UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__X__ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 3, 1998
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-26602
THE GRAND UNION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22 - 1518276
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
201 Willowbrook Boulevard, Wayne, New Jersey 07470 - 0966
(Address of principal executive offices) (Zip Code)
973-890-6000
(Registrant's telephone number, including area code)
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 whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes _X_. No ___.
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of February 17, 1998, there were issued and outstanding 10,182,371 shares,
par value $0.01 per share, of the Registrant's common stock.
1
<PAGE>
THE GRAND UNION COMPANY
INDEX
PART I - FINANCIAL INFORMATION (Unaudited)
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Page No.
<S> <C>
Consolidated Statements of Operations - 12 weeks ended January 3, 1998 and
January 4, 1997 and 40 weeks ended January 3, 1998 and January 4, 1997. ................................. 3
Consolidated Balance Sheets - January 3, 1998 and March 29, 1997 ............................................ 4
Consolidated Statements of Cash Flows - 40 weeks ended January 3, 1998 and
January 4, 1997 ........................................................................................ 5
Notes to Consolidated Financial Statements ................................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations. .................................................................................................. 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ................................................. 11
Item 5. Other Information ................................................................................... 12
Item 6. Exhibits and Reports on Form 8-K. ................................................................... 13
</TABLE>
All items which are not applicable or to which the answer is negative have been
omitted from this report.
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
12 WEEKS ENDED 40 WEEKS ENDED
-------------------------- --------------------------
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 534,320 $ 537,151 $ 1,761,214 $ 1,797,386
Cost of sales (378,115) (372,816) (1,269,566) (1,248,994)
----------- ----------- ----------- -----------
Gross profit 156,205 164,335 491,648 548,392
Operating and administrative expenses (130,044) (138,373) (442,369) (451,060)
Depreciation and amortization (16,593) (16,257) (61,369) (61,402)
Amortization of excess reorganization value (24,077) (23,678) (80,255) (78,928)
Unusual items (3,665) -- (3,665) --
Interest expense, net (27,654) (24,391) (85,986) (81,252)
----------- ----------- ----------- -----------
(Loss) before income taxes (45,828) (38,364) (181,996) (124,250)
Income tax benefit -- 6,687 -- 18,108
----------- ----------- ----------- -----------
Net (loss) (45,828) (31,677) (181,996) (106,142)
Accrued dividends on preferred stock (2,096) (788) (6,226) (1,031)
----------- ----------- ----------- -----------
Net (loss) applicable to common stock $ (47,924) $ (32,465) $ (188,222) $ (107,173)
=========== =========== =========== ===========
Basic and diluted net (loss) per share $ (4.79) $ (3.25) $ (18.82) $ (10.72)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value data)
(unaudited)
<TABLE>
<CAPTION>
January 3, March 29,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 38,084 $ 34,119
Receivables 26,845 28,966
Inventories 134,597 131,409
Other current assets 15,585 14,326
----------- -----------
Total current assets 215,111 208,820
Property, net 416,324 411,911
Excess reorganization value, net 254,810 335,065
Deferred tax asset 51,393 51,393
Beneficial leases, net 43,112 52,266
Other assets 21,417 12,375
----------- -----------
$ 1,002,167 $ 1,071,830
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ -- $ 46
Current portion of obligations under capital leases 7,434 8,045
Accounts payable and accrued liabilities 180,781 175,540
----------- -----------
Total current liabilities 188,215 183,631
Long-term debt 796,697 740,207
Obligations under capital leases 154,637 140,058
Other noncurrent liabilities 92,824 96,144
----------- -----------
Total liabilities 1,232,373 1,160,040
----------- -----------
Redeemable Class A Preferred Stock, $1.00 par
value, 3,500,000 shares authorized, 1,300,566 shares
issued and outstanding, liquidation preference $69,311
and $65,000, respectively 69,311 65,000
----------- -----------
Redeemable Class B Preferred Stock, $1.00 par
value, 1,400,000 shares authorized, 800,000 shares
issued and outstanding, liquidation preference $41,915 41,915 --
----------- -----------
Stockholders' (deficit):
Common stock, $.01 par value; 60,000,000 shares 100 100
authorized, 10,000,000 shares issued and outstanding
Preferred stock, $1.00 par value; 10,000,000 shares
authorized, less amount authorized as Class A and Class
B preferred stock, no shares issued and outstanding
Capital in excess of par value 133,674 139,900
Accumulated (deficit) (475,206) (293,210)
----------- -----------
Total stockholders' (deficit) (341,432) (153,210)
----------- -----------
$ 1,002,167 $ 1,071,830
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
40 WEEKS ENDED
----------------------
January 3, January 4,
1998 1997
--------- ---------
OPERATING ACTIVITIES:
Net (loss) $(181,996) $(106,142)
Adjustments to reconcile net (loss) to
net cash (used for) operating
activities before reorganization items paid:
Depreciation and amortization 141,624 140,330
Deferred taxes -- (18,108)
Noncash interest 531 (145)
Net changes in assets and liabilities:
Receivables (8,870) (12,241)
Inventories (3,188) (5,598)
Other current assets (1,259) (279)
Accounts payable and accrued liabilities 17,634 10,357
Other (7,550) (4,399)
--------- ---------
Net cash (used for) operating
activities before reorganization items paid (43,074) 3,775
Reorganization items paid (3,681) (4,492)
--------- ---------
Net cash (used for) operating activities (46,755) (717)
--------- ---------
INVESTMENT ACTIVITIES:
Capital expenditures (35,465) (31,430)
Disposals of property 5,863 7,942
--------- ---------
Net cash (used for) investment activities (29,602) (23,488)
--------- ---------
FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock 4O,000 28,O00
Net proceeds from long-term debt 77,978 9,000
Loan placement fees (9,744) --
Obligations under capital leases discharged (6,866) (8,434)
Net repayment of long-term debt (21,046) (7,695)
--------- ---------
Net cash provided by financing activities 80,322 20,871
--------- ---------
Net increase (decrease) in cash 3,965 (3,334)
Cash at beginning of year 34,119 39,425
--------- ---------
Cash at end of period $ 38,084 $ 36,091
========= =========
Supplemental disclosure of cash flow information:
Interest payments $ 64,245 $ 62,705
Capital lease obligations incurred 20,835 16,758
Accrued dividends 6,226 1,031
Decrease in common stock par value -- 9,900
See accompanying notes to consolidated financial statements (unaudited).
5
<PAGE>
THE GRAND UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - Basis of Accounting
The accompanying interim consolidated financial statements of The Grand
Union Company (the "Company") include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. In the opinion of management, the
consolidated financial statements include all adjustments, which consist only of
normal recurring adjustments necessary for a fair presentation of operating
results for the interim periods.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the 52 weeks ended March 29, 1997, and
the Company's Quarterly Reports on Form 10-Q for the 16 weeks ended July 19,
1997, and 28 weeks ended October 11, 1997. Operating results for the periods
presented are not necessarily indicative of results for the full fiscal year.
Certain reclassifications have been made to the prior year amounts to
conform to the current period presentation.
NOTE 2 - Preferred Stock Issuances
Pursuant to a series of related transactions commencing on July 30, 1996,
Trefoil Capital Purchasers II, L. P., a Delaware limited partnership, and GE
Investment Private Placement Partners II, A Limited Partnership, a Delaware
limited partnership (collectively, the "Purchasers"), currently maintains
beneficial ownership of an aggregate of approximately 70.41% of the Company's
outstanding voting stock as of the date of the filing of this Form 10-Q. On July
30, 1996, the Company entered into a definitive agreement (the "Stock Purchase
Agreement") to sell $100 million of Preferred Stock A to the Purchasers. Each
share of the Preferred Stock A was to be convertible at the option of the
holder, at any time, into 6.8966 shares of Common Stock. Pursuant to the Stock
Purchase Agreement, the Purchasers agreed to purchase, and the Company agreed to
sell, an aggregate of 2,000,000 shares of Preferred Stock A at a purchase price
of $50 per share (the "Stated Value") in stages through February 25, 1998. On
September 17, 1996, the first stage of the transaction was closed, and the
Purchasers acquired 800,000 shares of Preferred Stock A for an aggregate
purchase price of $40 million.
At a subsequent closing held on February 25, 1997, the Purchasers purchased
an additional 400,000 shares of Preferred Stock A for an aggregate purchase
price of $20 million. Additional subsequent closings were scheduled for August
25, 1997 and February 25, 1998 (the "Subsequent Closings"). At the Subsequent
Closings, the Purchasers would have been required to purchase an additional
800,000 shares of Preferred Stock A for an aggregate purchase price of $40
million.
Pursuant to an Acceleration and Exchange Agreement (the "Acceleration
Agreement"), dated June 12, 1997, between the Company and the Purchasers, the
Company and the Purchasers agreed to accelerate the sale and purchase of the
800,000 shares of Preferred Stock A to have occurred at the Subsequent Closings
(the "Accelerated Shares") to June 12, 1997 (the "Accelerated Closing") and to
exchange the Accelerated Shares for 800,000 shares of Preferred Stock B (the
"Exchange"). At the Accelerated Closing, the Company received the $40 million
purchase price for the sale of the Accelerated Shares. Immediately following the
Accelerated Closing, the Purchasers completed the Exchange pursuant to which
they received an aggregate of 800,000 shares of the Preferred Stock B, in
consideration for their surrender of the Accelerated Shares. Each share of
Preferred Stock B is convertible at the option of the holder, at any time, into
20.8333 shares of Common Stock. This conversion ratio is to be reset to a
conversion ratio based upon a 20% premium to the average trading price of Common
Stock during the twenty-day period commencing January 30, 1998 and ending with
the close of the market on February 27, 1998. The Purchasers obtained the
necessary funds to purchase the Preferred Stock from capital contributions from
their respective partners.
6
<PAGE>
On March 20, 1997, the Company consummated the sale to The Roger Stangeland
Family Limited Partnership (the "Stangeland Partnership") of 60,000 shares of
Preferred Stock A at a purchase price of $50.00 per share (the "Stangeland
Shares"), pursuant to the terms of a Stock Purchase Agreement, dated February
25, 1997, as amended by Amendment No. 1 thereto dated as of March 20, 1997 (as
so amended, the "Stangeland Stock Purchase Agreement"), between the Company and
Mr. Stangeland. Pursuant to a Stockholder Agreement dated February 25, 1997 (the
"Stangeland Stockholder Agreement"), among the Purchasers, Mr. Stangeland and
the Company, Mr. Stangeland has granted the Purchasers certain take-along
rights, the Purchasers have granted Mr. Stangeland certain tag-along rights, and
the Purchasers and the Company have granted Mr. Stangeland certain registration
rights related to the Stangeland Shares and any shares of Preferred Stock A, and
Common Stock, if any, paid as dividends with respect to the Preferred Stock A
(collectively, "Securities"). Pursuant to an Addendum, dated as of March 20,
1997, to the Stangeland Stockholder Agreement, the Stangeland Partnership has
succeeded to all of the rights, and has assumed all of the obligations, of Mr.
Stangeland pursuant to the Stangeland Stockholder Agreement. The Purchasers
disclaim any and all ownership of the Stangeland Shares or any additional
Securities acquired by the Partnership in respect of the Stangeland Shares.
At January 3, 1998, there were a total of 1,300,566 outstanding shares of
Preferred Stock A, which were convertible into an aggregate of 8,969,483 shares
of Common Stock, and a total of 800,000 outstanding shares of Preferred Stock B,
which were convertible into an aggregate of 16,666,640 shares of Common Stock.
As of the date of the filing of this Form 10-Q, the aggregate shares of
Preferred Stock A and Preferred Stock B together account for approximately
71.57% of the Company's outstanding voting stock.
The Class A Preferred Stock and Class B Preferred Stock have been
classified as redeemable Class A Preferred Stock and Class B Preferred Stock in
the accompanying Consolidated Balance Sheets. On March 31, 1997, the Company
paid dividends on the Class A Preferred Stock through the issuance of 20,866
shares of Class A Preferred Stock, with an aggregate Stated Value of $1,043,300.
The Company elected to suspend the declaration of the dividends payable June 30,
1997, September 30, 1997 and December 31, 1997. The dividends on the Class A
Preferred Stock and the Class B Preferred Stock and the accrued and unpaid
dividends through December 31, 1997 have been accounted for by a charge against
Capital in Excess of Par Value and a corresponding increase in the carrying
amounts of the Class A Preferred Stock and Class B Preferred Stock. The Class A
and Class B Preferred Stock have a Liquidation Preference over the Common Stock
equal to the Stated Value of the outstanding shares of the Preferred Stock plus
all accrued, unpaid dividends.
NOTE 3 - Unusual Items
The Company recorded a charge to operations in the quarter ended January 3,
1998 of $3,665,000. This charge included a $3,000,000 supplement for a reserve
set at fiscal year end 1997 for the reorganization of the Company during fiscal
1998 and additional charges of $665,000 for legal costs to supplement a reserve
created as a result of the Company's Chapter 11 filing in calendar year 1995.
The above reserves are included in accounts payable and accrued liabilities and
other noncurrent liabilities in the accompanying balance sheets.
NOTE 4 - Net Loss Per Share
The net loss per share is computed in accordance with SFAS No. 128,
"Earnings Per Share," which is effective for interim and year end periods ending
after December 15, 1997. This statement requires that entities present, on the
face of the income statement for all periods presented, basic and diluted per
share amounts. Basic earnings per share is computed using the weighted average
number of common shares outstanding for the period. Diluted earnings per share
is computed using the weighted average number of common shares outstanding
adjusted for dilutive potential common shares. There were 10,000,000 weighted
average shares outstanding for both basic and diluted earnings per share for all
periods presented. All potential common shares were excluded from the
computation of the Company's diluted earnings per share because the effect would
have been antidilutive.
7
<PAGE>
NOTE 5 - Stock Option Grants
On November 20, 1997, the Board of Directors, pursuant to the 1995 Equity
Incentive Plan, authorized a stock option grant of 100,000 shares of common
stock as a supplement to the 1,800,000 share stock option grant of the Board of
Directors on October 1, 1997 to certain associates of the Company, including
store managers, management personnel and other bi-weekly, exempt associates. On
November 20, 1997, eligible associates were granted the 100,000 options at an
exercise price of $2.15625 per share and the options will expire on November 19,
2007, although their expiration may be accelerated by certain events.
NOTE 6 - Amendment to Bank Facility
Effective August 29, 1997, the Company executed an amended and restated
Bank Facility (as amended and restated, the "Bank Facility") to eliminate
existing technical defaults and relax covenants relating to the Company's
performance in the future, thereby providing the Company access to the Revolving
Credit Facility. The Bank Facility also provides for a new term loan facility of
approximately $78 million. The amount available to the Company under the
Revolving Credit Facility was reduced to approximately $68 million. The
additional funds made available to the Company through the Bank Facility raise
the Company's total secured credit facility to $250 million. For additional
information regarding the Bank Facility, see the Company's Report on Form 8-K
filed on September 4, 1997. On October 15, 1997, the Company executed the
Eleventh Amendment to the Bank Facility. The Eleventh Amendment, which was made
effective retroactively to August 29, 1997, provided that certain interest
calculations and dates for those calculations under Section 1.8 (d) of the Bank
Facility would be adjusted to reflect the original intent of the August 29, 1997
amendment. Effective January 9, 1998, the Company executed the Twelfth Amendment
to the Bank Facility, which provided for the modification of certain real estate
security provisions relating to Section 7.11 of the Bank Facility and also
granted the Company permission to transact certain property exchanges
notwithstanding the provisions of Section 8.1 of the Bank Facility. For more
information concerning the Eleventh and Twelfth Amendments to the Bank Facility,
see Exhibits 10.1 and 10.2 to this Form 10-Q.
NOTE 7 - Related Party Transactions
Mr. Geoffrey T. Moore, a director, is a managing director and executive
officer of Shamrock Capital Advisors, Inc. ("SCA"). Pursuant to a three-year
management services agreement (the "Services Agreement") dated July 30, 1996,
between the Company and SCA, SCA shall consult with and provide advice to the
officers and management of the Company concerning matters relating to the
Company's financial policies, development and implementation of business plans
and general business affairs. The Services Agreement expires by its terms in
September 1999. SCA's compensation for such management and consulting services
under the Services Agreement was $300,000 in the fiscal year ending in 1997 and
will be $400,000 for the fiscal year ending in 1998. The Company also reimburses
SCA for its reasonable out-of-pocket costs and expenses incurred in connection
with the performance of its services under the Services Agreement. The Company
has agreed to indemnify SCA against all claims, liabilities, expenses, losses or
damages (or actions in respect thereof) related to or arising out of actions
taken (or omitted to be taken) by SCA pursuant to the terms of the Services
Agreement; provided that such liabilities did not result primarily from actions
taken, or omitted to be taken, by SCA in bad faith or due to SCA's gross
negligence.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The following table sets forth certain statements of operations and other
data (all dollars in millions).
<TABLE>
<CAPTION>
12 WEEKS ENDED 40 WEEKS ENDED
--------------------- ---------------------
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $ 534.3 $ 537.2 $1,761.2 $1,797.4
Gross profit 156.2 164.3 491.6 548.4
Operating and administrative expenses (130.0) (138.4) (442.4) (451.1)
Depreciation and amortization (16.6) (16.3) (61.4) (61.4)
Amortization of excess reorganization value (24.1) (23.7) (80.3) (78.9)
Unusual item (3.7) -- (3.7) --
Interest expense, net (27.7) (24.4) (86.0) (81.3)
Income tax benefit -- 6.7 -- 18.1
Net (loss) (45.8) (31.7) (182.0) (106.1)
Sales percentage increase (decrease) (0.5%) (1.2%) (0.2%) 0.5%
Same store sales percentage increase (decrease) 0.8% (0.8%) (0.9%) 0.8%
Gross profit as a percentage of sales 29.2% 30.6% 27.9% 30.5%
Operating and administrative
expenses as a percentage of sales 24.3% 25.8% 25.1% 25.1%
</TABLE>
Sales for the 12 (the "third quarter") and 40 (the "year to date") weeks
ended January 3, 1998, decreased $2.9 million, or 0.5%, and $36.2 million, or
2.0%, respectively, as compared to the 12 and 40 weeks ended January 4, 1997.
Comparable store sales, including replacement stores, increased 0.8% and
decreased 0.9% during the third quarter and year to date, respectively, compared
to the prior year. The Company opened one new store and closed one existing
store during the third quarter ended January 3, 1998. The Company has opened two
new stores and two replacement stores and closed eight stores (one due to fire)
for the year to date. The increase in same store sales for the third quarter is
mainly due to marketing strategies and initiatives instituted by the Company's
new management team. Same store sales decreased year to date primarily due to
continued competitive activity within the Company's operating area offset by the
new marketing strategies and initiatives.
Gross profit, as a percentage of sales, decreased to 29.2% from 30.6% for
the third quarter compared to the prior year due primarily to a reduction in
promotional income. On a year to date basis, it decreased to 27.9% from 30.5%,
compared to the prior year due to a reduction in promotional income.
Operating and administrative expenses, as a percentage of sales, decreased
to 24.3% from 25.8% for the third quarter compared to the prior year primarily
as a result of measures undertaken by the Company to reduce expenses. Operating
and administrative expenses, as a percentage of sales, remained constant at
25.1% year to date, compared to the prior year.
Depreciation and amortization increased to $16.6 million from $16.3 million
for the third quarter compared to the prior year due primarily to newly opened
and replacement stores. Depreciation and amortization remained constant at $61.4
million year to date, compared to the prior year.
Interest expense increased to $27.7 million from $24.4 million for the
third quarter and to $86.0 million from $81.3 million year to date, compared to
the prior year. The third quarter and year to date increase is mainly a result
of additional interest expense from the Bank Facility as amended and restated on
August 29, 1997.
The Company recorded no net income tax benefit or provision during the 1998
third quarter and year to date periods. A tax benefit related to the potential
use of operating loss carryforwards was offset by a valuation allowance.
9
<PAGE>
Liquidity and Capital Resources
As announced on January 27, 1998, the Company has retained Salomon Smith
Barney as financial advisor to assist the Company in evaluating various
financial alternatives, including a possible capital restructuring. In
connection with this retention, the Company has had and continues to have
discussions with an unofficial committee (the "Unofficial Committee") of holders
of its 12% Senior Notes due September 1, 2004 (the "Notes") regarding such a
restructuring. In connection therewith, the Company has determined that it will
not pay the approximately $36 million interest payment due March 2, 1998 on the
Notes. The failure to make this payment will constitute a default under the
Indenture governing the Notes, subject to a thirty day grace period, and will
also constitute a default under the Company's Bank Facility. The Company is
currently in discussions with the lenders party to the Bank Facility concerning
a waiver of such default and is optimistic that it will be able to obtain such
waiver. No assurances can be made, however, as to whether such capital
restructuring will be agreed upon with the Unofficial Committee or other holders
of the Notes or the terms thereof, nor whether such waiver will be obtained or
the terms thereof. The Company anticipates that it will continue its operations
in the ordinary course and will timely pay all of its ordinary course operating
expenses. For more information concerning the retention of Salomon Smith Barney
and any potential capital restructuring, reference is made to Exhibit 99.2 the
Company's Report on Form 8-K dated January 27, 1998 and filed with the SEC on
January 28, 1998.
The Bank Facility provides the Company with a revolving line of credit of
approximately $68 million. Of that amount, $44 million is extended on letters of
credit and $15 million has been drawn at the end of the quarter. The additional
funds made available to the Company through the Bank Facility raise the
Company's total secured credit facility to a total of $250 million.
With the exception of historical information, some matters discussed herein
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to, the competitive environment in which the Company operates, and
the general economic conditions in the geographic areas in which the Company
operates. For additional information about the Company and its operating and
financial condition, please see the Company's most recent Form 10-K for the year
ended March 29, 1997, as filed with the SEC.
10
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of stockholders on November 20, 1997,
and the following matters were voted on at that meeting:
(a) Votes cast in favor of and withheld from voting with respect to the
election of each nominee for director were as follows:
DIRECTOR VOTES FOR VOTES AGAINST OR WITHHELD
-------- --------- -------------------------
J. Wayne Harris 34,204,242 89,883
Gary M. Philbin 34,205,909 88,216
Roger E. Stangeland 34,205,909 88,216
James J. Costello 34,205,909 88,216
Jordan H. Krimstein 34,205,409 88,716
Mark H. Manski 34,205,909 88,216
Clifford A. Miller 34,205,909 88,216
Geoffrey T. Moore 34,206,409 87,716
Martha A. Pritchard 34,206,409 87,716
J. Richard Stonesifer 34,205,909 88,216
(b) The Associate Stock Purchase Plan (the "ASPP") which will allow
Company associates an opportunity to purchase common stock of the
Company through payroll deduction and direct purchase was approved,
with 29,904,408 votes in favor, 208,933 against, 48,058 in abstention
and 4,132,726 broker non-votes.
(c) The Executive Annual Incentive Bonus Plan (the "Bonus Plan") in order
to qualify certain incentive compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder was approved, with 33,163,060 votes
in favor, 248,377 against, 60,501 in abstention and 822,187 broker
non-votes.
(d) The amendments to the Company's 1995 Equity Incentive Plan (the
"Employee Plan") to increase the number of shares issuable under the
Employee Plan to an aggregate of 6,000,000 and to increase the number
of shares and stock appreciation rights issuable under the Employee
Plan to any individual to an aggregate of 2,000,000 was approved, with
27,043,237 votes in favor, 3,054,081 against, 64,081 in abstention and
4,132,726 broker non-votes.
(e) The appointment of Price Waterhouse LLP as independent accountants of
the Company for the fiscal year ending March 28, 1998 was ratified,
with 34,192,044 votes in favor, 69,745 votes against and 32,336 votes
in abstention, with no broker non-votes.
11
<PAGE>
Item 5. Other Information.
On January 5, 1998, the Board of Directors, pursuant to an employment
agreement between Jack W. Partridge, Jr. and the Company, elected Mr. Partridge
to the position of Chief Administrative Officer of the Company. Mr. Partridge's
employment agreement is incorporated by reference to Exhibit 99.1 to Grand
Union's Report on Form 8-K dated January 27, 1998 as filed with the SEC on
January 28, 1998. On January 15, 1998, the Board elected Mr. Partridge to serve
as a Director and Vice Chairman of the Board. In connection with Mr. Partridge's
election to the Board, the Company modified and amended its By-Laws. For more
information concerning the amended and restated By-Laws, please see Exhibit 3.1
to this Form 10-Q.
On January 27, 1998, the Company retained Salomon Smith Barney as financial
advisor to assist the Company in evaluating various financial alternatives
available to the Company, including a possible capital restructuring.
On January 27, 1998, the Company suspended the Associate Stock Purchase
Plan (the "ASPP") until further notice. The ASPP began November 1, 1997, and
provided associates of the Company with the opportunity to purchase the
Company's Common Stock at a 15% discount through payroll deductions or other
permissible contributions under the ASPP.
12
<PAGE>
Item 6. Exhibits and Report on Form 8-K.
(a) Exhibits
Exhibit Number
3.1 By-Laws of The Grand Union Company, as amended and restated
through January 15, 1998.
10.1 Eleventh Amendment to the Amended and Restated Credit
Agreement ("Bank Facility") dated as of August 29, 1997,
among Grand Union, the lending institutions listed from time
to time on Schedule 1 thereto, and Bankers Trust as Agent.
10.2 Twelfth Amendment to the Bank Facility.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
1. Report on Form 8-K dated October 28, 1997 as filed with the SEC on
October 29, 1997.
2. Report on Form 8-K dated January 27, 1998 as filed with the SEC on
January 28, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE GRAND UNION COMPANY
(Registrant)
/s/ Jeffrey P. Freimark
-------------------------------
Jeffrey P. Freimark,
Executive Vice President,
Chief Financial Officer
Date: February 17, 1998
14
EXHIBIT NO. 3.1
THE GRAND UNION COMPANY
BY-LAWS
As amended through January 15, 1998
ARTICLE I.
Stockholders
Section I. The annual meeting of the stockholders of the corporation for
the purpose of electing directors and for the transaction of such other business
as may properly be brought before the meeting shall be held at such place,
within or without the State of Delaware, and at such hour, as may be determined
by the Board of Directors, on the first Thursday in September of each year, or
on such other date as may be fixed by the Board of Directors.
To be properly brought before the annual meeting, business must be either
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a stockholder. In addition to
any other applicable requirements, for business to be properly brought before
the annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, addressed to the attention of
the Secretary of the Corporation, within the time specified in the federal proxy
rules for timely submission of a stockholder proposal or, if not within such
time, then not less than sixty days nor more than ninety days prior to the
meeting; provided, however, that in the event that less than fifty days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received by the
earlier of (a) the close of business on the fifteenth day following the day on
which such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs, and (b) two days prior to the date
of the meeting. A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such business. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this paragraph; provided, however,
that nothing in this paragraph shall
1
<PAGE>
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting.
The Chairman of the Board of Directors shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section I, and if
he should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
Section II. Special meetings of the stockholders may be held upon call of
the Board of Directors or of the Executive Committee or of the Chairman of the
Board (and shall be called by the Chairman of the Board at the request in
writing of stockholders owning a majority of the outstanding shares of the
Corporation entitled to vote at the meeting) at such time and at such place
within or without the State of Delaware, as may be fixed by the Board of
Directors or by the Executive Committee or the Chairman of the Board or by the
stockholders owning a majority of the outstanding stock of the Corporation
entitled to vote, as the case may be, and as may be stated in the notice setting
forth such call.
Section III. Notice of the time and place of every meeting of stockholders
shall be delivered personally or mailed at least ten days previous thereto to
each stockholder of record entitled to vote at the meeting, who shall have
furnished a written address to the Secretary of the Corporation for the purpose.
Such further notice shall be given as may be required by law. Meetings may be
held without notice if all stockholders entitled to vote at the meeting are
present, or if notice is waived by those not present.
Section IV. The holders of record of a majority of the issued and
outstanding shares of the Corporation, which are entitled to vote at the
meeting, shall, except as otherwise provided by law, constitute a quorum at all
meetings of the stockholders. If there be no such quorum present in person or by
proxy, the holders of a majority of such shares so present or represented may
adjourn the meeting from time to time.
Section V. Meetings of the stockholders shall be presided over by the
Chairman of the Board or, if the Chairman is not present, by the President or a
Vice-President or, if no such officer is present, by a chairman to be chosen at
the meeting. The Secretary of the Corporation, or in his absence, an Assistant
Secretary shall act as secretary of the meeting, if present.
Section VI. Each stockholder entitled to vote at any meeting shall have one
vote in person or by proxy for each share of stock held by him which has voting
power upon the matter in question at the time; but no proxy shall be voted after
three years from its date, unless such proxy expressly provides for a longer
period.
Section VII. When a quorum is present at any meeting, a plurality of the
votes properly cast for election to any office shall elect to such office and a
majority of the votes properly cast upon any question other than election to an
office shall decide the question,
2
<PAGE>
except when a larger vote is required by law, by the certificate of
incorporation or by these by-laws. No ballot shall be required for any election
unless requested by a stockholder present or represented at the meeting and
entitled to vote in the election. In the event a ballot shall be required, the
chairman of each meeting at which directors are to be elected shall appoint one
inspector of election, unless a greater number is required by applicable law or
unless such appointment shall be unanimously waived by those stockholders
present or represented by proxy at the meeting and entitled to vote in the
election of directors. No director, or candidate for the office of director,
shall be appointed as such inspector. The inspector shall first take and
subscribe an oath or affirmation faithfully to execute the duties of inspector
at such meeting with strict impartiality and according to the best of his
ability, and shall take charge of the polls and after the balloting shall make a
certificate of the result of the vote taken. Except where the stock transfer
books of the Corporation shall have been closed or a date shall have been fixed
as a record date for the determination of the stockholders entitled to vote, as
hereinafter provided, no share of stock shall be voted at any election of
directors which shall have been transferred on the books on the Corporation
within twenty days next preceding such election.
Section VIII. The Board of Directors may close the stock transfer books of
the Corporation for a period not exceeding sixty days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
stock shall go into effect; or, in lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date, not exceeding sixty days preceding
the date of any meeting of stockholders or the date for the payment of any
dividend, or the date for allotment of rights, or the date when any change or
conversion or exchange of stock shall go into effect, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, or entitled to receive payment of any such dividend, or to any
such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of stock, and in such case only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, such meeting, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date as aforesaid.
Section IX. Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations of persons
for election to the Board of Directors at the annual meeting or by the written
consent of the shareholders, by or at the direction of the Board of Directors,
may be made by any Nominating Committee or person appointed by the Board of
Directors; nominations may also be made by any shareholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section IX. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a shareholder's notice shall be delivered to or mailed and received at
the principal executive offices of the corporation addressed to the attention of
the Secretary of the Corporation not less than sixty days prior to the meeting
or the date the shareholders are first solicited for their consents as
3
<PAGE>
the case may be; provided, however, that, in the case of an annual meeting and
in the event that less than fifty days' notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be so received not later than the earlier of (a) the close of
business on the fifteenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever first
occurs, or (b) two days prior to the date of the meeting. Such shareholder's
notice to the Secretary shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or reelection as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the Corporation which are beneficially owned by the
person, (iv) a statement as to the person's citizenship, and (v) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, and (b) as to the shareholder giving the notice, (i) the
name and record address of the shareholder and (ii) the class, series and number
of shares of capital stock of the Corporation which are beneficially owned by
the shareholder. The Corporation may require any proposed nominee to furnish
such other information as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as a director of the
Corporation. No person shall be eligible as a director of the Corporation unless
nominated in accordance with the procedures set forth herein.
In connection with any annual meeting, the Chairman of the Board of
Directors shall, if the facts warrant, determine and declare to the meeting that
a nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
ARTICLE II.
Board of Directors
Section I. The Board of Directors of the Corporation shall consist of such
number of Directors as shall be determined from time to time by resolutions of
the Board of Directors or by the stockholders. If not so determined, the number
of directors shall be nine persons, subject to increase as provided in Section
VIII of this Article II. Directors shall hold office until the annual meeting of
the stockholders next ensuing after their election and until their respective
successors are elected and shall qualify, or until their earlier death,
resignation or removal. Newly created directorships resulting from any increase
in the authorized number of Directors shall be filled in the same manner and
with the same effect prescribed in Section 2 of this Article II with respect to
vacancies. A majority of the Board of Directors shall constitute a quorum.
Section II. Vacancies in the Board of Directors shall be filled by a
majority of the remaining directors, though less than a quorum, and the
directors so chosen shall hold office
4
<PAGE>
until the next annual election and until their successors shall be duly elected
and qualified, unless sooner displaced pursuant to law.
Section III. Meetings of the Board of Directors shall be held at such place
within or without the State of Delaware as may from time to time be fixed by
resolution of the Board or as may be specified in the call of any meeting.
Regular meetings of the Board of Directors shall be held at such times as may
from time to time be fixed by resolution of the Board; and special meetings may
be held at any time upon the call of the Executive Committee or the Chairman of
the Board, by oral, telegraphic or written notice, duly served on or sent or
mailed to each director not less than two days before the meeting. A meeting of
the Board may be held without notice immediately after the annual meeting of
stockholders at the same place at which such meeting is held. Notice need not be
given of regular meetings of the Board held at times fixed by resolutions of the
Board. Meetings may be held at any time without notice if all the directors are
present or if those not present waive notice of the meeting in writing.
Section IV. Except as may be otherwise provided by law, by the certificate
of incorporation or by these by-laws, when a quorum is present at any meeting
the vote of a majority of the directors present shall be the act of the Board of
Directors.
Section V. Any action required or permitted to be taken at any meeting of
the Board of Directors or a committee thereof may be taken without a meeting if
all the members of the Board or of such committee, as the case may be, consent
thereto in writing, and such writing or writings are filed with the records of
the meetings of the Board or of such committee. Such consent shall be treated
for all purposes as the act of the Board or of such committee, as the case may
be.
Section VI. Members of the Board of directors, or any committee designated
by such Board, may participate in a meeting of such Board or committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other or by any other
means permitted by law. Such participation shall constitute presence in person
at such meeting.
Section VII. The Board of Directors may also, by resolution or resolutions,
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation, which,
to the extent provided in said resolution or resolutions, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. A majority of the members of
any such committee may determine its action and fix the time and place of its
meetings unless the Board of Directors shall otherwise provide. The Board of
Directors shall have power at any time to fill vacancies in, to change the
membership of, or to dissolve any such committee.
5
<PAGE>
Section VIII. The provisions of Sections I and II of this Article are
subject to the rights, if any, of the holders of shares of any series of the
Class A Preferred Stock or the Class B Preferred Stock of the Company with
respect to the election of directors in the event the Company defaults in the
payment of dividends, the term of office of any director so elected and the
filling of any vacancy in the office of any director so elected. In connection
therewith, so long as any shares of such class are outstanding, the number of
directors authorized by resolution of the Board of Directors or by the
stockholders at the annual meeting pursuant to Section I of this Article shall
be such that upon the exercise by the holders of shares of any such class of any
right to elect a specified number of directors the number of directors of the
Company would be increased by such specified number.
ARTICLE III.
Officers
Section I. The Board of Directors as soon as may be after the election held
in each year shall choose a President of the Corporation, one or more Vice
Presidents, a Secretary, Treasurer, such Assistant Secretaries, Assistant
Treasurers and such other officers, agents, and employees as it may deem proper.
Section II. The term of office of all officers shall be one year, or until
their respective successors are chosen; but any officer may be removed from
office at any time by the affirmative vote of a majority of the members of the
Board.
Section III. Subject to such limitations as the Board of Directors, or the
Executive Committee may from time to time prescribe, the officers of the
Corporation shall each have such powers and duties as generally pertain to their
respective offices, as well as such powers and duties as from time to time may
be conferred by the Board of Directors or by the Executive Committee.
ARTICLE IV.
Certificates of Stock
Section I. The interest of each stockholder of the Corporation shall be
evidenced by a certificate or certificates for shares of stock in such form as
the Board of Directors may from time to time prescribe. The shares in the stock
of the Corporation shall be transferable on the books of the Corporation by the
holder thereof in person or by his attorney, upon surrender for cancellation of
a certificate or certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, and
with such proof of the authenticity of the signature as the Corporation or its
agents may reasonably require.
6
<PAGE>
Section II. The certificates of stock shall be signed by the Chairman of
the Board or the President or a Vice President and by the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer, shall be sealed
with the seal of the Corporation (or shall bear a facsimile of such seal), and
shall be countersigned and registered in such manner, if any, as the Board of
Directors may by resolution prescribe.
Section III. Certificates for shares of Stock in the Corporation may be
issued in lieu of certificates alleged to have been lost, stolen, destroyed or
mutilated, upon the receipt of (1) such evidence of loss, theft, destruction or
mutilation, and (2) a bond of indemnity in such amount, upon such terms and with
such surety, if any, as the Board of Directors may require in each specific case
or in accordance with general resolutions.
ARTICLE V.
Corporate Books
The books of the Corporation, except the original or duplicate stock
ledger, may be kept outside of the State of Delaware, at the office of the
Corporation in Wayne, New Jersey or at such other place or places as the Board
of Directors may from time to time determine.
ARTICLE VI.
Checks, Notes, Etc.
All checks and drafts on the Corporation's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and instruments
for the payment of money, shall be signed by such officer or officers or agent
or agents as shall be thereunto authorized from time to time by the Board of
Directors.
ARTICLE VII.
Fiscal Year
The fiscal year of the Corporation shall end on the Saturday nearest the
thirty-first day of March in each year.
7
<PAGE>
ARTICLE VIII.
Corporate Seal
The corporate seal shall have inscribed thereon the name of the Corporation
and the words "Incorporated Delaware 1928." In lieu of the corporate seal, when
so authorized by the Board of Directors or a duly empowered committee thereof, a
facsimile thereof may be impressed or affixed or reproduced.
ARTICLE IX.
Offices
The Corporation and the stockholders and the directors may have offices
outside of the State of Delaware at such places as shall be determined from time
to time by the Board of Directors.
ARTICLE X.
Amendments
The by-laws of the Corporation, regardless of whether made by the
stockholders or by the Board of Directors, may be amended, added to, rescinded
or repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change is given in the notice of the meeting. No
change of the time or place for the annual meeting of the stockholders for the
election of directors shall be made except in accordance with the laws of the
State of Delaware.
8
EXHIBIT NO. 10.1
ELEVENTH AMENDMENT TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
ELEVENTH AMENDMENT dated as of August 29, 1997 (this "Amendment") to the
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as modified by,
or the terms thereof waived by, the Waiver and First Amendment thereto dated as
of February 16, 1996, the Second Amendment thereto dated as of May 10, 1996, the
Third Amendment thereto dated as of September 11, 1996, the Fourth Amendment
thereto dated as of January 13, 1997, the Fifth Amendment thereto dated as of
March 7, 1997, the Waiver and Sixth Amendment thereto dated as of April 4, 1997,
the Seventh Amendment thereto dated as of May 6, 1997, the Eighth Amendment
thereto dated as of June 9, 1997, the Waiver thereto dated as of July 25, 1997,
the Waiver and Ninth Amendment thereto dated as of July 31, 1997, the Waiver
thereto dated as of August 7, 1997, the Waiver thereto dated as of August 14,
1997, and the Waiver thereto dated as of August 21, 1997, the Waiver and Tenth
Amendment thereto dated as of August 29, 1997, the "Credit Agreement"), each
among THE GRAND UNION COMPANY, a Delaware corporation (the "Borrower"), the
lending institutions from time to time party thereto as lenders each
constituting a Bank (as defined therein) (the "Required Banks"), and BANKERS
TRUST COMPANY, as agent (the "Agent"). Capitalized terms used herein and not
defined herein shall have the respective meanings set forth for such terms in
the Credit Agreement.
W I T N E S S E T H :
The parties hereto hereby agree as follows:
1
<PAGE>
Section 1. Amendments. (a) Subject to the satisfaction of the conditions
precedent set forth in Section 2 hereof, the Credit Agreement is hereby amended
by deleting Section 1.8(d) of the Credit Agreement in its entirety and inserting
the following in its place and stead:
(d) Interest shall accrue from and including the date of any Borrowing
to but excluding the date of any repayment thereof and shall be payable (i)
in respect of each Base Rate Loan, monthly in arrears on the last Business
Day of each calendar month, (ii) in respect of each Eurodollar Loan, on the
last day of each Interest Period applicable thereto and, in the case of an
Interest Period of longer than one month, monthly on each date occurring
one or more months after the first day of such Interest Period and (iii) in
respect of each Loan, on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after such maturity,
on demand.
Section 2. Effectiveness. This Amendment shall become effective, as of
August 29, 1997, when the Agent shall have executed and delivered a counterpart
of this Amendment and received duly executed counterparts of this Amendment from
the Borrower, each Subsidiary of the Borrower that is a party to any Credit
Document and as many of the Banks as shall be necessary to comprise the
"Required Banks". The aforesaid execution and delivery may be effected by
delivery and receipt by facsimile transmission. It is agreed that so long as any
interest payment due as a result of this Amendment is paid by the close of
business on October 14, 1997, no Default or Event of Default shall be deemed to
have occurred as a result of this Amendment becoming effective and, accordingly,
no additional interest shall be payable pursuant to Section 1.8(c) of the Credit
Agreement.
Section 3. Status of Credit Documents. (a) This Amendment is limited solely
for the purposes and to the extent expressly set forth herein, and, except as
expressly modified hereby, (i) the terms, provisions and conditions of the
Credit Documents, (ii) the terms and provisions of the Further Assurances
Agreement dated as of June 15, 1995, as modified in writing prior to the date
hereof, between the Borrower and the Agent, and (iii) the Liens granted under
the Credit Documents shall continue in full force and effect and are hereby
ratified and confirmed in all respects.
(b) No amendment of any terms or provisions of the Credit Agreement granted
hereunder shall relieve the Borrower from complying with such terms and
provisions other than as amended hereby or from complying with any other term or
provision of the Credit Agreement.
Section 4. Counterparts. This Amendment may be executed and delivered in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts shall be lodged with the Borrower and the Agent.
2
<PAGE>
Section 5. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized officers to execute and deliver this Eleventh Amendment to the
Amended and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Jeffrey P. Freimark
-----------------------------------------
Name: Jeffrey P. Freimark
Title: E.V.P. C.F.A.O.
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Allan M. Stewart
-----------------------------------------
Name: Allan M. Stewart
Title: Managing Director
CARGILL FINANCIAL SERVICES CORP.
By: /s/ Patrick J. Halloran
-----------------------------------------
Name: Patrick J. Halloran
Title: V.P.
FLEET CAPITAL CORPORATION
By: /s/ Theresa M. Earley
-----------------------------------------
Name: Theresa M. Earley
Title: V.P.
GOLDMAN SACHS CREDIT PARTNERS LP
By: /s/ John Urban
-----------------------------------------
Name: John Urban
Title: Authorized Signatory
4
<PAGE>
HELLER FINANCIAL, INC.
By: /s/ Tom Bukowski
-----------------------------------------
Name: Tom Bukowski
Title: V.P.
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michelle Swanson
-----------------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
ML CBO IV (CAYMAN) LTD, LLC and
PROTECTIVE LIFE
By: Protective Asset Management,
as Collateral Manager
By: /s/ Illegible
-----------------------------------------
Name: Illegible
Title: E.V.P.
QUANTUM PARTNERS LDC
By:________________________
Name:
Title:
SWISS BANK CORPORATION, LONDON BRANCH
By:________________________
Name:
Title:
5
<PAGE>
The foregoing Eleventh Amendment to the Amended and Restated Credit
Agreement is hereby consented and agreed to, and the Liens and guaranties under
the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Jeffrey P. Freimark
------------------------------------
Name: Jeffrey P. Freimark
Title: E.V.P. C.F.A.O.
6
EXHIBIT NO. 10.2
TWELFTH AMENDMENT TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
TWELFTH AMENDMENT dated as of January 9, 1998 (this "Amendment") to the
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as modified by,
or the terms thereof waived by, the Waiver and First Amendment thereto dated as
of February 16, 1996, the Second Amendment thereto dated as of May 10, 1996, the
Third Amendment thereto dated as of September 11, 1996, the Fourth Amendment
thereto dated as of January 13, 1997, the Fifth Amendment thereto dated as of
March 7, 1997, the Waiver and Sixth Amendment thereto dated as of April 4, 1997,
the Seventh Amendment thereto dated as of May 6, 1997, the Eighth Amendment
thereto dated as of June 9, 1997, the Waiver thereto dated as of July 25, 1997,
the Waiver and Ninth Amendment thereto dated as of July 31, 1997, the Waiver
thereto dated as of August 7, 1997, the Waiver thereto dated as of August 14,
1997, the Waiver thereto dated as of August 21, 1997, the Waiver and Tenth
Amendment thereto dated as of August 29, 1997, the Eleventh Amendment thereto
dated as of August 29, 1997, the Waiver and Consent thereto dated as of October
26, 1997 and the Consent and Waiver thereto dated as of November 14, 1997, the
"Credit Agreement"), each among THE GRAND UNION COMPANY, a Delaware corporation
(the "Borrower"), the lending institutions from time to time party thereto as
lenders each constituting a Bank (as defined therein) (the "Required Banks"),
and BANKERS TRUST COMPANY, as agent (the "Agent"). Capitalized terms used herein
and not defined herein shall have the respective meanings set forth for such
terms in the Credit Agreement.
W I T N E S S E T H :
The parties hereto hereby agree as follows:
Section 1. Amendments. (a) Schedules XVII and XVIII to the Credit Agreement
are hereby replaced with Schedules XVII and XVIII hereto, respectively.
(b) Section 7.11(a) of the Credit Agreement is hereby amended by adding the
following at the end of clause (ii) of the first sentence thereof:
<PAGE>
", and (iii) as promptly as practicable, but in any event within 30 days,
following any (A) acquisition after January 9, 1998 by the Borrower or any
Subsidiary of any Real Property (including, without limitation, the
acquisition of any Leasehold) or (B) renewal after January 9, 1998 of any
Leasehold in existence on such date for which there is no Mortgage or
Additional Mortgage, grant, or cause such Subsidiary to grant, as the case
may be, to the Collateral Agent security interests in and mortgages on all
of its right, title and interest in and to such Real Property and all
fixtures and improvements relating thereto, and take all actions with
respect thereto required by this Section 7.11(a); provided that in the case
of any such renewal of a lease that requires the consent of the landlord
thereunder to an Additional Mortgage on the applicable Leasehold, the
Borrower shall not be obligated to grant or cause to be granted an
Additional Mortgage thereon if the Borrower, after using all best efforts
to obtain such consent, has been unable to do so".
(c) Section 7.11(e)(D) of the Credit Agreement is hereby amended by
replacing the first four lines thereof with the following:
"(D) As promptly as practicable, and in any event on or prior to
February 25, 1998 (or such later date not beyond March 31, 1998 as the
Agent may agree to in writing in its sole discretion), the Borrower shall
obtain and deliver to the Agent:".
(d) Section 7.11(e)(E) of the Credit Agreement is hereby amended by
replacing the clause ", and in any event within sixty (60) days following the
Amendment No. 10 Effective Date,", which commences in the first line of such
Section, with the following:
", and in any event on or prior to February 25, 1998 (or such later date
not beyond March 31, 1998 as the Agent may agree to in writing in its sole
discretion),".
(e) Section 7.11(e)(E) of the Credit Agreement is hereby further amended by
inserting "or waived by the Agent in writing in its sole discretion" after the
words "state law" which appear in the proviso to such Section.
(f) The definition of "Asset Sale" in Section 10 of the Credit Agreement is
hereby amended by inserting "(other than sales of the closed store in Tampa, FL
(#798) and the warehouse facility in Waverly, NY (#92170 W02))" after the words
"other sales" in clause (y) of the parenthetical appearing at the end of such
definition.
Section 2. Certain Other Agreements of the Banks. The undersigned Banks
hereby:
(a) agree that the obligations of the Borrower under Sections
7.11(e)(A) and (B) of the Credit Agreement to supplement Schedules XVII and
XVIII to the Credit Agreement shall not apply to any Real Property that
meets the following conditions: (i) the Borrower has certified to the Agent
pursuant to documentation reasonably satisfactory to the Agent that neither
the Borrower nor any of its Subsidiaries conducts or intends to conduct any
operations thereat, and (ii) the Borrower and the Agent have agreed that
such Real Property does not have any material economic value;
(b) waive any Default or Event of Default arising under Section 8.1 of
the Credit Agreement as a result of the consummation by the Borrower of (i)
any of the property exchanges described on Exhibit A hereto; provided that,
substantially contemporaneous with each such exchange (or by such other
time as may be permitted by the Agent in writing), the Borrower delivers to
the Agent an Additional Mortgage on the property received by the Company as
part of such exchange together with such other documents of a type
described in Section 7.11 of the Credit Agreement as the Agent may request
in respect thereof; or (ii) any sale of the closed-store in Tampa, FL
(#798) or the warehouse facility in Waverly, NY (92170 W02); and
(c) consent to any subordination by the Agent of the Lien of any
Mortgage or Additional Mortgage to any easement or similar Lien on the
property subject to such Mortgage or Additional Mortgage that is permitted
by the Credit Agreement. In delivering any such subordination, the Agent
may rely on a certificate of an officer of the Borrower that such easement
or similar Lien is permitted by the Credit Agreement.
Section 3. Certain Borrower Acknowledgments. The Borrower hereby
acknowledges that the now or hereafter inapplicability of any item of Section
7.11(e) of the Credit Agreement to any Real Property of the Borrower or any of
its Subsidiaries as a result of this Amendment, any future waiver or other
modification of the requirements of such Section or any other circumstance
whatsoever shall not constitute a waiver by the Agent or any Bank of any of the
Borrower's or any of its Subsidiaries obligation to deliver, or any right of the
Agent or any Bank to request the delivery of,
<PAGE>
any such item in respect of any Real Property pursuant to Sections 7.11(a)
through (d) of the Credit Agreement or any other applicable provision of any
Credit Document; provided that neither the Agent nor any Bank shall be entitled
to request pursuant to Sections 7.11(a) through (d) of the Credit Agreement or
any other applicable provision of any Credit Document an Additional Mortgage on
any Real Property deleted by this Amendment from Schedule XVII or XVIII to the
Credit Agreement absent a Default, an Event of Default or a determination by the
Agent or such Bank in its sole discretion that the value or circumstances in
respect of such Real Property has changed.
Section 4. Representations and Warranties. The Borrower hereby represents
and warrants to the Agent and each Bank that:
(a) no Default or Event of Default has occurred and is continuing on
and as of the date hereof; and
(b) the representations and warranties of the Borrower and the other
Credit Parties contained in the Credit Agreement and the other Credit
Documents are true and correct on and as of the date hereof as if made on
and as of the date hereof, except to the extent such representations and
warranties expressly relate to a different specific date.
Section 5. Effectiveness. This Amendment shall become effective, as of
January 9, 1998, when the Agent shall have (a) executed and delivered a
counterpart of this Amendment and received duly executed counterparts of this
Amendment from the Borrower, each Subsidiary of the Borrower that is a party to
any Credit Document and as many of the Banks as shall be necessary to comprise
the "Required Banks"; and (b) received an executed certificate from an officer
of the Borrower that is in form and substance satisfactory to the Agent in
respect of the Real Property of the Borrower and its Subsidiary not listed on
Schedule XVII or XVIII of the Credit Agreement as modified hereby. The aforesaid
executions and deliveries may be effected by delivery and receipt by facsimile
transmission.
Section 6. Status of Credit Documents. (a) This Amendment is limited solely
for the purposes and to the extent expressly set forth herein, and, except as
expressly modified hereby, (i) the terms, provisions and conditions of the
Credit Documents, (ii) the terms and provisions of the Further Assurances
Agreement dated as of June 15, 1995, as modified in writing prior to the date
hereof, between the Borrower and the Agent, and (iii) the Liens granted under
the Credit Documents shall continue in full force and effect and are hereby
ratified and confirmed in all respects.
(b) No amendment of any terms or provisions of the Credit Agreement granted
hereunder shall relieve the Borrower from complying with such terms and
provisions other than as amended hereby or from complying with any other term or
provision of the Credit Agreement.
Section 7. Counterparts. This Amendment may be executed and delivered in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A
complete set of counterparts shall be lodged with the Borrower and the Agent.
Section 8. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized officers to execute and deliver this Twelfth Amendment to the Amended
and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Francis E. Nicastro
-----------------------------------------
Name: Francis E. Nicastro
Title: C.V.P., Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Keith C. Braun
-----------------------------------------
Name: Keith C. Braun
Title: Associate
CARGILL FINANCIAL SERVICES CORP.
By: /s/ Robert Beach
-----------------------------------------
Name: Robert Beach
Title: V.P.
FLEET CAPITAL CORPORATION
By: /s/ Thomas E. Joyce
-----------------------------------------
Name: Thomas E. Joyce
Title: V.P. & Portfolio Manager
GOLDMAN SACHS CREDIT PARTNERS LP
By: /s/ John Urban
-----------------------------------------
Name: John Urban
Title: Authorized Signatory
<PAGE>
HELLER FINANCIAL, INC.
By: /s/ Tom Bukowski
-----------------------------------------
Name: Tom Bukowski
Title: Sr. V.P.
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
-----------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
NATIONSBANK, N.A.
By: /s/ Chris Barton
-----------------------------------------
Name: Chris Barton
Title: V.P.
QUANTUM PARTNERS LDC
By: /s/ Mark Sonnino
-----------------------------------------
Name: Mark Sonnino
Title: Attorney in Fact
SWISS BANK CORPORATION, LONDON BRANCH
By: /s/ Christine Daley
-----------------------------------------
Name: Christine Daley
Title: Executive Director
<PAGE>
The foregoing Twelfth Amendment to the Amended and Restated Credit
Agreement is hereby consented and agreed to, and the Liens and guaranties under
the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Francis E. Nicastro
--------------------------------------
Name: Francis E. Nicastro
Title: C.V.P. Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1998
<PERIOD-END> JAN-03-1998
<CASH> 38,084
<SECURITIES> 0
<RECEIVABLES> 26,845
<ALLOWANCES> 0
<INVENTORY> 134,597
<CURRENT-ASSETS> 215,111
<PP&E> 945,638
<DEPRECIATION> 486,202
<TOTAL-ASSETS> 1,002,167
<CURRENT-LIABILITIES> 188,215
<BONDS> 599,575
0
0
<COMMON> 100
<OTHER-SE> (341,432)
<TOTAL-LIABILITY-AND-EQUITY> 1,002,167
<SALES> 1,761,214
<TOTAL-REVENUES> 1,761,214
<CGS> 1,269,566
<TOTAL-COSTS> 1,269,566
<OTHER-EXPENSES> 587,658
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,986
<INCOME-PRETAX> (181,996)
<INCOME-TAX> 0
<INCOME-CONTINUING> (181,996)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (181,996)
<EPS-PRIMARY> (18.82)
<EPS-DILUTED> 0
</TABLE>
