SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
___________________________
For the Quarterly period ended April 30, 1994
Commission file number 1-5745-1
FOODARAMA SUPERMARKETS, INC.
303 West Main Street
Freehold, N.J. 07728
I.D. # 21-0717108
Telephone #908-462-4700
Indicate by check mark whether the Registrant (1) has filed all
annual, quarterly and other reports required to be filed with the
Commission and (2) has been subject to the filing requirements
for at least the past 90 days.
Yes X No_______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the close of the period covered by
this report.
OUTSTANDING AT
CLASS April 30, 1994
Common Stock 1,118,150 shares
$1 par value
<PAGE>
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
April 30, 1994 and October 30, 1993
Consolidated Statements of Operations
For the thirteen weeks ended
April 30, 1994 and May 1, 1993
Consolidated Statements of Cash Flows
for the thirteen weeks ended
April 30, 1994 and May 1, 1993
Notes to the Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 3. Default Upon Senior Securities
See Management's Discussion and Analysis of
Financial Condition and Results of Operations --
Liquidity and Capital Resources -- Forbearance
Agreement
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4.01 Forbearance Agreement and Amendment, dated
as of May 31, 1994, among Foodarama Super-
markets, Inc., Shop Rite of Malverne, Inc.,
New Linden Price Rite, Inc., Regal Drugs,
Inc., Shop Rite of Reading, Inc., Shop Wise
Supermarkets of Connecticut, Inc., and cer-
tain other senior noteholders as set forth
on the signature pages thereto.
4.02 Standstill Agreement, dated as of May 31,
1994, among Foodarama Supermarkets, Inc.,
Shop Rite of Malverne, Inc., New Linden
Price Rite, Inc., Regal Drugs, Inc., Shop
Rite of Reading, Inc., Shop Wise Super-
markets of Connecticut, Inc., the Chase
Manhattan Bank (National Association), First
Fidelity Bank, United Jersey Bank, and the
Chase Manhattan Bank (National Association)
as agent.
<PAGE>
4.03 Amendment No. 5, dated as of June 1, 1994,
to a certain credit agreement among
Foodarama Supermarkets, Inc., the Chase
Manhattan Bank (National Association), First
Fidelity Bank, United Jersey Bank, and the
Chase Manhattan Bank (National Association)
as agent.
(b) No reports on Form 8-K were required to be filed
for the 13 weeks ended April 30,1994.
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets - April 30, 1994 and October 30, 1993
(IN THOUSANDS)
ASSETS
April 30, October 30,
1994 1993
(Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $ 4,103 $ 4,765
Merchandise inventories 28,381 33,983
Receivables and other 5,451 8,624
Total current assets 37,935 47,372
Property and equipment:
Land 1,762 1,762
Buildings and improvements 2,132 2,132
Leaseholds and leasehold improvements 32,886 31,732
Equipment 49,950 48,042
Property under capital leases 9,649 9,649
Equipment under capital leases 8,676 8,859
105,055 102,176
Less accumulated depreciation and
amortization including $9,628,
1994 and $8,984, 1993 relating
to property and equipment
under capital leases 42,479 39,474
62,576 62,702
Other assets:
Investment in related party 8,626 8,626
Intangibles 7,351 8,145
Other 4,338 4,457
20,315 21,228
$120,826 $131,302
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets - April 30, 1994 and October 30, 1993
(IN THOUSANDS EXCEPT PER SHARE DATE)
(continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
April 30, October 30,
1994 1993
(Unaudited) (Audited)
Current liabilities:
Current portion of long-term debt $ 8,422 $ 2,523
Current portion of long-term debt,
related party 88 204
Long-term obligation in default
classified as current 28,379 34,415
Current portion of obligations under
capital leases 1,120 1,245
Accounts payable:
Related party 13,573 16,638
Other 12,782 12,112
Accrued expenses and other 5,337 10,009
Total current liabilities 69,701 77,146
Long-term debt 2,827 3,587
Long-term debt, related party 89 176
Obligations under capital leases 9,107 9,699
Deferred income taxes 4,921 4,921
Other long-term liabilities 3,560 3,921
Mandatory redeemable preferred stock
subscribed $12.50 par: authorized
1,000,000 shares; 136,000 shares issued 1,700 1,700
Shareholders' equity:
Common stock, $1.00 par; authorized
2,500,000 shares; issued 1,621,627
shares 1,622 1,622
Capital in excess of par 2,351 2,351
Retained Earnings 31,570 32,831
35,543 36,804
Less 503,477 shares, held in
treasury, at cost 6,622 6,622
28,921 30,182
$120,826 $131,302
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations - Unaudited
(IN THOUSANDS - EXCEPT PER SHARE DATA)
13 Weeks Ended
4/30/94 5/01/93
Sales $ 151,546 $ 169,002
Cost of Sales 115,413 127,814
Gross profit 36,133 41,188
Operating expenses 36,782 39,090
(Loss) Income from operations ( 649) 2,098
Interest - net 1,268 1,615
(Loss) Income before taxes (1,917) 483
Income tax (benefit) provision ( 616) 193
Net (loss) income $ (1,301) $ 290
Net (loss) income per common share $ (1.19) $ .23
Weighted average of common
shares outstanding 1,118,150 1,118,150
Dividends per share - 0 - - 0 -
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations - Unaudited
(IN THOUSANDS - EXCEPT PER SHARE DATA)
26 Weeks Ended
4/30/94 5/01/93
Sales $ 309,037 $ 341,721
Cost of Sales 234,202 257,319
Gross profit 74,835 84,402
Operating expenses 74,182 80,345
(Loss) Income from operations 653 4,057
Interest - net 2,504 3,372
(Loss) Income before taxes (1,851) 685
Income tax (benefit) provision ( 590) 274
Net (loss) income $ (1,261) $ 411
Net (loss) income per common share $ (1.18) $ .34
Weighted average of common
shares outstanding 1,118,150 1,118,150
Dividends per share - 0 - - 0 -
See accompanying notes to consolidated financial statements.
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(IN THOUSANDS)
Oct. 31, 1993 Nov. 1, 1992
to April 30, 1994 to May 1, 1993
(Unaudited)
Cash flows from operating activities:
Net (Loss) income $ (1,261) $ 411
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 4,594 5,170
Amortization, other 1,431 1,732
Changes in assets and liabilities:
Decrease in inventories 5,602 1,563
Decrease in receivables and other 3,173 3,262
Increase in other assets ( 518) (1,439)
Decrease in accounts payable (2,395) (3,113)
Decrease in other liabilities (5,033) (1,995)
Net cash provided by operating
activities 5,593 5,591
Cash flows from investing activities:
Purchase of property, plant and equipment (4,468) (3,832)
Net cash used in investing activities (4,468) (3,832)
Cash flows from financing activities:
Proceeds from sales of preferred stock - 1,700
Principal payments under long-term debt (1,100) (5,179)
Principal payments under capital
lease obligations ( 687) ( 780)
Proceeds from issuance of long-term debt - 2,000
Net cash used in financing activities (1,787) (2,259)
Net Decrease in cash and cash equivalents ( 662) ( 500)
Cash and cash equivalents, beginning of period 4,765 8,348
Cash and cash equivalents, end of period $ 4,103 $ 7,848
See accompany notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Basis of Presentation
The unaudited condensed Consolidated Financial Statements as of April 30,
1994, included herein, have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and rule 10-01. The balance sheet at October
30, 1993 has been taken from the audited financial statements at that date.
In the opinion of the management of registrant, all adjustments (consisting
only of normal recurring accruals) which registrant considers necessary for
a fair presentation of the results of operation for the period have been
made. Certain financial information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The reader
is referred to the consolidated financial statements and notes thereto
included in the Registrant's annual report on Form 10-K for the year ended
October 30, 1993.
These results are not necessarily indicative of the results for the entire
fiscal year.
Note 2 Postretirement Benefits other than Pensions
Effective October 31, 1993, the Registrant adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits other than Pensions." The Registrant provides
limited postretirement medical benefits to certain individuals under
deferred compensation agreements. The Registrant does not provide such
benefits to most of its non-union workforce and benefits related to its
union employees are covered by collective bargaining agreements which
require monthly contributions and which are not subject to the provisions
of SFAS No. 106 requiring an accrual for such benefits. SFAS No. 106
requires the Registrant to accrue the estimated cost of retiree benefit
payments during the years the employee provides services. The Registrant
previously expensed the costs of such benefits. The Registrant recognized
the cumulative effect of this liability on the immediate recognition basis.
The cumulative effects as of January 29, 1994 of adopting SFAS No. 106 were
an increase in accrued postretirement benefits and a decrease in pre-tax
earnings of $146,000 ($.08 per share), which has been included in the
Registrant's financial statements for the fiscal quarter ended January 29,
1994. The Registrant's liability for such postretirement benefits is not
funded.
The effect of SFAS No. 106 on earnings for the fiscal quarter ended April
30, 1994 was not material.
Note 3 Income Taxes
In the fiscal quarter ended April 30, 1994, the Registrant adopted
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," effective October 31, 1993. The effect of adopting SFAS No.
109 on the Registrant's financial statements was also immaterial for fiscal
<PAGE>
quarter ended April 30, 1994.
The Registrant provided a valuation allowance against all deferred tax
assets recorded as of October 30, 1993. There was no change in the
valuation allowance for the fiscal quarter ended April 30, 1994.
<PAGE>
Part I - Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operation
Liquidity and Capital Resources
Forbearance Agreement
On June 1, 1994, the Company entered into a Standstill Agreement with
its three bank lenders (the "Banks") and a Forbearance Agreement and
Amendment with certain of its senior noteholders (collectively, the
"Agreements"). The outstanding principal balance of the Company's
indebtedness to the Banks as of June 1, 1994 was $15,957,000 and to its
noteholders $19,195,000.
The instruments pursuant to which these loans were made are referred
to herein as the "Loan Documents," and the Banks and the Company's senior
noteholders are referred to herein collectively as the "Holders." As of
June 15, 1994, the Forbearance Agreement has been subscribed to by the
Holders of senior notes totalling $15,682,000, representing 82.6% of the
outstanding balance of such notes.
The Agreements provide that the Company pay to the senior noteholders
subscribing to the Forbearance Agreement and Amendment the interest on the
senior notes which was due on June 1, 1994, which interest totaled
$983,450, and the Company has paid such interest to all subscribing senior
noteholders, but the Company has not paid to the senior noteholders the
$2,523,000 principal payment due to such Holders on such date.
Under the Agreements, the Holders agreed to forbear until September
30, 1994 from exercising their rights under the Loan Documents on account
of certain specified defaults by the Company under the Loan Documents,
including the failure to pay principal on June 1, 1994 to Holders of the
senior notes. The Agreements contain a number of affirmative and negative
covenants including covenants to supply designated information to the
Holders and, except with the consent of the Banks and the Holders of two-
thirds in principal amount of the senior notes, not to incur additional
indebtedness for borrowed money, not to sell assets nor to engage in
certain other specified transactions. In addition, the Agreements provide
that the Company shall continue to employ at its own expense its present
restructuring advisor, or another restructuring advisor acceptable to the
Holders, to assist the Company in the formulation of a business plan.
The Agreements terminate if Wakefern Food Corporation modifies the
terms on which it presently provides merchandise to the Company, if the
Company has a negative cash flow (as defined in the Agreement) in any
fiscal month during the four-month forbearance period, or if the Company
suffers a pre-tax loss (calculated in accordance with the Agreement) in
excess of $600,000 in any three-month period commencing with the three-
month period ending July 31, 1994.
The Agreements and a restated amendment to the Credit Agreement with
the Company's bank creditors provide that interest under the Credit
Agreements should be paid monthly and not semi-annually as heretofore
required under the Loan Documents.
<PAGE>
A holder of a senior note in the principal amount of $1,346,278 issued
under a certain Note Purchase Agreement dated June 1, 1994 which had not
executed a forbearance agreement with the Company, has given the Company
notice that it is accelerating the entire unpaid principal amount of its
note, together with accrued interest. The Company is in default in paying
principal and interest to such noteholder in the respective amounts of
$177,014.44 and $83,497.08, both due June 1, 1994. In giving such notice,
the noteholder reserved its right to take any and all appropriate remedies
available to it under the terms of the related note agreement, but did not
take any other action to enforce repayment of the note. Although no
assurances can be given, the Company does not anticipate any such demand at
the present stage of the Company's attempt to restructure its institutional
indebtedness. In this connection, the Company will deliver on June 15th to
its institutional lenders a business plan prepared by its restructuring
advisers which it anticipates will be the basis of the negotiation of a
restructuring of such indebtedness.
Working Capital
As a result of covenant violations at April 30, 1994, $28.4 million of
debt due to senior lenders has been classified as a current liability
thereby creating a working capital deficiency of $31.8 million.
At May 1, 1993, working capital was $6.0 million.
Cash flows (in millions) were as follows:
4/30/94 5/01/93
Operating activities $ 5.6 $ 5.6
Investing activities (4.5) (3.8)
Financing activities (1.8) (2.3)
Totals $( .7) $( .5)
Registrant intensified its program to generate cash through inventory
reduction which resulted in a decrease in inventory of $5.6 million from
year end to April 30, 1994.
Receivables and other current assets decreased $3.2 million since year
end due in part to the sale of the New York division on October 18, 1993
and speedier collection of receivables for manufacturers' coupons.
Accounts payable and accrued expenses decreased by $7.4 million from
year end by reason of the New York sale, payments for property and
equipment of the Neptune store, interest and other expense payments and
payment of amounts due for workers' compensation insurance and a reduction
of payables due Wakefern Food Corp.
Registrant has no available lines of credit.
<PAGE>
Results of Operations (13 weeks ended 4/30/94 compared to 13 weeks
ended 5/01/93)
Sales:
Sales for the twenty-one stores in operation for the current quarter
totaled $151.5 million, including one World Class replacement store opened
9/23/93. Sales for the twenty-six stores in operation in the prior period
totaled $169.0 million of which $22.3 million represented sales of the five
New York stores sold 10/18/93.
Comparable store sales were down 1.3% period to period.
Gross Profit:
The current period produced gross profit of 23.84% versus 24.37% in
the prior year period. General price reductions to stimulate sales growth
contributed to this shortfall coupled with price discounting to sell off
excess inventory to generate cash flow. The lack of cash flow also
curtailed the Registrant's ability to buy deal merchandise which enhances
gross profit. Additionally, by reason of cash flow problems, the
Registrant lost warehouse cash discounts of .07%.
Operating Expenses:
These expenses totaled 24.27% of sales during this quarter compared to
23.13% in the prior year period. Depreciation and amortization represented
3.97% and 4.08% for the respective periods.
Advertising costs rose by .07%, utilities and insurance rose by .10%,
outside services including snow plowing added .06% and warehouse service
fees totaled .33%.
The salary freeze and layoffs initiated in November 1992 reduced prior
period expenses by approximately $400,000. Reversal of a pension reserve
reduced second quarter 1993 expenses by $500,000.
Health and welfare premiums reflect a reduction of costs for the plan
year ended April 30, 1993 of approximately $400,000. A closed store lease
was sold for $125,000.
Pre-opening costs expensed in the current quarter were $103,000
compared to $314,000 in the prior year period.
(Loss) Income From Operations:
The current period loss of $649,000 resulted from a sales decline of
1.3%, reduced gross profit of $800,000 and increased expenses of $1,700,000
versus the prior year period.
<PAGE>
PART II
OTHER INFORMATION
Item 3. Default Upon Senior Securities
See Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources --
Forbearance Agreement
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4.01 Forbearance Agreement and Amendment, dated as of May
31, 1994, among Foodarama Supermarkets, Inc., Shop
Rite of Malverne, Inc., New Linden Price Rite, Inc.,
Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop
Wise Supermarkets of Connecticut, Inc., and certain
other senior noteholders as set forth on the signature
pages thereto.
4.02 Standstill Agreement, dated as of May 31, 1994, among
Foodarama Supermarkets, Inc., Shop Rite of Malverne,
Inc., New Linden Price Rite, Inc., Regal Drugs, Inc.,
Shop Rite of Reading, Inc., Shop Wise Supermarkets of
Connecticut, Inc., the Chase Manhattan Bank (National
Association), First Fidelity Bank, United Jersey Bank,
and the Chase Manhattan Bank (National Association) as
agent.
4.03 Amendment No. 5, dated as of June 1, 1994 to a certain
credit agreement among Foodarama Supermarkets, Inc.,
the Chase Manhattan Bank (National Association), First
Fidelity Bank, United Jersey Bank, and the Chase
Manhattan Bank (National Association) as agent.
(b) No reports on Form 8-K were required to be filed for the 13
weeks ended April 30,1994.
<PAGE>
Interest Expense:
Current period costs were $1,284,000 (.85% of sales) compared to
$1,674,000 (.99% of sales) in the prior year period. Total debt decreased
by $18.7 million since 5/1/93 while interest rates have increased on
floating rate debt and by reason of defaults on bank and noteholder debt.
Interest Income:
Period to period declined to $16,000 versus $108,000.
Income Taxes:
Tax benefits have been computed at 32% of the current period pre-tax
loss based on fiscal 1993 results versus a 40% provision in the prior year
period.
The Registrant provided a valuation allowance against all deferred tax
assets recorded as of October 31, 1993. There was no change in the
valuation allowance for the fiscal quarter ended April 30, 1994.
Net (Loss) Income:
A net loss of $1,301,000 was realized for the current quarter versus
net income of $290,000 in the prior year period.
The loss per common share of $1.19 is based on 1,118,150 shares
outstanding after a provision of $34,000 for preferred stock dividends. In
the prior year period, net income per common share was $.23 based on
1,118,150 shares after a provision for preferred stock dividends of
$29,000.
<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.
FOODARAMA SUPERMARKETS, INC.
(Registrant)
Date: June 14, 1994 /S/ JOSEPH J. SAKER
(Signature)
Joseph J. Saker, President
Chief Executive Officer
Date: June 14, 1994 /S/ JOSEPH C. TROILO
(Signature)
Joseph C. Troilo
Senior Vice President
(& Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
4.01 Forbearance Agreement and Amendment, dated as of May 31, 1994,
among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc.,
New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of
Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., and
certain other senior noteholders as set forth on the signature
pages thereto
4.02 Standstill Agreement, dated as of May 31, 1994, among Foodarama
Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price
Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop
Wise Supermarkets of Connecticut, Inc., the Chase Manhattan Bank
(National Association), First Fidelity Bank, United Jersey Bank,
and the Chase Manhattan Bank (National Association) as agent
4.03 Amendment No. 5, dated as of June 1, 1994, to a certain credit
agreement among Foodarama Supermarkets, Inc., the Chase Manhattan
Bank (National Association), First Fidelity Bank, United Jersey
Bank, and the Chase Manhattan Bank (National Association) as
agent
EXHIBIT 4.01
FORBEARANCE AGREEMENT AND AMENDMENT
Dated as of May 31, 1994
This Forbearance Agreement and Amendment (this
"Agreement"), dated as of May 31, 1994, entered into by and among
Foodarama Supermarkets, Inc., a New Jersey corporation (the
"Company"), Shop Rite of Malverne, Inc., a New York corporation,
New Linden Price Rite, Inc., a New Jersey corporation, Regal
Drugs, Inc., a New Jersey corporation, Shop Rite of Reading,
Inc., a Pennsylvania corporation, Shop Wise Supermarkets of
Connecticut, Inc., a New Jersey corporation (collectively, the
"Subsidiary Guarantors"; and together with the Company, the
"Obligors"), each of the senior noteholders set forth on the
signature pages hereto (collectively, together with their
transferees, the "Senior Noteholders" and, individually, a
"Senior Noteholder").
W I T N E S S E T H:
WHEREAS, the Senior Noteholders are all of the holders
(directly or indirectly through nominees thereof) of $31,000,000
aggregate original principal amount of the Company's senior
secured promissory notes issued and delivered pursuant to the
several Note Purchase Agreements, each dated June 1, 1989, among
the Company and each of the purchasers of the Notes (as defined
in the Note Agreements) set forth on the signature pages thereto
(collectively, as amended or modified from time to time, the
"Note Agreements");
WHEREAS, the Notes are entitled to the benefits of
(i) the Subsidiary Guaranty, dated as June 16, 1989, by the
Subsidiaries of the Company named therein in favor of the Senior
Noteholders (the "Subsidiary Guaranty") and (ii) the Trust and
Pledge Agreement, dated June 16, 1989, among the Company, IBJ
Schroder Bank & Trust Company, as Trustee, and the banks and
other lenders named therein (the "Pledge Agreement"; and together
with the Note Agreements, the Notes, the Subsidiary Guaranty and
all other agreements, instruments and documents executed in
connection with the Note Agreements, collectively, the "Note
Documents");
WHEREAS, the Company has requested the forbearance of
the Senior Noteholders with respect to certain existing and
anticipated defaults and Events of Default (as defined in the
Note Agreements), and the Senior Noteholders are willing to grant
such forbearance on the terms and conditions provided below.
<PAGE>
NOW, THEREFORE, in consideration of the agreements
herein contained, the parties hereto hereby agree intending to be
legally bound hereby as follows:
Section 1. Defined Terms. Unless otherwise defined
herein, terms defined in the Note Agreements are used herein as
therein defined.
Section 2. Specified Defaults. As used herein,
"Specified Defaults" shall mean the following continuing defaults
and Events of Default:
(i) The Company's failure to make the principal pay-
ment on the Notes due on June 1, 1994 pursuant to Section
3.1(a) of the Note Agreements is a default under Section
8.1(a) of the Note Agreements;
(ii) The Company's noncompliance with the restriction
on Capital Expenditures set forth in Section 6.19 of the
Note Agreements for the fiscal year ending in 1993 is a
default under Section 8.1(e) of the Note Agreements;
(iii) The Company's continuing noncompliance with the
minimum Consolidated Working Capital set forth in Section
6.1(b) of the Note Agreements is a default under Section
8.1(d) of the Note Agreements; and
(iv) The Company's continuing noncompliance with the
minimum interest coverage ratio set forth in Section 6.14 of
the Note Agreements and the minimum Cash Flow Coverage Ratio
set forth in Section 6.15 of the Note Agreements is a de-
fault under Section 8.1(c) of the Note Agreements.
<PAGE>
Section 3. Forbearance. The Senior Noteholders agree,
on the terms and subject to the conditions hereof, to forbear
during the period (the "Forbearance Period") from and after the
Effective Date (as defined in Section 4 below) until (but
excluding) the Forbearance Termination Date (as defined in
Section 5 below) in the exercise of the rights and remedies
available under the Note Agreements and the other Note Documents
with respect to any Specified Default. Notwithstanding such
forbearance, it is understood by the Company that the Senior
Noteholders have not waived any Specified Default or any other
default or Event of Default or any rights or remedies in respect
thereof under the Note Documents or otherwise. During the For-
bearance Period, the Senior Noteholders shall be permitted to
exercise all of their rights under the Note Documents as if no
default or Event of Default had occurred, except as may be lim-
ited or provided otherwise in this Agreement.
Section 4. Conditions. As conditions precedent to the
effectiveness of this Agreement, on or prior to June 1, 1994 (the
"Effective Date"):
(i) the Company shall have delivered to each of the
Senior Noteholders an agreement (the "Bank Standstill
Agreement"), substantially similar to this Agreement, ex-
ecuted by The Chase Manhattan Bank (National Association),
individually, and in its capacity as agent for the banks
under the Credit Agreement, First Fidelity Bank, and United
Jersey Bank, with respect to the defaults by the Company and
its Subsidiaries under the Credit Agreement, in form and
substance satisfactory to the Required Holders; and
(ii) the Company shall have paid each of the Senior
Noteholders that have executed this Agreement the interest
payment due on June 1, 1994 for the semiannual period ending
on such date in respect of each of such holder's Notes.
Section 5. Termination. Except for the amendments to
the Note Agreements set forth in Section 6 hereof which shall
survive any termination of this Agreement or as otherwise pro-
vided herein, this Agreement shall terminate and be of no further
force or effect at 10:00 a.m. (New York time) on the date (the
"Forbearance Termination Date") which is the earliest of:
<PAGE>
(i) September 30, 1994;
(ii) the date that Wakefern Food Corp. ("Wakefern"),
directly or indirectly, changes or otherwise modifies in any
manner whatsoever the terms that the Company purchases and
receives merchandise and services from Wakefern (including,
without limitation, the quantity of merchandise being made
available to the Company or the length of time such trade
credit is extended) from those in effect on May 27, 1994
other than such changes or modifications that are eco-
nomically beneficial to the Company or otherwise consented
to in writing by the Required Holders;
(iii) the date of the occurrence of the Forbearance
Termination Date (as such term is defined in the Bank
Standstill Agreement) under the Bank Standstill Agreement;
(iv) the date of the filing of a petition to commence a
case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, and in the case of an involuntary
proceeding the passage of 60 days from the date of such
filing without such filing being dismissed or stayed, by or
with respect to any Obligor;
(v) the date any Senior Noteholder gives notice to the
Company of the termination of this Agreement by reason of
the occurrence of any one or more of the following events:
(a) a breach by any of the Obligors of any of the
representations, warranties or covenants contained
in this Agreement which breach shall continue for
three (3) Business Days after any of the Obligors
have knowledge thereof;
(b) the Net Cash Flow (determined in the manner set
forth in Exhibit A attached hereto) for the Com-
pany and its consolidated Subsidiaries less the
aggregate amount of Interest Expense for such
period (other than interest paid in respect of the
Notes on June 1, 1994) is negative for any Company
fiscal month commencing with the fiscal month end-
ing June 25, 1994;
(c) the Company and its consolidated Subsidiaries have
a pre-tax loss in excess of $600,000 (the calcu-
lation of the pre-tax loss shall include Interest
Expenses and exclude (i) restructuring expenses
(including professional fees and expenses) and
(ii) income, expenses, profits or losses associ-
ated with any sale of assets permitted under
Section 6.8 of the Note Agreements or other asset
or capital disposition) determined on a consoli-
dated basis without duplication in accordance with
GAAP, for the three-month period commencing May 1,
1994 or for any three-month period commencing
thereafter; or
(d) any default or Event of Default, other than a
Specified Default, shall occur and be continuing.
<PAGE>
From and after the Forbearance Termination Date, the Senior
Noteholders shall be entitled to exercise and enforce any and all
rights and remedies available to the Senior Noteholders as a
consequence of any Specified Defaults that have occurred prior
to, during or after the Forbearance Period.
Section 6. Amendments to Note Agreements. The Company
hereby agrees with the Senior Noteholders to amend the Note
Agreements and Note Documents as follows:
(i) Monthly Interest Payments; Default Interest.
Section 1.1 of the Note Agreements designated "Authorization
of Notes" is hereby amended by adding the following sentence
at the end of such section:
"Notwithstanding any of the foregoing or anything in
the Note Agreements, the Notes, the other Note
Documents or otherwise, (a) commencing on July 1, 1994,
interest on the Notes shall be payable on a monthly
basis on the first day of each calendar month, or, if
such day is not a Business Day, the first Business Day
thereafter (it being understood and agreed that the
interest payment due on June 1, 1994 shall be for the
semiannual period ending on such date and shall be paid
by the Company on such date) and (b) the per annum rate
of interest payable in respect of the principal payment
on the Notes due on June 1, 1994 (in the event such
principal payment shall not have been made on such
date) shall be 14.90%."
(ii) Defined Terms. Section 9.1 of the Note Agreements
designated "Defined Terms" is hereby amended by adding in
appropriate alphabetical sequence the following definitions:
"'Interest Expense' shall mean, for any period, the sum
of the following, without duplication, for the Company
and its consolidated Subsidiaries (determined on a
consolidated basis in accordance with GAAP): (a) all
interest paid in cash or accrued as a liability on Debt
during such period (including, without limitation,
imputed interest on Capital Lease Obligations) plus
(b) all fees or commissions and net losses amortized
during such period in respect of all Interest Rate
Protection Agreements plus (c) fees or commissions
payable during such period in respect of any letters of
credit (including, without limitation, any letters of
credit issued pursuant to the Credit Agreement) minus
(d) all net gains during such period in respect of all
Interest Rate Protection Agreements minus (e) all
interest income received during such period."
"'Required Holders' shall mean, at any time, a holder
or holders of at least 66-2/3% in aggregate unpaid
Principal amount of all Notes at such time outstanding."
The Note Agreements and the other Note Documents are
each hereby deemed to be amended to reflect the foregoing.
<PAGE>
Section 7. Amendments; Extensions. The terms of this
Agreement may be modified or amended only by a writing or writ-
ings executed by each of the Senior Noteholders and the Obligors.
It is understood and agreed that the Senior Noteholders are not
and shall not be under any obligation, express or implied, to
consent to any modification or amendment hereof or to any exten-
sion of the Forbearance Period.
Section 8. Continuing Effect. Except as expressly
provided herein or as may hereafter be modified by a separate
document, each Note Document shall continue unchanged and in full
force and effect, and all rights, powers and remedies of the
Senior Noteholders and the Obligors thereunder are hereby ex-
pressly reserved. Without in any way limiting the generality of
the foregoing, the Obligors shall be liable in accordance with
the Note Agreements and the other Note Documents for any and all
sums and charges due pursuant thereto, including, without limita-
tion, default interest and late charges, if any. The Company
hereby acknowledges and agrees that in accordance with the terms
and provisions of the Note Documents as amended hereby, interest
on the principal payment required to have been made to the Senior
Noteholders on June 1, 1994 pursuant to Section 3 of the Note
Agreements shall accrue at the per annum rate of 14.90% until
such principal payment is made to the Senior Noteholders.
Section 9. Covenants. The Obligors covenant and agree
that:
(i) The Obligors shall provide the following informa-
tion to (x) each of the Senior Noteholders holding in excess
of $1,000,000 in principal amount of the Notes and (y) any
such other Senior Noteholder requesting such information
(such Senior Noteholders referred to in (x) and (y) above
shall be referred to herein collectively as the "Requesting
Senior Noteholders") no later than 10 days after the Ef-
fective Date, or, if permitted by the Required Holders, at
such other reasonable times as the Obligors and the Required
Holders may agree, and shall continue to provide to each of
the Requesting Senior Noteholders any updated information of
the type described below:
(a) all documents and agreements relating to indebt-
edness or obligations of the Company and its
Subsidiaries to any Person;
(b) all documents and agreements relating to any
pledge of assets or equity, direct or indirect, of
the Company and any of its Subsidiaries;
(c) the most recent appraisal of all property owned by
the Company and its Subsidiaries;
(d) information describing each of the Obligor's lease
obligations, by location, including but not lim-
ited to dates of lease commencement and lease
expiration, extension and renewal options, parties
to such leases (including identification of par-
ties in which any officer, director or stockholder
of the Company has a direct or indirect ownership
interest), base and other rents payable, whether
the premises covered by such leases are used in
the business of the Obligors, and defaults, if
any;
<PAGE>
(e) debt profile of each Obligor, identifying, among
other things, direct and contingent obligations,
maturities, required payments and related infor-
mation;
(f) all documents, agreements and policies relating to
the Company's relationship with Wakefern;
(g) information relating to any proposed disposition
of assets outside of the ordinary course of
business;
(h) management letters from the Company's outside
auditors, including any such management letters
for the 1992 and 1993 fiscal years;
(i) an organizational chart for the Company and its
Subsidiaries identifying all officers and direc-
tors, together with a narrative description of the
responsibilities of all officers; and
(j) a cash budget projection for the Forbearance
Period.
(ii) The Obligors shall provide the following informa-
tion to each of the Requesting Senior Noteholders during the
Forbearance Period:
(a) a weekly report on cash receipts and disbursements
(identifying the uses thereof) of the Obligors on
a consolidated basis;
(b) a consolidated inventory purchasing report on a
weekly basis prepared by the Restructuring Advisor
(as hereinafter defined) in the form annexed here-
to as Exhibit A;
(c) reports on a weekly basis showing store-by-store
sales together with comments thereto, prepared by
the Restructuring Advisor;
<PAGE>
(d) a report relating to the status of any disposi-
tions or proposed dispositions of any assets of
any Obligor, outside of the ordinary course of
business, on a monthly basis;
(e) status updates relating to discussions with other
creditors of the Obligors on a weekly basis;
(f) such financial information relating to the Obli-
gors as may from time to time reasonably be re-
quested by the Requesting Senior Noteholders,
including, without limitation, projections (with
assumptions), prospects, assets, liabilities,
dispositions, refinancings, cash flow analyses and
projections, business plans, capital expenditure
budgets and the like;
(g) all written information (including, without limi-
tation, that relating to projections and assump-
tions, prospects, business plans, assets, liabili-
ties, dispositions and refinancings, etc.) pro-
vided to other creditors of the Obligors; and
(h) a report on the actual cash flow of the Company
and its consolidated Subsidiaries for each fiscal
month of the Company, in the form attached hereto
as Exhibit A, which report will be delivered to
each of the Requesting Senior Noteholders within
10 days after the end of each such fiscal month.
All reports required to be provided by this Section 9(ii) shall
be reviewed and approved by the Restructuring Advisor prior to
being provided to the Requesting Senior Noteholders.
(iii) The Company shall pay from time to time, within 10
days after request therefor, all reasonable fees, expenses
and disbursements of the Senior Noteholders (including their
audit and legal expenses). The first payment of such fees
shall be made on the Effective Date.
(iv) During the Forbearance Period, except in the
ordinary course of business or as otherwise consented to in
writing by the Required Holders, neither the Company nor any
of its Subsidiaries shall:
(a) incur additional indebtedness (direct or contin-
gent) for borrowed money or for the deferred
purchase price of property or services (excluding
indebtedness to Wakefern incurred in the ordinary
course of business);
(b) incur additional obligations to purchase, sell or
lease (as lessee or lessor) property, except for
Approved Capital Expenditures (as hereinafter
defined);
(c) sell, dispose of, pledge or otherwise transfer its
assets or any interest therein;
(d) pay any dividends or distributions except for pay-
ments between and among the Obligors;
<PAGE>
(e) make any other payments or prepayments on Indebt-
edness;
(f) acquire any additional assets, except for Approved
Capital Expenditures (as hereinafter defined); or
(g) create any liens against its assets;
except that the Company and its Subsidiaries may.
(A) pay interest at contract rates on non-
accelerated obligations for borrowed
money;
(B) pay expenses and other obligations
(other than indebtedness for borrowed
money or guaranties thereof) incurred
in the ordinary course of the Obligors'
business (including lease obligations)
as presently conduct and
(C) make capital expenditures (including
commitments therefor) in accordance with
schedules to be provided by the Compa-
ny and approved the Required Holders
(the "Approved Capital Expenditures").
(v) The Company shall continue to employ at its own
expense Buccino & Associates, Inc. or another restructuring
advisor (the "Restructuring Advisor") acceptable to the
Required Holders to advise and assist the Company and its
Subsidiaries during the Forbearance Period in connection
with the evaluation of their businesses and the disposition
of operating and nonoperating assets, and the formulation of
a strategic plan to return the Company and its Subsidiaries
to profitability in accordance with the terms and conditions
provided below:
<PAGE>
(a) the Restructuring Advisor shall prepare a written
restructuring plan (the "Business Plan") that
includes an evaluation of the operating assets of
the Obligors on a store-by-store basis, an evalu-
ation of operations (including inventory and cash
management, MIS and reporting functions), plans
for the disposition of operating and nonoperating
assets (including details of the plan for disposi-
tion and/or closing of stores located in Pennsyl-
vania) and a proposal for the repayment of debt
obligations;
(b) the Company shall allow the Requesting Senior
Noteholders to have direct and independent access
to the Restructuring Advisor, including allowing
the Requesting Senior Noteholders to meet with the
Restructuring Advisor at periodic intervals as
reasonably requested by the Requesting Senior
Noteholders, and will authorize and instruct the
Restructuring Advisor to answer any questions that
the Requesting Senior Noteholders may have on the
operations and management of the Company and its
Subsidiaries;
(c) the Restructuring Advisor shall have responsibil-
ity for any studies, analyses or evaluations of
information systems, inventory, accounts receiv-
able collection opportunities, cash management,
capital expenditures, SG&A costs and the like;
<PAGE>
(d) the Company shall deliver to each of the
Requesting Senior Noteholders as soon as possible
but in any event no later than June 15, 1994 the
Business Plan, which Business Plan, together with
the Company's proposed implementation thereof,
shall be acceptable to the Company, the Restruc-
turing Advisor and the Required Holders; and
(e) the Company shall have appointed a chief financial
officer or other officer or officers (which ap-
pointment shall have been approved by the Board of
Directors of the Company), as soon as possible but
in any event no later than June 30, 1994, with
authority to implement and execute the Business
Plan and the Company shall have by such date (I)
commenced the implementation of the Business Plan
with respect to the components of the Business
Plan relating to inventory purchasing, cash man-
agement, plans for dispositions of operating and
nonoperating assets and capital expenditures and
(II) instructed such chief financial officer or
other applicable officer to so implement and
execute the other components of the Business Plan
as soon as practicable.
(vi) The Company will, and will cause each of its
Subsidiaries to, permit representatives of any Requesting
Senior Noteholders, during normal business hours, to ex-
amine, copy and make extracts from its books and records, to
inspect any of its properties, and to discuss its business
and affairs with its officers and its outside accountants,
all to the extent reasonably requested by such Requesting
Senior Noteholders (as the case may be).
(vii) The Obligors shall give immediate notice by
facsimile to each Senior Noteholder of any event or
condition described in Section 5(ii), Section 5(iii) or
Section 5(v) above.
(viii) Except as otherwise consented to in writing by the
Required Holders, the Company shall have in effect at all
times during the Forbearance Period an undertaking from
Wakefern entitling the Company to purchase and receive
merchandise and services from Wakefern on the same terms
offered to the Company immediately prior to the Effective
Date, in form and substance satisfactory to the Required
Holders.
(ix) Except as otherwise consented to in writing by the
Required Holders, the Company shall not (a) at any time
after the Effective Date through the Forbearance Termination
Date have an outstanding indebtedness (excluding trade ac-
counts payable and accrued liabilities to Wakefern) that
bears an interest rate or service charge in excess of 14.9%
per annum, or (b) for the period from the Effective Date
through the Forbearance Termination Date pay or accrue in-
terest or service charge expenses in excess of $250,000 in
the aggregate on account of past due balances owed to
Wakefern by the Company.
<PAGE>
Section 10. Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken to-
gether shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such
counterpart.
Section 11. Benefit of Agreement. This Agreement is
solely for the benefit of the signatories hereto (and their
respective successors and assigns) and no other Person (includ-
ing, without limitation, any other creditor of or claimant
against any Obligor or shareholder of any Obligor) shall have any
rights under, or because of the existence of, this Agreement.
Section 12. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
Section 13. No Commitment or Waiver. Neither this
Agreement nor any action or inaction on the part of the Senior
Noteholders shall be construed to constitute or represent (i) a
commitment by any of the Senior Noteholders to restructure any
indebtedness of the Obligors, or (ii) an intention by the Senior
Noteholders or any Obligor to waive, modify or, except as ex-
pressly provided in Section 3 above, forbear from exercising any
of their rights, powers, privileges or remedies under the Note
Agreements or the other Note Documents, at law, in equity or
otherwise, and the Obligors acknowledge, agree and confirm that
no such commitment, waiver or, except as expressly provided in
Section 6 above, modification, except as expressly provided in
Section 3 above, forbearance has been offered, granted, extended
or agreed to by the Senior Noteholders. Nothing set forth in
this Agreement shall be construed so as to require the Senior
Noteholders to agree to the terms of any modification to the Note
Agreements or the other Note Documents proposed by any of the
Obligors.
Section 14. Due Authorization. Each party executing
and delivering this Agreement represents and warrants to all
other parties that:
(i) such party has the full authority and legal right
and power to execute and deliver this Agreement, and to
perform the terms hereof and the transactions contemplated
hereby;
(ii) all necessary corporate or other action on the
part of such party to be taken in connection with the
execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been duly and
effectively taken; and
(iii) the execution, delivery and performance by such
party does not constitute a violation or breach of such
party's articles of incorporation or by-laws, or any law by
which such party is bound.
<PAGE>
Section 15. Entire Agreement. This Agreement consti-
tutes the entire and final agreement among the parties hereto
with respect to the subject matter hereof and there are no other
agreements, understandings, undertakings, representations or
warranties among the parties hereto with respect to the subject
matter hereof except as set forth herein.
Section 16. Remedies. No failure on the part of the
Senior Noteholders or any of the Obligors or any of their agents
to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder or
under the Note Agreements or the other Note Documents shall
operate as a waiver thereof; nor shall any single or partial
exercise by any Senior Noteholder or any of the Obligors, or any
of their agents of any right, power or remedy hereunder or under
the Note Agreements or the other Note Documents preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy.
Section 17. Headings, Etc. Section or other headings
contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this
Agreement.
Section 18. Voluntary Agreement. The Obligors rep-
resent and warrant that they are represented by legal counsel of
their choice, are fully aware of the terms contained in this
Agreement and have voluntarily and without coercion or duress of
any kind entered into this Agreement, and the documents and
agreements executed and to be executed in connection with this
Agreement.
Section 19. Notices. Any documents, reports, notices,
consents or requests which are required or may be given hereunder
shall be given to the parties at the addresses and in the manner
provided in the Note Agreements, except that copies of any
notices to any of the Senior Noteholders shall also be sent to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Chaim J. Fortgang, Esq.
Facsimile No.: (212) 403-2000
<PAGE>
Section 20. Further Assurances. Each party shall ex-
ecute all additional documents and do all acts not specifically
referred to herein which are reasonably necessary to fully effec-
tuate the intent of this Agreement.
Section 21. Time of Essence. Time is strictly of the
essence of this Agreement and full and complete performance of
each and every provision hereof.
Section 22. Limited Recourse. The sole remedy of the
Senior Noteholders for breach of this Agreement or the terms,
covenants, conditions, representations and warranties contained
herein shall be to terminate this Agreement and exercise their
rights under the Note Documents. The Senior Noteholders shall
have not any right to seek specific performance or damages by
reason of a breach of this Agreement.
Section 23. Note Documents in Full Force. Each
Obligor covenants and agrees that the Note Documents and the
provisions thereof are and remain legal, valid and binding ob-
ligations of the Obligors enforceable in accordance with their
terms and remain in full force and effect. No Obligor has any
claim, demand, action, defense or offset against any of its ob-
ligations under the Note Documents or against any of the Senior
Noteholders. The Obligors hereby waive and release each of the
Senior Noteholders and their respective employees, agents and
representatives from any and all claims, demands, causes of ac-
tion, defenses and offsets against liabilities of any kind or
character whatsoever, known or unknown, which any Obligor ever
had, now has or might hereafter have against such Senior Note-
holder, for or by reason of any matter, cause or thing whatsoever
occurring on or before the date hereof which relates to or arises
out of the Note Documents, any obligations or responsibilities of
the Senior Noteholders under or in respect of the Note Documents,
or any credit heretofore extended to the Obligors. In addition,
the Obligors agree not to commence, join in, assist, cooperate,
prosecute or participate in any suit or other proceeding in a
position that is adverse to the Senior Noteholders arising di-
rectly or indirectly from any of the foregoing matters. This
Section 23 and the covenants, agreements and representations set
forth herein shall survive the termination of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be duly executed as of the day and year first above
written.
OBLIGORS
FOODARAMA SUPERMARKETS, INC.
By /s/ JOSEPH SAKER
Title: President
SHOP RITE OF MALVERNE, INC.
By /s/ JOSEPH SAKER
Title: President
NEW LINDEN PRICE RITE, INC.
By /s/ JOSEPH SAKER
Title: President
REGAL DRUGS, INC.
By /s/ JOSEPH SAKER
Title: President
SHOP RITE OF READING, INC.
By /s/ JOSEPH SAKER
Title: President
<PAGE>
SHOP WISE SUPERMARKETS OF
CONNECTICUT, INC.
By /s/ JOSEPH SAKER
Title: President
<PAGE>
FORBERANCE AGREEMENT AND
ADMENDMENT
SENIOR NOTEHOLDERS
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION
OF AMERICA
Note Number: RB-1 By /s/ MARY ANN R. MATOON
Title: Director - Private
Placements
730 Third Avenue
New York, New York 10017
<PAGE>
FORBERANCE AGREEMENT AND AMENDMENT
CENTRAL LIFE ASSURANCE COMPANY
Note Number: RB-2 By /s/ ROBERT B. LINDSTROM
Title: Vice President -
Private Placements
611 Fifth Avenue
Des Moines, IA 50309
<PAGE>
FORBERANCE AGREEMENT AND AMENDMENT
STATE MUTUAL LIFE INSURANCE
COMPANY
Note Number: Ra-18 By /s/ ROBERT STRAUSS
Title: Vice President
One State Mutual Drive
Rome, GA 30162
<PAGE>
FORBERANCE AGREEMENT AND AMENDMENT
NATIONS BANK (PREVIOUSLY SECURITY
TRUST BANK)
Note Number: [unknown
- $100,000] By /s/ HAROLD ZIRKIN
Title:
805 15th Street
Washington, DC 20005<PAGE>
<PAGE>
FORBERANCE AGREEMENT AND AMENDMENT
NATIONS BANK (PREVIOUSLY SECURITY
TRUST BANK)
Note Number: [unknown
- $100,000] By /s/ MARSHALL CUTLER
Title:
805 15th Street
Washington, DC 20005<PAGE>
<PAGE>
Note Number:_____________ By /s/ [illegible]
Title:
245 Park Avenue
New York, NY 10167
<PAGE>
<TABLE>
EXHIBIT A
Foodarama Supermarkets, Inc.
Pro Forma Monthly Cash Flow Analysis
<CAPTION>
Cash Flow Before Professional Costs
<S> <C> <C> <C> <C> <C>
Summary 4 wks ending 5 wks ending 4 wks ending 5 wks ending Cumulative
June 25 July 30 August 27 October 1 Total
Beginning Balance, Book
Cash In:
Merchandise Sales Receipts
Other Receipts: Rents, etc.
Total Cash in, All Sources
Cash Out:
Wakefern Billings:
Wakefern Inventory Purchases
Wakefern Assessments, Insurance, other Costs
Wakefern Offsets
Total Wakefern Billings
Non-Wakefern Purchases
Total Payroll, Fringe
Operating Disbursements Stores:
Rents: Base, CAM, Real Estate Taxes
Utilities: Electric, Gas, Steam
Purchased Services, Stores
All Other operating Disbursements, Stores
Total Operating Disbursements, Stores
Direct Corporate Disbursements
Operating Disbursements, Before Interest:
Capital Expenditures
Retirement of Smutko Acquisition - Princ.
Total Operating Disbursements, Before Interest
Cash Out, Before Interest
Net Cash Flow
Less Interest Expense
Pro Forma Ending Cash, Book, Before Interest
</TABLE>
STANDSTILL AGREEMENT dated as of May 31, 1994 among:
(i) Foodarama Supermarkets, Inc., a corporation duly
organized and validly existing under the law of the State of New
Jersey (the "Company");
(ii) Shop Rite of Malverne, Inc., a corporation duly
organized and validly existing under the law of the State of New
York;
(iii) New Linden Price Rite Inc., a corporation duly
organized and validly existing under the law of the State of New
Jersey;
(iv) Regal Drugs, Inc., a corporation duly organized
and validly existing under the law of the State of New Jersey;
(v) Shop Rite of Reading, Inc., a corporation duly
organized and validly existing under the law of the State of
Pennsylvania;
(vi) Shop Wise Supermarkets of Connecticut, Inc., a
corporation duly organized and validly existing under the law of
the State of New Jersey ((i) through (vi) being collectively re-
ferred to herein as the "Obligors");
(vii) The Chase Manhattan Bank (National Association),
a national banking association;
(viii) First Fidelity Bank, a national banking associ-
ation;
(ix) United Jersey Bank, a national banking associa-
tion ((vii) through (ix) being collectively referred to herein as
the "Banks"); and
(x) The Chase Manhattan Bank (National Association),
as Agent (the "Agent") for the Banks under the Credit Agreement
(as defined herein).
The Company, the Agent and the Banks are parties to
that certain Credit Agreement dated as of March 16, 1989 (as
amended, the "Credit Agreement"). The Company has requested the
forbearance of the Agent and the Banks with respect to certain
existing and anticipated defaults and Events of Default (as
defined in the Credit Agreement), and the Agent and the Banks are
willing to grant such forbearance on the terms and conditions
provided below. Accordingly, the parties hereto hereby agree as
follows:
Section 1. Defined Terms. Unless otherwise defined
herein, terms defined in the Credit Agreement are used herein as
therein defined.
Section 2. Specified Defaults. As used herein,
"Specified Defaults" shall mean the following continuing defaults
and Events of Default:
(i) The Company's failure to make the principal
payment on the Senior Notes due on June 1, 1994 is a
default under Section 9(b) of the Credit Agreement;
<PAGE>
(ii) The Company's non-compliance with the re-
striction on Capital Expenditures set forth in Section
8.14(a) of the Credit Agreement for the fiscal year
ending in 1993 is a default under Section 9(d) of the
Credit Agreement;
(iii) The Company's non-compliance with the
minimum debt service ratio set forth in Section 8.26 of
the Credit Agreement for the fiscal year ending in 1993
is a default under Section 9(d) of the Credit Agree-
ment;
(iv) The Company's continuing non-compliance with
the minimum current ratio set forth in Section 8.12(a)
of the Credit Agreement and the minimum working capital
set forth in Section 8.12(b) of the Credit Agreement is
a default under Section 9(d) of the Credit Agreement;
(v) The Company's continuing non-compliance with
the minimum interest coverage ratio set forth in Sec-
tion 8.10 of the Credit Agreement and the minimum Cash
Flow Coverage Ratio set forth in Section 8.11 of the
Credit Agreement is a default under Section 9(d) of the
Credit Agreement;
(vi) The Company's anticipated non-compliance
with the minimum Net Worth covenant set forth in Sec-
tion 8.13(a) of the Credit Agreement for the third and
fourth fiscal quarters in 1994.
Section 3. Forbearance. The Agent and the Banks
agree, on the terms and subject to the conditions hereof, to
forbear during the period (the "Forbearance Period") from and
after the Effective Date (as defined in Section 4 below) until
(but excluding) the Forbearance Termination Date (as defined in
Section 5 below) in the exercise of the rights and remedies
available under the Credit Agreement and the Credit Documents
with respect to any Specified Default. Notwithstanding such
forbearance, it is understood by the Company that the Agent and
the Banks have not waived any Specified Default or any other
default or Event of Default or any rights or remedies in respect
thereof under the Credit Documents or otherwise. During the
Forbearance Period, the Banks shall be permitted to exercise all
of their rights under the Credit Documents as if no default or
Event of Default had occurred, except as may be limited or
provided otherwise in this Standstill Agreement.
Section 4. Conditions. As conditions precedent to the
effectiveness of this Standstill Agreement, on or prior to June
1, 1994 (the "Effective Date")
(i) the Company shall have delivered to the Banks an
agreement (the "Noteholder Forbearance Agreement"), substan-
tially similar to this Standstill Agreement, executed by
Teachers Insurance and Annuity Association of America,
Central Life Assurance Company, State Mutual Life Insurance
Company, and any other holder of Senior Notes with respect
to the defaults by the Company and its Subsidiaries under
certain Note Purchase Agreements dated as of June 1, 1989,
in form and substance satisfactory to the Banks; and
(ii) the Company shall have delivered to the Banks an
amendment to the Credit Agreement executed by the Company
and the Banks providing for the payment of Interest Expenses
to the Banks on a monthly basis on the first day of each
calendar month, commencing on June 1, 1994.
<PAGE>
Section 5. Termination. Except as otherwise provided
herein, this Standstill Agreement shall terminate and be of no
further force or effect at 10:00 a.m. (New York time) on the date
(the "Forbearance Termination Date") which is the earliest of:
(i) September 30, 1994;
(ii) the date that Wakefern Food Corp. ("Wakefern"), direct-
ly or indirectly, changes or otherwise modifies in any
manner whatsoever the terms on which the Company pur-
chases and receives merchandise and services from
Wakefern (including, without limitation, the quantity
of merchandise being made available to the Company or
the length of time such trade credit is extended) from
those in effect on May 27, 1994, other than such chang-
es or modifications that are economically beneficial to
the Company or otherwise consented to in writing by
the Banks
(iii) the date of the filing of a petition to commence a case
or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insol-
vency law of any jurisdiction, and in the case of an
involuntary proceeding the passage of 60 days from the
date of such filing without such filing being dismissed
or stayed, by or with respect to any Obligor;
(iv) the date the Agent gives notice to the Company of the
termination of this Standstill Agreement by reason of
the occurrence of any one or more of the following
events:
(a) a breach by any of the Obligors of any of the
representations, warranties or covenants contained
in this Standstill Agreement which breach shall
continue for three (3) Business Days after any of
the Obligors have knowledge thereof;
(b) the Company and its consolidated Subsidiaries have
a pre-tax loss in excess of $600,000 (the calcula-
tion of the pre-tax loss shall include Interest
Expenses and exclude (i) restructuring expenses
(including professional fees and expenses) and
(ii) income, expenses, profits or losses associat-
ed with any Transfer permitted under Section
8.05(c) of the Credit Agreement or other asset or
capital disposition), determined on a consolidated
basis without duplication in accordance with GAAP,
for the three-month period commencing May 1, 1994
or for any three-month period commencing thereaf-
ter;
(c) the Cash Flow for the Company and its consolidated
Subsidiaries is negative for any fiscal month
commencing on or after June 1, 1994; for purposes
of this Agreement "Cash Flow" shall mean, for any
period, the amount indicated on the third to last
line (entitled "Net Cash Flow") of the Cash Flow
Report attached hereto as Exhibit B (determined on
a consolidated basis for the Company and its con-
solidated Subsidiaries without duplication in
accordance with GAAP); or
(d) any default or Event of Default, other than a
Specified Default, shall occur and be continuing.
(v) the date of termination of the Noteholder Forbearance
Agreement.
<PAGE>
From and after the Forbearance Termination Date, the Agent and
the Banks shall be entitled to exercise and enforce any and all
rights and remedies available to the Agent and the Banks as a
consequence of any Specified Defaults that have occurred prior
to, during or after the Forbearance Period.
Section 6. Amendments; Extensions. The terms of this
Standstill Agreement may be modified or amended only by a writing
or writings executed by the Agent, each Bank and the Obligors.
It is understood and agreed that the Agent is not and shall not
be under any obligation, express or implied, to consent to any
modification or amendment hereof or to any extension of the
Forbearance Period.
Section 7. Continuing Effect. Except as expressly
provided herein or as may hereafter be modified by a separate
document, each Credit Document shall continue unchanged and in
full force and effect, and all rights, powers and remedies of the
Agent, the Banks and the Obligors thereunder are hereby expressly
reserved. Without in any way limiting the generality of the
foregoing, the Obligors shall be liable in accordance with the
Credit Agreement and the other Credit Documents for any and all
sums and charges due pursuant thereto, including, without limita-
tion, default interest and late charges, if any.
Section 8. Covenants. The Obligors covenant and agree
that:
(i) the Obligors shall provide the following informa-
tion to each of the Banks no later than 10 days after the
Effective Date, or, if permitted by the Banks, at such other
reasonable times as the Obligors and the Banks may agree,
and shall continue to provide to each of the Banks any
updated information of the type described below:
(a) all documents and agreements relating to
indebtedness or obligations of the
Company and its Subsidiaries to
any Person;
(b) all documents and agreements relating to
any pledge of assets or equity, direct
or indirect, of the Company and any
of its Subsidiaries;
(c) the most recent appraisal of all
property owned by the Company and
its Subsidiaries;
(d) information describing each of the
Obligor's lease obligations, by
location, including, but not limited to
dates of lease commencement and lease
expiration, extension and renewal
options, parties to including
identification of parties in which
any officer, director or stockholder
of the Company has a direct or indirect
ownership interest), base and other
rents payable, whether the premises
covered by such leases are used in
business of the Obligors, and defaults,
if any;
(e) debt profile of each Obligor,
identifying, among other things,
direct and contingent
obligations, maturities, required
payments and related information;
(f) all documents, agreements and
policies relating to the Company's
relationship with Wakefern Food Corp.
("Wakefern");
<PAGE>
(g) information relating to any proposed
disposition of assets outside of the
ordinary course of business;
(h) management letters from the Company's
outside auditor, including any such
management letter for the 1992 and
1993 fiscal years;
(i) an organizational chart for the Company
and its Subsidiaries identifying all
officers and directors together with
a narrative description of the
responsibilities of all officers;
(j) a cash budget projection for the
Forberance Period; and
(k) all existing management and employment
contracts between the Company and its
Subsidiaries and any officer or
former officer thereof.
(ii) the Obligors shall provide the following informa-
tion to each of the Banks during the Forbearance Period:
(a) a weekly report on cash receipts and
disbursements (identifying the uses
thereof) of the Obligors on a
consolidated basis;
(b) a consolidated inventory purchasing
report on a weekly basis prepared by
the Restructuring Advisor (as
hereinafter defined), in the form
annexed hereto as Exhibit A;
(c) reports on a weekly basis showing store
-by- store sales, together with
comments thereto, prepared by the
Restructuring Advisor;
(d) a report relating to the status of any
dispositions or proposed dispositions of
any assets of any Obligor, outside of
the ordinary course of business, on a
monthly basis;
(e) status updates relating to discussions
with other creditors of the Obligors on
a weekly basis;
(f) such financial information relating to
the Obligors as may from time to time
reasonably be requested by the Banks,
including, with limitation,
projections (with assumpt prospects,
assets, liability refinancings, cash
flow analyses and projections,
business plans, capital expenditure
budgets and the like; and
(g) all written information (including,
without limitation, that relating to
projections and assumptions,
prospects, business plan sets,
liabilities, dispositions and
refinancings, etc.) provided to other
creditors of the Obligors; and
(h) a report on the Cash Flow of the Company
and its consolidated Subsidiaries for
each fiscal month of the Company in
the form attached hereto as Exhibit
B, which report will be delivered to
each of the Banks within 10 days
after the end of each such fiscal
month.
<PAGE>
All reports required to be provided by this Section 8(ii) shall
be reviewed and approved by the Restructuring Advisor prior to
being provided to the Banks.
(iii) the Company shall pay from time to time, within
10 days after request therefor, all reasonable fees, expens-
es and disbursements of the Agent and the Banks (including
their audit and legal expenses). The first payment of such
fees shall be made on the Effective Date;
(iv) during the Forbearance Period, except in the
ordinary course of business or as otherwise consented to in
writing by the Banks, neither the Company nor any of its
Subsidiaries shall:
(a) incur additional indebtedness (direct or contin-
gent) for borrowed money or for the deferred pur-
chase price of property or services (excluding
indebtedness to Wakefern incurred in the ordinary
course of business);
(b) incur additional obligations to purchase, sell or
lease (as lessee or lessor) property, except for
Approved Capital Expenditures (as hereafter de-
fined);
(c) sell, dispose of, pledge or otherwise transfer its
assets or any interest therein;
(d) pay any dividends or distributions except for
payments between and among the Obligors;
(e) make any other payments or prepayments on Indebt-
edness;
(f) acquire any additional assets, except for Approved
Capital Expenditures (as hereafter defined); or
(g) create any liens against its assets; except that
the Company and its Subsidiaries may:
(A) pay interest at contract rates on non-accelerated
obligations for borrowed money; provided, however, that
the Company may pay interest in respect of the princi-
pal payment on the Senior Notes due on June 1, 1994 (in
the event such principal payment shall not have been
made on such date) at a rate not to exceed 14.9% per annum;
<PAGE>
(B) pay expenses and other obligations (other than indebt-
edness for borrowed money or guaranties thereof) in-
curred in the ordinary course of the Obligors' business
(including lease obligations) as presently conducted;
and
(C) make capital expenditures (including commitments there-
for) in accordance with schedules to be provided by the
Company and approved by the Banks (the "Approved Capi-
tal Expenditures");
(v) the Company shall continue to employ at its own expense
Buccino & Associates, Inc. or another restructuring advisor (the
"Restructuring Advisor") acceptable to the Banks to advise and
assist the Company and its Subsidiaries during the Forbearance
Period in connection with the evaluation of their businesses and
the disposition of operating and non-operating assets, and the
formulation of a strategic plan to return the Company and its
Subsidiaries to profitability in accordance with the terms and
conditions provided below:
(A) the Restructuring Advisor shall prepare a written
restructuring plan (the "Business Plan") that includes
an evaluation of the operating assets of the Obligors
on a store-by-store basis, an evaluation of operations
(including inventory and cash management, MIS and
reporting functions), plans for the disposition of
operating and non-operating assets (including details
of the plan previously discussed with the Banks for the
disposition and/or closing of stores located in Penn-
sylvania), and a proposal for the repayment of debt
obligations;
<PAGE>
(B) the Company shall allow the Banks to have direct and
independent access to the Restructuring Advisor, in-
cluding allowing the Banks to meet with the Restructur-
ing Advisor at periodic intervals as reasonably re-
quested by the Banks, and will authorize and instruct
the Restructuring Advisor to answer any questions that
the Banks may have on the operations and management of
the Company and its Subsidiaries;
(C) the Restructuring Advisor shall have responsibility for
any studies, analyses or evaluations of information
systems, inventory, accounts receivable collection
opportunities, cash management, capital expenditures,
SG&A costs and the like;
(D) the Company shall deliver to each of the Banks no later
than June 15, 1994 the Business Plan, which Business
Plan, together with the Company's proposed implementa-
tion thereof, shall be acceptable to the Company, the
Restructuring Advisor and the Banks; and
(E) the Company shall have appointed a chief financial
officer or other officer or officers (which appointment
shall have been approved by the Board of Directors of
the Company) as soon as possible but in any event no
later than June 30, 1994, with authority to implement
and execute the Business Plan, and the Company shall
have by such date (I) commenced the implementation of
the Business Plan with respect to the components of the
Business Plan relating to inventory purchasing, cash
management, plans for dispositions of operating and
nonoperating assets, and capital expenditures, and (II)
instructed such chief financial officer or other appli-
cable officer to so implement and execute the other
components of the Business Plan as soon as practicable;
(vi) the Company will, and will cause each of its Subsidiar-
ies to, permit representatives of any Bank or the Agent, during
normal business hours, to examine, copy and make extracts from
its books and records, to inspect any of its properties, and to
discuss its business and affairs with its officers and its
outside accountants, all to the extent reasonably requested by
such Bank or the Agent (as the case may be);
(vii) the Obligors shall give immediate notice by facsimile
to the Agent of any event or condition described in Section
5(ii), 5(v) and in clauses (a) through of (d) of Section 5(iv)
above;
(viii) the Company shall have in effect at all times during
the Forbearance Period an undertaking from Wakefern entitling the
Company to purchase and receive merchandise and services from
Wakefern on the same terms offered to the Company immediately
prior to the Effective Date, in form and substance satisfactory
to the Banks; and
(ix) the Company shall not (a) at any time after the
Effective Date through the Forbearance Termination Date have an
outstanding indebtedness (excluding trade accounts payable and
accrued liabilities to Wakefern) that bears an interest rate or
service charge in excess of 14.9% per annum, or (b) for the
period from the Effective Date through the Forbearance Termina-
tion Date pay or accrue interest or service charge expenses in
excess of $250,000 in the aggregate on account of past due
balances owed to Wakefern by the Company.
<PAGE>
Section 9. Counterparts. This Standstill Agreement
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of
the parties hereto may execute this Standstill Agreement by
signing any such counterpart.
Section 10. Benefit of Agreement. This Standstill
Agreement is solely for the benefit of the signatories hereto
(and their respective successors and assigns), and no other
Person (including, without limitation, any other creditor of or
claimant against any Obligor or shareholder of any Obligor) shall
have any rights under, or because of the existence of, this
Standstill Agreement.
SECTION 11. GOVERNING LAW. THIS STANDSTILL AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 12. No Commitment or Waiver. Neither this
Standstill Agreement nor any action or inaction on the part of
the Agent or any of the Banks shall be construed to constitute or
represent (i) a commitment by the Agent or the Banks to restruc-
ture any indebtedness of the Obligors, or (ii) an intention by
the Agent, the Banks, or any Obligor to waive, modify or, except
as expressly provided in Section 3 above, forbear from exercising
any of their rights, powers, privileges or remedies under the
Credit Agreement or other Credit Documents, at law, in equity or
otherwise, and the Obligors acknowledge, agree and confirm that
no such commitment, waiver, modification or, except as expressly
provided in Section 3 above, forbearance has been offered,
granted, extended or agreed to by the Agent or the Banks.
Nothing set forth in this Standstill Agreement shall be construed
so as to require the Agent or the Banks to agree to the terms of
any modification to the Credit Agreement or the Credit Documents
proposed by any of the Obligors.
Section 13. Due Authorization. Each party executing
and delivering this Standstill Agreement represents and warrants
to all other parties that:
(i) such party has the full authority and legal right
and power to execute and deliver this Standstill Agreement,
and to perform the terms hereof and the transactions contem-
plated hereby;
(ii) all necessary corporate or other action on the
part of such party to be taken in connection with the execu-
tion, delivery and performance of this Standstill Agreement
and the transactions contemplated hereby have been duly and
effectively taken; and
(iii) the execution, delivery and performance by such
party does not constitute a violation or breach of such
party's articles of incorporation or by-laws, or any law by
which such party is bound.
<PAGE>
Section 14. Entire Agreement. This Standstill Agree-
ment constitutes the entire and final agreement among the parties
hereto with respect to the subject matter hereof and there are no
other agreements, understandings, undertakings, representations
or warranties among the parties hereto with respect to the
subject matter hereof except as set forth herein.
Section 15. Remedies. No failure on the part of the
Agent, the Banks or any of the Obligors or any of their agents to
exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder or under the
Credit Agreement or the other Credit Documents shall operate as a
waiver thereof; nor shall any single or partial exercise by the
Agent, the Banks or any of the Obligors, or any of their agents
of any right, power or remedy hereunder or under the Credit
Agreement or the other Credit Documents preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy.
Section 16. Headings, Etc. Section or other headings
contained in this Standstill Agreement are for reference purposes
only and shall not in any way affect the meaning or interpreta-
tion of this Standstill Agreement.
Section 17. Voluntary Agreement. The Obligors repre-
sent and warrant that they are represented by legal counsel of
their choice, are fully aware of the terms contained in this
Standstill Agreement and have voluntarily and without coercion or
duress of any kind entered into this Standstill Agreement, and
the documents and agreements executed and to be executed in
connection with this Standstill Agreement.
Section 18. Notices. Any documents, reports, notices,
consents or requests which are required or may be given hereunder
shall be given to the parties at the addresses and in the manner
provided in the Credit Agreement except that copies of any
notices to the Agent shall also be sent to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Stephen J. Blauner, Esq.
Facsimile No.: (212) 530-5219
Section 19. Further Assurances. Each party shall
execute all additional documents and do all acts not specifically
referred to herein which are reasonably necessary to fully
effectuate the intent of this Standstill Agreement.
Section 20. Time of Essence. Time is strictly of the
essence of this Standstill Agreement and full and complete
performance of each and every provision hereof.
Section 21. Limited Recourse. The sole remedy of the
Agent and the Banks for breach of this Standstill Agreement or
the terms, covenants, conditions, representations and warranties
contained herein shall be to terminate this Standstill Agreement
and exercise their rights under the Credit Documents. Neither
the Agent nor the Banks shall have any right to seek specific
performance or damages by reason of a breach of this Standstill
Agreement.
Section 22. Credit Documents in Full Force. Each
Obligor covenants and agrees that the Credit Documents and the
provisions thereof are and remain legal, valid and binding
obligations of the Obligors enforceable in accordance with their
terms and remain in full force and effect. No Obligor has any
claim, demand, action, defense or offset against any of its
obligations under the Credit Documents or against the Agent or
the Banks. The Obligors hereby waive and release each of the
Banks and the Agent and their respective employees, agents and
representatives from any and all claims, demands, causes of
action, defenses and offsets against liabilities of any kind or
character whatsoever, known or unknown, which any Obligor ever
had, now has or might hereafter have against the Banks or the
Agent, for or by reason of any matter, cause or thing whatsoever
occurring on or before the date hereof which relates to or arises
out of the Credit Documents, any obligations or responsibilities
of the Banks or the Agent under or in respect of the Credit
Documents, or any credit heretofore extended to the Obligors. In
addition, the Obligors agree not to commence, join in, assist,
cooperate, prosecute or participate in any suit or other proceed-
ing in a position that is adverse to the Banks or the Agent
arising directly or indirectly from any of the foregoing matters.
This Section 22 and the covenants, agreements and representations
set forth herein shall survive the termination of this Standstill
Agreement.
IN WITNESS WHEREOF, the undersigned have caused this
Standstill Agreement to be duly executed as of the day and year
first above written.
Obligors
FOODARAMA SUPERMARKETS, INC.
By /s/ JOSEPH SAKER
Title: President
SHOP RITE OF MALVERNE, INC.
By /s/ JOSEPH SAKER
Title: President
NEW LINDEN PRICE RITE, INC.
By /s/ JOSEPH SAKER
Title: President
REGAL DRUGS, INC.
By /s/ JOSEPH SAKER
Title: President
SHOP RITE OF READING, INC.
By /s/ JOSEPH SAKER
Title: President
SHOP WISE SUPERMARKETS
OF CONNECTICUT, INC.
By /s/ JOSEPH SAKER
Title: President
Banks
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as Borrower
By /s/ RON BUCK
Title: Vice President
<PAGE>
FIRST FIDELITY BANK
By /s/ PHILIP GOGARTY
Title: Vice President
UNITED JERSEY BANK
By /s/ MARTIN FEIG
Title: Vice President
Agent
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Agent
By /s/ RON BUCK
Title: Vice President
<PAGE>
<TABLE>
Exhibit A
<CAPTION>
Foodarama Supermarkets, Inc.
Inventory Analysis
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Source Department
Document Perishables 6/4/94 6/11/94 6/18/94 6/25/94 7/2/94 7/9/94 7/16/94 7/23/94 7/30/94
Produce
Meat
Fish
Bakery
Appy
Snack Bar
Total
Wakefern
Grocery
Dairy
Frozen
General
Merchandise
HABA-65
Liquor
Garden
Drug
Tobacco-51
Floral
Total
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Source
Document Department 6/4/94 6/11/94 6/18/94 6/25/94 7/2/94 7/9/94 7/16/94 7/23/94 7/30/94
DSD
Purchases
Grocery
Diary
Frozen
General
Merchandise
HABA
Total
Commissary
Bakery
Total
Transfers
Out
Bakery
Comm.
Total
Net Purchases
</TABLE>
Exhibit B
Foodarama Supermarkets, Inc.
Pro Forma Monthly Cash Flow Analysis
Cash Flow Before Interest & Professional Costs
Summary 4 Weeks 4 Weeks 4 Weeks 4 Weeks Cumulative
ending ending ending ending Total
June 25 July 30 Aug. 31 Oct. 1
Beginning Balance Book Cash In
Merchandise Sales Receipt
Other Receipts & Rents, etc.
Total Cash In, All Sources
Wakefern bilings Cash Out
Wakefern Inventory Purchases
Wakefern Assesments, Insurance, Other
Costs
Wakefern Offsets
Total Wakefern Billings
Non-Wakefern Purchases
Total Payroll, Fringe
Operating Disbursements, Stores
Rents: CAM, Real Estate Taxes
Utilities: Electric, Gas, Steam
Purchased Services Stores
Total Operating Disbursements, Stores
Direct Corporate Disbursements
Operating Disbursements, Before Interest
Capital Expenditures
Retirement of Smutko Acquisition - Pr-
inc.
Total Operating Disbursements, Before In-
terest
Cash Out, Before Interest
Net Cash Flow (total cash from all sourc-
es, less cash out before interest)
Less Interest Expenses
Pro Forma Ending Cash, Book, Before Inter-
est
AMENDMENT NO. 5
AMENDMENT NO. 5 dated as of June 1, 1994 among: FOODARAMA
SUPERMARKETS, INC., a corporation duly organized and validly
existing under the laws of the State of New Jersey (the
"Company"); each of the banks that is a signatory hereto (the
"Banks"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as
agent for the Banks (in such capacity, together with its succes-
sors in such capacity, the "Agent").
The Company, the Banks and the Agent are parties to a Credit
Agreement dated as of March 16, 1989, as amended by an Amendment
No. 1 dated as of June 16, 1989, an Amendment No. 2 dated as of
January 25, 1990, an Amendment No. 3 dated as of February 5,
1992, and an Amendment No. 4 dated as of February 16, 1993 (as
heretofore amended and in effect on the date hereof, the "Credit
Agreement") providing, subject to the terms and conditions
thereof, for extensions of credit by making loans to the Company
and by issuing letters of credit for the account of the Company,
in an aggregate principal or face amount not exceeding
$26,000,000 (after the effective date of Amendment No. 3). The
parties hereto wish to amend certain provisions of the Credit
Agreement and, accordingly, the parties hereto hereby agree as
follows:
Section 1. Definitions. Terms defined in the Credit
Agreement are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of the
conditions precedent specified in Section 5 hereof, but effective
as of the date hereof, the Credit Agreement shall be amended as
follows:
A. Section 3.02 is amended by adding the following
sentence at the end of such section:
"Notwithstanding any of the foregoing or any-
thing in the Credit Agreement, the Notes, the
other Credit Documents or otherwise, com-
mencing on June 1, 1994, interest on the
Notes shall be payable on a monthly basis on
the first day of each calendar month, or if
such day is not a Business Day, the first
Business Day thereafter (it being understood
and agreed that the interest payment due on
June 1, 1994 shall be for the period from
March 31, 1994 to June 1, 1994) and shall be
paid by the Company on such date."
B. Reference in the Credit Agreement to "this
Agreement" and words of similar import shall be deemed to be
references to the Credit Agreement as amended hereby.
Section 3. Representations and Warranties. The Company
represents and warrants to the Banks and the Agent that the
representations and warranties set forth in Section 7 of the
Credit Agreement are true and complete on the date hereof as if
made on and as of the date hereof (except (a) to the extent any
such representation and warranty stated to relate to a specific
earlier date is true and correct as of such earlier date or (b)
to the extent disclosed by the Company in that certain Standstill
Agreement dated as of the date hereof between the Banks and the
Company (the "Standstill Agreement")) and as if each reference
therein to the Credit Agreement or words of similar import
included reference to the Credit Agreement as amended hereby. It
further represents and warrants that (a) except as disclosed to
the Banks and waived herein or as disclosed to the Banks in the
Standstill Agreement, it is in compliance with all of the affir-
mative, negative and financial covenants set forth in the Credit
Agreement as of the date hereof, (b) all audited financial
statements and all financial statements provided to the Securi-
ties and Exchange Commission (as part of filings on Form 10-K,
Form 10-Q or other SEC forms) delivered to the Banks through the
date hereof pursuant to Section 8.01 of the Credit Agreement or
otherwise have been complete and correct in all material respects
and fairly presented the financial condition of the Company and
its Subsidiaries as at such dates and the results of its opera-
tions for the periods covered thereby, all in accordance with
GAAP consistently applied, (c) on the date hereof no Event of
Default or Default has occurred which is not disclosed in the
Standstill Agreement, (d) it has no defense, counterclaim, set-
off or right to deduct against any amounts due to any of the
Banks at the date of execution of this Amendment, (e) the execu-
tion and delivery by the Company of this Amendment have been duly
authorized by all requisite corporate action, and the Company has
obtained any required approvals of third parties for the execu-
tion and delivery of such documents, and (f) the Agreement as
amended hereby and each of the Credit Documents constitute a
valid and binding obligation of the Company or the Subsidiary
which is a party hereof or thereof. The Pledge Agreement contin-
ues to provide the Banks and certain other lenders with a first
priority security interest in the Collateral defined therein.
<PAGE>
Section 4. Conditions Precedent. As provided in Section 2
hereof, the amendments to the Credit Agreement set forth in
Section 2 shall become effective, as of the date hereof, upon the
satisfaction of the following conditions precedent:
A. Execution by all Parties. This Amendment No. 5 shall
have been executed and delivered by each of the parties hereto.
B. Guarantors' Consent. Each of the Guarantors under the
Subsidiary Guarantee shall have executed the Consent on the
signature pages hereof.
C. Corporate Action. The Agent shall have received
certified copies of the charter and by-laws of the Company (or a
certification of the Company that neither the charter nor the by-
laws of the Company, as the case may be, has been amended since
the date of the certification delivered pursuant to Section
6.01(d) of the Credit Agreement) and all corporate action taken
by the Company approving this Amendment No. 5 and the Credit
Agreement as amended hereby and the borrowings by the Company
under the Credit Agreement as amended hereby (including, without
limitation, a certificate setting forth the resolutions of the
Board of Directors of the Company adopted in respect of the
transactions contemplated hereby and thereby).
D. Other Documents. The Agent shall have received such
other documents pertaining to this Amendment No. 5 as the Agent
or any Bank or special counsel to the Banks may reasonably
request.
Section 5. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and
effect. Without limiting the obligations of the Company under
Section 11.03 of the Credit Agreement, the Company agrees to pay
or reimburse the Agent on demand for all reasonable out-of-pocket
costs and expenses of the Agent (including, without limitation,
the reasonable legal fees and expenses) in connection with the
negotiation, preparation, execution and delivery of this Amend-
ment No. 5 and the other documents referred to herein. This
Amendment No. 5 may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
amendatory instrument and any of the parties hereto may execute
this Amendment No. 5 by signing any such counterpart. THIS
AMENDMENT NO. 5 SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 5 to be duly executed as of the date first above
written.
FOODARAMA SUPERMARKETS, INC.
By: /s/ JOSEPH SAKER
Name: Joseph Saker
Title: President
<PAGE>
CONSENT
Each of the undersigned, as a Guarantor under the Guarantee
Agreement dated as of March 16, 1989 between each of the under-
signed and The Chase Manhattan Bank (National Association), as
Agent, hereby consents to the execution and delivery by Foodarama
Supermarkets, Inc. of the foregoing Amendment No. 5 and hereby
confirms its continuing guarantee of the obligations of the
Company under the Credit Agreement, as amended by said Amendment
No. 5, and the other obligations specified in said Guarantee
Agreement.
GUARANTORS
SHOP RITE OF MALVERNE, INC.
By: /s/ JOSEPH SAKER
Title: President
NEW LINDEN PRICE RITE, INC.
By: /s/ JOSEPH SAKER
Title: President
REGAL DRUGS, INC.
By: /s/ JOSEPH SAKER
Title: President
SHOP RITE OF READING, INC.
By: /s/ JOSEPH SAKER
Title: President
<PAGE>
SHOP WISE SUPERMARKETS OF CONNECTICUT,
INC.
By: /s/ JOSEPH SAKER
Title: President
