISA or is
subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained by any member
of the ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the
ERISA Group for employees of any entity which was at such time a
member of the ERISA Group.
PNC Bank shall mean PNC Bank, National
Association, its successors and assigns.
Potential Default shall mean any event or
condition which with notice, passage of time or a determination
by the Agent or the Required Banks, or any combination of the
foregoing, would constitute an Event of Default.
Principal Office shall mean the main banking
office of the Agent in Pittsburgh, Pennsylvania.
Prohibited Transaction shall mean any prohibited
transaction as defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA for which neither an individual nor
a class exemption has been issued by the United States Department
of Labor.
Property shall mean all real property, both owned
and leased, of any Loan Party or Subsidiary of a Loan Party.
Purchase Money Security Interest shall mean Liens
upon tangible personal property securing loans to any Loan Party
or Subsidiary of a Loan Party or deferred payments by such Loan
Party or Subsidiary for the purchase of such tangible personal
property.
Purchasing Bank shall mean a Bank which becomes a
party to this Agreement by executing an Assignment and Assumption
Agreement.
Ratable Share shall mean the proportion that a
Bank's Revolving Credit Commitment bears to the Revolving Credit
Commitments of all of the Banks.
Regulated Substances shall mean any substance,
including any solid, liquid, semisolid, gaseous, thermal,
thoriated or radioactive material, refuse, garbage, wastes,
chemicals, petroleum products, by-products, coproducts,
impurities, dust, scrap, heavy metals, defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous
or toxic substance," "extremely hazardous substance," "toxic
chemical," "toxic waste," "hazardous waste," "industrial waste,"
"residual waste," "solid waste," "municipal waste," "mixed
waste," "infectious waste," "chemotherapeutic waste," "medical
waste," or "regulated substance" or any related materials,
substances or wastes as now or hereafter defined pursuant to any
Environmental Laws, ordinances, rules, regulations or other
directives of any Official Body, the generation, manufacture,
extraction, processing, distribution, treatment, storage,
disposal, transport, recycling, reclamation, use, reuse,
spilling, leaking, dumping, injection, pumping, leaching,
emptying, discharge, escape, release or other management or
mismanagement of which is regulated by the Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve
System, as amended from time to time.
Reimbursement Obligation shall have the meaning
assigned to such term in Section 2.6.3.2.
Reportable Event shall mean a reportable event
described in Section 4043 of ERISA and regulations thereunder
with respect to a Plan or Multiemployer Plan.
Requested Amount shall have the meaning assigned
to such term in Section 2.5.1.
Required Banks shall mean
(A) if there are no Loans, Reimbursement Obligations
or Letter of Credit Borrowings outstanding, Required Banks shall
mean Banks whose Revolving Credit Commitments aggregate at least
66-2/3% of the Commitments of all of the Banks, or
(B) if there are Loans, Reimbursement Obligations, or
Letter of Credit Borrowings outstanding, Required Banks shall
mean:
(i) prior to a termination of the Commitments
hereunder pursuant to Section 9.2.1 or 9.2.2, any Bank or group
of Banks if the sum of the Revolving Credit Loans, Reimbursement
Obligations and Letter of Credit Borrowings of such Banks then
outstanding aggregates at least 66-2/3% of the total principal
amount of all of the Committed Loans , Reimbursement Obligations
and Letter of Credit Borrowings then outstanding.
(ii) after a termination of the Commitments
hereunder pursuant to Section 9.2.1 or 9.2.2, any Bank or group
of Banks if the sum of the Loans, Reimbursement Obligations and
Letter of Credit Borrowings of such Banks then outstanding
aggregates at least 66-2/3% of the total principal amount of all
of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings then outstanding.
Reimbursement Obligations and Letter of Credit Borrowings shall
be deemed, for purposes of this definition, to be in favor of the
Issuing Bank and not a participating Bank if such Bank has not
made its Participation Advance in respect thereof and shall be
deemed to be in favor of such Bank to the extent of its
Participation Advance if it has made its Participation Advance in
respect thereof.
Required Share shall have the meaning assigned to
such term in Section 5.6.
Revolving Credit Base Rate Option shall mean the
option of the Borrower to have Revolving Credit Loans bear
interest at the rate and under the terms and conditions set forth
in Section 4.1.1(i).
Revolving Credit Commitment shall mean, as to any
Bank at any time, the amount initially set forth opposite its
name on Schedule 1.1(B) in the column labeled "Amount of
Commitment for Revolving Credit Loans," and thereafter on
Schedule I to the most recent Assignment and Assumption
Agreement, and Revolving Credit Commitments shall mean the
aggregate Revolving Credit Commitments of all of the Banks.
Revolving Credit Euro-Rate Option shall mean the
option of the Borrower to have Revolving Credit Loans bear
interest at the rate and under the terms and conditions set forth
in Section 4.1.1(ii).
Revolving Credit Interest Period shall have the
meaning set forth in Section 4.2.
Revolving Credit Loan Request shall mean a request
for a Revolving Credit Loan or a request to select, convert to or
renew a Base Rate Option or Euro-Rate Option with respect to an
outstanding Revolving Credit Loan in accordance with Section 2.4
or 4.1.
Revolving Credit Loans shall mean collectively and
Revolving Credit Loan shall mean separately all Revolving Credit
Loans or any Revolving Credit Loan made by the Banks or one of
the Banks to the Borrower pursuant to Section 2.1 or 2.6.3. A
Bid Loan is not a Revolving Credit Loan, except that it will be
treated as a Revolving credit Loan following a termination of the
Commitments hereunder pursuant to Section 9.2.1 or 9.2.2 as
provided in Section 9.3.
Revolving Credit Notes shall mean collectively and
Revolving Credit Note shall mean separately all the Revolving
Credit Notes of the Borrower in the form of Exhibit 1.1(R)
evidencing the Revolving Credit Loans together with all
amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time
the sum of the Revolving Credit Loans and Swing Loans outstanding
and the Letters of Credit Outstanding.
Section 20 Subsidiary shall mean the Subsidiary
of the bank holding company controlling any Bank, which
Subsidiary has been granted authority by the Federal Reserve
Board to underwrite and deal in certain Ineligible Securities.
Settlement Date shall mean (i) every other Friday
after the Closing Date, beginning with the second Friday after
the Closing Date (if such Friday is not a Business Day, the next
succeeding Business Day) and (ii) any other Business Day on which
the Agent elects to effect settlement pursuant to Section 5.6.
Standard & Poor's shall mean Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc.
or its successors.
Standby L/C shall mean a letter of credit which is
issued to support obligations of one or more of the Loan Parties
or any Subsidiary of a Loan Party, contingent or otherwise, which
finance the working capital and business needs of the Loan
Parties or any Subsidiary of a Loan Party incurred in the
ordinary course of business and which is not a Commercial L/C.
Subsidiary of any Person at any time shall mean
(i) any corporation or trust of which 50% or more (by number of
shares or number of votes) of the outstanding capital stock or
shares of beneficial interest normally entitled to vote for the
election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such
Person or one or more of such Person's Subsidiaries, (ii) any
partnership of which such Person is a general partner or of which
50% or more of the partnership interests is at the time directly
or indirectly owned by such Person or one or more of such
Person's Subsidiaries, (iii) any limited liability company of
which 50% or more of the membership or limited liability company
interests is at the time directly or indirectly owned by such
Person or one or more of such Person's Subsidiaries or (iv) any
corporation, trust, partnership, limited liability company or
other entity which is controlled or capable of being controlled
by such Person or one or more of such Person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned
to that term in Section 6.1.2.
Swing Loan Commitment shall mean PNC Bank's
commitment to make Swing Loans to the Borrower pursuant to
Section 2.1.2 hereof in an aggregate principal amount up to
$15,000,000.
Swing Loan Note shall mean the Swing Loan Note of
the Borrower in the form of Exhibit 1.1(S) evidencing the Swing
Loans, together with all amendments, extensions, renewals,
replacements, refinancings or refundings thereof in whole or in
part.
Swing Loan Request shall mean a request for Swing
Loans made in accordance with Section 2.4.2 hereof.
Swing Loans shall mean collectively and Swing Loan
shall mean separately all Swing Loans or any Swing Loan made by
PNC Bank to the Borrower pursuant to Section 2.1.2 hereof.
Tangible Assets shall mean as of any date of
determination the total amount of all assets of the Borrower and
its Subsidiaries (less depreciation, depletion and other properly
deductible valuation reserves) after deducting good will patents,
trade names, trade marks, copyrights, franchises, experimental
expense, organization expenses, unamortized debt discount and
expense, deferred assets other than prepaid insurance and prepaid
taxes, the excess of cost of share acquired over book value of
related assets, and such other assets as are properly classified
as "intangible assets" in accordance with GAAP.
Transferor Bank shall mean the selling Bank
pursuant to an Assignment and Assumption Agreement.
1.2 Construction.
Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this
Agreement and each of the other Loan Documents:
1.2.1 Number; Inclusion.
references to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive meaning
represented by the phrase "and/or," and "including" has the
meaning represented by the phrase "including without limitation";
1.2.2 Determination.
references to "determination" of or by the Agent
or the Banks shall be deemed to include good-faith estimates by
the Agent or the Banks (in the case of quantitative
determinations) and good-faith beliefs by the Agent or the Banks
(in the case of qualitative determinations) and such
determination shall be conclusive absent manifest error;
1.2.3 Agent's Discretion and Consent.
whenever the Agent or the Banks are granted the
right herein to act in its or their sole discretion or to grant
or withhold consent such right shall be exercised in good faith;
1.2.4 Documents Taken as a Whole.
the words "hereof," "herein," "hereunder,"
"hereto" and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document as a
whole and not to any particular provision of this Agreement or
such other Loan Document;
1.2.5 Headings.
the Section and other headings contained in this
Agreement or such other Loan Document and the Table of Contents
(if any), preceding this Agreement or such other Loan Document
are for reference purposes only and shall not control or affect
the construction of this Agreement or such other Loan Document or
the interpretation thereof in any respect;
1.2.6 Implied References to this Agreement.
article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Loan Document,
as the case may be, unless otherwise specified;
1.2.7 Persons.
reference to any Person includes such Person's
successors and assigns but, if applicable, only if such
successors and assigns are permitted by this Agreement or such
other Loan Document, as the case may be, and reference to a
Person in a particular capacity excludes such Person in any other
capacity;
1.2.8 Modifications to Documents.
reference to any agreement (including this
Agreement and any other Loan Document together with the schedules
and exhibits hereto or thereto), document or instrument means
such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated;
1.2.9 From, To and Through.
relative to the determination of any period of
time, "from" means "from and including," "to" means "to but
excluding," and "through" means "through and including"; and
1.2.10 Shall; Will.
references to "shall" and "will" are intended to
have the same meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to
this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate), and
all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all
accounting terms used in Section 8.2 and all defined terms used
in the definition of any accounting term used in Section 8.2
shall have the meaning given to such terms (and defined terms)
under GAAP as in effect on the date hereof applied on a basis
consistent with those used in preparing the Annual Statements
referred to in Section 6.1.8(i)). In the event of any change
after the date hereof in GAAP, and if such change would result in
the inability to determine compliance with the financial
covenants set forth in Section 8.2 based upon the Borrower's
regularly prepared financial statements by reason of the
preceding sentence, then the parties hereto agree to endeavor, in
good faith, to agree upon an amendment to this Agreement that
would adjust such financial covenants in a manner that would not
affect the substance thereof, but would allow compliance
therewith to be determined in accordance with the Borrower's
financial statements at that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Revolving Credit Commitments.
2.1.1 Revolving Credit Loans.
Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth,
each Bank severally agrees to make Revolving Credit Loans to the
Borrower at any time or from time to time on or after the date
hereof to the Expiration Date provided that (i) after giving
effect to such Loan the aggregate amount of Loans from such Bank
shall not exceed such Bank's Revolving Credit Commitment minus
such Bank's Ratable Share of the Letters of Credit Outstanding,
and (ii) the sum of the Revolving Facility Usage plus the Bid
Loans shall not exceed the Revolving Credit Commitments. Within
such limits of time and amount and subject to the other
provisions of this Agreement, the Borrower may borrow, repay and
reborrow pursuant to this Section 2.1.
2.1.2 Swing Loan Commitment.
Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth,
and in order to facilitate loans and repayments between
Settlement Dates, PNC Bank may, at its option, cancelable at any
time for any reason whatsoever, make swing loans (the "Swing
Loans") to the Borrower at any time or from time to time after
the date hereof to, but not including, the Expiration Date, in an
aggregate principal amount up to but not in excess of $15,000,000
(the "Swing Loan Commitment"), provided that the aggregate
principal amount of the Revolving Facility Usage plus the
outstanding Bid Loans at any one time shall not exceed the
Revolving Credit Commitments of all the Banks. Within such
limits of time and amount and subject to the other provisions of
this Agreement, the Borrower may borrow, repay and reborrow
pursuant to this Section 2.1.2.
2.2 Nature of Banks' Obligations with Respect to Revolving
Credit Loans.
Each Bank shall be obligated to participate in each
request for Revolving Credit Loans pursuant to Section 2.4 in
accordance with its Ratable Share. The aggregate of each Bank's
Revolving Credit Loans outstanding hereunder to the Borrower at
any time shall never exceed its Revolving Credit Commitment minus
its Ratable Share of the Letter of Credit Outstandings. The
obligations of each Bank hereunder are several. The failure of
any Bank to perform its obligations hereunder shall not affect
the Obligations of the Borrower to any other party nor shall any
other party be liable for the failure of such Bank to perform its
obligations hereunder. The Banks shall have no obligation to
make Revolving Credit Loans hereunder on or after the Expiration
Date.
2.3 Facility Fees.
Accruing from the date hereof until the Expiration
Date, the Borrower agrees to pay to the Agent for the account of
each Bank, as consideration for such Bank's Revolving Credit
Commitment hereunder, a nonrefundable fee (the "Facility Fee")
equal to the Applicable Facility Fee Rate (computed on the basis
of a year of 360 days, as the case may be, and actual days
elapsed) times the average (computed over any period of
determination of the Facility Fee) daily amount of such Bank's
Revolving Credit Commitment as the same may be constituted from
time to time. All Facility Fees shall be payable in arrears on
the last Business Day of each March, June, September and December
after the date hereof and on the Expiration Date or upon
acceleration of the Revolving Credit Notes.
2.4 Revolving Credit Loan Requests and Swing Loan Requests.
2.4.1 Revolving Credit Loan Requests.
Except as otherwise provided herein, the Borrower
may from time to time prior to the Expiration Date request the
Banks to make Revolving Credit Loans, or renew or convert the
Interest Rate Option applicable to existing Revolving Credit
Loans pursuant to Section 4.2, by delivering to the Agent, not
later than (i) 1:00 p.m. Pittsburgh time, (ii) three (3) Business
Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the Euro-Rate Option
applies or the conversion to or the renewal of the Euro-Rate
Option for any Revolving Credit Loans; and (iii) 12:00 Noon on
the proposed Borrowing Date with respect to the making of a
Revolving Credit Loan to which the Base Rate Option applies or
the last day of the preceding Revolving Credit Interest Period
with respect to the conversion to the Base Rate Option for any
Revolving Credit Loan, of a duly completed Revolving Credit Loan
Request therefor substantially in the form of Exhibit 2.4.1 or a
Revolving Credit Loan Request by telephone immediately confirmed
in writing by letter, facsimile or telex in the form of such
Exhibit, it being understood that the Agent may rely on the
authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation.
Each Loan Request shall be irrevocable and shall specify (i) the
proposed Borrowing Date; (ii) the aggregate amount of the
proposed Revolving Credit Loans comprising each Borrowing
Tranche, which shall be in integral multiples of $500,000 and not
less than $2,500,000 for each Borrowing Tranche to which the Euro-
Rate Option applies and integral multiples of $500,000 and not
less than the lesser of $1,000,000 or the maximum amount
available for Borrowing Tranches to which the Base Rate Option
applies; (iii) whether the Revolving Credit Euro-Rate Option or
Base Rate Option shall apply to the proposed Revolving Credit
Loans comprising the applicable Borrowing Tranche; (iv) in the
case of a Borrowing Tranche to which the Revolving Credit Euro-
Rate Option applies, an appropriate Revolving Credit Loan
Interest Period for the proposed Revolving Credit Loans
comprising such Borrowing Tranche.
2.4.2 Swing Loan Requests.
Except as otherwise provided herein, the Borrower
may from time to time prior to the Expiration Date request PNC
Bank to make Swing Loans by delivery to PNC Bank not later than
1:00 p.m. Pittsburgh time on the proposed Borrowing Date of a
duly completed request therefor substantially in the form of
Exhibit 2.4.2 hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a
"Swing Loan Request"), it being understood that the Agent may
rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and
shall specify the proposed Borrowing Date and the principal
amount of such Swing Loan, which shall be not less than $500,000.
2.4.3 Making Revolving Credit Loans.
The Agent shall, promptly after receipt by it of a
Revolving Credit Loan Request pursuant to Section 2.4, notify the
Banks of its receipt of such Revolving Credit Loan Request
specifying: (i) the proposed Borrowing Date and the time and
method of disbursement of the Revolving Credit Loans requested
thereby; (ii) the amount and type of each such Revolving Credit
Loan and the applicable Revolving Credit Interest Period (if
any); and (iii) the apportionment among the Banks of such
Revolving Credit Loans as determined by the Agent in accordance
with Section 2.2. Each Bank shall remit the principal amount of
each Revolving Credit Loan to the Agent such that the Agent is
able to, and the Agent shall, to the extent the Banks have made
funds available to it for such purpose and subject to
Section 7.2, fund such Revolving Credit Loans to the Borrower in
U.S. Dollars and immediately available funds at the Principal
Office prior to 2:00 p.m., Pittsburgh time, on the applicable
Borrowing Date, provided that if any Bank fails to remit such
funds to the Agent in a timely manner, the Agent may elect in its
sole discretion to fund with its own funds the Revolving Credit
Loans of such Bank on such Borrowing Date, and such Bank shall be
subject to the repayment obligation in Section 10.16.
2.4.4 Making Swing Loans.
So long as PNC Bank elects to make Swing Loans,
PNC Bank shall, after receipt by it of a Swing Loan Request
pursuant to Section 2.4.2, fund such Swing Loan to the Borrower
in U.S. Dollars and immediately available funds at the Principal
Office on the Borrowing Date.
2.4.5 Revolving Credit Notes.
The Obligation of the Borrower to repay the
aggregate unpaid principal amount of the Revolving Credit Loans
made to it by each Bank, together with interest thereon, shall be
evidenced by a Revolving Credit Note dated the Closing Date
payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
2.4.6 Swing Loan Note.
The obligation of the Borrower to repay the unpaid
principal amount of the Swing Loans made to it by PNC Bank
together with interest thereon shall be evidenced by a demand
promissory note of the Borrower dated the Closing Date in
substantially the form attached hereto as Exhibit 1.1(S) payable
to the order of PNC Bank in a face amount equal to the Swing Loan
Commitment.
2.4.7 Use of Proceeds.
The proceeds of the Revolving Credit Loans shall
be used for
working capital and general corporate purposes and in accordance
with Section 8.1.10. None of the Commitments or the Loans shall
be used for currency speculation or similar purposes.
2.4.8 Borrowings to Repay Swing Loans.
PNC may, at its option, exercisable at any time
for any reason whatsoever, demand repayment of the Swing Loans,
and each Bank shall make a Revolving Credit Loan in an amount
equal to such Bank's Ratable Share of the aggregate principal
amount of the outstanding Swing Loans, plus, if PNC so requests,
accrued interest thereon, provided that no Bank shall be
obligated in any event to make Revolving Credit Loans in excess
of its Revolving Credit Commitment. Revolving Credit Loans made
pursuant to the preceding sentence shall bear interest at the
Base Rate Option and shall be deemed to have been properly
requested in accordance with Section 2.4.1 without regard to any
of the requirements of that provision. PNC shall provide notice
to the Banks and the Borrower (which may be telephonic or written
notice by letter, facsimile or telex) that such Revolving Credit
Loans are to be made under this Section 2.4.8 and of the
apportionment among the Banks, and the Banks shall be
unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 7.2 are then
satisfied) by the time PNC so requests, which shall not be
earlier than 3:00 p.m. Pittsburgh time on the Business Day next
after the date the Banks receive such notice from PNC.
2.5 Bid Loan Facility.
2.5.1 Bid Loan Requests.
The Borrower may at its option from time to time
prior to the Expiration Date request that the Banks make Bid
Loans, provided that each of the following conditions is true and
correct on the date of such request: (i) no Potential Default or
Event of Default exists and is continuing, (ii) Borrower's Debt
to Capital Ratio was less than .55 to 1.0 on the date of, and as
reported on, the compliance certificate which Borrower most
recently delivered pursuant to Section 8.3.3, and
(iii) Borrower's Debt to Capital Ratio is less than .55 to 1.0 on
the date of such request as warranted by Borrower in such
request. Borrower shall make its request for Bid Loans by
delivering to the Agent not later than 1:00 p.m. Pittsburgh time
of a duly completed request therefor substantially in the form of
Exhibit 2.5.1 hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a "Bid
Loan Request") at least two (2) Business Days prior to the
proposed Bid Loan Borrowing Date if Borrower is requesting Fixed
Rate Bid Loans and four (4) Business Days prior to the proposed
Bid Loan Borrowing Date if Borrower is requesting Euro-Rate Bid
Loans. The Agent may rely on the authority of any individual
making a telephonic request referred to in the preceding sentence
without the necessity of receipt of written confirmation. Each
Bid Loan Request shall be irrevocable and shall specify (i) the
proposed Bid Loan Borrowing Date, (ii) whether Borrower is
electing the Fixed Rate Bid Loan Option or the Euro-Rate Bid Loan
Option, (iii) the term of the proposed Bid Loan (the "Bid Loan
Interest Period") which may be no less than seven (7) day(s) and
no longer than sixty (60) days, and (iv) the maximum principal
amount (the "Requested Amount") of such Bid Loan, which shall be
not less than $2,500,000 and shall be an integral multiple of
$500,000. After giving effect to such Bid Loan and any other Loan
made on or before the Bid Loan Borrowing Date, the aggregate
Revolving Facility Usage plus Bid Loans outstanding shall not
exceed the aggregate amount of the Revolving Credit Commitments
of the Banks. There shall be at least five (5) Business Days
between each Bid Loan Borrowing Date.
2.5.2 Bidding.
The Agent shall promptly after receipt by it of a
Bid Loan Request pursuant to Section 2.5.1 notify the Banks of
its receipt of such Bid Loan Request specifying (i) the proposed
Bid Loan Borrowing Date, (ii) whether the proposed Bid Loan shall
be a Fixed Rate Bid Loan or a Euro-Rate Bid Loan, (iii) the Bid
Loan Interest Period and (iv) the principal amount of the
proposed Bid Loan. Each Bank may submit a bid (a "Bid") to the
Agent not later than 11:00 A.M. Pittsburgh time one (1) Business
Day before the proposed Bid Loan Borrowing Date if Borrower is
requesting a Fixed Rate Bid Loan or three (3) Business Days
before the proposed Bid Loan Borrowing Date if Borrower is
requesting a Euro-Rate Bid Loan by telephone (immediately
confirmed in writing by letter, facsimile or telex). Each Bid
shall specify: (A) the principal amount of proposed Bid Loans
offered by such Bank (the "Offered Amount") which (i) may be less
than, but shall not exceed, the Requested Amount, (ii) shall be
at least $2,500,000 and shall be an integral multiple of $500,000
and (iii) may exceed such Bank's Revolving Credit Commitment, and
(B) the Fixed Rate which shall apply to such proposed Bid Loan
if Borrower has requested a Fixed Rate Bid Loan or the Euro-Rate
Bid Loan Spread which shall apply to such proposed Bid Loan if
Borrower has requested a Euro-Rate Bid Loan. If any Bid omits
information required hereunder, the Agent may in its sole
discretion attempt to notify the Bank submitting such Bid. If
the Agent so notifies a Bank, such Bank may resubmit its Bid
provided that it does so prior to time set forth in this Section
2.5.2 above by which such Bank is required to submit its Bid to
the Agent. The Agent shall promptly notify the Borrower of the
Bids which it timely received from the Banks. If the Agent in its
capacity as a Bank shall, in its sole discretion, make a Bid, it
shall notify the Borrower of such Bid before 10:00 A.M.
Pittsburgh time one (1) Business Day before the proposed Bid Loan
Borrowing Date if Borrower is requesting a Fixed Rate Bid Loan or
three (3) Business Days before the proposed Bid Loan Borrowing
Date if Borrower is requesting a Euro-Rate Bid Loan.
2.5.3 Accepting Bids.
The Borrower shall irrevocably accept or reject
Bids by notifying the Agent of such acceptance or rejection by
telephone (immediately confirmed in writing by letter, facsimile
or telex) not later than 11:30 a.m. Pittsburgh time one (1)
Business Day before the proposed Bid Loan Borrowing Date if
Borrower is requesting a Fixed Rate Bid Loan or three (3)
Business Days before the proposed Bid Loan Borrowing Date if
Borrower is requesting a Euro-Rate Bid Loan. If the Borrower
elects to accept any Bids, its acceptance must meet the following
conditions: (1) the total amount which Borrower accepts from all
Banks must equal or exceed $2,500,000 and be in integral
multiples of $500,000 and may not exceed the Requested Amount;
(2) the Borrower must accept Bids based solely on the amount of
the Fixed Rates or Euro-Rate Bid Loan Spreads, as the case may
be, which each of the Banks quoted in their Bids in ascending
order of the amount of Fixed Rates or Euro-Rate Bid Loan Spreads;
(3) the Borrower may not borrow Bid Loans from any Bank on the
Bid Loan Borrowing Date in an amount exceeding such Bank's
Offered Amount; (4) if two or more Banks make Bids at the same
Fixed Rate (if Borrower Requested a Fixed Rate Bid Loan)or Euro-
Rate Bid Loan Spread (if Borrower Requested a Euro-Rate Bid Loan)
and the Borrower desires to accept a portion but not all of the
Bids at such Fixed Rate or Euro-Rate Bid Loan Spread, as the case
may be, the Borrower shall accept a portion of each Bid equal to
the product of the Offered Amount of such Bid times the fraction
obtained by dividing the total amount of Bids which Borrower is
accepting at such Fixed Rate or Euro-Rate Bid Loan Spread, as the
case may be, by the sum of the Offered Amounts of the Bids at
such Fixed Rate or Euro-Rate Bid Loan Spread; provided that the
Borrower shall round the Bid Loans allocated to each such Bank
upward or downward as the Borrower may select to integral
multiples of $100,000. The Agent shall (i) promptly notify a
Bank that has made a Bid of the amount of its Bid that was
accepted or rejected by the Borrower and (ii) as promptly as
practical notify all of the Banks of all Bids submitted and those
which have been accepted.
2.5.4 Funding Bid Loans.
Each Bank whose Bid or portion thereof is accepted
shall remit the principal amount of its Bid Loan to the Agent by
1:00 p.m. on the Borrowing Date. The Agent shall make such funds
available to the Borrower on or before 2:00 p.m. on the Borrowing
Date provided that the conditions precedent to the making of such
Bid Loan set forth in Section 7.2 have been satisfied not later
than 10:00 A.M. Pittsburgh time on the proposed Borrowing Date.
If such conditions precedent have not been satisfied prior to
such time, then (i) the Agent shall not make such funds available
to the Borrower, (ii) the Bid Loan Request shall be deemed to be
canceled and (iii) the Agent shall return the amount previously
funded to the Agent by each applicable Bank promptly but in any
event no later than the next following Business Day. The
Borrower shall immediately notify the Agent of any failure to
satisfy the conditions precedent to the making of Bid Loans under
Section 7.2. The Agent may assume that Borrower has satisfied
such conditions precedent if the Borrower (i) has delivered to
the Agent the documents required to be delivered under Section
7.2, (ii) the Borrower has not notified the Agent that the Loan
Parties have not satisfied any other conditions precedent, and
(iii) the Agent has no actual notice of such a failure.
2.5.5 Several Obligations.
The obligations of the Banks to make Bid Loans
after their Bids have been accepted are several. No Bank shall
be responsible for the failure of any other Bank to make any Bid
Loan which another Bank has agreed to make.
2.5.6 Bid Notes.
The obligation of the Borrower to repay the
aggregate unpaid principal amount of the Bid Loans made to it by
each Bank, together with interest thereon, shall be evidenced by
a Bid Note dated as of the Closing Date payable to the order of
such Bank in a face amount equal to the aggregate Revolving
Credit Commitments of all of the Banks.
2.6 Letter of Credit Subfacility.
2.6.1 Issuance of Letters of Credit.
Borrower may request the issuance of a Standby L/C
(each a "Letter of Credit") on behalf of itself or another Loan
Party or a Subsidiary of a Loan Party by delivering to the
Issuing Bank a completed application and agreement for letters of
credit in such form as the Issuing Bank may specify from time to
time by no later than 1:00 p.m., Pittsburgh time, at least three
(3) Business Days, or such shorter period as may be agreed to by
the Issuing Bank, in advance of the proposed date of issuance.
Subject to the terms and conditions hereof and in reliance on the
agreements of the other Banks set forth in this Section 2.6, the
Issuing Bank will issue a Letter of Credit provided that each
Letter of Credit shall (A) have a maximum maturity of twelve (12)
months from the date of issuance, and (B) in no event expire
later than one Business Day prior to the Expiration Date and
providing that in no event shall (i) the Letters of Credit
Outstanding exceed, at any one time, $15,000,000, or (ii) the sum
of the Revolving Facility Usage plus the outstanding Bid Loans
exceed, at any one time, the Revolving Credit Commitments.
2.6.2 Letter of Credit Fees.
The Borrower shall pay to the Agent for the
ratable account of the Banks a fee (the "Letter of Credit Fee")
charged at a rate per annum equal to the Applicable Margin in
effect for Loans under the Revolving Credit Euro-Rate Option
(such rate shall be computed on the basis of a year of 360 days
and actual days elapsed and shall change at the time of any
change in the Applicable Margin) on the daily average Letters of
Credit Outstanding for the applicable period of determination of
the Letter of Credit Fee and payable quarterly in arrears
commencing with the last Business Day of each March, June,
September and December following issuance of each Letter of
Credit and on the Expiration Date. The Borrower shall also pay
to the Issuing Bank for the Issuing Bank's sole account the
Issuing Bank's then in effect customary fees and administrative
expenses payable with respect to the Letters of Credit as the
Issuing Bank may generally charge or incur from time to time in
connection with the issuance, maintenance, modification (if any),
assignment or transfer (if any), negotiation, and administration
of Letters of Credit.
2.6.3 Disbursements, Reimbursement.
2.6.3.1 Immediately upon the issuance of
each Letter of Credit, each Bank shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the
Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such Bank's Ratable
Share of the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively.
2.6.3.2 In the event of any request for
a drawing under a Letter of Credit by the beneficiary or
transferee thereof, the Issuing Bank will promptly notify the
Borrower. The Borrower shall reimburse (such obligation to
reimburse the Issuing Bank shall sometimes be referred to as
a "Reimbursement Obligation") the Issuing Bank prior to 12:00
noon, Pittsburgh time on each date that an amount is paid by
the Issuing Bank under any Letter of Credit (each such date,
an "Drawing Date") in an amount equal to the amount so paid
by the Issuing Bank. In the event the Borrower fails to
reimburse the Issuing Bank for the full amount of any drawing
under any Letter of Credit by 12:00 noon, Pittsburgh time,
on the Drawing Date, the Issuing Bank will promptly notify
each Bank thereof, and the Borrower shall be deemed to have
requested that Revolving Credit Loans be made by the Banks
under the Base Rate Option to be disbursed on the Drawing
Date under such Letter of Credit, subject to the amount of
the unutilized portion of the Revolving Credit Commitment and
subject to the conditions set forth in Section 7.2 other than
any notice requirements. Any notice given by the Issuing Bank
pursuant to this Section 2.6.3.2 may be oral if immediately
confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding
effect of such notice.
2.6.3.3 Each Bank shall upon any notice
pursuant to Section 2.6.3.2 make available to the Issuing Bank
an amount in immediately available funds equal to its Ratable
Share of the amount of the drawing, whereupon the participating
Banks shall (subject to Section 2.6.3.4) each be deemed to have
made a Revolving Credit Loan under the Base Rate Option to the
Borrower in that amount. If any Bank so notified fails to make
available to the Issuing Bank for the account of the Issuing Bank
the amount of such Bank's Ratable Share of such amount by no later
than 2:00 p.m., Pittsburgh time on the Drawing Date, then
interest shall accrue on such Bank's obligation to make such
payment, from the Drawing Date to the date on which such Bank
makes such payment, at a rate per annum equal to the Federal
Funds Rate in effect from time to time during such period. The
Issuing Bank will promptly give notice of the occurrence of the
Drawing Date, but failure of the Issuing Bank to give any such
notice on the Drawing Date or in sufficient time to enable any
Bank to effect such payment on such date shall not relieve such
Bank from its obligation under this Section 2.6.3.3.
2.6.3.4 With respect to any unreimbursed
drawing that is not converted into Revolving Credit Loans under
the Base Rate Option to the Borrower in whole or in part as
contemplated by Section 2.6.3.2, because of the Borrower's
failure to satisfy the conditions set forth in Section 7.2 other
than any notice requirements or for any other reason, the Borrower
shall be deemed to have incurred from the Issuing Bank a Letter
of Credit Borrowing in the amount of such drawing. Such Letter
of Credit Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the rate per annum
applicable to the Revolving Credit Loans under the Base Rate
Option. Each Bank's payment to the Issuing Bank pursuant to
Section 2.6.3.3 shall be deemed to be a payment in respect of its
participation in such Letter of Credit Borrowing and shall
constitute a Participation Advance from such Bank in satisfaction
of its participation obligation under this Section 2.6.3.
2.6.4 Repayment of Participation Advances.
2.6.4.1 Upon (and only upon) receipt by the
Issuing Bank for its account of immediately available funds from
the Borrower (i) in reimbursement of any payment made by the Issuing
Bank under the Letter of Credit with respect to which any Bank has
made a Participation Advance to the Issuing Bank, or (ii) in
payment of interest on such a payment made by the Issuing Bank
under such a Letter of Credit, the Issuing Bank will pay to each
Bank, in the same funds as those received by the Issuing Bank,
the amount of such Bank's Ratable Share of such funds, except the
Issuing Bank shall retain the amount of the Ratable Share of such
funds of any Bank that did not make a Participation Advance in
respect of such payment by Issuing Bank.
2.6.4.2 If the Issuing Bank is required at
any time to return to any Loan Party, or to a trustee, receiver,
liquidator, custodian, or any official in any Insolvency Proceeding,
any portion of the payments made by any Loan Party to the Issuing
Bank pursuant to Section 2.6.4.1 in reimbursement of a payment
made under the Letter of Credit or interest or fee thereon, each
Bank shall, on demand of the Issuing Bank, forthwith return to
the Issuing Bank the amount of its Ratable Share of any amounts
so returned by the Issuing Bank plus interest thereon from the
date such demand is made to the date such amounts are returned by
such Bank to the Issuing Bank, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
2.6.5 Documentation.
Each Loan Party agrees to be bound by the terms of
the Issuing Bank's application and reimbursement agreement and
any other agreement for letters of credit and the Issuing Bank's
written regulations and customary practices relating to letters
of credit, though such interpretation may be different from the
such Loan Party's own. In the event of a conflict between such
application, reimbursement agreement or other agreement (but not
the Letter of Credit) and this Agreement, this Agreement shall
govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Issuing Bank shall
not be liable for any error, negligence and/or mistakes, whether
of omission or commission, in following any Loan Party's
instructions or those contained in the Letters of Credit or any
modifications, amendments or supplements thereto.
2.6.6 Determinations to Honor Drawing Requests.
In determining whether to honor any request for
drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Bank shall be responsible only to determine that the
documents and certificates required to be delivered under such
Letter of Credit have been delivered and that they comply on
their face with the requirements of such Letter of Credit.
2.6.7 Nature of Participation and Reimbursement
Obligations.
Each Bank's obligation in accordance with this
Agreement to make the Revolving Credit Loans or Participation
Advances, as contemplated by Section 2.6.3, as a result of a
drawing under a Letter of Credit, and the Obligations of the
Borrower to reimburse the Issuing Bank upon a draw under a Letter
of Credit, shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this
Section 2.6 under all circumstances, including the following
circumstances:
(i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing
Bank, the Borrower or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any
other Person to comply, in connection with a Letter of Credit
Borrowing, with the conditions set forth in Section 2.1, 2.4 or
7.2 or as otherwise set forth in this Agreement for the making
of a Revolving Credit Loan, it being acknowledged that such
conditions are not required for the making of a Letter of Credit
Borrowing and the obligation of the Banks to make Participation
Advances under Section 2.6.3;
(iii) any lack of validity or
enforceability of any Letter of Credit;
(iv) the existence of any claim, set-off,
defense or other right which any Loan Party or any Bank may have
at any time against a beneficiary or any transferee of any Letter
of Credit (or any Persons for whom any such transferee may be
acting), the Issuing Bank or any Bank or any other Person or,
whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between any Loan Party or Subsidiaries of
a Loan Party and the beneficiary for which any Letter of Credit
was procured);
(v) any draft, demand, certificate or
other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect even
if the Issuing Bank has been notified thereof;
(vi) payment by the Issuing Bank under any
Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms
of such Letter of Credit;
(vii) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or
prospects of any Loan Party or Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any
other Loan Document by any party thereto;
(ix) the occurrence or continuance of an
Insolvency Proceeding with respect to any Loan Party;
(x) the fact that an Event of Default or a
Potential Default shall have occurred and be continuing;
(xi) the fact that the Expiration Date shall
have passed or this Agreement or the Commitments hereunder shall
have been terminated; and
(xii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing; provided
that each Bank's igation to make Revolving Credit Loans under Section
2.6.3.3 is subject to the conditions set forth in Section 7.2.
2.6.8 Indemnity.
In addition to amounts payable as provided in
Section 10.5, the Borrower hereby agrees to protect, indemnify,
pay and save harmless the Issuing Bank from and against any and
all claims, demands, liabilities, damages, losses, costs, charges
and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel)
which the Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any
Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of the Issuing Bank as
determined by a final judgment of a court of competent
jurisdiction or (B) subject to the following clause (ii), the
wrongful dishonor by the Issuing Bank of a proper demand for
payment made under any Letter of Credit, or (ii) the failure of
the Issuing Bank to honor a drawing under any such Letter of
Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government
or governmental authority (all such acts or omissions herein
called "Governmental Acts").
2.6.9 Liability for Acts and Omissions.
As between any Loan Party and the Issuing Bank,
such Loan Party assumes all risks of the acts and omissions of,
or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the Issuing Bank shall not be
responsible for: (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for an issuance of any
such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent
or forged (even if the Issuing Bank shall have been notified
thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the
beneficiary of any such Letter of Credit, or any other party to
which such Letter of Credit may be transferred, to comply fully
with any conditions required in order to draw upon such Letter of
Credit or any other claim of any Loan Party against any
beneficiary of such Letter of Credit, or any such transferee, or
any dispute between or among any Loan Party and any beneficiary
of any Letter of Credit or any such transferee; (iv) errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the
control of the Issuing Bank, including any Governmental Acts, and
none of the above shall affect or impair, or prevent the vesting
of, any of the Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation
of the specific provisions set forth above, any action taken or
omitted by the Issuing Bank under or in connection with the
Letters of Credit issued by it or any documents and certificates
delivered thereunder, if taken or omitted in good faith, shall
not put the Issuing Bank under any resulting liability to the
Borrower or any Bank.
2.6.10 Duties of Issuing Bank.
Nothing contained in this Section 2.6 shall be
deemed to release the Issuing Bank from its duty to comply with
the terms of a Letter of Credit (excluding to the extent of any
conflict with this Agreement the application for such Letter of
Credit, any reimbursement agreement or other agreement related
thereto) under applicable Law and such Letter of Credit.
3. REDUCTION IN COMMITMENTS
The Borrower shall have the right at any time and from time
to time upon five (5) Business Days' prior written notice to the
Agent to permanently reduce, in a minimum amount of $5,000,000
and whole multiples of $1,000,000, or terminate the Revolving
Credit Commitment without penalty or premium, except as
hereinafter set forth, provided that any such reduction or
termination shall be accompanied by (a) the payment in full of
any Facility Fee then accrued on the amount of such reduction or
termination and (b) prepayment of the Revolving Credit Notes and
also if necessary the Swing Note, together with the full amount
of interest accrued on the principal sum to be prepaid (and all
amounts referred to in Section 5.5 hereof), to the extent that
the aggregate amount of the sum of the Revolving Facility Usage
and the Bid Loans thereof then outstanding exceeds the Revolving
Credit Commitment as so reduced or terminated. From the
effective date of any such reduction or termination the
obligations of Borrower to pay the Facility Fee pursuant to
Section 2.3 shall correspondingly be reduced or cease.
4. INTEREST RATES
4.1 Interest Rate Options.
The Borrower shall pay interest in respect of the
outstanding unpaid principal amount of the Committed Loans as
selected by it from the Interest Rate Options set forth below
applicable to the Revolving Credit Loans or Swing Loans, it being
understood that, subject to the provisions of this Agreement, the
Borrower may select different Interest Rate Options and different
Interest Periods to apply simultaneously to the Revolving Credit
Loans or Swing Loans comprising different Borrowing Tranches and
may convert to or renew one or more Interest Rate Options with
respect to all or any portion of the Revolving Credit Loans or
Swing Loans comprising any Borrowing Tranche, provided that there
shall not be at any one time outstanding more than six (6)
Borrowing Tranches in the aggregate among all of the Loans. If
at any time the designated rate applicable to any Revolving
Credit Loan or Swing Loan made by any Bank exceeds such Bank's
highest lawful rate, the rate of interest on such Bank's Loan
shall be limited to such Bank's highest lawful rate.
4.1.1 Revolving Credit Interest Rate Options.
The Borrower shall have the right to select from
the following Interest Rate Options applicable to the Revolving
Credit Loans (but not the Swing Loans):
(i) Revolving Credit Base Rate Option:
A fluctuating rate per annum (computed on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed)
equal to the Base Rate plus the Applicable Margin such interest
rate to change automatically from time to time effective as of
the effective date of each change in the Base Rate;
(ii) Revolving Credit Euro-Rate Option:
A rate per annum (computed on the basis of a year of 360 days
and actual days elapsed) equal to the Euro-Rate plus the
Applicable Margin; or
4.1.2 Swing Loan Interest Rate Option.
The Borrower shall have the right to select from
the following Interest Rate Options applicable to the Swing Loans
(i) Swing Loan Federal Funds Rate Option:
A fluctuating rate per annum (computed on the basis of a year of
360 days, as the case may be, and actual days elapsed) equal to
the Federal Funds Rate plus .75% per annum, such interest rate
to change automatically from time to time effective as of the
effective date of each change in the Federal Funds Rate.
(ii) Swing Loan Negotiated Rate Option.
A fixed rate per annum (computed on the basis of a year of 360
days and actual days elapsed) as quoted by the Agent to the
Borrower on or before 9:30 a.m. on the Borrowing Date.
4.2 Revolving Credit Interest Periods.
At any time when the Borrower shall select, convert to
or renew a Revolving Credit Euro-Rate Option, the Borrower shall
notify the Agent thereof at least three (3) Business Days prior
to the effective date of such Revolving Credit Euro-Rate Option
by delivering a Revolving Credit Loan Request. The notice shall
specify an interest period (the "Revolving Credit Interest
Period") during which such Interest Rate Option shall apply, such
Revolving Credit Interest Period to be one, two, three or six
Months. Notwithstanding the preceding sentence, the following
provisions shall apply to any selection of, renewal of, or
conversion to a Revolving Credit Euro-Rate Option:
4.2.1 Ending Date and Business Day.
any Euro-Rate Interest Period which would
otherwise end on a date which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business
Day falls in the next calendar month, in which case such Euro-
Rate Interest Period shall end on the next preceding Business
Day;
4.2.2 Amount of Borrowing Tranche.
each Borrowing Tranche of Loans under the
Revolving Credit Euro-Rate Option shall be in integral multiples
of $500,000 and not less than $2,500,000;
4.2.3 Termination Before Expiration Date.
the Borrower shall not select, convert to or renew
an Interest Period for any portion of the Loans that would end
after the Expiration Date; and
4.2.4 Renewals.
in the case of the renewal of a Revolving Credit
Euro-Rate Option at the end of an Interest Period, the first day
of the new Interest Period shall be the last day of the preceding
Interest Period, without duplication in payment of interest for
such day.
4.3 Interest After Default.
To the extent permitted by Law, upon the occurrence of
an Event of Default and until such time such Event of Default
shall have been cured or waived:
4.3.1 Letter of Credit Fees, Interest Rate.
the Letter of Credit Fees and the rate of interest
for each Loan otherwise applicable pursuant to Section 2.6 or
Section 4.1 or otherwise applicable under this Agreement, shall
be increased by 2% per annum; and
4.3.2 Other Obligations.
each other Obligation hereunder if not paid when
due shall bear interest at a rate per annum equal to the sum of
the rate of interest applicable under the Revolving Credit Base
Rate Option plus an additional 2% per annum from the time such
Obligation becomes due and payable and until it is paid in full.
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available.
4.4.1 Unascertainable.
If on any date on which a Euro-Rate would
otherwise be determined with respect to Committed Loans or Bid
Loans, the Agent shall have determined that:
(i) adequate and reasonable means do not
exist for ascertaining such Euro-Rate, or
(ii) a contingency has occurred which
materially and adversely affects the secondary market for
negotiable certificates of deposit maintained by dealers of
recognized standing relating to the London interbank eurodollar
market relating to the Euro-Rate; the Agent shall have the
rights specified in Section 4.4.3.
4.4.2 Illegality; Increased Costs; Deposits Not Available.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any
Loan to which a Euro-Rate Option applies has been made impracticable
or unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or
with any request or directive of any such Official Body (whether
or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately
and fairly reflect the cost to such Bank of the establishment or
maintenance of any such Loan, or
(iii) after making all reasonable efforts,
deposits of the relevant amount in Dollars for the relevant Interest
Period for a Loan to which a Euro-Rate Option applies, respectively,
are not available to such Bank with respect to such Loan, in the London
interbank market, then the Agent shall have the rights specified in
Section 4.4.3.
4.4.3 Agent's and Bank's Rights.
In the case of any event specified in
Section 4.4.1 above, the Agent shall promptly so notify the Banks
and the Borrower thereof, and in the case of an event specified
in Section 4.4.2 above, such Bank shall promptly so notify the
Agent and endorse a certificate to such notice as to the specific
circumstances of such notice, and the Agent shall promptly send
copies of such notice and certificate and the Borrower. Upon
such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given), the obligation of
(A) the Banks, in the case of such notice given by the Agent, or
(B) such Bank, in the case of such notice given by such Bank, to
allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Agent shall have later
notified the Borrower, or such Bank shall have later notified the
Agent, of the Agent's or such Bank's, as the case may be,
determination that the circumstances giving rise to such previous
determination no longer exist. If at any time the Agent makes a
determination under Section 4.4.1 and the Borrower has previously
notified the Agent of its selection of, conversion to or renewal
of a Euro-Rate Option and such Interest Rate Option has not yet
gone into effect, such notification shall be deemed to provide
for the termination of Borrower's Bid Loan request (without
penalty) for such Loans if the Borrower has requested Bid Loans
under the Bid Loan Euro-Rate Option and for the selection of,
conversion to or renewal of the Base Rate Option otherwise
available with respect to such Loans if the Borrower has
requested the Revolving Credit Euro-Rate Option. If any Bank
notifies the Agent of a determination under Section 4.4.2, the
Borrower shall, subject to the Borrower's indemnification
Obligations under Section 5.5.2, as to any Loan of the Bank to
which a Euro-Rate Option applies, on the date specified in such
notice either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan or prepay such Loan in
accordance with Section 5.4. Absent due notice from the Borrower
of conversion or prepayment, such Loan shall automatically be
converted to the Base Rate Option otherwise available with
respect to such Loan upon such specified date.
4.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period
to apply to any Borrowing Tranche of Loans under the Revolving
Credit Euro-Rate Option at the expiration of an existing Interest
Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.2, the Borrower shall be deemed to
have converted such Borrowing Tranche to the Base Rate Option, as
applicable, commencing upon the last day of the existing Interest
Period.
5. PAYMENTS
5.1 Payments.
All payments and prepayments to be made in respect of
principal, interest, Facility Fees, Bid Loan Processing Fee,
Letter of Credit Fees, Agent's Fee or other fees or amounts due
from the Borrower hereunder shall be payable prior to 1:00 p.m.
(except that payments of principal of the Loans under the Base
Rate Option shall be payable prior to 12:00 Noon), Pittsburgh
time, on the date when due without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived
by the Borrower, and without set-off, counterclaim or other
deduction of any nature, and an action therefor shall immediately
accrue. Such payments shall be made to the Agent at the
Principal Office for the account of PNC Bank with respect to the
Swing Loans and for the ratable accounts of the Banks with
respect to the Revolving Credit Loans and for the account of the
lending Bank with respect to the Bid Loans, in U.S. Dollars and
in immediately available funds, and the Agent shall promptly
distribute such amounts to the Banks in immediately available
funds, provided that in the event payments are received by the
time set forth above by the Agent with respect to the Loans and
such payments are not distributed to the Banks on the same day
received by the Agent, the Agent shall pay the Banks the Federal
Funds Rate with respect to the amount of such payments for each
day held by the Agent and not distributed to the Banks. The
Agent's and each Bank's statement of account, ledger or other
relevant record shall, in the absence of manifest error, be
conclusive as the statement of the amount of principal of and
interest on the Loans and other amounts owing under this
Agreement.
5.2 Pro Rata Treatment of Banks.
Each borrowing of Revolving Credit Loans shall be
allocated to each Bank according to its Ratable Share
(irrespective of the amount of Bid Loans outstanding), and each
selection of, conversion to or renewal of any Interest Rate
Option applicable to Revolving Credit Loans and each payment or
prepayment by the Borrower with respect to principal or interest
on the Revolving Credit Loans or Facility Fees, Letter of Credit
Fees, or other fees (except for the Agent's Fee and the Bid Loan
Processing Fee) or amounts due from the Borrower hereunder to the
Banks with respect to the Revolving Credit Loans shall (except as
provided in Section 4.4.3 in the case of an event specified in
Section 4.4 [Euro-Rate Unascertainable; Illegality; Increased
Costs; Deposits Not Available], 5.4 [Voluntary Prepayments] or
5.5 [Additional Compensation in Certain Circumstances]) be made
in proportion to the applicable Revolving Credit Loans
outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank.
Each borrowing of a Bid Loan shall be made according to the
provisions in Section 2.5 hereof and each payment or prepayment
by the Borrower of principal, interest, fees or other amounts
from the Borrower with respect to Bid Loans shall be to made to
the Banks (except as provided in Section 5.5) in proportion to
the amounts of such items due to such Banks. Each borrowing or
payment or prepayment by the Borrower of principal, interest,
fees or other amounts from the Borrower with respect to Swing
Loans shall be made by or to PNC Bank according to Section 2.
5.3 Interest Payment Dates.
Interest on Loans to which the Base Rate Option,
Federal Funds Rate Option and Negotiated Rate Option applies
shall be due and payable in arrears on the last Business Day of
each March, June, September and December after the date hereof
and on the Expiration Date or upon acceleration of the Notes.
Interest on Revolving Credit Loans to which the Euro-Rate Option
applies shall be due and payable on the last day of each Interest
Period for those Loans and, if such Interest Period is longer
than three (3) Months, also on the 90th day of such Interest
Period. Interest on the principal amount of each Loan or other
monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and
payable (whether on the stated maturity date, upon acceleration
or otherwise).
5.4 Voluntary Prepayments.
5.4.1 Right to Prepay.
The Borrower shall have the right at its option
from time to time to prepay the Committed Loans in whole or part
without premium or penalty (except as provided in Section 5.4.2
below or in Section 5.5):
(i) at any time with respect to any Loan
to which the Base Rate Option applies,
(ii) on the last day of the applicable
Interest Period with respect to Revolving Credit Loans to which
a Euro-Rate Option applies, or
(iii) on the date specified in a notice
by any Bank pursuant to Section 4.4 [Euro-Rate Unascertainable;
Illegality; Increased Costs; Deposits Not Available] with
respect to any Revolving Credit Loan to which a Euro-Rate
Option applies.
Whenever the Borrower desires to prepay any part
of the Committed Loans, it shall provide a prepayment notice to
the Agent at least one (1) Business Day prior to the date of
prepayment of the Revolving Credit Loans to which the Euro-Rate
Option applies or no later than 12:00 Noon Pittsburgh time on the
date of prepayment of Swing Loans or Revolving Credit Loans to
which the Base Rate Option applies, setting forth the following
information:
(x) the date, which shall be a Business Day, on
which the proposed prepayment is to be made;
(y) a statement indicating the application of the
prepayment between the Swing Loans and Revolving Credit
Loans; and
(z) the total principal amount of such
prepayment, which shall not be less than $500,000 for
any Swing Loan, $1,000,000 for any Revolving Credit
Loan to which the Base Rate Option Applies or
$2,500,000 for any Revolving Credit Loan to which the
Euro-Rate Option applies.
All prepayment notices shall be irrevocable. The
principal amount of the Committed Loans for which a prepayment
notice is given, together with interest on such principal amount
except with respect to Committed Loans to which the Base Rate
Option applies, shall be due and payable on the date specified in
such prepayment notice as the date on which the proposed
prepayment is to be made. Except as provided in Section 4.4.3,
if the Borrower prepays a Committed Loan but fails to specify the
applicable Borrowing Tranche which the Borrower is prepaying, the
prepayment shall be applied first to Committed Loans to which the
Base Rate Option applies, then to Committed Loans to which the
Revolving Credit Euro-Rate Option applies. Any prepayment
hereunder shall be subject to the Borrower's Obligation to
indemnify the Banks under Section 5.5.2.
5.4.2 Replacement of a Bank.
In the event any Bank (i) gives notice under
Section 4.4 or Section 5.5.1, (ii) does not fund Revolving Credit
Loans or Bid Loans because the making of such Loans would
contravene any Law applicable to such Bank, (iii) does not
approve any action as to which consent of the Required Banks is
requested by the Borrower and obtained hereunder, or (iv) becomes
subject to the control of an Official Body (other than normal and
customary supervision), then the Borrower shall have the right at
its option, with the consent of the Agent, which shall not be
unreasonably withheld, to prepay the Loans of such Bank in whole,
together with all interest accrued thereon, and terminate such
Bank's Commitment within ninety (90) days after (w) receipt of
such Bank's notice under Section 4.4 or 5.5.1, (x) the date such
Bank has failed to fund Revolving Credit Loans or Bid Loans
because the making of such Loans would contravene Law applicable
to such Bank, (y) the date of obtaining the consent which such
Bank has not approved, or (z) the date such Bank became subject
to the control of an Official Body, as applicable; provided that
the Borrower shall also pay to such Bank at the time of such
prepayment any amounts required under Section 5.5 and any accrued
interest due on such amount and any related fees; provided,
however, that the Commitment and any Bid Loan of such Bank shall
be provided by one or more of the remaining Banks or a
replacement bank acceptable to the Agent; provided, further, the
remaining Banks shall have no obligation hereunder to increase
their Commitments or provide the Bid Loan of such Bank.
Notwithstanding the foregoing, the Agent may only be replaced
subject to the requirements of Section 10.14 and provided that
all Letters of Credit have expired or been terminated or
replaced.
5.4.3 Change of Lending Office.
Each Bank agrees that upon the occurrence of any
event giving rise to increased costs or other special payments
under Sections 4.4.2 [Illegality, etc.] or 5.5.1 [Increased
Costs, etc.] with respect to such Bank, it will if requested by
the Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event,
provided that such designation is made on such terms that such
Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such
Section. Nothing is this Section 5.4.3 shall affect or postpone
any of the Obligations of the Borrower or any other Loan Party or
the rights of the Agent or any Bank provided in this Agreement.
5.5 Additional Compensation in Certain Circumstances.
5.5.1 Increased Costs or Reduced Return
Resulting From Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.
If any Law, guideline or interpretation or any
change in any Law, guideline or interpretation or application
thereof by any Official Body charged with the interpretation or
administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central
bank or other Official Body:
(i) subjects any Bank to any tax or changes
the basis of taxation with respect to this Agreement, the Notes,
the Committed Loans or the Bid Loans or payments by the Borrower
of principal, interest, Facility Fees, or other amounts due from
the Borrower hereunder or under the Notes (except for taxes on the
overall net income of such Bank),
(ii) imposes, modifies or deems applicable
any reserve, special deposit or similar requirement against credits
or commitments to extend credit extended by, or assets (funded or
contingent) of, deposits with or for the account of, or other
acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable
any capital adequacy or similar requirement (A) against assets
(funded or contingent) of, or letters of credit, other credits or
commitments to extend credit extended by, any Bank, or (B)
otherwise applicable to the obligations of any Bank under this
Agreement, and the result of any of the foregoing is to increase
the cost to, reduce the income receivable by, or impose any
expense (including loss of margin) upon any Bank with respect to
this Agreement, the Notes or the making, maintenance or funding
of any part of the Committed Loans or the Bid Loans (or, in the
case of any capital adequacy or similar requirement, to have the
effect of reducing the rate of return on any Bank's capital,
taking into consideration such Bank's customary policies with
respect to capital adequacy) by an amount which such Bank in
its sole discretion deems to be material, such Bank shall from
time to time notify the Borrower and the Agent of the amount
determined in good faith (using any averaging and attribution
methods employed in good faith) by such Bank to be necessary
to compensate such Bank for such increase in cost, reduction
of income, additional expense or reduced rate of return.
Such notice shall set forth in reasonable detail the basis
for such determination. Such amount shall be due and
payable by the Borrower to such Bank ten (10) Business Days
after such notice is given.
5.5.2 Indemnity.
In addition to the compensation required by
Section 5.5.1, the Borrower shall indemnify each Bank against all
liabilities, losses or expenses (including loss of margin, any
loss or expense incurred in liquidating or employing deposits
from third parties and any loss or expense incurred in connection
with funds acquired by a Bank to fund or maintain Loans subject
to a Euro-Rate Option, or the Bid Loan Fixed Rate Option) which
such Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or
renewal of any Loan to which a Euro-Rate Option or the Bid Loan
Fixed Rate Option applies on a day other than the last day of
the corresponding Interest Period (whether or not such payment
or prepayment is mandatory, voluntary or automatic and whether
or not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in
whole or part any Loan Requests under Section 2.4, Section
2.5 or Section 4.2 or notice relating to prepayments under
Section 5.4, or
(iii) default by the Borrower in the
performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal of or interest
on the Committed Loans or the Bid Loans, Facility Fee or
any other amount due hereunder; or
(iv) payment or prepayment of any
Bid Loan on a day other than the maturity date thereof
(whether or not such payment or prepayment is mandatory
or voluntary).
If any Bank sustains or incurs any such loss or expense, it shall
from time to time notify the Borrower of the amount determined in
good faith by such Bank (which determination may include such
assumptions, allocations of costs and expenses and averaging or
attribution methods as such Bank shall deem reasonable) to be
necessary to indemnify such Bank for such loss or expense. Such
notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is
given.
5.6 Settlement Date Procedures.
In order to minimize the transfer of funds between the
Banks and the Agent, the Borrower may borrow, repay and reborrow
Swing Loans and PNC Bank may make Swing Loans as provided in
Section 2.1.2 hereof during the period between Settlement Dates.
On the Business Day preceding each Settlement Date and at the
Agent's Option on any other Business Day which the Agent selects,
the Agent shall notify each Bank of its Ratable Share of the
total of the Revolving Credit Loans and the Swing Loans (each a
"Required Share") as of the close of business on such day. Prior
to 1:00 p.m. Pittsburgh time on the following Business Day (which
shall be the Settlement Date in the case of a notice on the
Business Day preceding a Settlement Date), each Bank shall pay to
the Agent the amount equal to the positive difference between its
Required Share and its Revolving Credit Loans, and the Agent
shall pay to each Bank an amount equal to the negative difference
(if any) between its Required Share and its Revolving Credit
Loans. Upon any settlement described in the preceding sentence
all outstanding Swing Loans shall be repaid and new Revolving
Credit Loans under the Base Rate Option shall be made in like
amount. These settlement procedures are established solely as a
matter of administrative convenience, and nothing contained in
this Section 5.6 shall relieve the Banks of their obligations to
fund Revolving Credit Loans on dates other than a Settlement Date
pursuant to Section 2.1.2.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties.
The Loan Parties, jointly and severally, represent and
warrant to the Agent and each of the Banks as follows:
6.1.1 Organization and Qualification.
Each Loan Party and each Subsidiary of each Loan
Party is a corporation, partnership or limited liability company
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization (subject to Section
6.2). Each Loan Party and each Subsidiary of each Loan Party has
the lawful power to own or lease its properties and to engage in
the business it presently conducts or proposes to conduct. Each
Loan Party and each Subsidiary of each Loan Party is duly
licensed or qualified and in good standing in each jurisdiction
listed on Schedule 6.1.1 and in all other jurisdictions where the
property owned or leased by it or the nature of the business
transacted by it or both makes such licensing or qualification
necessary. The foregoing warranty is subject to Section 8.2.6
after the Closing Date.
6.1.2 Subsidiaries.
Schedules 6.1.1 and 6.1.2 (subject to Section
6.2)state the name of each of the Borrower's Subsidiaries, its
jurisdiction of incorporation, its authorized capital stock, the
issued and outstanding shares (referred to herein as the
"Subsidiary Shares") and the owners thereof if it is a
corporation, its outstanding partnership interests (the
"Partnership Interests") if it is a partnership and its
outstanding limited liability company interests, interests
assigned to managers thereof and the voting rights associated
therewith (the "LLC Interests") if it is a limited liability
company. The Borrower and each Subsidiary of the Borrower has
good and marketable title to all of the Subsidiary Shares,
Partnership Interests and LLC Interests it purports to own, free
and clear in each case of any Lien. All Subsidiary Shares,
Partnership Interests and LLC Interests have been validly issued,
and all Subsidiary Shares are fully paid and nonassessable. All
capital contributions and other consideration required to be made
or paid in connection with the issuance of the Partnership
Interests and LLC Interests have been made or paid, as the case
may be. There are no options, warrants or other rights
outstanding to purchase any such Subsidiary Shares, Partnership
Interests or LLC Interests except as indicated on Schedule 6.1.2
(subject to Section 6.2).
6.1.3 Power and Authority.
Each Loan Party has full power to enter into,
execute, deliver and carry out this Agreement and the other Loan
Documents to which it is a party, to incur the Indebtedness
contemplated by the Loan Documents and to perform its Obligations
under the Loan Documents to which it is a party, and all such
actions have been duly authorized by all necessary proceedings on
its part.
6.1.4 Validity and Binding Effect.
This Agreement has been duly and validly executed
and delivered by each Loan Party, and each other Loan Document
which any Loan Party is required to execute and deliver on or
after the date hereof will have been duly executed and delivered
by such Loan Party on the required date of delivery of such Loan
Document. This Agreement and each other Loan Document
constitutes, or will constitute, legal, valid and binding
obligations of each Loan Party which is or will be a party
thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to
the extent that enforceability of any of such Loan Document may
be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforceability of creditors'
rights generally or limiting the right of specific performance.
6.1.5 No Conflict.
Neither the execution and delivery of this
Agreement or the other Loan Documents by any Loan Party nor the
consummation of the transactions herein or therein contemplated
or compliance with the terms and provisions hereof or thereof by
any of them will conflict with, constitute a default under or
result in any breach of (i) the terms and conditions of the
certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation,
limited liability company agreement or other organizational
documents of any Loan Party or (ii) any Law or any agreement
material to the Borrower and its Subsidiaries taken as a whole or
instrument or order, writ, judgment, injunction or decree to
which any Loan Party or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries is bound or to which it is
subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or
hereafter acquired) of any Loan Party or any of its Subsidiaries
(other than Liens granted under the Loan Documents).
6.1.6 Litigation.
There are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of such Loan
Party at law or equity before any Official Body which
individually or in the aggregate may result in any Material
Adverse Change. None of the Loan Parties or any Subsidiaries of
any Loan Party is in violation of any order, writ, injunction or
any decree of any Official Body which may result in any Material
Adverse Change.
6.1.7 Title to Properties.
The real property owned or leased by each Loan
Party and each Subsidiary of each Loan Party on the date hereof
(excluding facilities which a Loan Party or Subsidiary of a Loan
Party leases as lessee and subleases as the lessor and which such
Loan Party or Subsidiary does not operate) and is described on
Schedule 6.1.7 (subject to Section 6.2). Each Loan Party and
each Subsidiary of each Loan Party has good and marketable title
to or valid leasehold interest in all material properties, assets
and other rights which it purports to own or lease or which are
reflected as owned or leased on its books and records, free and
clear of all Liens and encumbrances except Permitted Liens, and
subject to the terms and conditions of the applicable leases.
All leases of property are in full force and effect in all
material respects without the necessity for any consent which has
not previously been obtained upon consummation of the
transactions contemplated hereby.
6.1.8 Financial Statements.
(i) Historical Statements. The Borrower
has delivered to the Agent copies of its audited consolidated
financial statements for its fiscal years ending on or about
December 30, 1995, December 31, 1994 or January 1, 1994 (the
"Annual Statements"). In addition, the Borrower has delivered
to the Agent copies of its unaudited consolidated interim
financial statements for the fiscal year to date and as of
the end of the fiscal quarter ended September 28, 1996
(the "Interim Statements") (the Annual and Interim Statements
being collectively referred to as the "Historical Statements").
The Historical Statements were compiled from the books and
records maintained by the Borrower's management, are correct
and complete and fairly represent the consolidated financial
condition of the Borrower and its Subsidiaries as of their
dates and the results of operations for the fiscal periods
then ended and have been prepared in accordance with GAAP
consistently applied, subject (in the case of the Interim
Statements) to normal year-end audit adjustments.
(ii) Accuracy of Financial Statements.
Neither the Borrower nor any Subsidiary of the Borrower has
any liabilities, contingent or otherwise, or forward or long-
term commitments, which in the case of any of the foregoing
are required under GAAP to be disclosed in the Historical
Statements or in the notes thereto and are not so disclosed,
and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of the Borrower or
any Subsidiary of the Borrower which may cause a Material
Adverse Change. Since December 30, 1995, no Material
Adverse Change has occurred.
6.1.9 Use of Proceeds; Margin Stock.
The Loan Parties intend to use the proceeds of the
Loans in accordance with Section 8.1.10. None of the Loan
Parties or any Subsidiaries of any Loan Party engages or intends
to engage principally, or as one of its important activities, in
the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin
stock (within the meaning of Regulation U). No part of the
proceeds of any Loan has been or will be used, immediately,
incidentally or ultimately, to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or
carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a
violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve
System. None of the Loan Parties or any Subsidiary of any Loan
Party holds or intends to hold margin stock in such amounts that
more than 25% of the reasonable value of the assets of any Loan
Party or Subsidiary of any Loan Party are or will be represented
by margin stock.
6.1.10 Full Disclosure.
Neither this Agreement nor any other Loan
Document, nor any certificate, statement, agreement or other
documents furnished to the Agent or any Bank in connection
herewith or therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein, in
light of the circumstances under which they were made, not
misleading. There is no fact known to any Loan Party which
materially adversely affects the business, property, assets,
financial condition, results of operations or prospects of any
Material Subsidiary or the Borrower and its Subsidiaries taken as
a whole which has not been set forth in this Agreement or in the
certificates, statements, agreements or other documents furnished
in writing to the Agent and the Banks prior to or at the date
hereof in connection with the transactions contemplated hereby.
6.1.11 Taxes.
All federal, state, local and other tax returns
required to have been filed with respect to each Loan Party and
each Subsidiary of each Loan Party have been filed, and payment
or adequate provision has been made for the payment of all taxes,
fees, assessments and other governmental charges which have or
may become due pursuant to said returns or to assessments
received, except to the extent that such taxes, fees, assessments
and other charges are being contested in good faith by
appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made. There are no agreements
or waivers extending the statutory period of limitations
applicable to any federal income tax return of any Loan Party or
Subsidiary of any Loan Party for any period.
6.1.12 Consents and Approvals.
No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official
Body or any other Person is required by any Law or any agreement
in connection with the execution, delivery and carrying out of
this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 6.1.12, all of which shall have been
obtained or made on or prior to the Closing Date except as
otherwise indicated on Schedule 6.1.12.
6.1.13 No Event of Default; Compliance with
Instruments.
No event has occurred and is continuing and no
condition exists or will exist after giving effect to the
borrowings or other extensions of credit to be made on the
Closing Date under or pursuant to the Loan Documents which
constitutes an Event of Default or Potential Default. None of
the Loan Parties or any Subsidiaries of any Loan Party is in
violation of (i) any term of its certificate of incorporation,
bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any material
agreement or instrument to which it is a party or by which it or
any of its properties may be subject or bound where such
violation would constitute a Material Adverse Change.
6.1.14 Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party and each Subsidiary of each Loan
Party owns or possesses all the material patents, trademarks,
service marks, trade names, copyrights, licenses, registrations,
franchises, permits and rights necessary to own and operate its
properties and to carry on its business as presently conducted
and planned to be conducted by such Loan Party or Subsidiary,
without known possible, alleged or actual conflict with the
rights of others, except for conflicts which could not result in
a Material Adverse Change.
6.1.15 Insurance.
All insurance policies and other bonds to which
each Loan Party or Subsidiary of any Loan Party is a party, are
valid and in full force and effect. No notice has been given or
claim made and no grounds exist to cancel or avoid any of such
policies or bonds or to reduce the coverage provided thereby.
Such policies and bonds provide adequate coverage from reputable
and financially sound insurers in amounts sufficient to insure
the assets and risks of each Loan Party and each Subsidiary of
each Loan Party in accordance with prudent business practice in
the industry of the Loan Parties and their Subsidiaries.
6.1.16 Compliance with Laws.
The Loan Parties and their Subsidiaries are in
compliance in all material respects with all applicable Laws
(other than Environmental Laws which are specifically addressed
in Section 6.1.21) in all jurisdictions in which any Loan Party
or Subsidiary of any Loan Party is presently or will be doing
business except where the failure to do so would not constitute a
Material Adverse Change.
6.1.17 Material Contracts; Burdensome Restrictions.
All contracts material to the Loan Parties and
their Subsidiaries taken as a whole relating to the business
operations of each Loan Party and each Subsidiary of any Loan
Party, including all employee benefit plans and Labor Contracts
are valid, binding and enforceable upon such Loan Party or
Subsidiary and each of the other parties thereto in accordance
with their respective terms, and there is no default thereunder,
to the Loan Parties' knowledge, with respect to parties other
than such Loan Party or Subsidiary. None of the Loan Parties or
their Subsidiaries is bound by any contractual obligation, or
subject to any restriction in any organization document, or any
requirement of Law which could result in a Material Adverse
Change.
6.1.18 Investment Companies; Regulated Entities.
None of the Loan Parties or any Subsidiaries of
any Loan Party is an "investment company" registered or required
to be registered under the Investment Company Act of 1940 or
under the "control" of an "investment company" as such terms are
defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control."
None of the Loan Parties or any Subsidiaries of any Loan Party is
subject to any other Federal state statute or regulation limiting
its ability to incur Indebtedness for borrowed money.
6.1.19 Plans and Benefit Arrangements.
Except as set forth on Schedule 6.1.19:
(i) The Borrower and each other member of
the ERISA Group are in compliance in all material respects with
any applicable provisions of ERISA with respect to all Benefit
Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement
or any Plan or, to the best knowledge of the Borrower, with
respect to any Multiemployer Plan or Multiple Employer Plan,
which could result in any material liability of the Borrower or
any other member of the ERISA Group. The Borrower and all other
members of the ERISA Group have made when due any and all
payments required to be made under any agreement relating to a
Multiemployer Plan or a Multiple Employer Plan or any Law
pertaining thereto. With respect to each Plan and Multiemployer
Plan, the Borrower and each other member of the ERISA Group
(i) have fulfilled in all material respects their obligations
under the minimum funding standards of ERISA, (ii) have not
incurred any liability to the PBGC, and (iii) have not had
asserted against them any penalty for failure to fulfill the
minimum funding requirements of ERISA.
(ii) To the best of the Borrower's
knowledge, each Multiemployer Plan and Multiple Employer Plan
is able to pay benefits thereunder when due.
(iii) Neither the Borrower nor any other
member of the ERISA Group has instituted or intends to
institute proceedings to terminate any Plan.
(iv) No event requiring notice to the
PBGC under Section 302(f)(4)(A) of ERISA has occurred or is
reasonably expected to occur with respect to any Plan, and no
amendment with respect to which security is required under
Section 307 of ERISA has been made or is reasonably expected
to be made to any Plan.
(v) The aggregate actuarial present
value of all benefit liabilities (whether or not vested) under
each Plan, determined on a plan termination basis, as
disclosed in, and as of the date of, the most recent actuarial
report for such Plan, does not exceed the aggregate fair market
value of the assets of such Plan.
(vi) Neither the Borrower nor any other
member of the ERISA Group has incurred or reasonably expects to
incur any material withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither the
Borrower nor any other member of the ERISA Group has been
notified by any Multiemployer Plan or Multiple Employer Plan
that such Multiemployer Plan or Multiple Employer Plan has
been terminated within the meaning of Title IV of ERISA and,
to the best knowledge of the Borrower, no Multiemployer Plan
or Multiple Employer Plan is reasonably expected to be
reorganized or terminated, within the meaning of Title IV of
ERISA.
(vii) To the extent that any Benefit
Arrangement is insured, the Borrower and all other members of
the ERISA Group have paid when due all premiums required to be
paid for all periods through the Closing Date. To the extent
that any Benefit Arrangement is funded other than with insurance,
the Borrower and all other members of the ERISA Group have made
when due all contributions required to be paid for all periods
through the Closing Date.
(viii) All Plans, Benefit Arrangements
and Multiemployer Plans have been administered in accordance with
their terms and applicable Law.
6.1.20 Employment Matters.
Each of the Loan Parties and each of their
Subsidiaries is in compliance with the Labor Contracts and all
applicable federal, state and local labor and employment Laws
including those related to equal employment opportunity and
affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment
and relocation notices, immigration controls and worker and
unemployment compensation, in each case where the failure to
comply would constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom
arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or
slowdowns at facilities of any of the Loan Parties or any of
their Subsidiaries which in any case would constitute a Material
Adverse Change.
6.1.21 Environmental Matters.
Except as disclosed on Schedule 6.1.21 and except
as are not or could not result individually or in the aggregate
in a Material Adverse Change:
(i) None of the Loan Parties or any
Subsidiaries of any Loan Party has received any Environmental
Complaint from any Official Body or private Person alleging that
such Loan Party or Subsidiary or any prior or subsequent owner
of any of the Property is a potentially responsible party under the
Comprehensive Environmental Response, Cleanup and Liability Act,
42 U.S.C. 9601, et seq., and none of the Loan Parties has any
reason to believe that such an Environmental Complaint might be
received. There are no pending or, to any Loan Party's
knowledge, threatened Environmental Complaints relating to any
Loan Party or Subsidiary of any Loan Party or, to any Loan
Party's knowledge, any prior or subsequent owner of any of the
Property pertaining to, or arising out of, any Environmental
Conditions.
(ii) There are no circumstances at, on or
under any of the Property that constitute a breach of or non-
compliance with any of the Environmental Laws, and there are no
past or present Environmental Conditions at, on or under any of
the Property or, to any Loan Party's knowledge, at, on or under
adjacent property, that prevent compliance with the Environmental
Laws at any of the Property.
(iii) Neither any of the Property nor any
structures, improvements, equipment, fixtures, activities or facilities
thereon or thereunder contain or use Regulated Substances except
in compliance with Environmental Laws. There are no processes,
facilities, operations, equipment or other activities at, on or
under any of the Property, or, to any Loan Party's knowledge, at,
on or under adjacent property, that currently result in the
release or threatened release of Regulated Substances onto any of
the Property, except to the extent that such releases or
threatened releases are not a breach of or otherwise not a
violation of the Environmental Laws.
(iv) There are no aboveground storage tanks,
underground storage tanks or underground piping associated with
such tanks, used for the management of Regulated Substances at, on
or under any of the Property that (a) do not have, to the extent
required by Environmental Laws, a full operational secondary containment
system in place, and (b) are not otherwise in compliance with all
Environmental Laws. There are no abandoned underground storage
tanks or underground piping associated with such tanks,
previously used for the management of Regulated Substances at, on
or under any of the Property that have not either been closed in
place in accordance with Environmental Laws or removed in
compliance with all applicable Environmental Laws and no
contamination associated with the use of such tanks exists on any
of the Property that is not in compliance with Environmental
Laws.
(v) Each Loan Party and each Subsidiary of any
Loan Party has all material permits, licenses, authorizations, plans
and approvals necessary under the Environmental Laws for the conduct
of the business of such Loan Party or Subsidiary as presently
conducted. Each Loan Party and each Subsidiary of any Loan Party
has submitted all material notices, reports and other filings
required by the Environmental Laws to be submitted to an Official
Body which pertain to past and current operations on any of the
Property.
(vi) All past and present on-site generation,
storage, processing, treatment, recycling, reclamation, disposal or
other use or management of Regulated Substances at, on, or under any
of the Property and all off-site transportation, storage,
processing, treatment, recycling, reclamation, disposal or other
use or management of Regulated Substances have been done in
accordance with the Environmental Laws.
6.1.22 Senior Debt Status.
The Obligations of each Loan Party under this
Agreement, the Notes, the Guaranty Agreement and each of the
other Loan Documents to which it is a party do rank and will rank
at least pari passu in priority of payment with all other
Indebtedness of such Loan Party except Indebtedness of such Loan
Party to the extent secured by Permitted Liens. There is no Lien
upon or with respect to any of the properties or income of any
Loan Party or Subsidiary of any Loan Party which secures
indebtedness or other obligations of any Person except for
Permitted Liens.
6.2 Updates to Schedules.
Should any of the information or disclosures provided
on any of the Schedules attached hereto (except for Schedule
6.1.7 which shall not be updated to reflect changes after the
date hereof) become outdated or incorrect in any material
respect, the Borrower shall provide the Agent in writing with
such revisions or updates to such Schedule as may be necessary or
appropriate to update or correct same:
(a) promptly after such schedule becomes outdated or
incorrect in the case of Schedules 6.1.12(consents and
approvals), 6.1.19 (employee benefit plan disclosures), and
6.1.21 (environmental disclosures); notwithstanding this clause
(a) neither Schedule 6.1.12, 6.1.19, nor Schedule 6.1.21 shall be
deemed to have been amended, modified or superseded by any
correction or update thereto, nor shall any breach of warranty or
representation resulting from the inaccuracy or incompleteness of
such Schedule be deemed to have been cured thereby, unless and
until the Required Banks, in their sole and absolute discretion,
shall have accepted in writing such revisions or updates to such
Schedule, and
(b) on a quarterly basis at the time the Borrower
delivers its compliance certificate described in Section 8.3.3 in
the case of Schedule 6.1.1 (qualifications to do business) and
6.1.2 (subsidiaries)
7. CONDITIONS OF LENDING
The obligation of each Bank to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder is subject to the
performance by each of the Loan Parties of its Obligations to be
performed hereunder at or prior to the making of any such Loans
or issuance of such Letters of Credit and to the satisfaction of
the following further conditions:
7.1 First Loans and Letters of Credit.
On the Closing Date:
7.1.1 Officer's Certificate.
The representations and warranties of each of the
Loan Parties contained in Section 6 and in each of the other Loan
Documents shall be true and accurate on and as of the Closing
Date with the same effect as though such representations and
warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier
date or time, which representations and warranties shall be true
and correct on and as of the specific dates or times referred to
therein), and each of the Loan Parties shall have performed and
complied with all covenants and conditions hereof and thereof, no
Event of Default or Potential Default shall have occurred and be
continuing or shall exist; and there shall be delivered to the
Agent for the benefit of each Bank a certificate of each of the
Loan Parties, dated the Closing Date and signed by an Authorized
Officer of each of the Loan Parties, to each such effect.
7.1.2 Secretary's Certificate.
There shall be delivered to the Agent for the
benefit of each Bank a certificate dated the Closing Date and
signed by the Secretary or an Assistant Secretary of each of the
Loan Parties, certifying as appropriate as to:
(i) all action taken by each Loan Party in
connection with this Agreement and the other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and
the true signatures of such officer or officers and specifying the
Authorized Officers permitted to act on behalf of each Loan Party
for purposes of this Agreement and the true signatures of those
officers who will sign such documents, on which the Agent and each
Bank may conclusively rely; and
(iii) copies of its organizational documents,
including its certificate of incorporation, bylaws, certificate of
limited partnership, partnership agreement, certificate of formation,
and limited liability company agreement as in effect on the Closing
Date certified by the appropriate state official where such
documents are filed in a state office together with certificates
from the appropriate state officials as to the continued
existence and good standing of each Loan Party in each state
where organized or qualified to do business.
7.1.3 Delivery of Loan Documents.
The Guaranty Agreement, Notes and Intercompany
Subordination Agreement shall have been duly executed and
delivered to the Agent for the benefit of the Banks.
7.1.4 Opinion of Counsel.
There shall be delivered to the Agent for the
benefit of each Bank a written opinion of Whyte Hirschboeck Dudek
S.C., counsel for the Loan Parties (who may rely on the opinions
of such other counsel as may be acceptable to the Agent), dated
the Closing Date and in form and substance satisfactory to the
Agent and its counsel:
(i) as to the matters set forth in Exhibit 7.1.4;
and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
7.1.5 Legal Details.
All legal details and proceedings in connection
with the transactions contemplated by this Agreement and the
other Loan Documents shall be in form and substance satisfactory
to the Agent and counsel for the Agent, and the Agent shall have
received all such other counterpart originals or certified or
other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the
Agent and said counsel, as the Agent or said counsel may
reasonably request.
7.1.6 Payment of Fees.
The Borrower shall have paid or caused to be paid
to the Agent for itself and for the account of the Banks to the
extent not previously paid any fees accrued through the Closing
Date and the costs and expenses for which the Agent and the Banks
are entitled to be reimbursed.
7.1.7 Consents.
All material consents required to effectuate the
transactions contemplated hereby as set forth on Schedule 6.1.12
shall have been obtained.
7.1.8 Officer's Certificate Regarding MACs.
Since December 30, 1995, no Material Adverse
Change shall have occurred; prior to the Closing Date, there
shall have been no material change in the management of any Loan
Party or Subsidiary of any Loan Party; and there shall have been
delivered to the Agent for the benefit of each Bank a certificate
dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of each Loan Party to each
such effect.
7.1.9 No Violation of Laws.
The making of the Loans and the issuance of the
Letters of Credit shall not contravene any Law applicable to any
Loan Party or any of the Banks.
7.1.10 No Actions or Proceedings.
No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to
enjoin, restrain or prohibit, or to obtain damages in respect of,
this Agreement, the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby or which, in the
Agent's sole discretion, would make it inadvisable to consummate
the transactions contemplated by this Agreement or any of the
other Loan Documents.
7.1.11 Lien Search Results.
The Loan Parties shall deliver satisfactory
results of a Lien search evidencing that there exist no Liens on
the assets of the Loan Parties except for Permitted Liens.
7.1.12 Payoff Letter.
The Borrower and the lenders under the Existing
Credit Agreement shall have delivered a payoff letter confirming
that the Existing Credit Agreement has been terminated and that
all obligations thereunder have been satisfied.
7.2 Each Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters
of Credit other than Loans made or Letters of Credit issued on
the Closing Date and after giving effect to the proposed
extensions of credit: the representations and warranties of the
Loan Parties contained in Section 6 and in the other Loan
Documents shall be true on and as of the date of such additional
Loan or Letter of Credit with the same effect as though such
representations and warranties had been made on and as of such
date (except representations and warranties which expressly
relate solely to an earlier date or time, which representations
and warranties shall be true and correct on and as of the
specific dates or times referred to therein) and the Loan Parties
shall have performed and complied with all covenants and
conditions hereof; no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; the making of the
Loans or issuance of such Letter of Credit shall not contravene
any Law applicable to any Loan Party or Subsidiary of any Loan
Party or any of the Banks; and the Borrower shall have delivered
to the Agent a duly executed and completed Loan Request or to the
Issuing Bank a duly executed and completed application for a
Letter of Credit, as the case may be.
8. COVENANTS
8.1 Affirmative Covenants.
The Loan Parties, jointly and severally, covenant and
agree that until payment in full of the Loans, Reimbursement
Obligations and Letter of Credit Borrowings, and interest
thereon, expiration or termination of all Letters of Credit,
satisfaction of all of the Loan Parties' other Obligations under
the Loan Documents and termination of the Commitments, the Loan
Parties shall comply at all times with the following affirmative
covenants:
8.1.1 Preservation of Existence, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain its legal existence as a corporation,
limited partnership or limited liability company and its license
or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business
makes such license or qualification necessary, except as
otherwise expressly permitted in Section 8.2.6.
8.1.2 Payment of Liabilities, Including Taxes, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, duly pay and discharge all liabilities to which
it is subject or which are asserted against it, promptly as and
when the same shall become due and payable, including all taxes,
assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP
shall have been made, but only to the extent that failure to
discharge any such liabilities would not result in any additional
liability which would adversely affect to a material extent the
financial condition of any Material Subsidiary or the Borrower
and its Subsidiaries taken as a whole, provided that the Loan
Parties and their Subsidiaries will pay all such liabilities
forthwith upon the commencement of proceedings to foreclose any
Lien which may have attached as security therefor if such
proceedings or Lien could result in a Material Adverse Change.
8.1.3 Maintenance of Insurance.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets against loss or
damage by fire and such other insurable hazards as such assets
are commonly insured (including fire, extended coverage, property
damage, workers' compensation, public liability and business
interruption insurance) and against other risks (including errors
and omissions) in such amounts as similar properties and assets
are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and
financially sound insurers, including self-insurance to the
extent customary, all as reasonably determined by the Agent.
8.1.4 Maintenance of Properties and Leases.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in good repair, working order and
condition (ordinary wear and tear excepted) in accordance with
the general practice of other businesses of similar character and
size, all of those properties useful or necessary to its
business, and from time to time, such Loan Party will make or
cause to be made all appropriate repairs, renewals or
replacements thereof.
8.1.5 Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in full force and effect all patents,
trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the
ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material
Adverse Change.
8.1.6 Visitation Rights.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized
employees or representatives of the Agent or any of the Banks to
visit and inspect any of its properties and to examine and make
excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such
detail and at such times and as often as any of the Banks may
reasonably request, provided that each Bank shall provide the
Borrower and the Agent with reasonable notice prior to any visit
or inspection. In the event any Bank desires to conduct an audit
of any Loan Party, such Bank shall make a reasonable effort to
conduct such audit contemporaneously with any audit to be
performed by the Agent.
8.1.7 Keeping of Records and Books of Account.
The Borrower shall, and shall cause each
Subsidiary of the Borrower to, maintain and keep proper books of
record and account which enable the Borrower and its Subsidiaries
to issue financial statements in accordance with GAAP and as
otherwise required by applicable Laws of any Official Body having
jurisdiction over the Borrower or any Subsidiary of the Borrower,
and in which full, true and correct entries shall be made in all
material respects of all its dealings and business and financial
affairs.
8.1.8 Plans and Benefit Arrangements.
The Borrower shall, and shall cause each other
member of the ERISA Group to, comply with ERISA, the Internal
Revenue Code and other applicable Laws applicable to Plans and
Benefit Arrangements except where such failure, alone or in
conjunction with any other failure, would not result in a
Material Adverse Change. Without limiting the generality of the
foregoing, the Borrower shall cause all of its Plans and all
Plans maintained by any member of the ERISA Group to be funded in
accordance with the minimum funding requirements of ERISA and
shall make, and cause each member of the ERISA Group to make, in
a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
8.1.9 Compliance with Laws.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply with all applicable Laws, including all
Environmental Laws, in all respects, provided that it shall not
be deemed to be a violation of this Section 8.1.9 if any failure
to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief
which in the aggregate would constitute a Material Adverse
Change.
8.1.10 Use of Proceeds.
8.1.10.1 General.
The Loan Parties and their Subsidiaries will
use the Letters of Credit and the proceeds of the Loans only for
(i) general corporate purposes and for working capital, or
(ii) to repay and terminate Indebtedness outstanding under
Existing Credit Agreement. The Loan Parties use of the Letters
of Credit and the proceeds of the Loans for any purposes which
contravenes any applicable Law or any provision hereof.
8.1.10.2 Margin Stock.
The Loan Parties shall not use the proceeds
of the Loans to purchase margin stock as more fully provided in
Section 6.1.9.
8.1.10.3 Section 20 Subsidiaries.
The Loan Parties will not, directly or
indirectly, use any portion of the proceeds of the Loans
(i) knowingly to purchase any Ineligible Securities from a
Section 20 Subsidiary during any period in which such Section 20
Subsidiary makes a market in such Ineligible Securities,
(ii) knowingly to purchase during the underwriting or placement
period Ineligible Securities being underwritten or privately
placed by a Section 20 Subsidiary, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or
privately placed by as Section 20 Subsidiary and issued by or for
the benefit of any Loan Party or any Affiliate of any Loan Party.
8.1.11 Subordination of Intercompany Loans.
Each Loan Party shall cause any intercompany
Indebtedness, loans or advances owed by any Loan Party to any
other Loan Party to be subordinated pursuant to the terms of the
Intercompany Subordination Agreement.
8.2 Negative Covenants.
The Loan Parties, jointly and severally, covenant and
agree that until payment in full of the Loans, Reimbursement
Obligations and Letter of Credit Borrowings and interest thereon,
expiration or termination of all Letters of Credit, satisfaction
of all of the Loan Parties' other Obligations hereunder and
termination of the Commitments, the Loan Parties shall comply
with the following negative covenants:
8.2.1 Indebtedness.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on
Schedule 8.2.1 (including any extensions or renewals thereof, provided
there is no increase in the amount thereof or other significant change
in the terms thereof unless otherwise specified on Schedule 8.2.1;
(iii) Indebtedness secured by Purchase Money
Security Interests not exceeding $25,000,000;
(iv) Indebtedness of a Loan Party or a Subsidiary
of a Loan Party to another Loan Party or Subsidiary of a Loan Party which
is subordinated in accordance with the provisions of Section 8.1.11;
and
(v) Standby L/C's in an aggregate amount less than
or equal to $5,000,000 or Commercial L/C's;
(vi) Guaranties permitted under Section 8.2.3(ii)
and (iii);
(vii) Indebtedness (other than Indebtedness
permitted by Section 8.2.1(i) through (vi)) of Borrower (and not Borrower's
Subsidiaries) provided that the amount thereof which the Borrower
may incur (A) over any twelve calendar month period may not
exceed $30,000,000; and (B) between the Closing Date and the date
on which this Agreement is terminated may not exceed $50,000,000
in the aggregate.
8.2.2 Liens.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create, incur,
assume or suffer to exist any Lien on any of its property or
assets, tangible or intangible, now owned or hereafter acquired,
or agree or become liable to do so, except Permitted Liens.
8.2.3 Guaranties.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time, directly or
indirectly, become or be liable in respect of any Guaranty, or
assume, guarantee, become surety for, endorse or otherwise agree,
become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person,
except:
(i) Guaranties of Indebtedness permitted
hereunder of the Loan Parties and their Subsidiaries and Guaranties
of other obligations of the Loan Parties or their Subsidiaries owed
to one another;
(ii) Guaranties of obligations of customers of
the Loan Parties or their Subsidiaries incurred in the ordinary course
of their business not in excess of $17,500,000 in the aggregate;
(iii) Guaranties of obligations of officers of
the Loan Parties or their Subsidiaries in connection with the exercise of
stock options of not in excess of $2,000,000 in the aggregate.
8.2.4 Loans and Investments.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time make or suffer to
remain outstanding any loan or advance to, or purchase, acquire
or own any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or
interest in, or make any capital contribution to, any other
Person, or agree, become or remain liable to do any of the
foregoing, except:
(i) trade credit extended on usual and
customary terms in the ordinary course of business;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) loans, advances and investments in other
Loan Parties or their Subsidiaries
(v) loans to customers in the ordinary course
of the business of the Loan Parties or their Subsidiaries outstanding
on the Closing Date and described on Schedule 8.2.4;
(vi) loans to customers entered into after the
date hereof in the ordinary course of the business of the Loan Parties
or their Subsidiaries in an amount not to exceed at any one time 10% of
Tangible Assets at such time; and
(vii) mergers, consolidations and acquisitions
described in and permitted under Section 8.2.6.
8.2.5 Dividends and Related Distributions.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, make or pay, or agree to
become or remain liable to make or pay, any dividend or other
distribution of any nature (whether in cash, property, securities
or otherwise) on account of or in respect of its shares of
capital stock, partnership interests or limited liability company
interests on account of the purchase, redemption, retirement or
acquisition of its shares of capital stock (or warrants, options
or rights therefor), partnership interests or limited liability
company interests, except that: (a) the Borrower may purchase or
otherwise acquire shares of its capital stock by exchange for or
out of the proceeds received from a substantially concurrent
issue of new shares of its capital stock; (b) the Borrower may
purchase, redeem, retire or otherwise acquire shares of its
capital stock owned by current or former employees, customers or
directors, in accordance with the policies of Borrower summarized
in the documents filed by Borrower with the Securities and
Exchange Commission; (c) Borrower and its Subsidiaries may sell
or exchange stock of the Borrower's Subsidiaries to or with
Borrower and its Subsidiaries; (d) the Borrower may pay Patronage
Dividends in accordance with the terms of the Borrower's by-laws
if, after such dividends are paid, the book value per share of
the Borrower and its Subsidiaries on a consolidated basis is at
least five percent (5%) greater than such book value on the last
day of the immediately preceding fiscal year; provided that not
more than forty percent (40%) of the aggregate amount of
Patronage Dividends paid during any fiscal year while this
Agreement is in effect shall be paid in cash or cash equivalents
and (e) the Loan Parties and their Subsidiaries may pay dividends
to other Loan Parties or their Subsidiaries.
8.2.6 Liquidations, Mergers, Consolidations,
Acquisitions.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, dissolve, liquidate or wind-up
its affairs, or become a party to any merger or consolidation, or
acquire by purchase, lease or otherwise all or substantially all
of the assets or capital stock of any other Person, provided that
(1) any Loan Party other than the Borrower may
consolidate with or merge into another Loan Party and any
Subsidiary of the Borrower may consolidate with or merge into
another Subsidiary of the Borrower or into a Loan Party if the
Loan Party shall be the surviving entity, and
(2) any Loan Party or Subsidiary of a Loan Party
may acquire, whether by purchase or by merger, (A) all of the
ownership interests of another Person or (B) substantially all of
assets of another Person or of a business or division of another
Person (each an "Permitted Acquisition"), provided that each of
the following requirements is met:
(i) if the Loan Parties will form or acquire
any Material Subsidiary in such acquisition or if any existing
Subsidiary shall become a Material Subsidiary as a result of such
acquisition, such Material Subsidiary shall execute a Guarantor
Joinder and join this Agreement, the Guaranty Agreement and the
Intercompany Agreement pursuant to Section 11.18,
(ii) the business acquired, or the business
conducted by the Person whose ownership interests are being acquired,
as applicable, shall be substantially the same as one or more line
or lines of business conducted by the Loan Parties and shall
comply with Section 8.2.10,
(iii) no Potential Default or Event of Default
shall exist immediately prior to and after giving effect to such Permitted
Acquisition, and
(iv) the Borrower shall demonstrate that it shall
be in compliance with the covenants contained in Sections 8.2.1, 8.2.6,
and 8.2.15 after giving effect to such Permitted Acquisition by
delivering at least ten (10) Business Days prior to such
Permitted Acquisition a certificate in the form of Exhibit 8.2.6
evidencing such compliance.
8.2.7 Dispositions of Assets or Subsidiaries.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, sell, convey, assign, lease,
abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or
intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of
capital stock, shares of beneficial interest, partnership
interests or limited liability company interests of a Subsidiary
of such Loan Party), except:
(i) transactions involving the sale of
inventory in the ordinary course of business;
(ii) any sale, transfer or lease of assets
(including stores) in the ordinary course of business which are
no longer necessary or required in the conduct of such Loan
Party's or such Subsidiary's business;
(iii) any sale, transfer or lease of
assets by any wholly owned Subsidiary of such Loan Party to another
Loan Party or another Subsidiary of a Loan Party;
(iv) any sale, transfer or lease of assets in
the ordinary course of business which are replaced by substitute assets;
(v) any sale, transfer or lease of assets, other
than those specifically excepted pursuant to clauses (i) through (iv)
above, which is approved by the Required Banks.
8.2.8 Affiliate Transactions.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, enter into or carry out any
transaction (including purchasing property or services from or
selling property or services to any Affiliate of any Loan Party
or other Person) unless such transaction is (i) with another Loan
Party or Subsidiary of a Loan Party, or (ii) not otherwise
prohibited by this Agreement, is entered into in the ordinary
course of business upon fair and reasonable arm's-length terms
and conditions and is in accordance with all applicable Law and
the terms thereof are disclosed to the Agent, provided that if
the transaction is with a retail customer of the Loan Parties or
their Subsidiaries entered into in the ordinary course of
business, then the requirement above that the Loan Parties and
their Subsidiaries shall disclose the terms thereof to the Agent
shall not apply.
8.2.9 Subsidiaries, Partnerships and Joint Ventures.
(i) New Subsidiaries.
Each of the Loan Parties shall not, and shall
not permit any of its Subsidiaries to, own or create directly or
indirectly any Material Subsidiaries other than (i) any Material
Subsidiary which has joined this Agreement, the Guaranty
Agreement and the Intercompany Subordination Agreement on the
Closing Date; and (ii) any Material Subsidiary formed or acquired
after the Closing Date or any Subsidiary which becomes a Material
Subsidiary after the Closing Date which joins this Agreement, the
Guaranty Agreement and the Intercompany Subordination Agreement
as a Guarantor pursuant to Section 8.2.6 or Section 11.18. Each
of the Loan Parties shall not become or agree to (1) become a
general or limited partner in any general or limited partnership,
except that the Loan Parties may be general or limited partners
in other Loan Parties and State Street Limited Partnership,
(2) become a member or manager of, or hold a limited liability
company interest in, a limited liability company, except that the
Loan Parties may be members or managers of, or hold limited
liability company interests in, other Loan Parties, or (3) become
a joint venturer or hold a joint venture interest in any joint
venture.
(ii) Joinder of Subsidiaries as Required Under
Other Circumstances.
Each of the following requirements shall be met at
all times:
(A) the consolidated gross revenues of the
Borrower and the Guarantors (excluding Subsidiaries which are not
Guarantors) over the twelve-months preceding any date of
determination shall equal or exceed 80% of the consolidated gross
revenues of the Borrower and all of Borrower's Subsidiaries on
such date of determination; and
(B) the book value of the assets of the Borrower
and the Guarantors collectively shall equal or exceed 80% of the
book value of the consolidated assets of the Borrower and all of
Borrower's Subsidiaries.
If the Borrower and the Guarantors fail to
maintain gross revenues and assets according to the levels
required in clauses (A) and (B) above, Borrower shall promptly
cause additional Subsidiaries to join this Agreement, the
Guaranty Agreement and the Intercompany Subordination Agreement
as Guarantors pursuant to Section 11.18 such that the total gross
revenues and assets of the Borrower and the Guarantors shall meet
the requirements in clauses (A) and (B) above.
8.2.10 Continuation of or Change in Business.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, engage in any business other
than their current lines of business (collectively, the
"Business"), substantially as conducted and operated by the Loan
Parties and their Subsidiaries during the present fiscal year,
and the Loan Parties and their Subsidiaries shall not permit any
material change in the Business.
8.2.11 Plans and Benefit Arrangements.
Except as to exceptions on Schedule 6.1.19, each
of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to:
(i) fail to satisfy the minimum funding
requirements of ERISA and the Internal Revenue Code with respect
to any Plan;
(ii) request a minimum funding waiver from
the Internal Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction
with any Plan, Benefit Arrangement or Multiemployer Plan which,
alone or in conjunction with any other circumstances or set of
circumstances resulting in liability under ERISA, would constitute
a Material Adverse Change;
(iv) permit the aggregate actuarial present
value of all benefit liabilities (whether or not vested) under each
Plan, determined on a plan termination basis, as disclosed in the
most recent actuarial report completed with respect to such Plan,
to exceed, as of any actuarial valuation date, the fair market value
of the assets of such Plan;
(v) fail to make when due any contribution to
any Multiemployer Plan that the Borrower or any member of the ERISA
Group may be required to make under any agreement relating to such
Multiemployer Plan, or any Law pertaining thereto;
(vi) withdraw (completely or partially) from
any Multiemployer Plan or withdraw (or be deemed under Section 4062(e)
of ERISA to withdraw) from any Multiple Employer Plan, where any such
withdrawal is likely to result in a material liability of the
Borrower or any member of the ERISA Group;
(vii) terminate, or institute proceedings to
terminate, any Plan, where such termination is likely to result in a
material liability to the Borrower or any member of the ERISA Group;
(viii) make any amendment to any Plan with
respect to which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices and make
all disclosures and governmental filings required under ERISA or the
Internal Revenue Code, where such failure is likely to result in a
Material Adverse Change.
8.2.12 Fiscal Year.
The Borrower shall not, and shall not permit any
Subsidiary of the Borrower to, change its fiscal year from the 52
or 53 week period ending on the Saturday nearest to December 31
of each year.
8.2.13 Changes in Organizational Documents.
The Borrower shall not, and shall not permit any
of its Subsidiaries to, amend in any respect its certificate of
incorporation (including any provisions or resolutions relating
to capital stock), by-laws, voting trust agreement, or other
organizational documents in any respect which would affect the
authorized capital stock of the Borrower or the rights of holders
of such stock without providing at least fifteen (15) calendar
days' prior written notice to the Agent and the Banks and, in the
event such change would be adverse to the Banks as determined by
the Agent in its sole discretion, obtaining the prior written
consent of the Required Banks.
8.2.14 Minimum Fixed Charge Coverage Ratio.
The Borrower and its subsidiaries shall not permit
the Fixed Charge Coverage Ratio, calculated as of the end of each
fiscal quarter for the four fiscal quarters then ended, to be
less than 1.4 to 1.0.
8.2.15 Maximum Debt to Capital Ratio.
The Borrower and its subsidiaries shall not at any
time permit the Debt to Capital Ratio to exceed .60 to 1.0.
8.2.16 Minimum Tangible Net Worth.
The Borrower shall not at any time permit
Consolidated Tangible Net Worth to be less than the sum of
(i) $75,000,000; (ii) 55% of consolidated net income of the
Borrower and its Subsidiaries for each fiscal quarter in which
net income was earned (consolidated net income shall be treated
as zero and not a negative number in a quarter if Borrower and
its Subsidiaries incur a consolidated loss in such quarter)
during the period from June 30, 1996 through the date of
determination; plus (iii) 100% of the proceeds received by
Borrower directly or indirectly, whether in cash or other
property, in connection with any sale of capital stock of the
Borrower (except for sales of stock (i) to employees or former
employees of the Borrower or its Subsidiaries according to the
Borrower's stock option plan in effect from time to time or
according to policies of Borrower summarized in the documents
filed by Borrower with the Securities and Exchange Commission and
(ii) to retail customers of the Borrower and its Subsidiaries in
the ordinary course of the Borrower's business) net of any fees
and expenses incurred by Borrower in connection with such sale
during the period from June 30, 1996 through the date of
determination.
8.3 Reporting Requirements.
The Loan Parties, jointly and severally, covenant and
agree that until payment in full of the Loans, Reimbursement
Obligations and Letter of Credit Borrowings and interest thereon,
expiration or termination of all Letters of Credit, satisfaction
of all of the Loan Parties' other Obligations hereunder and under
the other Loan Documents and termination of the Commitments, the
Loan Parties will furnish or cause to be furnished to the Agent
and each of the Banks:
8.3.1 Quarterly Financial Statements.
As soon as available and in any event within sixty
(60) calendar days after the end of each of the first three
fiscal quarters in each fiscal year, financial statements of the
Borrower, consisting of a consolidated and consolidating balance
sheet as of the end of such fiscal quarter and related
consolidated and consolidating statements of income, and
stockholders' equity and related consolidated cash flows for the
fiscal quarter then ended and the fiscal year through that date,
all in reasonable detail and certified (subject to normal year-
end audit adjustments) by an Authorized Officer as having been
prepared in accordance with GAAP, consistently applied and
subject to year end adjustments, and setting forth in comparative
form the respective financial statements for the corresponding
date and period in the previous fiscal year.
8.3.2 Annual Financial Statements.
As soon as available and in any event within one
hundred and twenty (120) days after the end of each fiscal year
of the Borrower, financial statements of the Borrower consisting
of a consolidated and consolidating balance sheet as of the end
of such fiscal year, and related consolidated and consolidating
statements of income, and stockholders' equity and related
consolidated cash flows for the fiscal year then ended, all in
reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding
fiscal year, and certified by independent certified public
accountants of nationally recognized standing satisfactory to the
Agent. The certificate or report of accountants shall be free of
qualifications (other than any consistency qualification that may
result from a change in the method used to prepare the financial
statements as to which such accountants concur) and shall not
indicate the occurrence or existence of any event, condition or
contingency which would materially impair the prospect of payment
or performance of any covenant, agreement or duty of any Loan
Party under any of the Loan Documents.
8.3.3 Certificate of the Borrower.
Concurrently with the financial statements of the
Borrower furnished to the Agent and to the Banks pursuant to
Sections 8.3.1 and 8.3.2, a certificate of the Borrower signed by
an Authorized Officer of the Borrower, in the form of Exhibit
8.3.3, to the effect that, except as described pursuant to
Section 8.3.4, (i) the representations and warranties of the
Borrower contained in Section 6 and in the other Loan Documents
are true on and as of the date of such certificate with the same
effect as though such representations and warranties had been
made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or
time) and the Loan Parties have performed and complied with all
covenants and conditions hereof, (ii) no Event of Default or
Potential Default exists and is continuing on the date of such
certificate (iii) containing calculations in sufficient detail to
demonstrate compliance as of the date of such financial
statements with all financial covenants contained in Section 8.2
and determining the Applicable Margin and the Applicable Facility
Fee Rate.
8.3.4 Notice of Default.
Promptly after any officer of any Loan Party has
learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by an Authorized Officer of such
Loan Party setting forth the details of such Event of Default or
Potential Default and the action which the such Loan Party
proposes to take with respect thereto.
8.3.5 Notice of Litigation.
Promptly after the commencement thereof, notice of
all actions, suits, proceedings or investigations before or by
any Official Body or any other Person against any Loan Party or
Subsidiary of any Loan Party which involve a claim or series of
claims in excess of $5,000,000 or which if adversely determined
would constitute a Material Adverse Change.
8.3.6 Forecasts, Other Reports and Information.
Promptly upon their becoming available to the
Borrower:
(i) the forecasts or projections of the
Borrower, to be supplied not later than one hundred twenty (120)
days after commencement of the fiscal year to which any of the
foregoing may be applicable,
(ii) any reports, notices or proxy statements
generally distributed by the Borrower to its stockholders on a date no
later than the date supplied to such stockholders,
(iii) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses,
filed by the Borrower with the Securities and Exchange Commission,
(iv) a copy of any order in any material proceeding
to which the Borrower or any of its Subsidiaries is a party issued by any
Official Body, and
(v) such other reports and information as any
of the Banks may from time to time reasonably request. The Borrower
shall also notify the Banks promptly of the enactment or adoption of
any Law which may result in a Material Adverse Change.
Promptly upon the request of the Agent , any reports
including management letters submitted to the Borrower by
independent accountants in connection with any annual, interim or
special audit,
8.3.7 Notices Regarding Plans and Benefit Arrangements.
8.3.7.1 Certain Events.
Promptly upon becoming aware of the
occurrence thereof, notice (including the nature of the event
and, when known, any action taken or threatened by the Internal
Revenue Service or the PBGC with respect thereto) of:
(i) any Reportable Event, other than a merger
of a Plan into another Plan, with respect to the Borrower or any
other member of the ERISA Group (regardless of whether the obligation
to report said Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could
subject the Borrower or any other member of the ERISA Group to a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Internal Revenue Code in connection
with any Plan, any Benefit Arrangement or any trust created thereunder,
(iii) any assertion of material withdrawal
liability with respect to any Multiemployer Plan,
(iv) any partial or complete withdrawal from a
Multiemployer Plan by the Borrower or any other member of the ERISA
Group under Title IV of ERISA (or assertion thereof), where such
withdrawal is likely to result in material withdrawal liability,
(v) any cessation of operations (by the Borrower
or any other member of the ERISA Group) at a facility in the circumstances
described in Section 4062(e) of ERISA,
(vi) withdrawal by the Borrower or any other member
of the ERISA Group from a Multiple Employer Plan,
(vii) a failure by the Borrower or any other
member of the ERISA Group to make a payment to a Plan required to avoid
imposition of a Lien under Section 302(f) of ERISA,
(viii) the adoption of an amendment to a Plan
requiring the provision of security to such Plan pursuant to Section 307
of ERISA, or
(ix) any change in the actuarial assumptions or
funding methods used for any Plan, where the effect of such change is to
materially increase or materially reduce the unfunded benefit liability
or obligation to make periodic contributions.
8.3.7.2 Notices of Involuntary Termination and
Annual Reports.
Promptly after receipt thereof, copies of
(a) all notices received by the Borrower or any other member of
the ERISA Group of the PBGC's intent to terminate any Plan
administered or maintained by the Borrower or any member of the
ERISA Group, or to have a trustee appointed to administer any
such Plan; and (b) at the request of the Agent or any Bank each
annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each
Plan administered or maintained by the Borrower or any other
member of the ERISA Group, and schedules showing the amounts
contributed to each such Plan by or on behalf of the Borrower or
any other member of the ERISA Group in which any of their
personnel participate or from which such personnel may derive a
benefit, and each Schedule B (Actuarial Information) to the
annual report filed by the Borrower or any other member of the
ERISA Group with the Internal Revenue Service with respect to
each such Plan.
8.3.7.3 Notice of Voluntary Termination.
Promptly upon the filing thereof, copies of
any Form 5310, or any successor or equivalent form to Form 5310,
filed with the PBGC in connection with the termination of any
Plan.
9. DEFAULT
9.1 Events of Default.
An Event of Default shall mean the occurrence or
existence of any one or more of the following events or
conditions (whatever the reason therefor and whether voluntary,
involuntary or effected by operation of Law):
9.1.1 Payments Under Loan Documents.
The Borrower shall fail to pay any principal of
any Loan (including scheduled installments, mandatory prepayments
or the payment due at maturity), Reimbursement Obligation or
Letter of Credit Borrowing or shall fail to pay any interest on
any Loan, Reimbursement Obligation or Letter of Credit Borrowing
or any other amount owing hereunder or under the other Loan
Documents after such principal, interest or other amount becomes
due in accordance with the terms hereof or thereof;
9.1.2 Breach of Warranty.
Any representation or warranty made at any time by
any of the Loan Parties herein or by any of the Loan Parties in
any other Loan Document, or in any certificate, other instrument
or statement furnished pursuant to the provisions hereof or
thereof, shall prove to have been false or misleading in any
material respect as of the time it was made or furnished;
9.1.3 Breach of Negative Covenants or Visitation Rights.
Any of the Loan Parties shall default in the
observance or performance of any covenant contained in
Section 8.1.6 or Section 8.2;
9.1.4 Breach of Other Covenants.
Any of the Loan Parties shall default in the
observance or performance of any other covenant, condition or
provision hereof or of any other Loan Document and such default
shall continue unremedied for a period of thirty (30) Business
Days after any officer of any Loan Party becomes aware of the
occurrence thereof (such grace period to be applicable only in
the event such default can be remedied by corrective action of
the Loan Parties as determined by the Agent in its sole
discretion);
9.1.5 Defaults in Other Agreements or Indebtedness.
A default or event of default shall occur at any
time under the terms of any other agreement involving borrowed
money or the extension of credit or any other Indebtedness under
which any Loan Party or Subsidiary of any Loan Party may be
obligated as a borrower or guarantor, and such breach, default or
event of default consists of the failure to pay (beyond any
period of grace permitted with respect thereto, whether waived or
not) any indebtedness or interest thereon when due (whether at
stated maturity, by acceleration or otherwise) or if such breach
or default permits or causes the acceleration of any indebtedness
(whether or not such right shall have been waived) or the
termination of any commitment to lend;
9.1.6 Final Judgments or Orders.
Any final judgments or orders for the payment of
money in excess of $2,500,000 in the aggregate shall be entered
against any Loan Party by a court having jurisdiction in the
premises, which judgment is not discharged, vacated, bonded or
stayed pending appeal within a period of thirty (30) days from
the date of entry;
9.1.7 Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party
executing the same or such party's successors and assigns (as
permitted under the Loan Documents) in accordance with the
respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared
ineffective or inoperative or shall in any way be challenged or
contested or cease to give or provide the respective Liens,
security interests, rights, titles, interests, remedies, powers
or privileges intended to be created thereby;
9.1.8 Uninsured Losses; Proceedings Against Assets.
Any of the Loan Parties' or any of their
Subsidiaries' assets are attached, seized, levied upon or
subjected to a writ or distress warrant; or such come within the
possession of any receiver, trustee, custodian or assignee for
the benefit of creditors and the same is not cured within thirty
(30) days thereafter;
9.1.9 Notice of Lien or Assessment.
A notice of Lien or assessment in excess of
$2,500,000 which is not a Permitted Lien is filed of record with
respect to all or any part of any of the Loan Parties' or any of
their Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state,
county, municipal or other governmental agency, including the
PBGC, or any taxes or debts owing at any time or times hereafter
to any one of these becomes payable and the same is not paid
within thirty (30) days after the same becomes payable;
9.1.10 Insolvency.
Any Loan Party or any Subsidiary of a Loan Party
ceases to be solvent (after giving effect to intercompany
borrowings or capital contributions) or admits in writing its
inability to pay its debts as they mature;
9.1.11 Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i) any Reportable
Event, other than a merger of a Plan with another Plan, which the
Agent determines in good faith constitutes grounds for the
termination of any Plan by the PBGC or the appointment of a
trustee to administer or liquidate any Plan, shall have occurred
and be continuing; (ii) proceedings shall have been instituted or
other action taken to terminate any Plan, or a termination notice
shall have been filed with respect to any Plan; (iii) a trustee
shall be appointed to administer or liquidate any Plan; (iv) the
PBGC shall give notice of its intent to institute proceedings to
terminate any Plan or Plans or to appoint a trustee to administer
or liquidate any Plan; and, in the case of the occurrence of (i),
(ii), (iii) or (iv) above, the Agent determines in good faith
that the amount of the Borrower's liability is likely to exceed
10% of its Consolidated Tangible Net Worth; (v) the Borrower or
any member of the ERISA Group shall fail to make any
contributions when due to a Plan or a Multiemployer Plan;
(vi) the Borrower or any other member of the ERISA Group shall
make any amendment to a Plan with respect to which security is
required under Section 307 of ERISA; (vii) the Borrower or any
other member of the ERISA Group shall withdraw completely or
partially from a Multiemployer Plan; (viii) the Borrower or any
other member of the ERISA Group shall withdraw (or shall be
deemed under Section 4062(e) of ERISA to withdraw) from a
Multiple Employer Plan; or (ix) any applicable Law is adopted,
changed or interpreted by any Official Body with respect to or
otherwise affecting one or more Plans, Multiemployer Plans or
Benefit Arrangements and, with respect to any of the events
specified in (v), (vi), (vii), (viii) or (ix), the Agent
determines in good faith that any such occurrence would be
reasonably likely to materially and adversely affect the total
enterprise represented by the Borrower and the other members of
the ERISA Group;
9.1.12 Cessation of Business.
Any Loan Party or Subsidiary of a Loan Party
ceases to conduct its business as contemplated, except as
expressly permitted under Section 8.2.6 or 8.2.7, or any Loan
Party or Subsidiary of a Loan Party is enjoined, restrained or in
any way prevented by court order from conducting all or any
material part of its business and such injunction, restraint or
other preventive order is not dismissed within thirty (30) days
after the entry thereof;
9.1.13 Change of Control.
(i) Any person or group of persons (within
the meaning of Sections 13(d) or 14(a) of the Securities Exchange
Act of 1934, as amended), together with its affiliates (but not including
the Roundy's, Inc. Voting Trust (the "Voting Trust"), shall have
acquired beneficial ownership of (within the meaning of Rule 13d-
3 promulgated by the Securities and Exchange Commission under
said Act) thirty percent (30%) or more of the then outstanding
common stock of the Borrower or thirty percent (30%) or more of
the then outstanding securities of Borrower entitled generally to
vote for the election of directors of the Borrower; or
(ii) within a period of twelve (12) consecutive calendar months
and after the termination of the Voting Trust, individuals who
were directors of the Borrower on the first day of such period
shall cease to constitute a majority of the board of directors of
the Borrower;
9.1.14 Involuntary Proceedings.
A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for
relief in respect of any Loan Party or Subsidiary of a Loan Party
in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter
in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or
similar official) of any Loan Party or Subsidiary of a Loan Party
for any substantial part of its property, or for the winding-up
or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of thirty (30)
consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or
9.1.15 Voluntary Proceedings.
Any Loan Party or Subsidiary of a Loan Party shall
commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other
similar official) of itself or for any substantial part of its
property or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they
become due, or shall take any action in furtherance of any of the
foregoing.
9.2 Consequences of Event of Default.
9.2.1 Events of Default Other Than Bankruptcy,
Insolvency or Reorganization Proceedings.
If an Event of Default specified under Sections
9.1.1 through 9.1.13 shall occur and be continuing, the Banks and
the Issuing Bank shall be under no further obligation to make
Revolving Credit Loans or Bid Loans or issue Letters of Credit,
as the case may be, and the Agent may, and upon the request of
the Required Banks, shall by written notice to the Borrower, take
one or both of the following actions: (i) terminate the
Commitments and thereupon the Commitments shall be terminated and
of no further force and effect, or (ii) declare the unpaid
principal amount of the Revolving Credit Notes then outstanding
and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and
thereunder to be forthwith due and payable, and the same shall
thereupon become and be immediately due and payable to the Agent
for the benefit of each Bank without presentment, demand, protest
or any other notice of any kind, all of which are hereby
expressly waived, and (iii) require the Borrower to, and the
Borrower shall thereupon, deposit in a non-interest bearing
account with the Agent, as cash collateral for its Obligations
under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all
outstanding Letters of Credit, and the Borrower hereby pledges to
the Agent and the Banks, and grants to the Agent and the Banks a
security interest in, all such cash as security for such
Obligations. Upon the curing of all existing Events of Default
to the satisfaction of the Required Banks, the Agent shall return
such cash collateral to the Borrower; and
9.2.2 Bankruptcy, Insolvency or Reorganization
Proceedings.
If an Event of Default specified under
Section 9.1.14 or 9.1.15 shall occur, the Commitments shall
automatically terminate and be of no further force and effect,
the Banks shall be under no further obligations to make Revolving
Credit Loans or Bid Loans hereunder and the unpaid principal
amount of the Revolving Credit Notes and the Swing Note then
outstanding and all interest accrued thereon, any unpaid fees and
all other Indebtedness of the Borrower to the Banks hereunder and
thereunder shall be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived; and
9.2.3 Set-off.
If an Event of Default shall occur and be
continuing, any Bank to whom any Obligation is owed by any Loan
Party hereunder or under any other Loan Document or any
participant of such Bank which has agreed in writing to be bound
by the provisions of Section 10.13 and any branch, Subsidiary or
Affiliate of such Bank or participant anywhere in the world shall
have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set-off
against and apply to the then unpaid balance of all the Loans and
all other Obligations of the Borrower and the other Loan Parties
hereunder or under any other Loan Document any debt owing to, and
any other funds held in any manner for the account of, the
Borrower or such other Loan Party by such Bank or participant or
by such branch, Subsidiary or Affiliate, including all funds in
all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or
hereafter maintained by the Borrower or such other Loan Party for
its own account (but not including funds held in custodian or
trust accounts) with such Bank or participant or such branch,
Subsidiary or Affiliate. Such right shall exist whether or not
any Bank or the Agent shall have made any demand under this
Agreement or any other Loan Document, whether or not such debt
owing to or funds held for the account of the Borrower or such
other Loan Party is or are matured or unmatured and regardless of
the existence or adequacy of any Guaranty or any other security,
right or remedy available to any Bank, including the Issuing
Bank, or the Agent; and
9.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be
continuing, and whether or not the Agent shall have accelerated
the maturity of Committed Loans pursuant to any of the foregoing
provisions of this Section 9.2, the Agent or any Bank, if owed
any amount with respect to the Revolving Credit Notes or Swing
Notes, may proceed to protect and enforce its rights by suit in
equity, action at law and/or other appropriate proceeding,
whether for the specific performance of any covenant or agreement
contained in this Agreement or the Revolving Credit Notes or
Swing Notes, including as permitted by applicable Law the
obtaining of the ex parte appointment of a receiver, and, if such
amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or
equitable right of the Agent or such Bank; and
9.2.5 Application of Proceeds.
From and after the date on which the Agent has
taken any action pursuant to this Section 9.2 and until all
Obligations of the Loan Parties have been paid in full, any and
all proceeds received by the Agent from any remedy by the Agent,
shall be applied as follows:
(i) first, to reimburse the Agent and the
Banks for out-of-pocket costs, expenses and disbursements, including
reasonable attorneys' and paralegals' fees and legal expenses,
incurred by the Agent or the Banks in connection with collection of
any Obligations of any of the Loan Parties under any of the Loan
Documents;
(ii) second, to the repayment of all Indebtedness
then due and unpaid of the Loan Parties to the Banks incurred under this
Agreement or any of the other Loan Documents, whether of principal,
interest, fees, expenses or otherwise, in such manner as the Agent may
determine in its discretion; and
(iii) the balance, if any, as required by Law.
9.2.6 Other Rights and Remedies.
The Agent may, and upon the request of the
Required Banks shall, exercise all post-default rights granted to
the Agent and the Banks under the Loan Documents or applicable
Law all of which rights and remedies shall be cumulative.
9.3 Right of Competitive Bid Loan Banks.
If any Event of Default shall occur and be continuing,
the Banks which have any Bid Loans then outstanding to the
Borrower (the "Bid Loan Banks") shall not be entitled to
accelerate payment of the Bid Loans or to exercise any right or
remedy related to the collection of the Bid Loans until the
Commitments shall be terminated hereunder pursuant to Sections
9.2.1 or 9.2. Upon such a termination of the Commitments:
(i) references to Revolving Credit Loans in Section 9.2 shall be
deemed to apply also to the Bid Loans and the Bid Loan Banks
shall be entitled to all enforcement rights given to a holder of
a Revolving Credit Loan in Section 9.2; and (ii) the definition
of Required Banks shall be changed as provided in Section 1.1 so
that each Bank shall have voting rights hereunder in proportion
to its share of the total Loans outstanding.
10. THE AGENT
10.1 Appointment.
Each Bank hereby irrevocably designates, appoints and
authorizes PNC Bank to act as Agent for such Bank under this
Agreement and to execute and deliver or accept on behalf of each
of the Banks the other Loan Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the
acceptance of a Note shall be deemed irrevocably to authorize,
the Agent to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise
such powers and to perform such duties hereunder as are
specifically delegated to or required of the Agent by the terms
hereof, together with such powers as are reasonably incidental
thereto. PNC Bank agrees to act as the Agent on behalf of the
Banks to the extent provided in this Agreement.
10.2 Delegation of Duties.
The Agent may perform any of its duties hereunder by or
through agents or employees (provided such delegation does not
constitute a relinquishment of its duties as Agent) and, subject
to Sections 10.5 and 10.6, shall be entitled to engage and pay
for the advice or services of any attorneys, accountants or other
experts concerning all matters pertaining to its duties hereunder
and to rely upon any advice so obtained.
10.3 Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and no implied
covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist.
The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and
nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement except as expressly set
forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to
the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of
any applicable Law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect
only an administrative relationship between independent
contracting parties. Each Bank expressly acknowledges (i) that
the Agent has not made any representations or warranties to it
and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed
to constitute any representation or warranty by the Agent to any
Bank; (ii) that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the
financial condition and affairs and its own appraisal of the
creditworthiness of each of the Loan Parties in connection with
this Agreement and the making and continuance of the Loans
hereunder; and (iii) except as expressly provided herein, that
the Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Bank with any credit or
other information with respect thereto, whether coming into its
possession before the making of any Loan or at any time or times
thereafter.
10.4 Actions in Discretion of Agent; Instructions from the Banks.
The Agent shall not be required to take any action
which exposes the Agent to personal liability or which is
contrary to this Agreement or any other Loan Document or
applicable Law. The Agent shall have authority, in its sole
discretion, to take or not to take any such action, unless this
Agreement specifically requires the consent of the Required Banks
or all of the Banks. Any action taken or failure to act pursuant
to such instructions or discretion shall be binding on the Banks,
subject to Section 10.6. Subject to the provisions of
Section 10.6, no Bank shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining
from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the
absolute discretion of the Agent.
10.5 Reimbursement and Indemnification of Agent by the Borrower.
The Borrower unconditionally agrees to pay or reimburse
the Agent and hold the Agent harmless against (a) liability for
the payment of all reasonable out-of-pocket costs, expenses and
disbursements, including fees and expenses of counsel (including
the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i) in
connection with the development, negotiation, preparation,
printing, execution, administration, syndication, interpretation
and performance of this Agreement and the other Loan Documents,
(ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the
enforcement of this Agreement or any other Loan Document or
collection of amounts due hereunder or thereunder or the proof
and allowability of any claim arising under this Agreement or any
other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or
restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in
connection with any foreclosure, collection or bankruptcy
proceedings, and (b) all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent, in its
capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or
omitted by the Agent hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements if the same results from
the Agent's gross negligence or willful misconduct, or if the
Borrower was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense
(except that the Borrower shall remain liable to the extent such
failure to give notice does not result in a loss to the
Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which
shall not be unreasonably withheld. In addition, the Borrower
agrees to reimburse and pay all reasonable out-of-pocket expenses
of the Agent's regular employees and agents engaged periodically
to perform audits of the Loan Parties' books, records and
business properties.
10.6 Exculpatory Provisions; Limitation of Liability.
Neither the Agent nor any of its directors, officers,
employees, agents, attorneys or Affiliates shall (a) be liable to
any Bank for any action taken or omitted to be taken by it or
them hereunder, or in connection herewith including pursuant to
any Loan Document, unless caused by its or their own gross
negligence or willful misconduct, (b) be responsible in any
manner to any of the Banks for the effectiveness, enforceability,
genuineness, validity or the due execution of this Agreement or
any other Loan Documents or for any recital, representation,
warranty, document, certificate, report or statement herein made
or furnished under or in connection with this Agreement or any
other Loan Documents, or (c) be under any obligation to any of
the Banks to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties, or the financial
condition of the Loan Parties, or the existence or possible
existence of any Event of Default or Potential Default. No claim
may be made by any of the Loan Parties, any Bank, the Agent or
any of their respective Subsidiaries against the Agent, any Bank
or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special,
indirect or consequential damages or, to the fullest extent
permitted by Law, for any punitive damages in respect of any
claim or cause of action (whether based on contract, tort,
statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions
contemplated hereby or any act, omission or event occurring in
connection therewith, including the negotiation, documentation,
administration or collection of the Loans, and each of the Loan
Parties, (for itself and on behalf of each of its Subsidiaries),
the Agent and each Bank hereby waive, releases and agree never to
sue upon any claim for any such damages, whether such claim now
exists or hereafter arises and whether or not it is now known or
suspected to exist in its favor. Each Bank agrees that, except
for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder or given to the
Agent for the account of or with copies for the Banks, the Agent
and each of its directors, officers, employees, agents, attorneys
or Affiliates shall not have any duty or responsibility to
provide any Bank with an credit or other information concerning
the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties
which may come into the possession of the Agent or any of its
directors, officers, employees, agents, attorneys or Affiliates.
10.7 Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the Agent
(to the extent not reimbursed by the Borrower and without
limiting the Obligation of the Borrower to do so) in proportion
to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements, including attorneys'
fees and disbursements (including the allocated costs of staff
counsel), and costs of appraisers and environmental consultants,
of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, in its capacity as
such, in any way relating to or arising out of this Agreement or
any other Loan Documents or any action taken or omitted by the
Agent hereunder or thereunder, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent's gross
negligence or willful misconduct, or (b) if such Bank was not
given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that
such Bank shall remain liable to the extent such failure to give
notice does not result in a loss to the Bank), or (c) if the same
results from a compromise and settlement agreement entered into
without the consent of such Bank, which shall not be unreasonably
withheld. In addition, each Bank agrees promptly upon demand to
reimburse the Agent (to the extent not reimbursed by the Borrower
and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share for all amounts due and payable
by the Borrower to the Agent in connection with the Agent's
periodic audit of the Loan Parties' books, records and business
properties.
10.8 Reliance by Agent.
The Agent shall be entitled to rely upon any writing,
telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other
document or conversation by telephone or otherwise believed by it
to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions
of counsel and other professional advisers selected by the Agent.
The Agent shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its
satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.9 Notice of Default.
The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Potential Default or Event of
Default unless the Agent has received written notice from a Bank
or the Borrower referring to this Agreement, describing such
Potential Default or Event of Default and stating that such
notice is a "notice of default."
10.10 Notices.
The Agent shall promptly send to each Bank a copy of
all notices received from the Borrower pursuant to the provisions
of this Agreement or the other Loan Documents promptly upon
receipt thereof. The Agent shall promptly notify the Borrower
and the other Banks of each change in the Base Rate and the
effective date thereof.
10.11 Banks in Their Individual Capacities.
With respect to its Revolving Credit Commitment, the
Revolving Credit Loans, the Swing Loan Commitment and the Swing
Loan and any Bid Loans made by it and any other rights and powers
given to it as a Bank hereunder or under any of the other Loan
Documents, the Agent shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though
it were not the Agent, and the term "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual
capacity. PNC Bank and its Affiliates and each of the Banks and
their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, accept deposits from,
discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking or trust business with,
the Loan Parties and their Affiliates, in the case of the Agent,
as though it were not acting as Agent hereunder and in the case
of each Bank, as though such Bank were not a Bank hereunder. The
Banks acknowledge that, pursuant to such activities, the Agent or
its Affiliates may (i) receive information regarding the Loan
Parties (including information that may be subject to
confidentiality obligations in favor of the Loan Parties) and
acknowledge that the Agent shall be under no obligation to
provide such information to them, and (ii) accept fees and other
consideration from the Loan Parties for services in connection
with this Agreement and otherwise without having to account for
the same to the Banks.
10.12 Holders of Notes.
The Agent may deem and treat any payee of any Note as
the owner thereof for all purposes hereof unless and until
written notice of the assignment or transfer thereof shall have
been filed with the Agent. Any request, authority or consent of
any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange
therefor.
10.13 Equalization of Banks.
The Banks and the holders of any participations in any
Notes agree among themselves that, with respect to all amounts
received by any Bank or any such holder for application on any
Obligation hereunder or under any Note or under any such
participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-
off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner
stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Banks and such
holders in proportion to their interests in payments under the
Notes, except as otherwise provided in Section 4.4.3, 5.4.2 or
5.5. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks an interest
in such Bank's Loans in such amount as shall result in a ratable
participation by the Banks and each such holder in the aggregate
unpaid amount under the Notes, provided that if all or any
portion of such excess amount is thereafter recovered from the
Bank or the holder making such purchase, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Bank or
the holder making such purchase.
10.14 Successor Agent.
The Agent (i) may resign as Agent or (ii) shall resign
if such resignation is requested by the Required Banks (if the
Agent is a Bank, the Agent's Loans and its Commitment shall be
considered in determining whether the Required Banks have
requested such resignation) or required by Section 5.4.2, in
either case of (i) or (ii) by giving not less than thirty (30)
days' prior written notice to the Borrower. If the Agent shall
resign under this Agreement, then either (a) the Required Banks
shall appoint from among the Banks a successor agent for the
Banks, subject to the consent of the Borrower, such consent not
to be unreasonably withheld, or (b) if a successor agent shall
not be so appointed and approved within the thirty (30) day
period following the Agent's notice to the Banks of its
resignation, then the Agent shall appoint, with the consent of
the Borrower, such consent not to be unreasonably withheld, a
successor agent who shall serve as Agent until such time as the
Required Banks appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant
to either clause (a) or (b) above, such successor agent shall
succeed to the rights, powers and duties of the Agent, and the
term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as
Agent shall be terminated without any other or further act or
deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of any Agent hereunder,
the provisions of this Section 10 shall inure to the benefit of
such former Agent and such former Agent shall not by reason of
such resignation be deemed to be released from liability for any
actions taken or not taken by it while it was an Agent under this
Agreement.
10.15 Agent's Fee.
The Borrower shall pay to the Agent a non-refundable
fee (the "Bid Loan Processing Fee") in connection with processing
Bid Loans and a nonrefundable fee (the "Agent's Fee") for Agent's
services hereunder under the terms of a letter (the "Agent's
Letter") between the Borrower and Agent, as amended from time to
time.
10.16 Availability of Funds.
The Agent may assume that each Bank has made or will
make the proceeds of a Loan available to the Agent unless the
Agent shall have been notified by such Bank on or before the
close of Business on the Business Day preceding the Borrowing
Date with respect to such Loan to the Borrower (whether using its
own funds pursuant to this Section 10.16 or using proceeds
deposited with the Agent by the Banks and whether such funding
occurs before or after the time on which Banks are required to
deposit the proceeds of such Loan with the Agent). The Agent
may, in reliance upon such assumption (but shall not be required
to), make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the
Agent by such Bank, the Agent shall be entitled to recover such
amount on demand from such Bank (or, if such Bank fails to pay
such amount forthwith upon such demand, from the Borrower)
together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to
the Borrower and ending on the date the Agent recovers such
amount, at a rate per annum equal to the applicable interest rate
in respect of the Loan.
10.17 Calculations.
In the absence of gross negligence or willful
misconduct, the Agent shall not be liable for any error in
computing the amount payable to any Bank whether in respect of
the Loans, fees or any other amounts due to the Banks under this
Agreement. In the event an error in computing any amount payable
to any Bank is made, the Agent, the Borrower and each affected
Bank shall, forthwith upon discovery of such error, make such
adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds
Rate.
10.18 Beneficiaries.
Except as expressly provided herein, the provisions of
this Section 10 are solely for the benefit of the Agent and the
Banks, and the Loan Parties shall not have any rights to rely on
or enforce any of the provisions hereof. In performing its
functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of
agency or trust with or for any of the Loan Parties.
11. MISCELLANEOUS
11.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the
Agent, acting on behalf of all the Banks, and the Borrower, on
behalf of the Loan Parties, may from time to time enter into
written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Banks
or the Loan Parties hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of
the Obligations of the Loan Parties hereunder or thereunder. Any
such agreement, waiver or consent made with such written consent
shall be effective to bind all the Banks and the Loan Parties;
provided, that, without the written consent of all the Banks, no
such agreement, waiver or consent may be made which will:
11.1.1 Increase of Commitment; Extension or
Expiration Date.
Increase the amount of the Commitment of any Bank
hereunder or extend the Expiration Date;
11.1.2 Extension of Payment; Reduction of Principal
Interest or Fees; Modification of Terms of Payment.
Whether or not any Loans are outstanding, extend
the time for payment of principal or interest of any Loan
(excluding the due date of any mandatory prepayment of a Loan or
any mandatory Commitment reduction in connection with such a
mandatory prepayment hereunder except for mandatory reductions of
the Commitments on the Expiration Date), the Facility Fee or any
other fee payable to any Bank, or reduce the principal amount of
or the rate of interest borne by any Loan or reduce the Facility
Fee or any other fee payable to any Bank, or otherwise affect the
terms of payment of the principal of or interest of any Loan, the
Facility Fee or any other fee payable to any Bank;
11.1.3 Release of Guarantor.
Release any Guarantor from its Obligations under
the Guaranty Agreement or any other security for any of the Loan
Parties' Obligations; or
11.1.4 Miscellaneous
Amend Sections 5.2 [Pro Rata Treatment of Banks],
10.6 [Exculpatory Provisions, etc.] or 10.13 [Equalization of
Banks] or this Section 11.1, alter any provision regarding the
pro rata treatment of the Banks, change the definition of
Required Banks, or change any requirement providing for the Banks
or the Required Banks to authorize the taking of any action
hereunder.
provided, further, that no agreement, waiver or consent which
would modify the interests, rights or obligations of the Agent in
its capacity as Agent shall be effective without the written
consent of the Agent
11.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the
Agent or any Bank in exercising any right, power, remedy or
privilege under this Agreement or any other Loan Document shall
affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise
thereof or of any other right, power, remedy or privilege. The
rights and remedies of the Agent and the Banks under this
Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise
have. Any waiver, permit, consent or approval of any kind or
character on the part of any Bank of any breach or default under
this Agreement or any such waiver of any provision or condition
of this Agreement must be in writing and shall be effective only
to the extent specifically set forth in such writing.
11.3 Reimbursement and Indemnification of Banks by the Borrower;
Taxes.
The Borrower agrees unconditionally upon demand to pay
or reimburse to each Bank (other than the Agent, as to which the
Borrower's Obligations are set forth in Section 10.5) and to save
such Bank harmless against (i) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel (including allocated
costs of staff counsel) for each Bank except with respect to (a)
and (b) below), incurred by such Bank (a) in connection with the
administration and interpretation of this Agreement, and other
instruments and documents to be delivered hereunder, (b) relating
to any amendments, waivers or consents pursuant to the provisions
hereof, (c) in connection with the enforcement of this Agreement
or any other Loan Document, or collection of amounts due
hereunder or thereunder or the proof and allowability of any
claim arising under this Agreement or any other Loan Document,
whether in bankruptcy or receivership proceedings or otherwise,
and (d) in any workout or restructuring or in connection with the
protection, preservation, exercise or enforcement of any of the
terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against such Bank, in
its capacity as such, in any way relating to or arising out of
this Agreement or any other Loan Documents or any action taken or
omitted by such Bank hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements (A) if the same results
from such Bank's gross negligence or willful misconduct, or
(B) if the Borrower was not given notice of the subject claim and
the opportunity to participate in the defense thereof, at its
expense (except that the Borrower shall remain liable to the
extent such failure to give notice does not result in a loss to
the Borrower), or (C) if the same results from a compromise or
settlement agreement entered into without the consent of the
Borrower, which shall not be unreasonably withheld. The Banks
will attempt to minimize the fees and expenses of legal counsel
for the Banks which are subject to reimbursement by the Borrower
hereunder by considering the usage of one law firm to represent
the Banks and the Agent if appropriate under the circumstances.
The Borrower agrees unconditionally to pay all stamp, document,
transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by the Agent or any Bank
to be payable in connection with this Agreement or any other Loan
Document, and the Borrower agrees unconditionally to save the
Agent and the Banks harmless from and against any and all present
or future claims, liabilities or losses with respect to or
resulting from any omission to pay or delay in paying any such
taxes, fees or impositions.
11.4 Holidays.
Whenever payment of a Loan to be made or taken
hereunder shall be due on a day which is not a Business Day such
payment shall be due on the next Business Day and such extension
of time shall be included in computing interest and fee, except
that the Loans shall be due on the Business Day preceding the
Expiration Date if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder
(other than payment of the Loans) shall be stated to be due on a
day which is not a business Day, such payment or action shall be
made or taken on the next following Business Day (except as
provided in Section 4.2 with respect to Interest Periods under
the Euro-Rate Option), and such extension of time shall not be
included in computing interest or fees, if any, in connection
with such payment or action.
11.5 Funding by Branch, Subsidiary or Affiliate.
11.5.1 Notional Funding.
Each Bank shall have the right from time to time,
without notice to the Borrower, to deem any branch, Subsidiary or
Affiliate (which for the purposes of this Section 11.5 shall mean
any corporation or association which is directly or indirectly
controlled by or is under direct or indirect common control with
any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or
funded any Loan to which the Euro-Rate Option applies at any
time, provided that immediately following (on the assumption that
a payment were then due from the Borrower to such other office),
and as a result of such change, the Borrower would not be under
any greater financial obligation pursuant to Section 5.5 than it
would have been in the absence of such change. Notional funding
offices may be selected by each Bank without regard to such
Bank's actual methods of making, maintaining or funding the Loans
or any sources of funding actually used by or available to such
Bank.
11.5.2 Actual Funding.
Each Bank shall have the right from time to time
to make or maintain any Loan by arranging for a branch,
Subsidiary or Affiliate of such Bank to make or maintain such
Loan subject to the last sentence of this Section 11.5.2. If any
Bank causes a branch, Subsidiary or Affiliate to make or maintain
any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires
otherwise, be applicable to such part of the Loans to the same
extent as if such Loans were made or maintained by such Bank, but
in no event shall any Bank's use of such a branch, Subsidiary or
Affiliate to make or maintain any part of the Loans hereunder
cause such Bank or such branch, Subsidiary or Affiliate to incur
any cost or expenses payable by the Borrower hereunder or require
the Borrower to pay any other compensation to any Bank (including
any expenses incurred or payable pursuant to Section 5.5) which
would otherwise not be incurred.
11.6 Notices.
All notices, requests, demands, directions and other
communications (as used in this Section 11.6, collectively
referred to as "Notices") given to or made upon any party hereto
under the provisions of this Agreement shall be by telephone or
in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or
sent by telex or facsimile to the respective parties at the
addresses and numbers set forth under their respective names on
Schedule 1.1(B) hereof or in accordance with any subsequent
unrevoked written direction from any party to the others. All
Notices shall, except as otherwise expressly herein provided, be
effective (a) in the case of telex or facsimile, when received,
(b) in the case of hand-delivered Notice, when hand-delivered,
(c) in the case of telephone, when telephoned, provided, however,
that in order to be effective, telephonic Notices must be
confirmed in writing no later than the next day by letter,
facsimile or telex, (d) if given by mail, four (4) days after
such communication is deposited in the mail with first-class
postage prepaid, return receipt requested, and (e) if given by
any other means (including by air courier), when delivered;
provided, that Notices to the Agent shall not be effective until
received. Any Bank giving any Notice to any Loan Party shall
simultaneously send a copy thereof to the Agent, and the Agent
shall promptly notify the other Banks of the receipt by it of any
such Notice.
11.7 Severability.
The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof in any
jurisdiction.
11.8 Governing Law.
Each Letter of Credit and Section 2.6 shall be subject
to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500,
as the same may be revised or amended from time to time, and to
the extent not inconsistent therewith, the internal laws of the
Commonwealth of Pennsylvania without regard to its conflict of
laws principles and the balance of this Agreement shall be deemed
to be a contract under the Laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and
construed and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania without regard to its conflict
of laws principles.
11.9 Prior Understanding.
This Agreement and the other Loan Documents supersede
all prior understandings and agreements, whether written or oral,
between the parties hereto and thereto relating to the
transactions provided for herein and therein, including any prior
confidentiality agreements and commitments.
11.10 Duration; Survival.
All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the
making of Loans and issuance of Letters of Credit and shall not
be waived by the execution and delivery of this Agreement, any
investigation by the Agent or the Banks, the making of Loans,
issuance of Letters of Credit, or payment in full of the Loans.
All covenants and agreements of the Loan Parties contained in
Sections 8.1, 8.2 and 8.3 herein shall continue in full force and
effect from and after the date hereof so long as the Borrower may
borrow or request Letters of Credit hereunder and until
termination of the Commitments and payment in full of the Loans
and expiration or termination of all Letters of Credit. All
covenants and agreements of the Borrower contained herein
relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification,
including those set forth in the Notes, Section 5 and Sections
10.5, 10.7 and 11.3, shall survive payment in full of the Loans,
expiration or termination of the Letters of Credit and
termination of the Revolving Credit Commitments.
11.11 Successors and Assigns.
(i) This Agreement shall be binding upon
and shall inure to the benefit of the Banks, the Agent, the Loan
Parties and their respective successors and assigns, except that
none of the Loan Parties may assign or transfer any of its rights
and Obligations hereunder or any interest herein. Each Bank may,
at its own cost, make assignments of or sell participations in all
or any part of its Commitments and the Loans made by it to one or
more banks or other entities, subject to the consent of the Borrower
and the Agent with respect to any assignee, such consent not to
be unreasonably withheld, provided that (1) no consent of the
Borrower shall be required in the case of an assignment by a Bank
to an Affiliate of such Bank, (2) assignments of Revolving Credit
Commitments may not be made in amounts less than the lesser of
$5,000,000 or the amount of the assigning bank's Revolving Credit
Commitment, and (3) a Bank may assign a Bid Loan to another
Person only if it is simultaneously assigning all or a portion of
its Commitment to such Person or such Person is already a Bank
hereunder. In the case of an assignment, upon receipt by the
Agent of the Assignment and Assumption Agreement, the assignee
shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights, benefits and obligations as
it would have if it had been a signatory Bank hereunder, the
Commitments shall be adjusted accordingly, and upon surrender of
any Revolving Credit Note subject to such assignment, the
Borrower shall execute and deliver a new Revolving Credit Note to
the assignee in an amount equal to the amount of the Revolving
Credit Commitment assumed by it and a new Revolving Credit Note
to the assigning Bank in an amount equal to the Revolving Credit
Commitment retained by it hereunder. The assigning Bank shall
surrender its Bid Note and the Borrower shall execute and
deliver to the assignee (and to the assignor if the assignor is
assigning less than all of its Revolving Credit Commitments and
Bid Loans) a new Bid Note in the form of Exhibit 1.1(B), as
appropriate. The assigning Bank shall pay to the Agent a service
fee in the amount of $3,500 for each assignment. In the case of
a participation, the participant shall only have the rights
specified in Section 9.2.3 (the participant's rights against such
Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant
relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 11.1.1,
11.1.2, or 11.1.3, all of such Bank's obligations under this
Agreement or any other Loan Document shall remain unchanged, and
all amounts payable by any Loan Party hereunder or thereunder
shall be determined as if such Bank had not sold such
participation.
(ii) Any assignee or participant which is
not incorporated under the Laws of the United States of America
or a state thereof shall deliver to the Borrower and the Agent
the form of certificate described in Section 11.17 relating to
federal income tax withholding. Each Bank may furnish any
publicly available information concerning any Loan Party or its
Subsidiaries and any other information concerning any Loan Party
or its Subsidiaries in the possession of such Bank from time to
time to assignees and participants (including prospective assignees
or participants), provided that such assignees and participants
agree to be bound by the provisions of Section 11.12.
(iii) Notwithstanding any other provision in
this Agreement, any Bank may at any time pledge or grant a security
interest in all or any portion of its rights under this Agreement,
its Note and the other Loan Documents to any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14 without notice to or consent of
the Borrower or the Agent. No such pledge or grant of a security
interest shall release the transferor Bank of its obligations
hereunder or under any other Loan Document.
11.12 Confidentiality.
The Agent and the Banks each agree to keep confidential
all information obtained from any Loan Party or its Subsidiaries
which is nonpublic and confidential or proprietary in nature
(including any information the Borrower specifically designates
as confidential), except as provided below, and to use such
information only in connection with their respective capacities
under this Agreement and for the purposes contemplated hereby.
The Agent and the Banks shall be permitted to disclose such
information (i) to outside legal counsel, accountants and other
professional advisors who need to know such information in
connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the
confidentiality, (ii) to assignees and participants as
contemplated by Section 11.11, (iii) to the extent requested by
any bank regulatory authority or, with notice to the Borrower, as
otherwise required by applicable Law or by any subpoena or
similar legal process, or in connection with any investigation or
proceeding arising out of the transactions contemplated by this
Agreement, (iv) if it becomes publicly available other than as a
result of a breach of this Agreement or becomes available from a
source not known to be subject to confidentiality restrictions,
or (v) if the Borrower shall have consented to such disclosure.
11.13 Counterparts.
This Agreement may be executed by different parties
hereto on any number of separate counterparts, each of which,
when so executed and delivered, shall be an original, and all
such counterparts shall together constitute one and the same
instrument.
11.14 Agent's or Bank's Consent.
Whenever the Agent's or any Bank's consent is required
to be obtained under this Agreement or any of the other Loan
Documents as a condition to any action, inaction, condition or
event, the Agent and each Bank shall be authorized to give or
withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral,
the payment of money or any other matter.
11.15 Exceptions.
The representations, warranties and covenants contained
herein shall be independent of each other, and no exception to
any representation, warranty or covenant shall be deemed to be an
exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such
exceptions be deemed to permit any action or omission that would
be in contravention of applicable Law.
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF
ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA AND WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH
LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
LACK OF JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND
THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO
THE FULL EXTENT PERMITTED BY LAW.
11.17 Tax Withholding Clause.
Each Bank or assignee or participant of a Bank that is
not incorporated under the Laws of the United States of America
or a state thereof agrees that it will deliver to each of the
Borrower and the Agent two (2) duly completed copies of the
following: (i) Internal Revenue Service Form W-9, 4224 or 1001,
or other applicable form prescribed by the Internal Revenue
Service, certifying that such Bank, assignee or participant is
entitled to receive payments under this Agreement and the other
Loan Documents without deduction or withholding of any United
States federal income taxes, or is subject to such tax at a
reduced rate under an applicable tax treaty, or (ii) Internal
Revenue Service Form W-8 or other applicable form or a
certificate of such Bank, assignee or participant indicating that
no such exemption or reduced rate is allowable with respect to
such payments. Each Bank, assignee or participant required to
deliver to the Borrower and the Agent a form or certificate
pursuant to the preceding sentence shall deliver such form or
certificate as follows: (A) each Bank which is a party hereto on
the Closing Date shall deliver such form or certificate at least
five (5) Business Days prior to the first date on which any
interest or fees are payable by the Borrower hereunder for the
account of such Bank; (B) each assignee or participant shall
deliver such form or certificate at least five (5) Business Days
before the effective date of such assignment or participation
(unless the Agent in its sole discretion shall permit such
assignee or participant to deliver such form or certificate less
than five (5) Business Days before such date in which case it
shall be due on the date specified by the Agent). Each Bank,
assignee or participant which so delivers a Form W-8, W-9, 4224
or 1001 further undertakes to deliver to each of the Borrower and
the Agent two (2) additional copies of such form (or a successor
form) on or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a change
in the most recent form so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that
such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal
income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or
reduced rate is allowable. The Agent shall be entitled to
withhold United States federal income taxes at the full
withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate
as established pursuant to the above provisions.
11.18 Joinder of Guarantors.
Any Material Subsidiary of the Borrower which is
required to join this Agreement as a Guarantor pursuant to
Section 8.2.9 shall execute and deliver to the Agent (i) a
Guarantor Joinder in substantially the form attached hereto as
Exhibit 1.1(G)(1) pursuant to which it shall join as a Guarantor
each of the documents to which the Guarantors are parties; and
pursuant to which it shall join the Intercompany Subordination
Agreement, and (ii) documents in the forms described in
Section 7.1 [First Loans] modified as appropriate to relate to
such Subsidiary. The Loan Parties shall deliver such Guarantor
Joinder and related documents to the Agent
(A) within five (5) Business Days after the later of (1) the date
of the filing of such Subsidiary's articles of incorporation if
the Subsidiary is a corporation, the date of the filing of its
certificate of limited partnership if it is a limited partnership
or the date of its organization if it is an entity other than a
limited partnership or corporation, or (2) the date on which such
Subsidiary becomes a Material Subsidiary, or (B) For purposes of
clause (i) above the date specified in Section 8.2.5, if such
date is sooner than the dates set forth in (A) or (B) above.
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the
day and year first above written.
ATTEST: ROUNDY'S, INC.
ROBERT D. RANUS By: GERALD F. LESTINA
- ---------------------- --------------------------------
Name: Gerald F. Lestina
Title: President and CEO
ATTEST: CARDINAL FOODS, INC.
ROBERT D. RANUS By: MICHAEL J. SCHMITT
- ---------------------- ---------------------------------
Name: Michael J. Schmitt
Title: President
ATTEST: THE MIDLAND GROCERY COMPANY
DAVID D. ZURCHER By: ROBERT D. RANUS
- ---------------------- ---------------------------------
Name: Robert D. Ranus
Title: Vice President & Treasurer
ATTEST: SCOT LAD FOODS, INC.
DAVID D. ZURCHER By: GERALD F. LESTINA
- ---------------------- --------------------------------
Name: Gerald F. Lestina
Title: President & Treasurer
ATTEST: SCOT LAD-LIMA, INC.
DAVID D. ZURCHER By: GERALD F. LESTINA
- ---------------------- --------------------------------
Name: Gerald F. Lestina
Title: President & Treasurer
ATTEST: SHOP-RITE, INC.
DAVID D. ZURCHER By: ROBERT D. RANUS
- ---------------------- --------------------------------
Name: Robert D. Ranus
Title: President & Treasurer
PNC BANK, NATIONAL
ASSOCIATION, individually and
as Agent
By: RICHARD T. JANDER
--------------------------------
Name: Richard T. Jander
Title: Assistant Vice President
BANK ONE, MILWAUKEE, N.A.
By: ERIC L. THOMAS
--------------------------------
Name: Eric L. Thomas
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD
By: MASAHARU KUHARA
--------------------------------
Name: Masaharu Kuhara
Title: General Manager
NATIONAL CITY BANK OF COLUMBUS
By: SUSAN M. BOTTIGGI
--------------------------------
Name: Susan M. Bottiggi
Title: Vice President
SCHEDULE 1.1(A)
PRICING GRID--
VARIABLE PRICING AND FEES BASED ON DEBT TO CAPITAL RATIO
- ------------------------------------------------------------
Revolving Revolving
Debt to Capital Facility Fee Credit Base Credit Euro-
Ratio Rate Spread Rate Spread
- ------------------------------------------------------------
Greater than or
equal to .55 to .25% 0% .75%
1.0
- ------------------------------------------------------------
Greater than or
equal to .45 to
1.0 but less .20% 0% .55%
than .55 to 1.0
- ------------------------------------------------------------
Greater than or
equal to .35 to
1.0 but less .175% 0% .45%
than .45 to 1.0
- ------------------------------------------------------------
Greater than or
equal to .25 to
1.0 but less .15% 0% .35%
than .35 to 1.0
- ------------------------------------------------------------
Less than .25 to .125% 0% .25%
1.0
- ------------------------------------------------------------
For purposes of determining the Applicable Margin and the
Applicable Facility Fee Rate:
(a) The Applicable Margin and the Applicable Facility Fee
Rate shall be determined on the Closing Date based on the Debt to
Capital Ratio computed on such date pursuant to a certificate in
the form of Exhibit 1.1(A)(2) to be delivered on the Closing
Date.
(b) The Applicable Margin and the Applicable Facility Fee
Rate shall be recomputed as of the end of each fiscal quarter
ending after the Closing Date based on the Debt to Capital Ratio
as of such quarter end. Any increase or decrease in the
Applicable Margin or the Applicable Facility Fee Rate computed as
of a quarter end shall be effective on the date on which the
Compliance Certificate evidencing such computation is due to be
delivered under Section 8.3.3.
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 1 of 2
Part 1--Commitments of Banks and Addresses for Notices to Banks
Amount of
Commitment Amount of Ratable
for Commitment Share or
Revolving for Swing Revolving
Credit Loans Credit
Bank Loans Commitments
- -----------------------------------------------------------------------
Name: PNC Bank, National
Association
Address: Suite 3140
500 W. Madison Street
Chicago, IL 60606
Attention: Mr. Richard T. Jander
Telephone:(312) 906-3440 $17,500,000 $15,000,000 31.818181%
Telecopy:(312) 906-3420
- -----------------------------------------------------------------------
Name: Bank One, Milwaukee, N.A.
Address: 111 East Wisconsin
Avenue
P.O. Box 2033
Milwaukee, WI 53201
Attention: Mr. Eric L. Thomas
Telephone:(414) 765-2541 $12,500,000 $ 0 22.727273%
Telecopy:(414) 765-2176
- -----------------------------------------------------------------------
Name: The Long Term Credit Bank of
Japan, Ltd.
Address: 190 South LaSalle
Street
Suite 800
Chicago, IL 60603
Attention: Mr. John R. Carley
Telephone (312) 704-1700 $12,500,000 $ 0 22.727273%
Telecopy: (312) 704-8505
- -----------------------------------------------------------------------
Name: National City Bank of Columbus
Address: 155 East Broad Street
Columbus, OH 43251
Attention: Ms. Susan M. Bottiggi
Telephone (614) 463-6963
Telecopy: (614) 463-6770 $12,500,000 $ 0 22.727273.%
- -----------------------------------------------------------------------
Total $55,000,000 $15,000,000 100.000000%
----------------------------------------------------------------
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
Page 2 of 2
Part 2--Addresses for Notices to Borrower and Guarantors:
BORROWER AND EACH GUARANTOR:
Name: c/o Roundy's, Inc.
Address: 23000 Roundy Drive
Pewaukee, WI 53072-4095
Attention: Edward G. Kitz
Telephone: (414-524-5901)
Telecopy: (414-547-7561)
with a copy to:
John F. Emanuel, Esquire
Whyte Hirschboeck Dudek S.C.
111 East Wisconsin Ave., Suite 2100
Milwaukee, WI 53202
Exhibit 10.2(a)
Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8132-05-32C
Federal Insurance Company, a stock
insurance company, incorporated
under the laws of Indiana, herein
called the Company.
Item 1. Parent Organization:
ROUNDY'S, INC.
23000 ROUNDY DRIVE
PEWAUKEE, WISCONSIN
53072
Item 2. Policy Period: From 12:01 A.M. on NOVEMBER 01, 1996
To 12:01 A.M. NOVEMBER 01, 1998
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
Item 4. Termination of
Prior Policies: 8132-05-32B
THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY,
OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A
CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE
SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING
THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused
this policy to be signed by its authorized officers, but it shall
not be valid unless also signed by a duly authorized
representative of the Company.
FEDERAL INSURANCE COMPANY
HENRY A. GULICK DEAN R. OFFURE
_______________________ ______________________
Secretary President
NOVEMBER 12, 1996 JOHN S. BAIN
_______________________ ----------------------
Date Authorized
Representative
ROUNDY'S 1996 ANNUAL REPORT
($000 omitted except for
per share data and ratios)
1996 1995 1994 1993 1992
---------- ---------- ----------- ---------- -----------
Net sales and
service fees $2,579,010 $2,488,196 $2,461,510 $2,480,254 $2,491,293
Net earnings 10,267 9,022 6,554 8,028 7,353
Patronage dividends 5,568 5,129 0 5,301 5,135
Total assets 434,641 407,337 404,652 380,092 390,148
Long-term debt 93,615 78,850 88,227 113,045 135,420
Stockholders' equity(1) 109,945 100,033 90,419 86,066 78,573
Book value per share 94.30 85.15 77.40 71.65 65.10
Working capital 90,498 90,740 91,814 113,643 119,153
Current ratio 1:42:1 1:43:1 1:43:1 1:64:1 1.70:1
Earnings before
patronage dividends
as a percent of net
sales and service fees .91% .81% .45% .81% .66%
(1) includes redeemable common stock
Message To Our Stockholders
The greatest things ever done have been done little by
little -- step by step. So it is in business, and so has it
been with our strategy for success and growth at Roundy's.
More than anything else, our Company's performance in
1996 was the result of proper strategies -- strategies that
were thoughtfully developed and effectively implemented.
From the outset I have said that the Company's strategic
plan was a shared plan, one that would draw upon the abilities
of every Roundy's associate, and one that would require follow-
through at every level. I'm proud to see that this sense of
shared ownership is everywhere.
Each time we have faced a challenge, we met it and
conquered it. Each time we saw an opportunity, we pursued
it. These little successes have added up. This annual
report -- this snapshot-- is really a compilation of a year's
worth of accomplishments. It is also a testament to our
ability to reach higher, and travel further, to attain future
goals.
No one ever said this business was easy, or that things
would get better. Competition is stiffer. Vendor allowances
have shrunk. Technology -- and the need for it -- marches on.
These are not revelations, nor are they one-time phenomena.
They are more or less constant factors in our core business,
and they are the things that require sound, diligent stragetic
planning on an ongoing basis. They also require us to be
innovative and flexible.
Roundy's, in 1996, experienced major challenges
including a retail acquisition, consolidation of two
warehouses, record demand for capital, technology changes
and organizational opportunities. The Company's
accomplishments in these areas exemplify both our commitment
to our strategic plan and our ability to adjust strategy to
meet unforeseen needs. This, in turn, allowed us to meet
our overall objective of increasing stockholder value.
We set records in 1996 for net sales, patronage
dividends and net earnings. We also successfully negotiated
new labor contracts for two operating divisions, including
our largest, the Milwaukee Division.
We made a strong effort to enhance our customer
support services and activities, improve and standardize
systems throughout all Roundy's Divisions and restructure
the organization to become more focused and responsive.
While the Company and our associates accepted the challenges
of 1996 and responded with improved sales and earnings,
these changes will enable us to continue our overall
mission: to enhance stockholder value.
"Success is the reward for accomplishment"
- Harry F. Banks.
THE YEAR IN REVIEW
Financial Accomplishments
Sales reached record levels at $2.579 billion, a 3.6
percent increase. The increase reflects the strong efforts
of our wholesale divisions to improve concentration with
existing customers, secure new customers, increase private
label sales, open new locations and integrate wholesale
transfers to the new retail stores acquired by the Company.
Earnings before patronage dividends reached record
levels at $23.5 million, a 15.9 percent increase over the
prior year. The solid improvement in earnings was achieved
while absorbing the cost of consolidating the two Ohio
divisions into one facility in Lima, Ohio.
- Patronage dividends reached record levels at $5.6
million, an 8.6 percent increase.
- Net earnings also reached record levels at $10.3
million, a 13.8 percent increase.
Roundy's continues to concentrate on improving cash
flows and strengthening our balance sheet. During 1996, net
cash flows from operations exceeded $39 million, a 55.4
percent increase compared to 1995. In addition, the Company
issued $25 million in Senior Unsecured Notes. These funds
were essential to helping finance $39.3 million in capital
expenditures and the purchase of a five store retail grocery
business located in and around Sheboygan, Wisconsin.
Operating Accomplishments
A major priority in Roundy's Strategic Plan was the
consolidation of our two Ohio Divisions into one efficient
operation. This was a significant undertaking, some aspects
of which began in late 1995 but the majority of which was
completed in 1996. Highlights included the transfer of 145
stores and more than $14 million in inventory from Columbus
to Lima, the reracking of the Lima Division warehouse and
the construction of new offices. Further, a 61,800 square
foot freezer was constructed to accommodate 2,800 slots
for the expanded sales base and provide the space needed
to handle the increased variety of frozen products required
by our retailers and their customers.
Another strategic accomplishment for Roundy's was to
secure ownership of the Westville, Indiana warehouse.
Until June of 1996, this facility was leased through a
complex sublease involving several companies.
We also made great efforts to identify opportunities
to increase sales. We purchased a five store retail
grocery group within our service area, which will increase
annual sales by more than $75 million. We completed this
purchase in June, and then sold one store to an existing
retailer. With the acquisition, Roundy's increased its
retail square footage by 126,300 square feet.
square feet of retail space.
Our retailers also continued to expand their businesses,
and this contributed to a large growth in sales. Several new
stores were opened or expanded during the year, including:
MILWAUKEE DIVISION
Location Square Footage
-------- --------------
East Troy, WI 38,000 Replacement
McFarland, WI 45,000 Replacement
Waterford, WI 40,000 New
Remodels
Eau Claire, WI 18,000 Expansion
Menomonee Falls, WI 15,000 Expansion
WESTVILLE DIVISION
Location Square Footage
-------- --------------
Logansport, IN 46,000 New
Elkhart, IN 48,000 Replacement
Kalamazoo, MI 35,000 New
Schoolcraft, MI 35,000 New
LIMA DIVISION
Location Square Footage
-------- --------------
Shadyside, OH 10,000 New
Ypsilanti, MI 9,000 New
New Lebanon, OH 8,000 New
ELDORADO DIVISION
Location Square Footage
-------- --------------
Brandenburg, KY 8,000 New
Providence, KY 7,500 New
Technology accomplishments
Technology marches on. So much our pursuit of it at
Roundy's if we are to continue to develop and improve our
operations. Part of our overall stragetic plan is a plan
for technology development, and in 1996 Roundy's engaged
an independent consulting firm for advice.
We identified a need to standardize all major systems
company-wide. During 1996 we completed several of these
steps by implementing a new, common, modern purchasing
system in every division. We have also developed plans
for standard, state-of-the-art warehouse system in all
divisions, with progress started in the Westville Division.
Other major systems targeted for upgrade and/or
complete overhaul include order entry, billing, retail
accounting and transportation. Our goal is to complete
implementation at larger divisions in 1997, and the other
divisions by mid-1998.
Roundy's commitment to Efficient Consumer Response
("ECR") and Electronic Data Interchange ("EDI") continues.
We are working closely with a handful of key manufacturers
to insure that Roundy's will keep abreast of the many
changes occurring in our industry. These partnerships are
a real "win-win" for Roundy's, our customers and our
suppliers. They are also a central aspect of our strategy
to continue reducing expense and improving operational
efficiency.
Besides our in-house systems, we have significantly
improved systems offered to our customers. Specifically,
a new contract was negotiated with one of the leading
providers of electronic payment (debit and credit)
services. Conversion of existing customers to this new
provider will be completed in early 1997. Also, our
target marketing program was enhanced to provide more
options for targeting customers -- and to keep Roundy's
in a position of leadership.
Finally, our wide area network was expanded to
accommodate 78 stores, the majority of which are using the
satellite network. To ensure an even greater degree of
reliability for the satellite, dial backup capabilities are
available to all users.
Future goals
Fiscal 1996 was a year of new records and significant
accomplishments, and its fitting that we pause to reflect
on them. It is equally fitting the we honor those people,
departments and divisions whose efforts were the building
blocks of our success.
The year has passed, though, and we face many new
challenges in 1997 and beyond. We believe our existing
strategies were proven sound, and are the foundation of
future growth. I am proud, though, of our Company's
ability to see opportunity and challenge, and to plot new
strategies to meet both.
I look to every Roundy's associate for innovative
approaches to the problems that will face us. But I am
convinced that innovation is nothing more than the
adaptation of common sense to meet new situations.
Our plans call for continued reinvestment in the
Company with more than $29 million in capital expenditures
planned for 1997. We will continue to dedicate resources
to improve and strengthen our retail stores.
During 1996, private label product sales exceeded $179
million, a 7.4 percent increase. We will continue to
increase our number of private label offerings. This, we
believe, will continue to be a key growth area, so in 1997 we
plan to add 143 new items in grocery, frozen food and dairy.
Private label produce has also shown exceptional growth. We
have planned to introduce more varieties of salad mixes as
well as new salad dressings and dips.
Good information makes good decisions possible -- for
Roundy's and for its retailers. With our expansion into
increasing private label offerings, we must make certain
that the products we offer are generating the kinds of
returns our retailers need to remain financially viable
and capable of growing. So, we are in the process of
implementing another stage of our category management
program which we believe will provide our retailers
with additional market data to focus on the items
necessary to meet consumer demands.
In 1997, Roundy's customers will have access to our
web page on the Internet. We developed a special consumer
service page which will allow them to E-mail their concerns
directly to us. We recognize that it is essential for us
to keep in touch with our customers and believe this will
pay significant dividends as we move into the next century.
To every Roundy's customer, associate and supplier, I
wish to extend my personal thanks and congratulations,
along with an invitation to help us meet the new challenges
and opportunities that face us.
The philosopher Edmund Burke said, "The past is not a
guide to the future." I believe that's true. But I believe
that past peformance is a good indicator of future performance.
Given the past performance of our Company and its people, I am
confident that Roundy's will enjoy a future filled with
successes.
Gerald F. Lestina
President and Chief Executive Officer
Financial and Operational Review
Liquidity and capital resources
The long-term viability of a Company like Roundy's is
predicated on maintaining a sound financial foundation. It
is a challenge to maintain a strong financial position when
demands for capital, to support our growth, continue to
increase.
Fiscal 1996 was a year in which Roundy's experienced
many challenges. Capital expenditures exceeded $39 million,
a grocery retail business costing approximately $14 million
was acquired and the Company consolidated two Ohio divisions
into one expanded warehouse complex in Lima, Ohio.
The Company made several strategic improvements
designed at enhancing divisional operational efficiencies
both in the short and long-term. The most comprehensive
improvement, as noted above, was the consolidation of two
Ohio Divisions. This consolidation will create long-term
savings which will be achieved through reduced capital,
lower operating costs, increased volume with less
administrative overhead and lower inventory requirements.
Essential to the success of the consolidation was the
construction of a new frozen food facility which eliminated
the need for outside facilities and allowed for expanded
product variety necessary to satisfy retailer and market
demands. Based on the results to date, this new frozen food
warehouse is expected to be a significant factor in the
division's growth and a contributor to its financial strength.
The Company completed a private placement of $25
million in 7.86% Senior Unsecured Notes during the second
quarter of 1996. A large portion of these funds were used
to finance the acquisition of the Westville Division
warehouse which had been leased. Ownership of this facility
was an important part of the strategic plan for the Company.
The remainder of this new debt was utilized to acquire the
five store grocery retailer.
Even with a 62% increase in capital expenditures
compared to 1995, the average daily borrowing of the Company
only increased $13 million compared to 1995. Further, the
Company continued to maintain its long-term debt to equity
ratio below the 1.00:1 level at .85:1. This was slightly
greater than the .79:1 ratio achieved in 1995, but better
than anticipated in view of the strategic initiatives
undertaken during the year. At December 28, 1996, the
Company had $60 million available under its revolving credit
agreements which management believes is adequate to finance
its operations.
The strong long-term debt to equity ratio was achieved
with the significant net cash flows provided by operations.
In fiscal 1996, these cash flows were $39.3 million versus
$25.3 million in 1995 or a $14.0 million increase. A major
factor influencing this growth was a $10.3 million decrease
in inventories which was achieved while enjoying a $90.8
million increase in net sales. Equity in inventory in 1996
also reflected a positive trend declining 3.2% to 35.8% from
37.0% in 1995. The reasons for Roundy's ability to increase
sales, yet decrease inventory, include (1) the Ohio
consolidation, (2) the implementation of a standard,
automated buying/inventory management system in all
divisions, (3) expanded utilization of ECR and EDI
applications in all divisions, and (4) continued management
focus on improved inventory/category management approaches
at all levels.
A second significant factor in the strong cash flow
improvement was the decrease in notes receivable in 1996 of
$3.9 million with a 3.6% sales increase compared to a $6.3
million increase in 1995. The reduction in notes receivable
was accomplished with an increased focus on customer
liquidity and a concentrated credit program. This credit
program was developed and implemented in all divisions to
further standardize credit terms and reduce the Company's
credit exposure with weaker customers. Corresponding to the
decreases in inventory, accounts payable decreased $7.2
million in 1996 compared to a $0.5 million decrease in 1995.
It is anticipated that there will be further reductions in
accounts payable with the continued growth of EDI to
transmit orders and receive invoices.
A critical component of the Company's strategic plan is
to maintain a strong balance sheet while strengthening the
business. The capital structure for fiscal 1996 and 1995 is
summarized in the table above.
Roundy's growth in total capital was needed to finance
the aforementioned acquisition and strategic initiatives
completed during 1996. These strategic moves made during
1996 will better enable the Company to continue the positive
trends into 1997, including enhanced performance in the
consolidated Ohio Division and from the retail stores which
were acquired during the year.
The Company continued its plan of reinvesting resources
in its facilities. In 1996, capital expenditures were the
largest in over five years at $39.3 million versus $24.2
million for 1995. The largest expenditures include the
purchase of the Westville Division complex for $18.9 and a
state of the art freezer in Lima, Ohio for $5.4 million. In
addition, $5.4 million was expended to acquire and upgrade
retail facilities Company-wide. The fourth area of
significance was in the Company's transportation fleet where
$2.7 million was expended. These fleet expenditures were
made in addition to redeploying tractors and trailers made
available as the result of closing the Columbus, Ohio
facility. Maintaining a low freight cost is a critical
element in providing competitive pricing to our customers.
Therefore, one strategic goal of the Company is to make
available, to all operating divisions, newer, lower
maintenance and more reliable transportation equipment.
A key ratio that illustrates the strength of the
Company is its current ratio. It is important to keep this
ratio at a prudent level by minimizing the investment in
assets, such as receivables and inventory. With the
continued implementation of modern purchasing and warehouse
systems, as well as accounts receivable reporting systems,
the Company has been able to minimize its investments in
these types of assets, yet maintain a prudent current ratio.
In fiscal 1996, this ratio was 1.42:1 versus 1.43:1 in 1995.
Total working capital was also relatively flat at $90.5
million in 1996 compared to $90.7 million in 1995.
Maintaining this level while realizing a $90.8 million
growth in net sales in 1996 versus 1995, was a positive
achievement requiring a Company-wide effort.
Senior management realizes the importance of quality
systems to manage and grow the Company in an industry
undergoing major technological change. To maximize the
benefits of funds expended in this area, a program was
established in 1996 to standardize all systems in all
divisions. This standardization will enable Company-wide
communication and uniform evaluation of the buying,
warehousing and financial functions. Additional benefits of
standard systems include reduced programming and maintenance
costs. This will also enable the Company to have more
timely access to information regarding inventory costs. The
resulting lower inventory levels and improved operations
will provide cost savings and benefits which can then be
passed to customers and to stockholders.
Roundy's 1996 book value per share increased 10.75%
over 1995 to $94.30 per share. Patronage dividends were
approximately $5.6 million which represented an 8.6%
increase over 1995 which was a record for the Company.
Stockholders' equity, including redeemable common stock,
increased 9.9% compared to 1995.
RESULTS OF OPERATIONS
Net sales and service fees increased $90.8 million over
1995 and $117.5 million over 1994. This represents a 3.6%
increase over 1995 sales and a 4.8% increase over 1994. The
five store retail grocery business acquired in June
accounted for 35.9% of the increase over 1995 and 27.6% over
1994. Other factors include (1) expanded usage of the
Company's target marketing/frequent shopper programs
relative to 1995 and 1994, (2) growth in retail sales, and
(3) a 3.8% growth in our "non-foods" wholesale sales
compared to 1995 and a 9.2% improvement over 1994. The
Company continues to experience positive growth trends in
non-foods which have been stimulated by expanded product
lines and enhanced retailer programs.
Gross profits improved .36% over 1995 and .15% over
1994. The modest improvements over both 1995 and 1994 are
attributable to the Company's growth in retail stores.
Gross profits at the wholesale level continue to decline,
.04% from 1995 and .22% from 1994. The gradual erosion of
gross profits at the wholesale level is the result of
several factors including (1) manufacturers changing
programs and reducing buy-in opportunities, (2) the increase
in passing of deal monies directly to the retailers and
diminishing the wholesaler's role in the funding process,
and (3) the continued competitive pressures to make the best
price always available to the independent retailer. As in
the past, Roundy's continues to work with both the
manufacturers and the retailers to maximize cost reductions
and offer "everyday low prices" to our retailers and their
customers.
Operating and administrative expenses increased .27%
over 1995, but were .23% below 1994 levels, as a percent to
net sales. The fluctuation in operating and administrative
expenses as a percent to net sales can be attributed to the
following: (1) a decline in closed store and bad debt
expenses of $0.5 million compared to 1995 and $11.2 million
compared to 1994, (2) the incurrence of $2.1 million in
costs associated with the consolidation the Ohio warehouses
in 1996, (3) an increase in corporate retail stores over the
prior years which maintain a significantly higher wage
expense, as a percent to net sales, and (4) an increase of
.08% in depreciation expense, as a percent of net sales, in
1996 compared to 1995 and .11% compared to 1994. These
changes in operating costs were the result of strategic plan
initiatives which had been implemented in 1996. The
continuing challenge is to maximize productivity
opportunities in all divisions while keeping the related
implementation costs at reasonable levels.
Interest expense was $0.6 million greater than 1995,
but was $1.0 million below 1994. The increase over 1995 in
dollars is attributable to the increased debt which was
needed in 1996 to finance the purchase of the Westville
warehouse and the acquisition of the five store grocery
retail business. Even with the increase in debt necessary
to finance these initiatives, interest expense was only .33%
of net sales in 1996 compared to .32% in 1995 and .39% in
1994. The ability of the Company to borrow at favorable
rates continues to facilitate our growth as well as provide
continued balance sheet strength.
The effective income tax rates for 1996, 1995 and 1994
were 42.6%, 40.3% and 40.7%, respectively. The slight
increase in the 1996 effective tax rate compared to prior
years was the result of an increase in non-deductible
goodwill which increased with the five store retail grocery
business acquisition.
The positive trend in earnings continued in 1996 with
net earnings achieving .40% of net sales and fees compared
to .36% in 1995 and .27% in 1994. The 1996 net earnings of
$10.3 million is a Company record. The percent of these net
earnings to net sales has been the highest percentage in 14
years and was achieved on a sales base which grew by $90.8
million compared to 1995 and $117.5 million compared to
1994. Further, the Company declared record patronage
dividends to be paid to active stockholders. As a result of
record sales in 1996, coupled with a reduction in
administrative staff and standardization of the buying
system in all divisions, Roundy's was able to achieve its
strategic goals for 1996 and posture itself for continued
growth in 1997.
Capital Structure (in millions) 1996 1995
- ---------------------------------------------------------------------
Long-term debt $ 93.6 46.0% $ 78.9 44.1%
Stockholders' equity 109.9 54.0 100.0 55.9
- ---------------------------------------------------------------------
Total capital $203.5 100.0% $178.9 100.0%
- ---------------------------------------------------------------------
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 December
28, 1996 and December 30, 1995 and the related statements of
consolidated earnings, stockholders' equity and cash flows
for each of the three years in the period ended December 28,
1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial
position of the companies at December 28, 1996 and December
30, 1995, and the results of their operations and their cash
flows for each of the three years in the period ended
December 28, 1996 in conformity with generally accepted
accounting principles.
Milwaukee, Wisconsin
February 21, 1997
Statements of Consolidated Earnings
For The Years Ended December 28, 1996, December 30, 1995 and December 31, 1994
1996 1995 1994
-------------- ------------- ---------------
Revenues:
Net sales and service fees $2,579,010,200 $2,488,196,200 $2,461,509,600
Other-net 4,494,700 3,966,100 3,892,300
-------------- -------------- --------------
2,583,504,900 2,492,162,300 2,465,401,900
-------------- -------------- --------------
Costs and Expenses:
Cost of sales 2,333,216,600 2,260,039,400 2,230,645,500
Operating and administrative 218,342,700 203,943,400 214,221,900
Interest 8,479,900 7,929,000 9,479,300
-------------- -------------- --------------
2,560,039,200 2,471,911,800 2,454,346,700
-------------- -------------- --------------
Earnings Before Patronage
Dividends 23,465,700 20,250,500 11,055,200
Patronage Dividends 5,568,300 5,128,500
-------------- -------------- -------------
Earnings Before Income Taxes 17,897,400 15,122,000 11,055,200
Provision (Credit) for Income Taxes:
Current-Federal 5,396,400 7,361,200 7,863,700
- State 859,800 1,177,400 2,290,100
-Jobs & other tax credits (141,200) (105,700) (448,700)
-Deferred 1,515,000 (2,333,000) (5,204,000)
-------------- -------------- -------------
7,630,000 6,099,900 4,501,100
-------------- -------------- -------------
Net Earnings $ 10,267,400 $ 9,022,100 $ 6,554,100
============== ============== =============
See notes to consolidated financial statements.
Consolidated Balance Sheets
As of December 28, 1996 and December 30, 1995
1996 1995
------------- --------------
Assets
Current Assets:
Cash and cash equivalents $ 40,342,300 $ 26,382,000
Notes and accounts receivable,
less allowance for losses,
$6,314,700 and $8,431,300,
respectively 98,593,300 99,727,000
Merchandise inventories 155,562,300 163,204,100
Prepaid expenses 2,741,000 5,060,700
Refundable and future income
tax benefits 7,817,400 8,496,800
------------- -------------
Total current assets 305,056,300 302,870,600
------------- -------------
Other Assets:
Notes receivable, less
allowance for losses,
$5,576,000 and $4,641,000,
respectively 12,386,600 17,249,100
Other real estate 4,439,700 4,659,400
Goodwill and other assets 12,100,600 5,300,600
Deferred income tax benefit 1,922,000 2,706,000
------------- -------------
Total other assets 30,848,900 29,915,100
------------- -------------
Property and Equipment - At Cost:
Land 5,343,900 5,042,700
Buildings 69,084,600 43,021,900
Equipment 101,679,800 94,499,200
Leasehold improvements 13,467,600 12,412,000
------------- -------------
189,575,900 154,975,800
Less accumulated depreciation
and amortization 90,840,100 80,424,900
------------- -------------
Property and equipment - net 98,735,800 74,550,900
------------- -------------
$ 434,641,000 $ 407,336,600
============= =============
See notes to consolidated financial statements.
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of
long-term debt $ 10,225,800 $ 3,776,500
Accounts payable 159,038,100 165,539,300
Accrued expenses 44,358,400 42,231,400
Income taxes 936,100 583,600
------------- -------------
Total current liabilities 214,558,400 212,130,800
Long-Term Debt, Less
Current Maturities 93,614,600 78,850,200
Other Liabilities 16,522,700 16,322,500
------------- -------------
Total liabilities 324,695,700 307,303,500
Commitments and Contingencies (Note 10)
Redeemable Common Stock 6,217,100 8,132,000
------------- -------------
Stockholders' Equity:
Common stock:
Voting (Class A) 16,300 16,700
Non-voting (Class B) 1,325,200 1,282,400
------------- -------------
Total common stock 1,341,500 1,299,100
Amount related to recording
minimum pension liability (232,800) (283,600)
Patronage dividends payable
in common stock 3,779,000 3,405,000
Additional paid-in capital 24,920,600 21,222,100
Reinvested earnings 75,051,100 66,258,500
------------- -------------
104,859,400 91,901,100
Less treasury stock, at cost 1,131,200
------------- -------------
Total stockholders' equity 103,728,200 91,901,100
------------- -------------
$ 434,641,000 $ 407,336,600
============= =============
<TABLE>
Statements of Consolidated Stockholders' Equity
For The Years Ended December 28, 1996, December 30, 1995 and December 31, 1994
<CAPTION>
Common Stock
------------------------------------ Patronage
Class A Class B Dividends Additional
------------------------------------ Payable in Paid-in Retained
Shares Amount Shares Amount Common Stock Capital Earnings
------------------------------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 15,500 $19,400 1,048,067 $1,310,100 $ 3,263,000 $18,761,900 $56,411,800
Net earnings 6,554,100
Common stock issued 700 900 52,138 65,200 (3,263,000) 3,516,200
Common stock purchased (2,200) (2,800) (1,533) (1,900) (222,200) (191,800)
Redeemable common stock (15,880) (19,900) (314,700) (894,500)
-------------------------------------------------------------------------
Balance, December 31, 1994 14,000 17,500 1,082,792 1,353,500 0 21,741,200 61,879,600
Net earnings 9,022,100
Common stock issued 200 200 12,755 16,000 931,400
Common stock purchased (800) (1,000) (17,446) (21,800) (384,500) (1,329,300)
Redeemable common stock (52,204) (65,300) (1,066,000) (3,313,900)
Patronage dividends
payable in common stock 3,405,000
-------------------------------------------------------------------------
Balance, December 30, 1995 13,400 16,700 1,025,897 1,282,400 3,405,000 21,222,100 66,258,500
Net earnings 10,267,400
Common stock issued 600 800 51,806 64,800 (3,405,000) 4,312,900
Common stock purchased (1,000) (1,200) (10,433) (13,100) (449,200) (980,300)
Redeemable common stock (7,090) (8,900) (165,200) (494,500)
Patronage dividends
payable in common stock 3,779,000
-------------------------------------------------------------------------
Balance, December 28, 1996 13,000 $16,300 1,060,180 $1,325,200 $3,779,000 $24,920,600 $75,051,100
=========================================================================
Treasury Stock, December 28, 1996 13,285 $1,131,200
========= ==========
<FN>
See notes to consolidated financial statements.
</end table>
Statements of Consolidated Cash Flows
For The Years Ended December 28, 1996, December 30, 1995 and December 31, 1994
1996 1995 1994
------------ ------------ ------------
Cash Flows From Operating Activities: $ 10,267,400 $ 9,022,100 $ 6,554,100
Net earnings
Adjustments to reconcile
net earnings to net cash flows
provided by operating activities:
Depreciation and amortization 16,326,800 13,594,400 12,756,500
Allowance for losses 5,302,600 5,871,500 9,166,600
(Gain) loss on sale of
property and equipment (1,233,500) 451,900 (1,087,700)
Closed facility reserve 620,200 42,300 8,000,000
Patronage dividends payable
in common stock 3,779,000 3,405,000
(Increase) decrease in operating
assets:
Accounts receivable (2,818,400) (6,768,000) (5,012,600)
Merchandise inventories 10,319,700 (6,008,400) (4,026,200)
Prepaid expenses 2,453,500 713,500 1,182,600
Refundable and future income
tax benefits 679,400 (2,805,000) (1,410,000)
Other real estate 219,700 1,924,800 758,800
Goodwill and other assets (413,400) 1,208,700 323,300
Deferred income tax benefit (860,100) 472,000 (3,060,000)
Increase (decrease) in operating
liabilities:
Accounts payable (7,237,800) (485,400) 35,837,100
Accrued expenses 850,400 6,018,200 (1,582,700)
Income taxes 864,300 (3,899,600) 4,072,300
Deferred income taxes (734,000)
Other liabilities 200,200 2,538,200 3,015,300
------------- ------------ -----------
Net cash flows provided by
operating activities 39,320,000 25,296,200 64,753,400
------------- ------------ -----------
Cash Flows From Investing Activities:
Capital expenditures (39,291,800) (24,216,300) (22,316,600)
Proceeds from sale of property
and equipment 5,763,400 5,296,500 1,753,200
Payment for business acquisition
net of cash acquired (13,918,700)
Decrease (increase) in
notes receivable 3,927,500 (6,342,800) 830,400
------------- ------------ -----------
Net cash flows used in investing
activities (43,519,600) (25,262,600) (19,733,000)
------------- ------------ -----------
Cash Flows From Financing Activities:
Proceeds from long-term borrowings 25,000,000
Principal payments of long-term debt (10,235,600) (9,376,500) (24,818,000)
Increase (decrease) in current
maturities of long-term debt 6,449,300 (1,902,100) (3,381,700)
Proceeds from sale of common stock 973,500 947,600 319,300
Common stock purchased (4,027,300) (3,589,400) (2,716,800)
------------- ------------ ------------
Net cash flows provided by
(used in) financing activities 18,159,900 (13,920,400) (30,597,200)
------------- ------------ ------------
Net Increase (Decrease) in Cash and
Cash Equivalents 13,960,300 (13,886,800) 14,423,200
Cash And Cash Equivalents,
Beginning Of Year 26,382,000 40,268,800 25,845,600
------------- ------------ ------------
Cash And Cash Equivalents,
End Of Year $ 40,342,300 $ 26,382,000 $ 40,268,800
============= ============= ============
Cash Paid During The Year For:
Interest $ 8,545,900 $ 8,116,000 $ 9,775,300
Income Taxes 6,965,100 12,319,000 5,163,300
Supplemental Noncash Financing
Activities - Patronage
Dividends Payable in
Common Stock 3,779,000 3,405,000
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Description of business-The Company is primarily engaged in
the wholesale distribution of food products and related non-
food items through retail supermarkets, primarily located in
the Great Lakes Region of the Midwestern United States, 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. Each of
the three years in the period ended December 28, 1996
included 52 weeks.
Consolidated financial statements-The consolidated financial
statements include the accounts of the Company and its
subsidiaries. Significant intercompany balances and
transactions are eliminated in consolidation. Revenue from
product sales are recognized upon shipment of the product
for food distribution and at the point of sale for retail
food. The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Cash and cash equivalents-The Company considers all highly
liquid investments, with maturities of three months or less
when acquired, to be cash equivalents.
Inventories-Inventories are primarily recorded at the lower
of cost, on the first-in, first-out method, or market.
Goodwill-The excess of cost over the fair value of net
assets of businesses acquired (goodwill) is being amortized
on a straight-line basis over 20 years. Accumulated
amortization at December 28, 1996 and December 30, 1995 was
$3,517,800 and $2,989,800, respectively.
Long-lived assets-The Company periodically evaluates the
carrying value of long-lived assets in accordance with
Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." The Company
analyzes the future recoverability of the long-lived assets
using the related undiscounted future cash flows of the
business and recognizes any adjustment to its carrying value
on a current basis.
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.
Closed facility costs-When a facility is closed the
remaining investment, net of expected salvage value, is
expensed. For properties under lease agreements, the present
value of any remaining future liability under the lease, net
of expected sublease recovery, is also expensed. The amounts
charged to operations for the present value of these
remaining future liabilities were $620,000, $42,300 and
$8,000,000 in 1996, 1995 and 1994, respectively.
Income Taxes-The Company provides income taxes in accordance
with SFAS 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. ACQUISITION
On June 22, 1996, the Company purchased all of the
outstanding stock of a grocery retailer for $13,918,700 in
cash. The acquisition has been accounted for as a purchase
and the results of operations have been included in the
Consolidated Financial Statements since the date of
acquisition. On an unaudited pro-forma basis, the effect of
the acquisition was not significant to the Company's 1996
results of operations.
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 years ended December 28, 1996 and December
30, 1995 were payable 30% in cash. There were no patronage
dividends for the year ended December 31, 1994 because the
Company did not meet the requirement to increase the book
value of its common stock by 10%.
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,
equipment, personal assets and pledges of company stock.
Interest rates are generally in excess of the prime rate and
terms of the notes are up to 15 years. Included in current
notes and accounts receivable are amounts due within one
year totalling $10,190,000 and $9,305,500 at December 28,
1996 and December 30, 1995, respectively.
5. LONG-TERM DEBT
Long-term debt, exclusive of current maturities, consists of
the following at the respective year-ends:
1996 1995
------------ -------------
Senior unsecured notes payable:
9.26%, due 1998 to 2001 $ 10,000,000 $ 12,500,000
7.57% to 8.26%, due 1998 to 2008 19,700,000 20,900,000
6.94%, due 1998 to 2003 38,571,400 45,000,000
7.86%, due 2000 to 2006 25,000,000
Other long-term debt 343,200 450,200
------------ -------------
Total $ 93,614,600 $ 78,850,200
============ =============
At December 28, 1996, $60,000,000 was available to the
Company under its revolving credit agreements, all of which
was unused. The loan agreements include, among other
provisions, minimum working capital and net worth
requirements and limit stock repurchases and total debt
outstanding.
Repayment of principal on long-term debt outstanding is as follows:
1997.........................................$10,225,800
1998......................................... 10,156,800
1999......................................... 10,159,700
2000......................................... 24,734,400
2001......................................... 13,738,000
Thereafter................................... 34,825,700
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, as defined in SFAS
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
$102,750,000 and $81,100,000 as of December 28, 1996 and
December 30, 1995, respectively.
Notes to Consolidated Financial Statements Continued
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 $94.30, $85.15 and $77.40 for 1996, 1995
and 1994, 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.
Class B common stock which is subject to redemption is
reflected outside of stockholders' equity. Redeemable common
stock is held by inactive customers and former employees. As
of December 28, 1996 and December 30, 1995, 65,929 and
95,502 shares, respectively, were subject to redemption. The
Class B common stock subject to redemption is payable over a
five year period based upon the book value at the preceding
fiscal year end. The Company expects to repurchase shares of
23,409, 17,130, 12,956, 11,072 and 1,362 in 1997, 1998,
1999, 2000 and 2001, respectively.
In conjunction with the acquisition discussed in Note 2,
13,285 shares of Class B common stock were owned by the
acquired company. The fair market value of the shares as of
the June 22, 1996 acquisition date has been reflected in the
Consolidated Balance Sheet as treasury stock.
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, January 1, 1994...... 43,167 18,500 $53.10-65.10
Exercised...................... (3,667) 58.75-65.10
------- ------ ------------
Outstanding, December 31, 1994.... 39,500 18,500 53.10-65.10
Granted........................ 9,500 4,500 77.40
Exercised...................... (3,400) (1,550) 53.10-65.10
Cancelled...................... (2,000) (2,350) 53.10-65.10
------- ------ ------------
Outstanding, December 30, 1995.... 43,600 19,100 53.10-77.40
Exercised...................... (1,600) (2,266) 53.10-77.40
Cancelled...................... (500) (834) 77.40
------- ------ ------------
Outstanding, December 28, 1996.... 41,500 16,000 $53.10-77.40
======= ====== ============
Available for grant after
December 28, 1996.............. 9,500 5,184
======= ======
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 December 28, 1996,
options were exercisable for 34,633 shares at $53.10-$77.40
per share.
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
1996, 1995 and 1994. As of December 28, 1996, 9,882 SARs
were exercisable at $53.10-$77.40 per SAR.
In the event of a change in control of the Company, all
options and SARs previously granted and not exercised,
become exercisable.
The Company has adopted the disclosure-only provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," but
applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for its plans.
Compensation expense was immaterial for 1996 and 1995. If
the Company had elected to recognize compensation cost for
the Plan based on the fair value of the options at the grant
dates, consistent with the method prescribed by SFAS No.
123, the decrease in 1996 and 1995 net earnings would have
been less than $60,000.
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
December 28, 1996 and December 30, 1995:
1996 1995
------------------------- --------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
Benefits Exceed Assets Benefits Exceed Assets
------------------------- --------------------------
Actuarial present value of:
Vested benefit
obligation...........$25,136,600 $ 5,211,100 $23,977,700 $ 3,473,300
=========== ============ =========== ============
Accumulated benefit
obligation...........$27,197,200 $ 5,347,300 $26,054,300 $ 3,592,200
=========== ============ =========== ============
Projected benefit
obligation...........$32,399,900 $ 5,347,300 $30,750,300 $ 3,592,200
Plan assets (primarily
listed stocks and bonds)
at market value........ 28,647,200 4,630,600 26,928,100 2,465,900
----------- ------------ ----------- ------------
Projected benefit
obligation in excess of
plan assets............ (3,752,700) (716,700) (3,822,200) (1,126,300)
Unrecognized net loss.... 907,600 333,900 1,419,500 478,600
Prior service cost not
yet recognized in net
periodic pension cost.. 240,100 83,800 359,800 63,400
Unrecognized net asset... (776,500) (118,900) (1,069,500)
Adjustment required to
recognize minimum
liability.............. (393,900) (542,000)
----------- ------------- ----------- ------------
Accrued pension cost.....$(3,381,500) $ (811,800)$(3,112,400) $ (1,126,300)
=========== ============= =========== ============
The assumptions used in the accounting were as follows:
1996 1995 1994
----- ----- -----
Discount rate 7.75% 7.75% 8.25%
Rate of increase in compensation levels 4.00% 4.00% 4.00%
Expected long-term rate of return of assets 9.00% 9.00% 9.00%
In accordance with SFAS No. 87, "Employers' Accounting for
Pensions," the Company has recorded a minimum liability of
which $232,800 and $283,600, net of income taxes, is
reflected as a reduction of stockholders' equity in 1996 and
1995, respectively.
Net pension cost for the foregoing defined benefit plans
includes the following components:
1996 1995 1994
----------- ----------- -----------
Service cost-benefits earned
during the year $ 2,155,300 $ 1,652,800 $ 1,756,800
Interest on projected benefit obligation 2,608,900 2,191,100 2,020,600
Actual (return) loss on plan assets (3,361,100) (4,424,500) 1,013,200
Net amortization and deferral 575,600 1,989,200 (3,625,300)
----------- ----------- -----------
Net pension cost $ 1,978,700 $ 1,408,600 $ 1,165,300
=========== =========== ===========
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 $4,296,100,
$3,611,600 and $3,705,300 in 1996, 1995 and 1994,
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 $556,600, $541,500
and $507,500 in 1996, 1995 and 1994, respectively.
Notes to Consolidated Financial Statements Continued
9. INCOME TAXES
Federal income tax at the statutory rates of 35% in 1996, 1995
and 1994 and income tax expense as reported are reconciled as follows:
1996 1995 1994
---------- ---------- ----------
Federal income tax at statutory rates $6,264,100 $5,292,700 $3,869,300
State income taxes, net of federal
tax benefits 930,700 765,300 720,000
Jobs and other tax credits (141,200) (105,700) (448,700)
Other-net 576,400 147,600 360,500
---------- ---------- ----------
Income tax expense $7,630,000 $6,099,900 $4,501,100
========== ========== ==========
</TABLE>
<TABLE>
The approximate tax effects of temporary differences at
December 28, 1996 and December 30, 1995 are as follows:
<CAPTION>
1996 1995
---------------------------------------------------------------------------
Assets Liabilities Total Assets Liabilities Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts $ 1,285,000 $ 1,285,000 $ 1,603,000 $ 1,603,000
Inventories $(1,314,200) (1,314,200) $ (975,200) (975,200)
Employee benefits 4,225,000 4,225,000 4,825,000 4,825,000
Accrued expenses
not currently
deductible 1,926,000 1,926,000 3,044,000 3,044,000
---------------------------------------------------------------------------
Current 7,436,000 (1,314,200) 6,121,800 9,472,000 (975,200) 8,496,800
---------------------------------------------------------------------------
Allowance for
doubtful accounts 2,254,000 2,254,000 1,876,000 1,876,000
Depreciation and
amortization (6,989,000) (6,989,000) (3,739,000) (3,739,000)
Employee benefits 3,971,000 3,971,000 3,485,000 3,485,000
Accrued expenses
not currently
deductible 2,906,000 2,906,000 1,068,000 1,068,000
Other (220,000) (220,000) 16,000 16,000
---------------------------------------------------------------------------
Noncurrent 9,131,000 (7,209,000) 1,922,000 6,445,000 (3,739,000) 2,706,000
---------------------------------------------------------------------------
Total $16,567,000 $(8,523,200) $ 8,043,800 $15,917,000 $(4,714,200) $11,202,800
===========================================================================
</end table>
10. LEASE OBLIGATIONS AND CONTINGENT LIABILITIES
Rental payments and related subleasing rentals under
operating leases are as follows:
RENTAL PAYMENTS
----------------------
SUBLEASING
MINIMUM CONTINGENT RENTALS
----------- ------------ -------------
1994 $36,268,800 $448,300 $22,329,500
1995 35,264,400 422,900 22,045,500
1996 31,711,700 486,600 21,628,300
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 December 28, 1996:
OPERATING
LEASES
------------
1997 $ 30,644,000
1998 29,566,500
1999 28,297,000
2000 27,163,700
2001 26,079,700
Thereafter 210,877,200
------------
Total $352,628,100
============
Total minimum rentals to be received in the future under non-
cancelable subleases as of December 28, 1996 are $265,510,700.
The Company has guaranteed customer bank loans and customer
leases amounting to $645,700 and $983,500, respectively, at
December 28, 1996.
The Company is involved in various claims and litigation
arising in the normal course of business. In the opinion of
management, the ultimate resolution of these actions will
not materially affect the consolidated financial position,
results of operations or cash flows of the Company.
11. EARNINGS PER SHARE
Earnings per share are not presented because they are not
deemed meaningful. See Notes 3 and 7 relating to patronage
dividends and common stock repurchase requirements.
BOARD OF DIRECTORS
Gerald F. Lestina
PRESIDENT & CEO
Robert D. Ranus
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
Charles R. Bonson
BONSON'S FOODS, INC.
EAGLE RIVER, WI
Lloyd E. Coppersmith
RON & LLOYD'S
NEW LONDON, WI
Gary N. Gundlach
PICK 'N SAVE - STOUGHTON
STOUGHTON, WI
Patrick D. McAdams
MCADAMS, INC.
OCONOMOWOC, WI
Robert E. Bartels
MARTIN'S SUPER MARKETS, INC.
SOUTH BEND, IN
George C. Kaiser
MILWAUKEE, WI
Henry Karbiner, Jr.
TRI CITY BANKSHARES CORPORATION
OAK CREEK, WI
Brenton H. Rupple
MILWAUKEE, WI
ELECTED CORPORATE OFFICERS
Gerald F. Lestina
PRESIDENT & CEO
Ralph D. Beketic
VICE PRESIDENT -
WHOLESALE
David C. Busch
VICE PRESIDENT
OF ADMINISTRATION
Edward G. Kitz
VICE PRESIDENT, SECRETARY
& TREASURER
Charles H. Kosmaler, Jr.
VICE PRESIDENT OF
LOGISTICS AND PLANNING
Robert D. Ranus
VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
Michael J. Schmitt
VICE PRESIDENT - SALES
AND DEVELOPMENT
Marion H. Sullivan
VICE PRESIDENT OF
MARKETING
ADVISORY COMMITTEE
Kent Burnstad
BURNSTAD'S SUPERMARKET
P.O. BOX 768
TOMAH, WI 54660
Bob Glisch
MEGA MARTS, INC.
6400 S. 27TH STREET
OAK CREEK, WI 53154
Tom McAdams
PICK 'N SAVE - MUKWONAGO
1010 ROCHESTER STREET
MUKWONAGO, WI 53149
George Prescott
PRESCOTT'S SUPERMARKETS, INC.
1719 SOUTH MAIN STREET
WEST BEND, WI 53095
Dave Ruehlman
THE GRAND FOOD CENTER
606 GREEN BAY RD.
WINNETKA, IL 60093
Frank Serio
PICK 'N SAVE - CUDAHY
5851 SOUTH PACKARD AVENUE
CUDAHY, WI 53110
John Stone
PICK 'N SAVE - BARABOO
615 HIGHWAY 136
WEST BARABOO, WI 53913
Scott Sylla
ULTRA MART, INC.
W173 N9170 ST. FRANCIS DRIVE
MENOMONEE FALLS, WI 53051
Rick Walker
PICK 'N SAVE - EAU CLAIRE
2717 BIRCH STREET
P.O. BOX 1508
EAU CLAIRE, WI 54703
TRUSTEES
Gerald F. Lestina
PRESIDENT & CEO
Edward G. Kitz
ViCE PRESIDENT, SECRETARY
& TREASURER
Robert S. Gold
B. & H. GOLD CORPORATION
BROWN DEER, WI
David A. Ulrich
MEGA MARTS, INC.
OAK CREEK, WI
Gary R. Sarner
PRESIDENT & COO
CHRISTIANA COMPANIES, INC.
MILWAUKEE, WI
Robert R. Spitzer
PRESIDENT EMERITUS
MILWAUKEE SCHOOL OF
ENGINEERING
MILWAUKEE, WI
DIVISIONAL MAP
PICTURE OF MAP SHOWN
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
400 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. WESTVILLE DIVISION
6500 SOUTH U.S. 421, WESTVILLE, IN 46391
7. SOUTH BEND PERISHABLE DIVISION
2107 WESTERN AVENUE, SOUTH BEND IN 46619
8. MUSKEGON DIVISION
1764 CRESTON STREET, MUSKEGON, MI 49443
9. VAN WERT DIVISION
1200 N. WASHINGTON, VAN WERT, OH 45891
10. LIMA DIVISION
1100 PROSPERITY ROAD, LIMA, OH 45802
</TABLE>
EXHIBIT 21
ROUNDY'S, INC.
Subsidiaries
Roundy's, Inc. has twelve 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) Kee Wholesale, Inc.
CD of Wisconsin, Inc. Midland Grocery of Michigan, Inc.(6)
Holt Public Storage, Inc. Old Time, Inc.
I.T.A., Inc. Ropak, Inc.
Jondex Corp. Scot Lad Foods, Inc.
Kee Trans, Inc. WFC Foods, Inc.(2)
Six Wisconsin corporations doing business under their
corporate names are wholly-owned subsidiaries of Ropak, Inc.
These corporations are:
Insurance Planners, Inc. Shop-Rite, Inc.
Pick 'n Save Warehouse Foods, Inc. Villard Avenue Shop-Rite, Inc.
Sheboygan Land Corporation Rindt Enterprises, Inc.
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)
Two corporations doing business under their corporate names
are wholly- owned subsidiaries of Rindt Enterprises, Inc. These
corporations are:
Rindt's Park & Save, Inc. Park & Shop of Sheboygan, Inc.
Two corporations doing business under their corporate names
are wholly-owned subsidiaries of Cardinal Foods, Inc. These
corporations are:
Wilson's Cardinal Gardner Food Galleries, Inc. (4)
Supermarket, Inc.(4)
One corporation doing business under its corporate name is a
subsidiary of Shop-Rite, Inc. and is partially owned by
Cardinal Foods, Inc. The corporation is:
The Midland Grocery Company(4)
_____________
(1) A Bermuda corporation. (4) An Ohio corporation.
(2) An Illinois corporation. (5) A Delaware corporation.
(3) An Indiana corporation. (6) A Michigan corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ROUNDY'S,
INC. FORM 10-K 405 FOR THE PERIOD ENDED 12-28-96 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 40,342,300
<SECURITIES> 0
<RECEIVABLES> 98,593,300
<ALLOWANCES> 0
<INVENTORY> 155,562,300
<CURRENT-ASSETS> 305,056,300
<PP&E> 189,575,900
<DEPRECIATION> 90,840,100
<TOTAL-ASSETS> 434,641,000
<CURRENT-LIABILITIES> 214,558,400
<BONDS> 93,614,600
0
0
<COMMON> 1,341,500
<OTHER-SE> 102,386,700
<TOTAL-LIABILITY-AND-EQUITY> 434,641,000
<SALES> 2,579,010,200
<TOTAL-REVENUES> 2,583,504,900
<CGS> 2,333,216,600
<TOTAL-COSTS> 2,333,216,600
<OTHER-EXPENSES> 218,608,400
<LOSS-PROVISION> 5,302,600
<INTEREST-EXPENSE> 8,479,900
<INCOME-PRETAX> 17,897,400
<INCOME-TAX> 7,630,000
<INCOME-CONTINUING> 10,267,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,267,400
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
