UNITED STATES
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 January 27, 1996
Commission file number 1-5745-1
FOODARAMA SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)
New Jersey 21-0717108
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
922 Highway 33, Freehold, N.J. 07728
(Address of principal executive offices)
Telephone #908-462-4700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 12 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to the filing requirements for at least
the past 90 days.
Yes No X
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the latest practicable
date.
OUTSTANDING AT
CLASS March 8,1996
Common Stock 1,118,150 shares
$1 par value<PAGE>
FOODARAMA SUPERMARKETS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
January 27, 1996 and October 28, 1995
Unaudited Consolidated Statements of
Operations for the thirteen weeks ended
January 27, 1996 and January 28, 1995
Unaudited Consolidated Statements of
Cash Flows for the thirteen weeks ended
January 27, 1996 and January 28, 1995
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 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I FINANCIAL INFORMATION
FOODARAMA SUPERMARKETS, INC AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
January 27, October 28,
1996 1995
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 3,468 $ 3,435
Merchandise inventories 28,365 27,669
Receivables and other current assets 2,677 2,916
Related party receivables - Wakefern 2,973 4,804
Related party receivables - other 817 508
Total current assets 38,300 39,332
Property and equipment:
Land 1,650 1,650
Buildings and improvements 1,867 1,867
Leaseholds and leasehold improvements 30,211 30,188
Equipment 45,962 45,679
Property and equipment under capital leases 14,064 14,064
93,754 93,448
Less accumulated depreciation and
amortization 46,097 45,296
47,657 48,152
Other assets:
Investments in related parties 8,315 8,315
Intangibles 5,828 6,038
Other 5,854 7,198
Related party receivables - Wakefern 894 871
Related party receivables - other 1,044 1,078
21,935 23,500
$107,892 $110,984
(continued)
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 28, 1995.
See accompanying notes to consolidated financial statements.
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands except share data)
January 27, October 28,
1996 1995
(Unaudited) (1)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,436 $ 7,715
Current portion of long-term debt,
related party - 86
Current portion of obligations under
capital leases 317 303
Current income tax liability (71) 77
Deferred income tax liability 1,295 1,295
Accounts payable:
Related party 25,546 20,239
Others 6,030 5,753
Accrued expenses 8,235 8,315
Total current liabilities 45,788 43,783
Long-term debt 14,733 20,349
Obligations under capital leases 7,895 7,985
Deferred income taxes 2,716 2,716
Other long-term liabilities 5,892 5,779
Total long-term liabilities 31,236 36,829
Mandatory redeemable preferred stock
$12.50 par; authorized
1,000,000 shares; issued 136,000
shares 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 32,623 32,127
Minimum pension liability adjustment (806) (806)
35,790 35,294
Less 503,477 shares, held in
treasury, at cost 6,622 6,622
Total shareholders' equity 29,168 28,672
$ 107,892 $ 110,984
(1) Derived from the Audited Consolidated Financial Statements for the year
ended October 28, 1995.
See accompanying notes to consolidated financial statements.
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations - Unaudited
(in thousands - except per share data)
13 Weeks Ended
January 27, January 28,
1996 1995
Sales $ 146,303 $ 151,748
Cost of merchandise sold 109,763 114,124
Gross profit 36,540 37,624
Store operating, general and
administrative expenses 34,889 36,316
Income from operations 1,651 1,308
Other (expense) income:
Interest expense (882) (1,319)
Interest income 19 21
Income before taxes 788 10
Income tax 292 3
Income before cumulative effect of
change in accounting 496 7
Cumulative effect of change in accounting,
(net of tax benefit of $61) - (175)
Net income (loss) $ 496 $ (168)
Income (loss) per share before cumulative
effect of change in accounting $ .41 $ (.02)
Cumulative effect of change in accounting,
net of taxes - (.16)
Net income (loss) per share $ .41 $ (.18)
Weighted average number of common
shares outstanding 1,118,150 1,118,150
Dividends per share -0- -0-
See accompanying notes to consolidated financial statements.
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - Unaudited
(in thousands)
13 Weeks Ended
Jan.27,1996 Jan.28,1995
Cash flows from operating activities:
Net income (loss) $ 496 $ (168)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 2,049 2,211
Amortization, intangibles 209 185
Amortization, deferred financing costs 262 43
Amortization, escalation rents 81 148
Amortization, other assets - 32
Changes in assets and liabilities:
(Increase)in inventories (696) (11)
Decrease in receivables and other
current assets 239 357
Decrease (increase) in other assets 1,094 (715)
Decrease in related party receivables-Wakefern 1,831 3,113
(Increase) in related party receivables-other (309) -
Increase (decrease)in accounts payable 5,584 ( 4,458)
Decrease (increase)in other liabilities (196) 142
Net cash provided by operating
activities 10,644 879
Cash flows from investing activities:
Purchase of property and equipment (1,554) (143)
Net cash used in investing
activities (1,554) (143)
Cash flows from financing activities:
Principal payments under long-term debt (13,049) (1,014)
Principal payments under capital
lease obligations ( 76) ( 293)
Proceeds from issuance of debt 4,068 -
Net cash used in financing activities (9,057) (1,307)
NET INCREASE (DECREASE)IN CASH AND CASH
EQUIVALENTS 33 (571)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,435 5,542
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,468 $ 4,971
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation
The unaudited Consolidated Financial Statements as of or for the period
ending January 27, 1996, 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 28,
1995 has been taken from the audited financial statements at that date. In
the opinion of the management of the Registrant, all adjustments (consisting
only of normal recurring accruals) which the Registrant considers necessary
for a fair presentation of the results of operations 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 28,
1995.
These results are not necessarily indicative of the results for the entire
fiscal year.
Note 2 Adoption of Accounting Standards
Employee Benefit plans
Effective October 30, 1994, the Registrant adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." SFAS No. 112 requires the accrual for postemployment benefits
provided to former or inactive employees. The effect of this change resulted
in a pre tax charge of $236,000 and an after tax charge of $175,000 or $.16
per share in the quarter ended January 28, 1995. There was no material effect
on earnings, in the quarter ended January 27, 1996, from the adoption of SFAS
No. 112. Prior to this change, the Registrant charged these amounts to
expense on a cash basis.
Part I - Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
On February 15, 1995, the Company entered into a Revolving Credit and Term
Loan Agreement ("the Agreement") with a consortium of banks providing for a
total commitment of $38,000,000, secured by substantially all of the
Registrant's assets. The proceeds from this financing were utilized to repay
the Registrant's senior notes and bank debt which totaled $33,200,000. The
Agreement provides a working capital facility ("Revolving Note") to fund
future operations and capital expenditures.
The Agreement consists of three Term Loans (A, B and C) and a Revolving Note.
Term Loan A totals $2,000,000, bears interest at 2% over prime, and was due
August 15, 1995. Term Loan B totals $8,500,000, bears interest at 2% over
prime and was due February 15, 1996. Term Loans A an B are required to be
repaid from asset sales or equipment refinancing. Term Loan C totals
$12,500,000 and bears interest at 2% over prime until Term Loans A and B are
repaid, at which time interest is reduced to 1.25% over prime. Term Loan C
is payable in quarterly installments commencing March 31, 1996 thru December
31, 1998. The Revolving Note, with a total availability, based on 60% of
eligible inventory, of $15,000,000, bears interest at 1.5% over prime until
Term Loans A and B are repaid, at which time interest is reduced to 1.25%
over prime. A commitment fee of 1/2 of 1 percent is charged on the unused
portion of the Revolving Note.
Pursuant to the provisions of the terminated loan agreements, the Registrant
was required to pay a special premium totaling $1,100,000. Additionally, the
Registrant paid the new lenders a facility fee of $1,000,000 and an annual
administrative fee of $150,000. The Registrant wrote off, in the second
quarter of 1995, expenses of $1,848,000 ($1,009,000 after taxes), including
the special premium related to the early extinguishment of debt.
The Agreement contains certain affirmative and negative covenants which,
among other matters will, (i) restrict capital expenditures, (ii) require the
maintenance of certain levels of net worth and earnings before interest,
taxes, depreciation and amortization, and maintenance of (iii) fixed charge
coverage and total liabilities to net worth ratios. The Registrant was in
compliance with such covenants through January 27, 1996.
The new Agreement combined with an asset redeployment plan described below
strengthens the Registrant's financial condition by reducing outstanding
debt, lowering interest cost and providing working capital through the
Revolving Note.
In order to repay Term Loans A and B on a timely basis, the Registrant has
developed an Asset Redeployment Program. This program consists of the sale
of the assets of two supermarkets, located in Bethlehem and Whitehall,
Pennsylvania, the sale of a real estate partnership interest in a
non-supermarket property located in Shrewsbury, New Jersey, the
sale/leaseback or mortgaging of buildings owned by the Registrant and located
in Linden and Aberdeen, New Jersey and the financing of equipment at three
operating locations in Neptune, Piscataway and Sayreville, New Jersey. Other
than the sale of the two supermarkets in Pennsylvania, it is not anticipated
that the Asset Redeployment Program will have any impact on the Registrant's
sales, gross margins or net income. As of January 27, 1996 Term Loan A and
Term Loan B had been fully repaid and Term Loan C had an outstanding balance
of $12,500,000. Except for the sale of the assets of the two Pennsylvania
supermarkets and the financing of equipment at three operating locations,
other aspects of the Asset Redeployment Program remain to be completed.
On May 23, 1995 the Registrant concluded the sale of its two operating
locations in Pennsylvania for $5,700,000 plus inventory of $2,300,000 and
obtained the return of its investment of $1,200,000 in Wakefern, a related
party, with respect to the two stores. All proceeds were in cash and were
used to reduce outstanding debt. Proceeds of $2,000,000 were used to repay
Term Loan A, $3,000,000 was applied against Term Loan B, $1,200,000 of
equipment leases were fully repaid, $900,000 repaid debt due to Wakefern and
the balance of the proceeds was applied against accounts payable and the
Revolving Note.
On January 19, 1996, $700,000 of term Loan B was repaid from the proceeds of
a worker's compensation insurance deposit which was returned to the
Registrant.
On January 25, 1996 the Registrant financed the equipment at the three
locations discussed above. The note bears interest at 10.58% and is payable
in monthly installments over its four year term. $4,000,000 of the proceeds
were applied against Term Loan B with the balance of $68,000 used to repay
existing equipment financing in two of the stores. This payment completed the
repayment of Term Loan B.
The Registrant's compliance with the major financial covenants under the
Agreement was as follows as of January 27, 1996.
Actual
Financial (As defined in the
Covenant Agreement Agreement)
Capital Expenditures Less than $10,080,000 $ 5,166,000
Net Worth Greater than $27,500,000 $31,469,000
Fixed Charge Coverage
Ratio Greater than .8 to 1.00 1.46 to 1.00
Total Liabilities to
Net Worth Ratio Less than 2.80 to 1.00 2.32 to 1.00
EBITDA Greater than $13,900,000 $17,056,000
On February 16, 1993, in order to partially fund capital expenditures made
in fiscal 1992 and also to induce the senior lenders to amend the loan
agreements, the Registrant sold to Wakefern Food Corporation 136,000 shares
of duly authorized Class A 8% Cumulative Convertible Preferred Stock (the
"Preferred Stock") par value $12.50 per share, for $1,700,000, the aggregate
par value of such shares. The Preferred Stock bears a preferential cumulative
dividend at the rate of 8% per annum for three years, increasing at the rate
of 2% per annum each 12 months thereafter.
The Preferred Stock is redeemable by the Registrant in whole or in part at
any time and must be redeemed by the earlier of (i) June 8, 1999, (ii)
consummation of the sale of all or substantially all of the Registrant's
assets or upon entering into the first of a related series of transactions
for the purpose of selling all or substantially all of the Registrant's
assets, (iii) the changing of shares of the Common Stock of the Registrant
into, or the exchange of such shares for, the securities of any other
corporation, or (iv) a "Change of Control" (as such term is defined in the
Registrant's Certificate of Incorporation) of its equity voting securities
by way of merger, consolidation or otherwise. The Preferred Stock is
convertible by Wakefern at any time after March 31, 1996 into shares of the
Common Stock of the Registrant at the then market value of such shares at a
conversion value of $12.50 per share of Preferred Stock but with the
provision that no more than 1,381,850 shares (representing the total of the
Registrant's unissued and treasury shares) may be issued on conversion of all
of the Preferred Stock. The Agreement provides that no dividends may be paid
on nor may any Preferred Stock be redeemed unless the Registrant has met or
exceeded its financial performance and debt reduction targets for the year
ended October 28, 1995. As of January 27, 1996 all these targets have been
met. The Registrant and Wakefern are currently discussing the possibility of
amending certain provisions of the Preferred Stock to (a) extend the date
after which Wakefern shall be entitled to convert the Preferred Stock to
Common Stock from March 31, 1996 to March 31, 1997; and (b) defer the 2%
increase in the dividend rate effective March 1996 to March 1997. The
Registrant expects to declare and pay dividends in arrears on the Preferred
Stock of approximately $434,400 and does not expect to redeem the Preferred
Stock in fiscal 1996 if the amendments are implemented.
No cash dividends have been paid since 1979, and the Registrant has no
present intentions or ability to pay any dividends in the near future on its
Common Stock. The Agreement does not permit the payment of any cash dividends
on the Registrant's Common Stock.
Working Capital
At January 27, 1996, the Registrant had a working capital deficiency of
$7,488,000 compared to a deficiency of $4,451,000 at October 28, 1995 and a
deficiency of $8,818,000 at January 28, 1995.
The Registrant normally requires small amounts of working capital since
inventory is generally sold prior to the time that payments to Wakefern and
other suppliers are due.
Working capital ratios were as follows:
January 27, 1996 0.84 to 1.0
October 28, 1995 0.90 to 1.0
January 28, 1995 0.82 to 1.0
Cash flows (in millions) were as follows:
1/27/96 1/28/95
Operating activities... $10.6 $ .9
Investing activities... (1.5) (0.1)
Financing activities... (9.1) (1.3)
Totals $(0.0) $(0.5)
The Registrant had $12,619,000 of available credit, at January 27, 1996,
under its revolving credit facility and believes that its capital resources
are adequate to meet its operating needs, scheduled capital expenditures and
its debt service in fiscal 1996.
The decrease in other assets was due to the return to the Registrant of
$1,230,000 of collateral from the worker's compensation insurance carrier.
The increase in accounts payable was due to an increase in purchases from
Wakefern for the last two weeks in January 1996 compared to the last two
weeks in October 1995 and to deferred billing from Wakefern for purchases
related to promotional sales events.
Depreciation was $2,049,000 while capital expenditures totaled $1,554,000,
compared to $2,211,000 and $143,000 respectively in the prior year period.
Results of Operations (13 weeks ended January 27, 1996 compared to 13
weeks ended January 28, 1995)
Sales:
Same store sales from the eighteen stores in operation in both periods
increased 6.13% in the current year period versus the prior year period.
Approximately 1% of the increase in same store sales is due to a change in
the accounting for ShopRite coupons. Previously the value of these coupons
had been credited to cost of goods sold but are now shown as an increase to
sales. The balance of the increase in same store sales was attributable to
an increase in both the number of customer transactions and the dollar value
of the average customer order. An increase in advertising and promotion
expense in the current period, as well as improved inventory stocking levels,
contributed to these increases.
Sales for the eighteen stores in operation for the current quarter totaled
$146.3 million as compared to $151.7 million of sales from the twenty stores,
including the two Pennsylvania stores sold in May 1995, operated in the prior
year period.
Gross Profit:
Gross profit on sales increased slightly to 25.0% of sales compared to 24.8%
in the prior year period. Patronage dividends, applied as a reduction of the
cost of merchandise sold, were $1.3 million compared to $1.2 million in the
prior year period. The exclusion of results of the two Pennsylvania stores,
from the prior year results, would not have had any material impact on gross
profit percentages when comparing the current period to the prior year
period.
Operating Expenses:
Store operating, general and administrative expenses as a percent of sales
were 23.8% versus 23.9% in the prior year period. Although the reduction in
sales in the current period contributed to an increase in percent of general
and administrative costs, and advertising, snow removal and supply costs
increased, these increases were more than offset by lower store payroll and
fringe benefit expense.
Interest Expense:
Interest expense decreased to $882,000 from $1,319,000 while interest income
was $19,000 compared to $21,000 for the prior period. The decline in interest
expense for the current year period was due to a decrease in outstanding debt
of $20,700,000 since January 28, 1995, as well as a decrease in the interest
rate paid on debt.
Income Taxes:
An income tax rate of 37% has been used in the current period based on the
expected effective tax rate for fiscal 1996, while a rate of 30% was used in
the prior year period.
Net Income:
Net income was $496,000 in the current year period compared to $7,000 in the
prior year period before the cumulative effect of a change in accounting and
a loss of $168,000 in the prior year period after the cumulative effect of
a change in accounting. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the current period were $4,252,000 as compared
to $3,927,000 in the prior year period. Net income per common share was $.41
in the current period compared to a loss of $(.02) in the prior year period
before the cumulative effect of a change in accounting. Both period
calculations are based on 1,118,150 shares outstanding and a provision of
$34,000 for preferred stock dividends.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (27) - Financial Data Schedule
Exhibit (99) - Amendment of Revolving
Credit and Term Loan Agreement - dated as
of January 25, 1996.
(b) No reports on Form 8-K were required to be
filed for the 13 weeks ended January 27, 1996.
<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: March 12, 1996 /S/ MICHAEL SHAPIRO
(Signature)
Michael Shapiro
Senior Vice President
Chief Financial Officer
Date: March 12, 1996 /S/ JOSEPH C. TROILO
(Signature)
Joseph C. Troilo
Senior Vice President
Principal Accounting Officer
<PAGE>
EXHIBIT 99
AMENDMENT OF REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMENDMENT OF REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of
January __, 1996 among NEW LINDEN PRICE RITE, INC. ("New Linden"), SHOP RITE
OF READING, INC.("Reading" and together with New Linden, each a "Borrower"
and collectively, the "Borrowers"), FOODARAMA SUPERMARKETS, INC. (the
"Pa rent"), the Guarantors signatory hereto, the lenders party to the
Cre dit Agreement (as hereinafter defined)(collectively with their
respective permitted successors and assigns, the "Lenders"), and NATWEST
BAN K N.A. (formerly National Westminster Bank USA), as agent for the
Len ders (in such capacity together with any successor thereto in such
cap acity, the "Agent").
RECITALS
WHEREAS, the Borrowers, the Guarantors, the Lenders and the Agent have
entered into a Revolving Credit and Term Loan Agreement dated as of
February 15, 1995 (as amended, restated, modified and supplemented, the
"Credit Agreement"), pursuant to which the Borrower may borrow up to an
amo unt of $15,000,000 on a revolving loan basis and in an aggregate
ori ginal principal amount of $23,000,000 on a term loan basis;
WHEREAS, the Borrowers, the Parent and the Guarantors have each
requested that the Credit Agreement be amended to, among other things, (i)
permit the Parent and New Linden to jointly and severally incur $4,067,843.53 of
aggregate principal indebtedness (the "Finova Loan") from Finova Capital
Cor poration ("Finova"), $4,000,000 of which shall be used to prepay a
portion of Term Loan B and the remainder of which shall be used to repay
certain indebtedness owing by Borrowers and/or Parent to MetLife Capital
Corporation and (ii) permit the Parent and New Linden to provide a lien on
and a security interest in the Finova Collateral as hereinafter defined;
and
WHEREAS, the Agent and the Lenders have agreed, subject to the terms
and conditions of this Amendment, to amend the Credit Agreement as hereinafter
set forth.
Terms used but not defined herein shall have the meaning assigned
thereto in the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein, IT IS AGREED as follows:
1. Amendment of Credit Agreement. The Credit Agreement shall be
and is hereby amended, as of the Effective Date (as hereinafter defined), as
follows:
a. Section 7.01 of the Credit Agreement shall be amended by
(i) deleting the word "or" in clause (k) thereof, (ii) deleting the "." at
the end of clause (l) thereof, (iii) adding "; or" at the end of clause (l)
thereof and (iv) adding the following:
"(m) Liens created pursuant to the Finova Loan Agreement on all equipment,
furniture, machinery and fixtures of the Parent and New Linden located at
the premises described below (the "Premises") and all proceeds of and
accessions and additions thereto, substitutions therefor (to the extent
constituting equipment, furniture, machinery and fixtures) and all
replacements thereof (to the extent constituting equipment, furniture,
machinery and fixtures), cash and non-cash, including insurance proceeds
(the "Finova Collateral").
Premises: 2909 Washington Road
Parlin, New Jersey
1306 Centennial Avenue
Piscataway, New Jersey
2200 Highway 66
Neptune, New Jersey"
b. Section 7.03 of the Credit Agreement shall be amended by
(i) deleting clause 7.03(i)(a) and substituting in lieu thereof "(a) up to
$1,000,000 existing on the Effective Date of the Amendment of Revolving
Credit and Term Loan Agreement dated as of January ___, 1996 among the
Borrowers, the Parent, the Guarantors, the Agent and the Lenders;", (ii)
deleting the word "and" at the end of clause (viii) thereof, (iii) deleting
the "." at the end of clause (ix) thereof, (iv) adding ", and" at the end of
clause (ix) thereof and (v) adding "(x) Indebtedness in a maximum original
aggregate principal amount of $4,067,843.53 (minus all payments of
principal thereon) owing by the Parent and New Linden to Finova pursuant
to the Loan and Security Agreement dated ___________, 199_ as originally
in effect,(the "Finova Loan Agreement") among the Parent, New Linden and
Finova C apital Corporation ("Finova")."
c. Section VIII shall be amended by (i) inserting after the
"," which appears after the thirty-first word in clause (g) of such section,
" including without limitation under the Finova Loan,", (ii) deleting the
reference to "$1,000,000" in clause (j) of such section and by
substituting "$500,000" therefor, (iii) deleting the word "or" at the end
of clause (l) thereof and adding the word "or" at the end of clause (m)
thereof and (iv) adding "(n) any violation by the Parent, New Linden or
Finova of the Intercreditor Agreement dated as of ____________, 1996 among
Finova, the Pare nt, New Linden and the Agent.".
d. Section 6.05 shall be amended by (i) deleting the word "and"
at the end of clause (i) thereof, (ii) deleting the "." at the end of clause
(j) thereof, (iii) adding "; and" at the end of clause (j) thereof and (iv)
adding "(k) Borrowers, Parent and Guarantors shall from time to time
provide Agent with a copy of all documents and information provided by
each to Finova."
2. Representations and Warranties. In order to induce the Lenders
and the Agent to enter into this Amendment, the Borrowers, the Parent and the
Guarantors make the following representations and warranties (which
representations and warranties shall survive the execution and delivery of
this Amendment) as of the date hereof and as of the Effective Date:
(a) The Borrowers, the Parent and the Guarantors restate and
repeat (as of February 15, 1995, as of the date hereof and as of the
Effective Date) each of the representations and warranties contained in the
Credit Agreement.
(b) There has occurred and is continuing no Event of Default as
defined in the Credit Agreement and there has occurred and is continuing no
event which, with the giving of notice or the passage of time or both, would
constitute an Event of Default.
(c) Each of the Borrowers, the Parent and the Guarantors has the
corporate power to borrow and/or guaranty, as the case may be, and to execute,
deliver and carry out the terms and provisions of this Amendment and all
instruments and documents delivered by each of them pursuant to this
Amendment and each of the Borrowers, the Parent and the Guarantors has
taken or caused to be taken all necessary corporate action (including, but
not limited to, the obtaining of any consent of stockholders required by
law or by the Articles or Certificate of Incorporation or By-Laws of the
Borrowers, the Parent or any Guarantor) to authorize the execution, deliv-
ery and performance of this Amendment, the borrowings referred to herein
and the execution, delivery and performance of the instruments and
document s delivered by it pursuant to this Amendment.
(d) None of the Borrowers, the Parent or any Guarantor is in
default under any indenture, mortgage, deed of trust, agreement or other
instrument to which it is a party or by which it may be bound. Neither the
execution and delivery of this Amendment or any of the instruments and
documents to be delivered pursuant to this Amendment, nor the consummation of
the transactions herein and therein contemplated, nor compliance with the
provisions hereof or thereof will (i) violate any law or regulation, or
(ii) result in or cause a violation by the Borrowers, the Parent or any
Guaranto r, of any order or decree of any court or governmental
instrumentality, or (iii) conflict with, or result in the breach of, or
constitute a default under, any indenture, mortgage, deed of trust, agree-
ment or other instrument to which the Borrowers, the Parent or any
Guarantor is a party or may be bound or (iv) result in the creation or
imposition of any lien, charge or encumbrance upon any of the property of
the Borrowers, the Parent or any Guarantor (other than liens in the Finova
Collateral securing the Finova Loan), or (v) violate any provision of the
Articles or Certificate of Incorporation, By-Laws or any preferred stock
provisio ns of the Borrowers, the Parent or any Guarantor.
(e) No action of, or filing with, any governmental or public body
or authority is required to authorize, or is otherwise required in connection
with, the execution, delivery and performance of this Amendment or any of
the instruments or documents to be delivered by the Borrowers, the Parent
or any G uarantor pursuant to this Amendment.
(f) This Amendment, and all of the other instruments and documents
to be delivered by the Borrowers, the Parent and/or the Guarantors pursuant to
this Amendment, constitute a legal, valid and binding obligation of each
of the Borrowers, the Parent and the Guarantors party thereto, enforceable
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency and similar laws and to
moratori um laws from time to time in effect.
3. Effective Date. This Amendment shall become effective
upon the satisfaction of each of the following conditions precedent (the date
of such satisfaction, the "Effective Date"):
(a) The Agent and the Lenders shall have received a counterpart of
this Amendment, duly executed and delivered by each of the Agent, the
Borrowers, the Parent, the Guarantors and the Lenders.
(b) The Agent shall have received a certificate of each of the
Borrowers, the Parent and the Guarantors, executed by a Responsible Officer
of each of the Borrowers, the Parent and the Guarantors and dated the
Effective Date, as to the truthfulness and accuracy of the representations and
warranties made in this Amendment and as to the absence of Events of
Default under the Loan Documents or events which, with the giving of
notice or the passage of time or both, would constitute an Event of
Default.
(c) The Agent shall have received the favorable written opinion
of counsel for the each of the Borrowers, the Parent and each of the
Guarantors, in form and substance satisfactory to the Agent and the Lenders
dated the Effective Date and addressed to the Agent and Lenders.
(d) The Agent shall have received evidence of authorization of
the Borrowers, the Parent and the Guarantors with respect to the execution,
delivery and performance of this Amendment and the transactions
contemplated hereunder, such evidence to be in form and substance
satisfactory to the Agent.
(e) The Agent shall have received from the Parent and New Linden
immediately available funds in the amount of $4,000,000 to be applied to
Term Loa n B.
(f) The Agent shall have received a copy of and determined to be
in a form and substance satisfactory to them all of the documents executed by
the Borrowers, the Parent and/or the Guarantors in connection with the Finova
Loan (the "Finova Documents").
(g) The Agent and Finova shall have executed the Intercreditor
Agreement dated __________, 1996 (the "Intercreditor Agreement"), which shall
have been accepted and agreed to by the Parent and New Linden.
4. Consent to Intercreditor Agreement. Each of the Lenders
consents to the execution and delivery by the Agent of the Intercreditor
Agreement.
5. Counterparts; Telecopy. This Amendment may be executed by the
parties hereto individually or in any combination, in one or more
counterparts, each of which shall be an original and all of which shall
constitute one and the same amendment. The delivery of a signed signature
page to this Amendment by telecopy transmission shall constitute due
execution and delivery of this Amendment for all purposes.
6. Credit Agreement and All Other Loan Documents in Full Force and
Effect; Confirmation of Collateral. Except as amended by this Amendment, all
of the provisions of the Credit Agreement and all of the provisions of each
Loan Document shall remain in full force and effect from and after the
date hereof. The undersigned hereby confirm and agree that all collateral
security and guaranties granted by any of the undersigned in connection
with the Credit Agreement and/or the Loan Documents remains in full force
and effect after giving effect to this Amendment.
7. References to Credit Agreement. From and after the Effective
Date, (a) all references in the Credit Agreement to "this Agreement",
"hereof", "herein", or similar terms and (b) all references to the Credit
Agreement in each agreement, instrument and other document executed or
delivered in connection with the Credit Agreement, shall mean and refer to
the Credit Agreement, as amended by this Amendment.
8. Further Assurances. The parties hereto agree to execute and
deliver any and all further agreements, certificates and other documents
rea sonably necessary to implement the provisions of this Amendment.
IN WITNESS WHEREOF, the Agent, the Lenders, the Borrowers, the
Parent and the Guarantors have caused this Amendment to be duly executed by
their respective officers thereunto duly authorized as of the day and year
first above written.
FOODARAMA SUPERMARKETS, INC., as
Parent and as Guarantor
By:______________________________
Name: Michael Shapiro
Title: Senior Vice-President
NEW LINDEN PRICE RITE, INC., as
Borrower and as Guarantor
By:______________________________
Name: Michael Shapiro
Title: Senior Vice-President
SHOP RITE OF READING, INC., as
Borrower and as Guarantor
By:______________________________
Name: Michael Shapiro
Title: Senior Vice-President
SHOP RITE OF MALVERNE, INC., as
Guarantor
By:_______________________________
Name: Michael Shapiro
Title: Senior Vice-President
NATWEST BANK N.A.(formerly
National Westminster Bank USA),
as Agent
By:_______________________________
Name: Thomas Maiali
Title: Vice-President
NATWEST BANK N.A. (formerly
National Westminster Bank USA),
as Lender
By:_______________________________
Name: Thomas Maiale
Title: Vice-President
CHEMICAL BANK, as Lender
By:_______________________________
Name: George L. McKinley
Title: Vice-President
IBJ SCHRODER BANK & TRUST COMPANY,
as Lender
By:_______________________________
Name: Peter W. Thompson
Title: Vice-President
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