FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 29, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from............... to ...........
Commission File No. 1-8739
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Exact Name of Registrant as specified in
its charter)
Delaware 22-1970303
- ---------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1830 Route 130
Burlington, New Jersey 08016
------------------------ ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (609) 387-7800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
----------------------------- ---------------------------
Common Stock, $1.00 par value New York Stock Exchange, Inc.
per share
Securities Registered pursuant to Section 12(g) of the Act:
Title of Class
--------------
None
Page 1 <PAGE>
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO_____.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the common stock, $1.00 par
value ("Common Stock"), of the registrant held by non-affiliates of the
registrant, as determined by reference to the closing sale price of the
Common Stock on the New York Stock Exchange as of August 31, 1996,
was $165,915,325.
As of August 31, 1996, the number of shares of Common Stock,
$1.00 par value, outstanding was 40,663,563.
Documents incorporated by Part of Form 10-K into which
reference into this report document is incorporated
- -------------------------- -----------------------------
Registrant's Proxy Statement Part III
to be filed pursuant to
Regulation 14A
Page 2 <PAGE>
PART I
Item 1. Business
Burlington Coat Factory Warehouse Corporation and its
subsidiaries (the "Company" or "Burlington Coat") operates a chain
of "off-price" apparel stores which offer a broad range of moderate
to higher priced, current brand name merchandise for men, women and
children at prices substantially below traditional full retail
prices generally charged by department and specialty stores.
In addition, Burlington Coat offers customers a complete line of
men's, women's and children's wear as well as a linens, bath shop
items, gifts and accessories department in 186 of its stores and a
children's furniture department in approximately 155 of its stores.
The Company's policy of buying significant quantities of merchandise
throughout the year, maintaining inventory control and using a
"no-frills" merchandising approach, allows it to offer merchandise
at prices below traditional full retail prices. The sale of
irregular or discontinued merchandise represents only a small portion
of the Company's business. Merchandise is displayed on easy access racks,
and sales assistance generally is available. Clothing alteration services
are available on a limited basis in many stores for an additional charge.
Burlington Coat's practice of purchasing outerwear early
in each fashion season and of reordering in rapid response to sales
has enabled it to maintain a large, current and varied selection of
outerwear throughout each year. Although the Company believes that
this practice helps attract customers to its stores, to the extent
the Company maintains a relatively large volume of merchandise,
particularly outerwear, the risks related to style changes, weather
and other seasonal factors, and economic conditions are necessarily
greater than if the Company maintained smaller inventories.
An important factor in Burlington Coat's operations has
been its continued ability to purchase desirable, first-quality
current brand labeled merchandise directly from manufacturers on
terms at least as favorable as those offered large retail
department and specialty stores. The Company estimates that over
1000 manufacturers of apparel, including over 300 manufacturers of
outerwear, are represented at the Company's stores, and that no
manufacturer accounted for more than 5% of the Company's purchases
during the last full fiscal year. The Company does not maintain
any long-term or exclusive commitments or arrangements to purchase
from any manufacturer. No assurance can be given that the Company
will be able to continue to purchase such merchandise directly from
manufacturers or to continue its current selling price structure.
See "Competition."
Page 3<PAGE>
The Company sells its merchandise to retail customers for
cash and accepts checks and most major credit cards. The Company's
"Cohoes" division also offers its own credit card. In addition,
the Company sells on a layaway plan and offers special orders on
selected merchandise. It does not offer refunds, except on furs,
defective merchandise and certain sales of specialty retail operations, but
will exchange or give store credit slips for merchandise returned
within a prescribed period of time.
The Company advertises primarily on television and, to a
lesser extent, in regional and local newspapers and radio. During
the past three fiscal years, advertising expenditures have averaged
approximately 2.7% of total revenues.
The Stores
- ----------
As of August 31, 1996, the Company operated 244 stores,
all but 19 of which are located in leased facilities ranging in
size (including storage space) from approximately 15,000 to
approximately 163,000 square feet, with an average area of
approximately 64,000 square feet. Selling space accounts for
over four-fifths of the total area in most stores.
All of the Company's stores are either free-standing or are located
in shopping malls or strip shopping centers. The Company believes that its
customers are attracted to its stores principally by the availability of a
large assortment of first-quality current brand name merchandise at
attractive prices.
The Company also operates stores under the names "Cohoes
Fashions," "Decelle," "Luxury Linens," "Totally 4 Kids," "Baby
Depot," and "Fit For Men." Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in
the moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty
store for linens, bath shop items, gifts and accessories and offers
merchandise in the middle to higher range. Totally 4 Kids is a moderate to
upscale concept store offering maternity wear, baby furniture, children's wear
from toddlers up to teens, children's books, toys, computer software for kids
and educational tapes in a family environment. Baby Depot is a concept store
specializing in infant to toddler apparel, baby and juvenile furniture
and furnishings and accessories. Fit For Men is a stand alone mens store
catering to the needs of "hard to fit" men (big, tall, husky, athletic,
portly, short and small).
In the past, Burlington Coat generally has selected sites
for its stores where there are suitable existing structures which
can be refurbished, and, if necessary, enlarged, in a manner
Page 4<PAGE>
consistent with the Company's merchandising concepts. In some
cases, space has been substantially renovated or built to
specifications given by Burlington Coat to the lessor. Such
properties have been available to the Company on lease terms which
it believes have been favorable. See "Growth and Expansion."
The stores generally are located in close proximity to
population centers, department stores and other retail operations
and are usually established near a major highway or thoroughfare,
making them easily accessible by automobile. Since the Company's
stores are generally located outside of urban centers and the
Company believes that some of its customers drive long distances
to visit store locations, it is likely that the Company
would be adversely affected by any conditions which were to
result in the reduction of automobile use.
The Company owns substantially all the equipment used
in its stores and believes that its selling space is well utilized and
that its equipment is well maintained and suitable for its
requirements.
At August 31, 1996, a majority of the Company's stores
contained one or more departments leased by unaffiliated parties
for the sale of jewelry and accessories. During the fiscal
year ended June 29, 1996, the Company's rental income from all of its
leased departments aggregated less than 1% of the Company's
total revenues.
Central Distribution
- --------------------
Central distribution, warehousing, ticketing and marking
services are extended to approximately fifty percent of the dollar
volume of the Company's merchandise through its office and
warehouse/distribution facility in Burlington, New Jersey. This
facility is capable of servicing the Company's present stores as
well as accommodating expansion, with certain modifications, except
for juvenile furniture inventory. The Company is leasing
approximately 85,000 square feet of warehouse space nearby to its
existing warehouse distribution center for the purpose of
warehousing and distributing its juvenile furniture inventory.
Growth and Expansion
- --------------------
Since 1972 when its first store was opened in Burlington,
New Jersey, the Company has expanded to two hundred eighteen
Burlington Coat stores, five Cohoes Fashions stores, eight Decelle
stores, seven stand-alone Luxury Linens stores, four Totally 4 Kids
store, one stand alone Baby Depot store and one Fit For Men store
as of August 31, 1996.
Page 5<PAGE>
At August 31, 1996 the Company operated stores in 41 states and
is exploring expansion opportunities both within its current market areas
and in other regions. For fiscal 1997, the Company has plans to open
approximately seven to ten additional Burlington Coat Factory stores and
one Totally 4 Kids store. The Company continues to monitor store
profitability and should economic factors change, some store closings could
be possible.
The Company believes that its ability to find
satisfactory locations for its stores is essential for the
continued growth of its business. The opening of stores generally
is contingent upon a number of factors, including the availability
of desirable locations with suitable structures and the negotiation
of acceptable lease terms. There can be no assurance, however,
that the Company will be able to find suitable locations for new
stores or that even if such locations are found and acceptable
lease terms are obtained, the Company will be able to open the
number of new stores presently planned.
The Company operates its own jewelry department in sixteen stores
as of August 31, 1996. The jewelry program consists of karat gold
and precious and semi-precious stone jewelry, and in some stores may include
brand-name watches.
In May of 1994, the Company opened its first "Totally
4 Kids" store in Sterling, Virginia. Two additional Totally 4 Kids
stores were opened in Tulsa, Oklahoma and Cherry Hill, New Jersey,
respectively, during fiscal 1995 (subsquently, the Tulsa, Oklahoma Totally
4 Kids store and a Luxury Linens sister store were converted to a Burlington
Coat Factory store). During fiscal 1996 the Company opened two additional
Totally 4 Kids stores in Milpitas, California and Nashville, Tennessee. The
store caters to the moderate to upscale market and offers maternity wear,
baby furniture, children's wear up to teens, children's books, educational
tapes, computer software for kids, and toys in a family environment. The
Company plans to open one additional Totally 4 Kids store in fiscal
1997.
In September, 1994, the Company entered into a license
arrangement with a vendor to supply department store brand or
better fragrance and cosmetics to 127 stores on a test basis.
The program was expanded to 216 stores, including five Cohoes Fashions
stores and five Decelle stores, and the arrangement has been extended
through January 31, 1998.
The Company seeks to maintain its competitive position
and improve its prospects by periodically reevaluating its methods
of operation, including its pricing and inventory policies, the
format of its stores and its ownership or leasing of stores.
Page 6<PAGE>
Seasonality
- -----------
The Company's business is seasonal, with its highest
sales occurring in the second fiscal quarter of each year.
For the past six fiscal years, approximately 57% of the Company's net sales
have occurred during the period from September through January.
Weather, however, continues to be an important contributing factor
to the sale of clothing in the fall, winter and spring seasons.
Generally, the Company's sales are higher if the weather is cold
during the early fall and winter months and warm during the early
spring months. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Operations
- ----------
Each store has a manager and one or more assistant
managers, as well as department managers. The Company also employs
regional and district managers to supervise overall store operating
and merchandising policies. Major merchandising decisions are
made, overall policies are set, and accounting and general
financial functions for the Company's stores are conducted, at
corporate headquarters. In addition, the Company employs
directors of administration, store operations, loss prevention and
merchandise presentation who are in charge of those functions on a
Company-wide basis.
Merchandise purchased by the Company is either shipped
directly from manufacturers to store locations or distributed
through the Company's warehousing and distribution facility. See
"Central Distribution." A computerized merchandise information
system provides regular detailed reports of sales and inventory
levels for each store and assists the merchandise managers and
buyers in monitoring and, where necessary, adjusting inventory
levels.
At June 29, 1996, the Company had approximately 17,000
employees, including a large number of part-time and seasonal
employees which varies throughout the year. Of the Company's
employees, only those employed at one of its stores and at its
warehousing facility (aggregating up to 500 persons at its peak and
approximately 300 persons at June 29, 1996) are covered by
collective bargaining agreements. The Company cannot predict
whether any future attempts to unionize its employees will be
successful. The Company believes that its relationship with its
employees has been and remains satisfactory.
Page 7<PAGE>
Competition
- -----------
General. The retail apparel business is highly
competitive. Competitors include other individual, regional and
national "off-price" retailers offering similar merchandise at
comparable prices as well as individual and chain stores, some of
which are regional and national department and discount store
chains. At various times throughout the year department store
chains and specialty shops offer brand name merchandise at
substantial markdowns, which can result in prices approximating
those offered by the Company. Some of the Company's competitors
are considerably larger than the Company and have substantially
greater financial and other resources.
Resale Price Maintenance. Since it is the general policy
of the Company to sell at lower than the traditional full retail
price, its business may be adversely affected by manufacturers who
attempt to maintain the resale price of their merchandise by
refusing to sell, or to grant advertising allowances, to purchasers
who do not adhere to their suggested retail prices. Federal
legislation and regulations have been proposed from time to time
which, if enacted, would be helpful to manufacturers attempting
to establish minimum prices or withhold allowances. In addition,
the rules against resale price maintenance have been subject to
challenge in the courts from time to time.
The Company has, on several occasions in the past,
brought lawsuits against certain manufacturers and department store
chains and complained to the Federal Trade Commission seeking more
vigorous enforcement of existing Federal laws, as well as testified
before Congress in connection with proposed legislation concerning
the Federal antitrust laws.
Item 2. Properties
----------
The Company owns the land and building for nineteen of its stores
and is a 50% partner in a partnership which owns the building in which one
store is located. Generally, however, the Company's policy has been to lease
its stores. Store leases generally provide for fixed monthly rental payments,
plus the payment, in most cases, of real estate taxes and other charges with
escalation clauses. In certain locations, the Company's store leases contain
formulas providing for the payment of additional rent based on sales.
<TABLE>
The following table shows the years in which store leases
existing at August 31, 1996 expire:
Page 8<PAGE>
<CAPTION>
Fiscal Years Number of Leases Expiring with
Ending June 30 Expiring Renewal Options
- -------------- ---------------- ---------------
<S> <C> <C>
1997-1999 48 43
2000-2001 31 25
2002-2003 16 9
2004-2005 35 21
2006-2007 20 12
Thereafter 75 29
--- ---
Total 225 139
=== ===
</TABLE>
The Company owns five buildings in Burlington, New
Jersey. Of these buildings, two are used by the Company as retail
space. In addition, the Company owns approximately 97 acres of
land in the Townships of Burlington and Florence, New Jersey on
which the Company has constructed its office and warehouse/distribution
facility. The Company leases approximately 85,000 square feet of space
nearby to the warehouse/distribution facility to store its juvenile
furniture inventory. The Company leases approximately 20,000
square feet of office space in New York City with the right of
occupancy that expires in January 2001.
Item 3. Legal Proceedings
-----------------
In late September 1994, three putative class action lawsuits, P.
Gregory Buchanan v. Monroe G. Milstein, et al., No. 94-CV-4663, Jacob Turner
v. Monroe G. Milstein, et al., No. 94-CV-4737, and Ronald Abramoff v. Monroe
G. Milstein, et al., No. 94-CV-4751 (collectively, the "Class Actions"), were
filed against the Company, Monroe G. Milstein, Stephen E. Milstein and Robert
L. LaPenta, Jr. in the United States District Court for the District of New
Jersey. By Order entered November 15, 1994, the Court consolidated the Class
Actions under the caption In re Burlington Coat Factory Securities Litigation.
On January 17, 1995, plaintiffs filed their Consolidated Amended and
Supplemental Class Action Complaint (the "Amended Complaint"), naming as
defendants, in addition to those originally named in September 1994, Andrew
R. Milstein and Mark A. Nesci. The Amended Complaint sought unspecified
damages in connection with alleged violations of Sections 10(b) (and Rule
10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of
1934, as amended. The Amended Complaint alleged material misstatements and
omissions by the Company and certain of its officers and directors that
plaintiffs
Page 9<PAGE>
alleged caused the Company's common stock to be artificially inflated during
the proposed Class Period, which was defined in the Amended Complaint as the
period from October 4, 1993 through September 23, 1994. On March 3, 1995,
the Company and the individual defendants served a motion to dismiss
plaintiffs' Amended Complaint. That motion was fully briefed and filed with
the Court on May 17, 1995; oral argument on that motion was held on July 20,
1995. On February 20, 1996, the District Court granted the Company's motion
and dismissed the plaintiffs' Amended Complaint in its entirety. In March,
1996, the plaintiffs filed an appeal from the District Court's decision in
the United States Court of Appeals for the Third Circuit (the "Appeal").
Although the Company is unable at this time to assess the probable outcome of
the Appeal or the materiality of the risk of loss in connection therewith,
the Company fully agrees with the District Court's decision to dismiss the
Amended Complaint in its entirety, and intends to vigorously oppose the
plaintiffs' efforts to overturn the District Court's decision.
In the past, the Company has initiated several lawsuits in its
effort to stop what it believes to be unlawful practices on the part of
certain manufacturers and large retailers to control the prices at which
certain items of merchandise may be sold at the Company's stores.
Item 4. Submission of Matters to a Vote
of Security Holders
-------------------------------
The Company did not submit any matter to a vote of its security
holders during the fourth quarter of fiscal 1996.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
-------------------------------------
The Company's Common Stock is traded on the New York
Stock Exchange, Inc. and its trading symbol is "BCF."
The following table provides the high and low closing
prices on the New York Stock Exchange for each fiscal quarter
for the period from July 3, 1994 to June 29, 1996 and for the two months
ended August 31, 1996.
Page 10<PAGE>
<TABLE>
<CAPTION>
Period Low Price High Price
------ --------- ----------
<S> <C> <C>
<C>
July 3, 1994 to
October 1, 1994 12 2/3 24 3/4
October 2, 1994 to
December 31, 1994 10 1/4 14 1/8
January 1, 1995 to
April 1, 1995 8 1/2 11 7/8
April 2, 1995 to
July 1, 1995 9 7/8 11 1/4
July 2, 1995 to
September 30, 1995 10 14 1/8
October 1, 1995 to
December 30, 1995 10 1/4 13 1/4
December 31, 1995 to
March 30, 1996 9 3/8 12 1/4
March 31, 1996 to
June 29, 1996 10 1/8 12 1/8
June 30, 1996 to
August 31, 1996 10 11 1/8
</TABLE>
As of August 31, 1996 there were 547 record holders of
the Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of the Company's Common
Stock for whom shares are held by Cede & Co., certain brokerage
firms and others.
Dividend Policy
- ---------------
The Company has not paid cash dividends in the past and does not
currently plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development of
the Company's business. Any payment of cash dividends in the future will be
at the discretion of the Company's Board of Directors and will depend upon
the financial condition, capital requirements and earnings of the Company as
well as other factors which the Board of Directors may deem relevant.
Page 11<PAGE>
Item 6. Selected Financial Data
-----------------------
The following table sets forth certain selected financial data:
<TABLE>
<CAPTION>
6/27/92 7/3/93 7/2/94 7/1/95 6/29/96
(In thousands of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
<C>
Statement of
Operations:
- --------------
Revenues $1,013,470 $1,214,783 $1,480,676 $1,597,028 $1,610,892
Net Income 31,368 42,903(1) 45,383 14,866 29,013
Net Income per Share .78(2) 1.06(1)(2) 1.12 .37 .71
Balance Sheet Data:
- -------------------
Total Assets $491,940 $585,481 $725,439 $ 735,269 $704,731
Working Capital 252,364 275,113 278,590 245,468 288,107
Long-Term Debt 94,234 91,428 91,369 83,298 74,907
Stockholders' Equity 278,712 323,111 369,857 385,019 413,745
</TABLE>
__________________
[FN]
<F1>
(1) Effective June 28, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." The Company reflected the cumulative
effect of change in accounting for income taxes by
recording a benefit of $.6 million ($.02 per share)
during fiscal 1993.
<F2>
(2) Adjusted to give retroactive effect to three-for-two stock
splits effective in July, 1992 and September, 1993.
[/FN]
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------
The Company maintains its records on the basis of a 52-53
week fiscal year ending on the Saturday closest to June 30. Fiscal 1996
ended on June 29, 1996, fiscal 1995 ended on July 1, 1995 and fiscal 1994
ended on July 2, 1994 and comprised 52 weeks each.
Results of Operations
Fiscal Years Ended July 2, 1994,
July 1, 1995 and June 29, 1996
--------------------------------
The following table sets forth certain items in the
consolidated statements of operations as a percentage of net sales
for the fiscal years ended July 2, 1994, July 1, 1995 and June 29, 1996.
Page 12<PAGE>
<TABLE>
<CAPTION>
Percentage of Net Sales
-----------------------
Fiscal Year Ended
-------------------------
7/2/94 7/1/95 6/29/96
<S> <C> <C> <C>
<C>
Net Sales 100.0% 100.0% 100.0%
------ ------ ------
Costs and expenses:
Cost of sales 65.2 66.9 65.4
Selling and administrative
expenses 28.6 29.7 30.1
Depreciation and amortization 1.4 1.7 1.9
Interest expense 0.7 0.9 0.7
--- --- ---
95.9 99.2 98.1
---- ---- ----
Other income 0.8 0.7 1.2
--- --- ---
Income before income taxes 4.9 1.5 3.1
Provision for income taxes 1.8 0.6 1.3
--- --- ---
Net income 3.1% 0.9% 1.8%
==== ==== ====
</TABLE>
Results of Operations
- ---------------------
Performance in 1996 compared with 1995
- --------------------------------------
Net sales increased $7.0 million (.4%) for fiscal 1996 compared with
fiscal 1995. Comparative store sales decreased 7.2%. The Company believes
the decrease in comparative store sales this year is due mainly to a weak
apparel retail environment. New Burlington Coat Factory Warehouse stores
opened during fiscal 1996 contributed $100.2 million to this year's sales.
Stores which were in operation a year ago, but which were closed prior to
this year contributed $15.9 million to last year's sales. The Cohoes stores
Page 13<PAGE>
showed a comparative stores sale descrease of 11.3%, while contributing $40.8
million to consolidated sales for the fiscal year. Sales in fiscal 1996 for
the Decelle stores were $34.6 million compared with $33.1 million in fiscal
1995. Two Totally 4 Kids stores, and one Luxury Linens store, opened during
fiscal 1996 contributed sales of $6.0 million to net sales. Sales from leased
departments, included in the twelve month net sales figure, were $34.9 million
compared with $27.4 million last year.
The Company closed nine stores during fiscal 1996. These stores
contributed $15.5 million to net sales for the fiscal year ended
June 29, 1996 compared with $23.3 million last year.
Other income (consisting primarily of rental income from leased
departments, investment income and miscellaneous items) increased to $18.9
million for the year ended June 29, 1996 compared with $12.1 million for the
year ended July 1, 1995. The increase for the fiscal year was due in part
to a gain of approximately $1.8 million on the sale of the Company's
Secaucus, New Jersey facility, a portion of which the Company had been
leasing to third parties and a portion of which it uses as a store. In
addition, increases in interest income of $4.2 million were the result of
increases in investable funds generated by the Company through its continued
plan of maintaining lower inventory levels compared with inventory levels of
a year ago. Furthermore, during the third quarter of fiscal 1996, the
Company recorded non-recurring miscellaneous income of $4.0 million.
Partially offsetting these increases was a loss of $1.8 million for the
twelve month period ended June 29, 1996, recorded for the writeoff of
leasehold improvements of stores closed during this fiscal year.
Cost of sales decreased $19.8 million (1.9%) for fiscal 1996 compared with
fiscal 1995. The dollar decrease in cost of sales was due in part
to a 7.2% decline in comparative store sales. This was partially offset by
cost of sales from new stores opened during the year. Cost of sales as a
percentage of net sales decreased from 66.9% a year ago to 65.4% this year.
Cost of sales declined this year as a percentage of net sales due to higher
initial markups as a result of better opportunistic buys. In addition,
markdowns as a percentage of sales were down due to the significantly lower
inventory levels carried at the stores. Freight as a percentage of purchases
was down approximately 0.3% percent this year over last year.
Selling and administrative expenses increased by $7.9 million (1.7%) from
fiscal 1995 to fiscal 1996. This increase in expense was due
primarily to costs associated with new store operations. As a percentage of
net sales, selling and administrative expenses were 30.1% in the 1996 fiscal
year compared with 29.7% for the 1995 fiscal year, an increase of 0.4%.
Page 14<PAGE>
Depreciation and amortization expense amount to $29.9 million in fiscal
1996 compared with $26.3 million in fiscal 1995. This increase of $3.6 million
in the fiscal 1996 period compared with fiscal 1995 is attributable to new
stores opened during the year as well as remodeling and fixturing of existing
stores.
Interest expense decreased $1.9 million for the fiscal year ended
June 29, 1996 compared with the fiscal year ended July 1, 1995. The
decrease in interest expense is the result of decreases in borrowing levels
associated with the Company's revolving credit and term loan agreements and
the refinancing of its industrial development bonds.
The provision for income taxes increased to $20.0 million for the fiscal
year ended June 29, 1996 from $10.1 million for the fiscal year ended July 1,
1995. The effective tax rate was 40.8% for the year ended June 29, 1996
compared with 40.4% for fiscal 1995.
Net income increased $14.1 million to $29.0 million for fiscal 1996
from $14.9 million for fiscal 1995. Income per share was $.71 per share for
fiscal 1996 compared with $.37 for fiscal 1995.
The Company's business is seasonal, with its highest sales occurring in
the month of October, November, December of each year. The Company's net
income generally reflects the same seasonal pattern as its net sales. In the
past, substantially all of the Company's profits have been derived from
operations during the months of October, November, and December.
Performance in 1995 compared with 1994
- --------------------------------------
Net sales increased $116.5 million (7.9%) for fiscal 1995
compared to fiscal 1994. The increase in fiscal 1995 over fiscal
1994 was due to $101.1 million in sales from new Burlington Coat
stores, $8.2 million from Luxury Linens stores, $4.1 million from
Totally 4 Kids stores and $1.7 million each from Fit For Men and
Baby Depot stores opened during the year. Cohoes Fashions stores,
Decelle stores and the Mexican operations (sometimes collectively
referred to as the "Specialty Operations") contributed additional
sales over the prior year of $14.7 million. Offsetting these sales
was a decrease in Burlington Coat comparative store sales of $75.4
million (5.4%). Sales from leased departments this year were $27.4
million compared with $18.8 million last year. Lack of consumer
interest in apparel throughout the second half of fiscal 1995, the
highly promotional retail environment and unseasonably warm weather
in the fall and winter months were all factors affecting sales
results for fiscal 1995.
Page 15<PAGE>
Other income in fiscal 1995 decreased $.2 million from
fiscal 1994. The primary reason for the slight decrease was a decline in
investment income. Investment income was reduced by $.9 million due to the
higher inventory levels and capital expenditures during fiscal 1995 absorbing
excess investable funds. This decrease was offset by an increase in rent
income.
Cost of sales increased by $103.4 million (10.8%) from
the fiscal 1994 period to the fiscal 1995 period. The dollar in-
crease in cost of sales was attributable to the increases in unit
sales from new stores opened during the period. The decrease in
comparative stores sales volume of 5.4% in the 1995 period offset
in part the additional cost of sales from new units. Cost of sales
as a percentage of net sales increased to 66.9% in the 1995 period.
The percentage increase in 1995 over 1994 was primarily due to
additional markdowns taken as a result of the weaker apparel sales
performance during the year.
Selling and administrative expenses increased by
$51.9 million (12.4%) from fiscal 1994 to fiscal 1995 primarily as
a result of increased expenses in connection with the increase in
the number of stores. As a percentage of net sales, selling and
administrative expenses were 29.7% in the 1995 period compared with
28.6% for the prior fiscal year. In fiscal 1995, the percentage
increase over 1994 was primarily due to a decrease in comparative
store sales of 5.4%.
The increase in depreciation expense of $4.8 million in
the 1995 period was attributable to 29 new stores opened during the
period, remodeling and fixturing of existing stores, as well as the
acquisition of one additional store.
Interest expense increased $3.7 million (37.8%) from the
1994 period to the 1995 period. The increase in interest expense
in the fiscal 1995 period was the result of the Company's increased
usage of its lines of credit during the year as well as an increase
in the average interest rate from last year of 3.8% to the current
year's average borrowing rate of 5.7% on short-term debt.
The effective income tax rates were 37.3% and 40.4% for
the 1994 and 1995 periods, respectively. The increase in the tax
rate in fiscal 1995 was due to the elimination of the Targeted Jobs
Tax credit after December 31, 1994 and increases in state income
taxes as a percentage of pre-tax income.
Income before cumulative effect of change in accounting
for income taxes decreased $30.5 million for fiscal year ended July
1, 1995 compared with the 1994 fiscal year. Income per share
before cumulative effect of change in accounting for income taxes
decreased to $0.37 per share for fiscal 1995 from $1.12 per share
for fiscal 1994, which reflected a decline in operating income of
Page 16<PAGE>
the Company. The fiscal 1995 performance reflected a weak U.S.
apparel environment and an unusually warm fall and winter. As a
result of the weak sales performance in a highly promotional U.S.
retail environment, higher markdowns reduced the Company's
gross profit margin percentage in fiscal 1995. In addition,
declining comparative store sales negatively impacted
operating expense leverage.
Liquidity and Capital Resources
- -------------------------------
During the year ended June 29, 1996, the Company opened
fifteen stores, including eleven Burlington Coat Factory
Warehouse stores, one "Luxury Linens" store, two "Totally 4 Kids" stores
and one Decelle store. The Company closed nine stores during the fiscal year
ended June 29, 1996. Expenditures incurred to acquire, set up and fixture
new stores opened during fiscal 1996 were approximately
$16.2 million. In addition, the Company expended approximately $7.3 million
for capital improvements and refurbishing of existing stores and its former
Secaucus, New Jersey property (which was sold September 29, 1995). The
Company estimates that it will spend approximately $20.2 million for capital
expenditures (i.e., fixtures, equipment and leasehold improvements) in
connection with the opening of from eight to eleven new stores and remodeling
of existing stores during fiscal 1997.
Working capital increased to $288.1 million at June 29, 1996 from
$245.5 million at July 1, 1995. At July 2, 1994, working capital was $278.6
million.
Total funds provided from operations for the fiscal years
ended July 2, 1994, July 1, 1995 and June 29, 1996 were $72.6 million,
$45.5 million and $66.9 million, respectively. Total funds from operations
are calculated by adding back to net income non-cash expenditures such as
depreciation and deferred taxes.
Net cash provided by operating activities of $163.4 million for the
fiscal year ended June 29, 1996, increased from $43.0 million in net cash
provided from operating activities for fiscal 1995. This increase in net
cash from operations was due mainly to a reduction in merchandise inventory
in the current year of $81.6 million versus a $16.9 million reduction in
fiscal 1995 and to the earnings improvements made in fiscal 1996 versus fiscal
1995.
The Company's long-term borrowings at June 29, 1996 include $72
million of long term subordinated notes issued by the Company to institutional
investors in June, 1990 ("the Notes") and an industrial development bond of
$10 million issued by the New Jersey Economic Development Authority. In July,
1996, the Company
Page 17<PAGE>
repurchased an additional $5.4 million of the Notes, leaving a remaining
outstanding principal balance of the Notes of $66.6 million.
The Notes mature on June 27, 2005 and bear interest at the rate of
10.6% per annum. The Notes have a remaining average maturity of 4.5 years
and are subject to mandatory payment in installments of $8.0 million each
without premium on June 27 of each year beginning in 1996. The Notes are
subordinated to senior debt, including, among others, bank debt and
indebtedness for borrowed money. The industrial development bond financing
(the "Bonds") consist of serial and term bonds. The serial bonds aggregate
$3.6 million and mature in series annually on September 1, beginning in 1996
and continuing to and including 2003. The term bonds consist of two portions,
$1.4 million maturing on September 1, 2005 and $5.0 million maturing on
September 1, 2010. The serial bonds bear interest ranging from 3.75% to 5.4%
per annum, and the term bonds bear interest at the rates of 5.60% for the
portion maturing on Sepember 1, 2005 and 6.125% per annum for the portion
maturing on September 1, 2010. The average interst rate and average maturity
of the Bonds are 5.84% and 9.78 years, respectively.
The Company has in place a committed line of credit
agreement in the amount of $50.0 million and $150.0 million in
uncommitted lines of credit. The maximum borrowings outstanding
under these lines were $120.4 million and $147.4 million during
fiscal 1996 and fiscal 1995, respectively. The average borrowings
outstanding under the lines were $38.7 million and $69.1 million
during fiscal 1996 and 1995, respectively. The weighted average
interest rate on outstanding borrowings during fiscal 1996 and 1995
were 6.3% and 5.7%, respectively. There were no short term borrowing
as of June 29, 1996, compared with short term borrowings
outstanding of $85.9 million at July 1, 1995.
The Company believes that its current capital
expenditures and operating requirements can be satisfied from
internally generated funds, from short term borrowings under its
revolving credit and term loan agreement as well as uncommitted
lines of credit and from its long term borrowings. The Company may
consider replacing some of its short term borrowing sources with long term
financing. Furthermore, to the extent that the Company decides to
purchase additional store locations, it may be necessary to finance
such acquisitions with additional long term borrowings.
On or about September 23, 1994 three separate putative
class actions were filed against the Company. These three actions
were consolidated and an amended complaint was served on January
17, 1995. The Company filed a motion to dismiss on May 17, 1995 and
a hearing on the motion was held on July 20, 1995. One February 20,
1996, the District Court dismissed the plaintiff's amended
Page 18<PAGE>
complaint in its entirely. In March, 1996, plaintiffs filed an appeal from
the District Court's decision. (See part II - Other Information,
Item 1 Legal Proceedings.) The Company is unable to determine the probability
of any potential loss with respect to these class actions suits or the
materiality thereof at this time and accordingly has not established
any reserve for this matter. However, the Company believes the actions
are without merit and intends to vigorously defend them.
Inflation
- ---------
Historically, the Company has been able to increase its
selling prices as the costs of merchandising and related operating
expenses have increased, and, therefore, inflation has not had a
significant effect on operations.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Index to Financial Statements and following pages.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
---------------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the
Registrant
---------------------------------------
Item 11. Executive Compensation
----------------------
Item 12. Security Ownership of Certain Beneficial
Owners and Management
----------------------------------------
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
In accordance with General Instruction G(3) of the
General Instructions to Form 10-K, the information called for by
Items 10, 11, 12 and 13 is omitted from this Report and is
incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation l4A of the General
Rules and Regulations under the Securities Exchange Act of 1934,
which the Company will file not later than 120 days after June 29, 1996.
Page 19<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
----------------------------------------
(a) The following documents are filed as part of this
Report.
Page No.
1. Financial Statements
Index to Consolidated Financial 29
Statements
Independent Auditors' Report 30
Consolidated Balance Sheets 31
June 29, 1996 and July 1, 1995
Consolidated Statements of Operations 32
Fiscal Years Ended June 29, 1996,
July 1, 1995 and July 2, 1994
Consolidated Statements of 33
Stockholders' Equity for the
Fiscal Years Ended July 2, 1994,
July 1, 1995 and June 29, 1996
Consolidated Statements of Cash 34
Flows for the Fiscal Years
Ended June 29, 1996, July 1, 1995
and July 2, 1994
Notes to Consolidated Financial 36
Statements
2. Financial Statement Schedules
Schedule II - Valuation and 50
Qualifying Accounts
Schedules I, III, IV and V are omitted
because they are not applicable or not
required or because the required
information is included in the consol-
idated financial statements or notes
thereto.
Page 20<PAGE>
Page No.
3. Exhibits
3.1 Articles of Incorporation,
as amended 2/
3.2 By-laws 2/
*10.1 1993 Stock Incentive Plan 2/
10.2 Revolving Credit Agreement dated 56
August 30, 1985 between the
Company and BancOhio National
Bank, as amended through Amendment
No. 6.
10.3 Burlington Coat Factory Warehouse 154
Corporation 401(k) Profit-Sharing
Plan (as amended and restated
effective July 1, 1989)
10.4 Loan Agreement dated as of August 1, 1/
1995 by and between New Jersey
Economic Development Authority and
Burlington Coat Factory Warehouse
of New Jersey, Inc.
10.5 Assignment of Leases dated as of 1/
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity
Bank, National Association
_______________
[FN]
<F1>
(1) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
1, 1995, File No. 1-8739.
<F2>
(2) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
3, 1993, File No. 1-8739.
*Executive Compensation Plan
[/FN]
Page 21 <PAGE>
Page No.
10.6 Mortgage and Security Agreement 1/
dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey, Inc. and
First Fidelity Bank, National
Association
10.7 Indenture of Trust dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association
10.8 Guaranty and Suretyship dated as of 1/
August 1, 1995 from the Company to
First Fidelity Bank, National
Association
10.9 Letter of Credit Reimbursement 1/
Agreement dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association
10.10 Environmental Indemnity Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association
10.11 Note Agreement dated June 27, 1990 1/
21 Subsidiaries of Registrant 199
23 Consent of Deloitte & Touche LLP, 201
independent certified public
accountants, to the use of
their report on the financial
statements of the Company for
the fiscal year ended June 29,
1996 in the Registration Statements
of the Company on Form S-8,
Registration No. 2-96332,
No. 33-21569, No. 33-51965 and
No. 33-61351
27 Financial Data Schedule 203
Page 22<PAGE>
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
---------------------------------------------
Description Location
----------- --------
1) 1993 Stock Incentive Plan Filed as Exhibit 10.1
to the Company's Annual
Report on Form 10-K for
the year ended July 3,
1993, Pages 103-130
(b) Reports on Form 8-K
During the period ended June 29, 1996 the Company filed two (2)
reports on Form 8-K.
Page 23 <PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: /s/ Monroe G. Milstein
----------------------------
Monroe G. Milstein, President
Dated: September 27, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Monroe G. Milstein Chief Executive Officer September 27, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
/s/ Robert L. LaPenta, Jr. Controller (Principal September 27, 1996
- ------------------------- Financial and
Robert L. LaPenta, Jr. Accounting Officer)
/s/ Henrietta Milstein Director September 27, 1996
- -------------------------
Henrietta Milstein
- ------------------------- Director September ___, 1996
Harvey Morgan
/s/ Andrew R. Milstein Director September 27, 1996
- -------------------------
Andrew R. Milstein
/s/ Stephen E. Milstein Director September 27, 1996
- -------------------------
Stephen E. Milstein
/s/ Mark A. Nesci Director September 27, 1996
- -------------------------
Mark A. Nesci
- ------------------------- Director September ___, 1996
Irving Drillings
Page 24<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: _____________________________
Monroe G. Milstein, President
Dated: September , 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
________________________ Chief Executive Officer September __, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
________________________ Controller (Principal September __, 1996
Robert L. LaPenta, Jr. Financial and
Accounting Officer)
________________________ Director September __, 1996
Henrietta Milstein
/s/Harvey Morgan Director September 27, 1996
- ------------------------
Harvey Morgan
________________________ Director September __, 1996
Andrew R. Milstein
________________________ Director September __, 1996
Stephen E. Milstein
________________________ Director September __, 1996
Mark A. Nesci
________________________ Director September __, 1996
Irving Drillings
Page 25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: _____________________________
Monroe G. Milstein, President
Dated: September , 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
________________________ Chief Executive Officer September __, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
________________________ Controller (Principal September __, 1996
Robert L. LaPenta, Jr. Financial and
Accounting Officer)
________________________ Director September __, 1996
Henrietta Milstein
________________________ Director September __, 1996
Harvey Morgan
________________________ Director September __, 1996
Andrew R. Milstein
________________________ Director September __, 1996
Stephen E. Milstein
________________________ Director September __, 1996
Mark A. Nesci
/s/Irving Drillings Director September 27, 1996
- ------------------------
Irving Drillings
Page 26<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 27<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 28<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page No.
Independent auditors' report 30
Consolidated balance sheets 31
June 29, 1996 and July 1, 1995
Consolidated statements of operations for the 32
fiscal years ended June 29, 1996, July 1,
1995 and July 2, 1994
Consolidated statements of stockholders' 33
equity for the fiscal years ended July 2,
1994, July 1, 1995 and June 29, 1996
Consolidated statements of cash flows for 34
the fiscal years ended June 29, 1996, July
1, 1995 and July 2, 1994
Notes to consolidated financial statements 36
Financial Statement Schedules
- Schedule II -- Valuation and Qualifying 50
Accounts
- Schedules I, III, IV and V are motted
because they are not applicable or
not required because the required
information is included in the
consolidated financial statements
or notes thereto.
Page 29<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
Board of Directors and Stockholders
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey
We have audited the accompanying consolidated balance sheets of Burlington
Coat Factory Warehouse Corporation and its subsidiaries as of June 29, 1996 and
July 1, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three fiscal years in the
period ended June 29, 1996. Our audits also included the financial statement
schedule listed in the Index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Burlington Coat Factory Warehouse
Corporation and subsidiaries at June 29, 1996 and July 1, 1995, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended June 29, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 13, 1996
Page 30<PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
June 29, July 01,
1996 1995
<S> <C> <C>
<C>
ASSETS
- ------
Current Assets:
Cash and Cash Equivalents $73,560 $ 14,520
Accounts Receivable (Net of Allowance for Doubtful
Accounts of 1996--$990 and 1995--$3,711) 15,003 15,326
Merchandise Inventories 370,437 452,026
Deferred Tax Asset 9,762 8,843
Prepaid and Other Current Assets 19,808 6,006
---------------------
Total Current Assets 488,570 496,721
Property and Equipment Net of Accumulated
Depreciation and Amortization 206,582 224,493
Other Assets 9,579 14,055
---------------------
Total Assets $704,731 $735,269
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable $118,900 $101,046
Notes Payable -- 85,900
Income Taxes Payable 5,227 2,064
Accrued Insurance Costs 17,407 13,448
Other Current Liabilities 50,538 40,729
Current Maturities of Long-Term Debt 8,391 8,066
---------------------
Total Current Liabilities 200,463 251,253
Long-Term Debt 74,907 83,298
Other Liabilities 8,237 9,728
Deferred Tax Liability 7,379 5,971
Commitment and Contingencies
Stockholders' Equity:
Preferred Stock, Par Value $1; Authorized
5,000,000 shares; none issued and outstanding -- --
Common Stock, Par Value $1; Authorized 100,000,000 shares;
41,164,848 shares issued and outstanding at June 29, 1996
41,139,459 shares issued and outstanding at July 1, 1995 41,165 41,139
Capital in Excess of Par Value 25,384 25,143
Retained Earnings 349,608 320,595
Unrealized Loss-Marketable Securities -- (8)
Unearned Compensation (87) --
Treasury Stock at Cost; 1996--468,987 Shares (2,325) (1,850)
1995--427,387 Shares
Total Stockholders Equity 413,745 385,019
----------------------
Total Liabilities and Stockholders' Equity $704,731 $735,269
======================
See notes to consolidated financial statements
</TABLE>
Page 31<PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands except share data)
Year Ended
------------------------------------
June 29, July 01, July 02,
1996 1995 1994
------------------------------------
<S> <C> <C> <C>
<C>
REVENUES:
Net Sales $1,591,964 $1,584,942 $1,468,440
Other Income 18,928 12,086 12,236
------------------------------------
1,610,892 1,597,028 1,480,676
------------------------------------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of
Depreciation and Amortization) 1,040,388 1,060,212 956,818
Selling and Administrative Expenses 479,852 471,947 420,046
Depreciation and Amortization 29,913 26,327 21,528
Interest Expense 11,735 13,602 9,873
-----------------------------------
1,561,888 1,572,088 1,408,265
-----------------------------------
Income Before Provision for
Income Taxes 49,004 24,940 72,411
Provision for Income Taxes 19,991 10,074 27,028
-----------------------------------
Net Income $29,013 $14,866 $ 45,383
===================================
Net Income Per Share $ 0.71 $ 0.37 $ 1.12
=======================================
Weighted Average Shares Outstanding 40,730,516 40,710,683 40,632,201
=======================================
Dividends Per Share -- --
=======================================
See notes to consolidated financial statements
</TABLE>
Page 32 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 02, 1994, JULY 01, 1995 AND JUNE 29, 1996
(All amounts in thousands)
Capital in Valuation
Common Excess of Retained Treasury Unearned Allowance
Stock Par Value Earnings Stock Compensation Total
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Balance at July 03, 1993 $ 41,028 $ 23,598 $ 260,346 ($1,850) -- ($11) $323,111
Net Income 45,383 45,383
Stock Options Exercised 81 1,007 1,088
Net Unrealized Loss on
Noncurrent Marketable
Securities (9) (9)
Equity Adjustment for
Translation 284 284
Stock Split Adjustment 13 (13) 0
--------------------------------------------------------------------------
Balance at July 02, 1994 41,122 24,592 305,729 (1,850) 264 369,857
Net Income 14,866 14,866
Stock Options Exercised 17 551 568
Net Unrealized Gain on
Noncurrent Marketable
Securities 12 12
Equity Adjustment for
Translation (284) (284)
__________________________________________________________________________
Balance at July 01, 1995 41,139 25,143 320,595 (1,850) (8) 385,019
Net Income 29,013 29,013
Stock Options Exercised 16 142 158
Net Unrealized Gain on
Noncurrent Marketable
Securities 8 8
Unearned Compensation 10 99 (87) 22
Treasury Stock Transactions (475) (475)
___________________________________________________________________________
Balance at June 29, 1996 $41,165 $25,384 $349,608 ($2,325) ($87) -- $413,745
===========================================================================
See notes to consolidated financial statements
</TABLE>
Page 33 <PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
Year Ended
--------------------------------
June 29, July 01, July 02,
1996 1995 1994
--------------------------------
<S> <C> <C> <C>
<C>
OPERATING ACTIVITIES
Net Income $29,013 $ 14,866 $ 45,383
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 29,913 26,327 21,528
Provision for Losses on Accounts Receivable 6,068 5,162 4,821
Provision for Deferred Income Taxes 489 (2,920) (826)
(Gain)Loss on Disposition of Fixed Assets (100) 536 203
Non-Cash Rent Expense and Other 1,438 1,521 1,527
Changes in Operating Assets and Liabilities:
Accounts Receivable (5,965) (3,032) (8,674)
Merchandise Inventories 81,589 16,895 (116,002)
Prepaids and Other Current Assets (13,876) 11,962 (1,327)
Accounts Payable 17,854 (32,660) 17,499
Accrued and other Current Liabilities 16,931 4,389 7,525
-----------------------------------
Net Cash Provided by (Used in)
Operating Activities 163,354 43,046 (28,343)
-----------------------------------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (29,340) (66,900) (63,686)
Short-Term Investments-Net -- -- 16,421
Proceeds From Sale of Fixed Assets 17,839 27 17
Issuance of Long-Term Notes Receivable (516) (5,202) (3,668)
Receipts Against Long-Term Notes Receivable 4,539 1,611 609
Acquisition of Leasehold -- (2,652) (2,050)
Minority Interest (62) (66) 497
Other (2,485) 2,031 568
-----------------------------------
Net Cash (Used in) Investing Activities (10,031) (71,151) (51,292)
-----------------------------------
FINANCING ACTIVITIES
Principal Payments on Long-Term Debt (8,066) (59) (118)
Issuance of Common Stock Upon Exercise of
Stock Options 158 568 1,088
Purchase of Treasury Stock (475) -- --
Net (Payments) Borrowings Under
Lines of Credit (85,900) 20,880 65,020
------------------------------------
Net Cash (Used in) Provided by
Financing Activities (94,283) 21,389 65,990
------------------------------------
Increase (Decrease) in Cash and
Cash Equivalents 59,040 (6,716) (13,645)
Cash and Cash Equivalents at
Beginning of Period 14,520 21,236 34,881
-----------------------------------
Cash and Cash Equivalents at
End of Period $73,560 $ 14,520 $ 21,236
====================================
Interest Paid $12,062 $ 13,490 $ 9,873
====================================
Income Taxes Paid $16,339 $ 10,900 $ 32,414
====================================
</TABLE>
See notes to consolidated financial statements
Page 34 <PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Schedule of Non-Cash Financing and Investing Activities:
The Company wrote off certain fixed assets with a book value of $.2
million, $.5 million and $1.8 million for the fiscal years 1994, 1995
and 1996, respectively.
During fiscal 1996, the Company granted a restricted stock award of
10,000 shares of its common stock to an officer of the Company with a fair
market value of $108,800 as of the award's measurement date. This award vests
over a four year period from the date of grant.
See notes to consolidated financial statements.
Page 35<PAGE>
Notes to Consolidated Financial Statements
- ----------------------------------------------------------------------------
A. Summary of Significant Accounting Policies
1. Business
Burlington Coat Factory Warehouse Corporation operates 244 stores, in 41
states, which sell "off-price" apparel for men, women and children. A
majority of those stores offer a home linens department and a baby room
furniture department. The Company operates stores under the names
"Burlington Coat Factory Warehouse" (two hundred eighteen stores),
"Cohoes Fashions" (five stores), "Decelle" (eight stores), "Luxury Linens"
(seven stores), "Totally 4 Kids" (four stores), "Fit For Men" (one store),
and "Baby Depot" (one store). Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in the
moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty store for
linens, bath shop item, gifts and accessories and offers merchandise
in the middle to higher range. Totally 4 Kids is a moderate to
upscale concept store offering maternity wear, baby furniture,
children's wear from toddlers up to teens, childrens's books, toys,
computer software for kids and educational tapes in a family
environment. Fit For Men is a stand alone mens store specializing
in special size menswear. Baby Depot is a stand alone infant and
toddler store specializing in infant and toddler apparel, furnishings
and accessories.
2. Principles of Consolidation
The consolidated financial statements include the accounts of
Burlington Coat Factory Warehouse Corporation and its subsidiaries
(the "Company"). All intercompany transactions and balances have been
eliminated in consolidation.
3. Use of Estimates
The Company's consolidated financial statemens have been prepared in
conformity with generally accepted accounting principals. Certain
amounts included in the consolidated financial statements are estimated
based on currently available information and management's judgment as to
the outcome of future conditions and circumstances. While every effort
is made to ensure the integrity of such estimates, including the use of
third party specialists where appropriate, actual result could differ
from these estimates.
4. Inventories
Inventories are stated at the lower of the First In First Out (FIFO)
cost or market, as determined by the retail inventory method.
5. Property and Equipment
Property and equipment are stated at cost and depreciation is computed
on the straight line method over the estimated useful lives of the
assets. The estimated useful lives are between 20 and 40 years for
Page 36<PAGE>
buildings, depending upon the expected useful life of the facility,
and three to ten years for store fixtures and equipment. Leasehold
improvements are amortized over a ten year period. Repairs and
maintenance expenditures are charged to expense as incurred. Renewals
and betterments which significantly extend the useful lives of
existing property and equipment are capitalized.
6. Store Opening Expenses
Expenses related to new store openings are charged to operations in
the period incurred.
7. Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
Deferred income taxes have been recorded to recognize temporary differences
which result from revenues and expenses being recognized in different
periods for financial reporting purposes than for income tax purposes.
8. Net Income per Share
Net income per share is based on the weighted average number of shares
outstanding during each period. The dilutive effect of stock options
is not material.
9. Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly liquid
investments with maturities of three months or less at the time of
purchase. Cash equivalent investments amounted to $58.9 million at
June 29, 1996 and $.8 million at July 1, 1995.
10. Fiscal Year End Date
The Company's fiscal year is a 52-53 week year with its year ending on
the Saturday closest to June 30th of each year. Fiscal 1996,
fiscal 1995 and fiscal 1994 ended June 29, 1996, July 1, 1995 and
July 2, 1994, respectively, and comprised 52 weeks each.
11. Other Income
Other income is primarily rental income received from leased
departments and interest income. In addition, the Company realized
approximately $4.0 million in non-recurring income from a settlement
of a contractual obligation during fiscal 1996.
12. Reclassifications
Certain reclassifications have been made to the prior years' financial
statements to conform to the classifications used in the current
year.
13. Recent Accounting Pronouncements
a. In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Page 37<PAGE>
Assets to Be Disposed Of, which will be adopted by the Company in fiscal
year 1997 as required by this statement. This statement requires that
long-lived assets and certain identifiable intangibles to be held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. Also, in general, long-lived
assets and certain intangibles to be disposed of should be
reported at the lower of carrying amount or fair value less cost
to sell. Management has not yet determined what impact, if any,
adoption of this Statement will have on the Company's financial
statements.
b. In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, which is
effective for the Company beginning June 30, 1996. SFAS No. 123
requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation expense to be measured based on the fair value of
the equity instrument awarded. Companies are permitted, however,
to continue to apply Accounting Principals Board Option No. 25
(APB No. 25), which recognizes compensation costs based on the
intrinsic value of the equity instrument awarded. The Company
will continue to apply APB No. 25 to its stock-based compensation
awards to employees and will disclose the required pro-forma
effects on net income and earnings per share as required by SFAS
No. 123.
B. Stock Splits
On September 13, 1993, the Board of Directors declared a three-for-two
split of the Company's common stock effective October 4, 1993, to
stockholders of record on September 24, 1993. This stock split was
effected in the form of a 50% stock dividend by the distribution of one
additional share for every two shares of stock already issued. The par
value of the common stock remained at $1.00 per share. As a result,
$13.68 million, representing the total par value of the new shares issued,
were transferred from the capital in excess of par value account to common
stock. Common stock and paid in capital in excess of par value accounts
as of July 3, 1993 were adjusted to give effect to the stock split. All
amounts per share were adjusted to give retroactive effect to the stock
split.
Page 38<PAGE>
<TABLE>
C. Property and Equipment
Property and equipment consists of:
<S>
<C>
- -----------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- -----------------------------------------------------------------------------
Land $ 18,345 $ 21,181
Buildings 66,926 81,191
Store Fixtures and Equipment 180,862 188,072
Leasehold Improvements 65,683 60,546
Construction in Progress 146 ---
- -----------------------------------------------------------------------------
$331,962 350,990
- -----------------------------------------------------------------------------
Less Accumulated Depreciation
and Amortization (125,380) (126,497)
- -----------------------------------------------------------------------------
$206,582 $224,493
- -----------------------------------------------------------------------------
</TABLE>
D. Accounts Payable
Accounts payable consists of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- ------------------------------------------------------------------------------
<S> <C> <C>
<C>
Accounts Payable-Trade $ 98,441 $ 76,571
Accounts Payable-Due Banks 10,247 7,641
Other 10,212 16,834
- ------------------------------------------------------------------------------
$118,900 $101,046
- ------------------------------------------------------------------------------
</TABLE>
E. Lines of Credit
The Company had committed lines of credit of $50.0 million and $40.0 million
at June 29, 1996 and July 1, 1995, respectively. The Company also had
uncommitted lines of credit of $150.0 million and $160.0 million at June 29,
1996 and July 1, 1995, respectively. As of June 29, 1996 all borrowings under
these agreements had been repaid. Short-term borrowings outstanding under these
committed and uncommitted lines at July 1, 1995 were $85.9 million. Letters
of credit outstanding against these lines were $38.6 million and $36.9
million at June 29, 1996 and July 1, 1995, respectively.
The maximum borrowings outstanding under these lines were $120.4 million and
$147.4 million during fiscal 1996 and fiscal 1995, respectively. The
average borrowings outstanding under these lines were $38.7 million during
fiscal 1996 and $69.1 million during fiscal 1995.
Page 39<PAGE>
The weighted average interest rate on outstanding borrowings during fiscal
1996 was 6.3%. The weighted average interest rate on outstanding
borrowings during fiscal 1995 was 5.7%.
Short-term borrowings against these lines of credit bear interest at or
below the lending bank's prime rate. The $50 million committed line of
credit requires a commitment fee on the unused portion of 1/4 of 1
percent.
The Company's committed line of credit renews annually and is available
through 1998. The uncommitted lines of credit are cancellable at any
time.
F. Long-Term Debt
Long-term debt consists of:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
<C>
Subordinated Notes, 10.6%, due in
annual $8 million payments from
June 1996 to June 2005 $ 72,000 $ 80,000
Industrial Revenue Bonds, 5.84%,
due in semi-annual payments of
various amounts from September 1,
1996 to September 1, 2010 10,000 10,000
Urban Development Action Grant, non-
interest bearing, due April 1999 917 917
Promissory note, due at various dates
through 2000 (interest rate
imputed at 10.6%) 381 447
- -------------------------------------------------------------------------------
Subtotal 83,298 91,364
Less current portion (8,391) (8,066)
- -------------------------------------------------------------------------------
Long-Term Debt $ 74,907 $83,298
- -------------------------------------------------------------------------------
</TABLE>
The Industrial Revenue Bonds and Urban Development Action Grant were
issued in connection with the construction of the Company's distribution
center. The Bonds are secured by a first mortgage on the Company's
distribution center. The Urban Development Action Grant was secured by a
second mortgage on the facility.
On September 1, 1995 the Company called the Industrial Revenue Bonds at
103 and simultaneously refinanced these bonds with fixed rate bonds with
an average interest rate of 5.84%. The new Industrial Revenue Bonds have
the same maturity schedule as the original bonds and are also secured by a
first mortgage on the Company's home office and distribution center. The
Page 40<PAGE>
average interest rate before the refinancing was 9.78%. Indebtedness totalling
$10.9 million are secured by land and buildings with a net book value of
$19.8 million at June 29, 1996.
Long-term debt maturing in each of the next five fiscal years is as
follows: 1997 - $8.4 million; 1998 - $8.4 million; 1999 - $9.4 million;
2000 - $8.5 million; and 2001 - $8.5 million.
Several loan agreements of the Company contain restrictions which, among
other things, require maintenance of certain financial ratios, restrict
encumbrance of assets and creation of indebtedness, and limit the payment
of dividends. At June 29, 1996, $190.6 million of the Company's retained
earnings of $349.6 million were unrestricted and available for the payment
of dividends under the most restrictive terms of the agreements.
G. Sales from Leased Departments
Retail sales from certain leased departments, included in net sales,
amounted to $34.9 million, $27.4 million and $18.8 million in fiscal 1996,
fiscal 1995 and fiscal 1994, respectively.
H. Lease Commitments
The Company leases 228 stores and office spaces under operating leases
that will expire principally during the next twenty years. The leases
typically include renewal options and escalation clauses and provide for
contingent rentals based on a percentage of gross sales.
The following is a schedule of future minimum lease payments under the
operating leases:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
(in thousands)
<S> <C>
<C>
Fiscal Year
__________________________________________________________________
1997 $ 60,664
1998 58,332
1999 54,938
2000 49,124
2001 45,273
Thereafter 314,125
- ------------------------------------------------------------------
Total minimum lease payments $ 582,456
- ------------------------------------------------------------------
</TABLE>
The above schedule of future minimum lease payments has not been reduced
by future minimum sublease rental income of $4.6 million under non-
cancelable subleases and other contingent rental agreements.
Total rental expenses under operating leases for the periods ended on June 29,
1996, July 1, 1995 and July 2, 1994 were $62.7 million, $57.1 million and
$47.3 million, respectively, including contingent rentals of $1.8
Page 41<PAGE>
million, $2.5 million, and $1.5 million, respectively. Rent expense for the
above periods has not been reduced by sublease rental income of $5.7 million,
$6.1 million, and $4.9 million which has been included in other income for
the periods ended June 29, 1996, July 1, 1995 and July 2, 1994, respectively.
The Company has irrevocable letters of credit in the amount of $15.6
million to guarantee payment and performance under certain leases, insurance
contracts and utility agreements.
I. Employee Retirement Plans
The Company has a noncontributory profit-sharing plan covering employees
who meet age and service requirements. Effective September 1, 1995, the
Company amended and restated the plan to provide additional retirement
security to particpants by adding a cash or deferred (salary deferral)
feature qualifying under Section 401(k) of the Internal Revenue Code.
Membership in the salary deferral feature is voluntary. Employees may,
up to certain prescribed limits, contribute to the 401(k) Plan and a
portion of these contributions are matched by the Company. In addition,
under the profit sharing feature, the Company's contribution to the plan is
determined annually by the Board of Directors. The provision for Company
profit sharing and 401(k) contributions was $5.0 million for fiscal
1996. The provision for profit sharing contibutions were $.9 million and
$4.2 million, respectively, for the periods ended July 1, 1995 and July 2,
1994.
J. Income Taxes
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
- ----------------------------------------------------------------------
Year ended 1996 1995 1994
(in thousands)
- ----------------------------------------------------------------------
Current:
Federal $17,112 $10,737 $24,779
State and Local 2,390 2,257 3,075
- ----------------------------------------------------------------------
Subtotal 19,502 12,994 27,854
Deferred 489 (2,920) (826)
- ----------------------------------------------------------------------
Total $19,991 $10,074 $27,028
- ----------------------------------------------------------------------
</TABLE>
A reconciliation of the Company's effective tax rate with the statutory
federal tax rate is as follows:
Page 42<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
______________________________________________________________________
Year ended 1996 1995 1994
______________________________________________________________________
Tax at statutory rate 35.0% 35.0% 35.0%
State income taxes, net
of federal benefit 3.9 4.7 2.8
Job tax credit -- (.3) (.9)
Other charges 1.9 1.0 .4
- ----------------------------------------------------------------------
Effective tax rate 40.8% 40.4% 37.3%
______________________________________________________________________
</TABLE>
Deferred income taxes for 1996, 1995 and 1994 reflect the impact of
"temporary differences" between amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws. These
temporary differences are determined in accordance with SFAS No. 109.
On August 10, 1993 the Omnibus Budget Reconciliation Act was enacted which
increased federal tax rates from 34% to 35%. The effect on current and
deferred taxes of this change in tax rates was not significant and was
recognized in income during fiscal 1994.
Temporary differences which give rise to deferred tax assets and
liabilities at June 29, 1996 and July 1, 1995 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended 1996 1995
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
(in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C>
Current:
Allowance for doubtful
accounts $ 399 $1,494
Compensated absences 692 657
Inventory costs
capitalized for tax
purposes 2,805 3,544
Insurance reserves 6,630 4,836
Prepaid items deductible
for tax purposes _____ $1,413 $2,117
Other 649 429
- ------------------------------------------------------------------------------
$11,175 $1,413 10,960 2,117
- -------------------------------------------------------------------------------
Non-Current:
Depreciation 11,111 9,706
Accounting for rent
expense 1,152 1,131
Pre-opening cost 2,615 35 2,414
Other 190
- -------------------------------------------------------------------------------
$ 3,767 $11,146 $3,735 $9,706
- -------------------------------------------------------------------------------
</TABLE>
No valuation account is deemed necessary.
Page 43<PAGE>
K. Supplementary Income Statement Information
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
- -------------------------------------------------------------------------------
Year ended 1996 1995 1994
(in thousands)
- -------------------------------------------------------------------------------
Advertising $44,172 $42,345 $38,793
Repairs and Maintenance $16,631 $15,533 $13,330
- -------------------------------------------------------------------------------
</TABLE>
All other required items are omitted since they are less than 1% of total
revenues.
L. Incentive Plans
In April 1983, the stockholders of the Company adopted a Stock Option and
Stock Appreciation Rights Plan (the "1983 Plan") which authorized the
granting of options for the issuance of 1,125,000 shares of common stock.
During 1988 the stockholders authorized the issuance of an additional
675,000 shares of common stock for a total of 1,800,000 shares under this
Plan. The 1983 Plan provided for the issuance of incentive stock options,
nonqualified stock options and stock appreciation rights. This plan
expired in April, 1993. In November, 1993, the stockholders of the
Company approved a stock incentive plan (the "1993 Plan"), authorizing the
granting of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance stock and other stock
based compensation. A total of 450,000 shares of common stock have been
reserved for issuance under the 1993 Plan. A summary of stock options
transactions in fiscal 1994, 1995 and 1996 is as follows (all data have
been restated to reflect the three-for-two stock split):
Page 44<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Number Option Price
of Shares Per Share
- ------------------------------------------------------------------
<S> <C> <C>
<C>
- ------------------------------------------------------------------
Options outstanding
July 3, 1993 . . . . . 379,401 $ 4.48 to $ 8.30
Options issued . . . . . 25,100 $24.69
Options cancelled . . . . . (5,445) $ 4.74 to $ 7.37
Options exercised . . . . . (81,011) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 2, 1994 . . . . . 318,045 $ 4.74 to $24.69
Options issued . . . . . 38,200 $11.50
Options cancelled . . . . . (5,290) $ 4.74 to $ 7.37
Options exercised . . . . . (16,404) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 1, 1995 . . . . . 334,551 $ 4.74 to $24.69
Options issued . . . . . 38,900 $11.38
Options cancelled . . . . . (6,525) $ 4.74 to $ 7.37
Options exercised . . . . . (15,456) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
June 29, 1996 . . . . . 351,470 $ 4.74 to $24.69
Options exercisable. . . . . 312,570 $ 4.74 to $24.69
- ------------------------------------------------------------------
</TABLE>
Included in the above are options to purchase 2,250 shares of stock issued
to a member of the Board of Directors at $8.22 per share which were
exercised during the year ended July 2, 1994.
During the fiscal year ended June 29, 1996, a restricted stock award of 10,000
shares of the Company's common stock was made to an officer of the company.
The fair market value on the date of the award was $108,800. The shares become
vested to the officer over a four year period based on certain employment
criteria. The unearned compensation related to this award is being amortized
over the vesting period.
Page 45<PAGE>
M. Interim Financial Information (Unaudited)
(All amounts in thousands except per share data.)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Net Income
Provision (Loss)
(Benefit) Net per
Net Gross for Income Income Share
Sales Profit Taxes (Loss) (1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>
1996:
First $291,227 $ 97,086 ($7,761) ($11,161) $(.27)
Second 658,631 233,760 33,769 48,784 1.20
Third 323,234 108,070 (3,089) (4,567) (.11)
Fourth 318,872 112,660 (2,928) (4,043) (.10)
- -------------------------------------------------------------------------------
1995:
First $299,242 $105,875 ($4,675) ($7,526) $(.18)
Second 656,492 218,309 26,442 43,115 1.06
Third 324,457 107,901 (5,144) (9,029) (.22)
Fourth 304,751 92,645 (6,549) (11,694) (.29)
- -------------------------------------------------------------------------------
</TABLE>
(1) Net income per share is based on the weighted average number of shares
outstanding during each of the quarters. The sum of the four quarters may
not equal the full year computation due to rounding.
On an interim basis the Company values inventory using the gross profit
method and at year-end values inventory at the lower of FIFO cost or
market as determined by the retail inventory method. The annual
adjustment for the difference between actual gross profit and interim
estimated gross profit is recorded in the fourth quarter of the fiscal
year. Results of quarterly operations are impacted by the highly seasonal
nature of the Company's business, timing of certain holiday selling
seasons and the comparability of calendar weeks within a quarter as a
result of the 52/53 week fiscal years.
N. Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, short-term investments,
accounts receivable and accounts payable approximate fair value because of
the short maturities of these items.
Interest rates that are currently available to the Company for issuance of
notes payable and long-term debt (including current maturities) with
similar terms and remaining maturities are used to estimate fair value for
debt issues. The estimated fair value of notes payable and long-term debt
(including current maturities) are as follows:
Page 46<PAGE>
<TABLE>
<CAPTION>
_____________________________________________________________________________
June 29, July 1,
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C>
Notes Payable -- -- $85,900 $85,900
Long-Term Debt
(including current maturities) $83,298 $83,556 $91,364 $92,930
- -----------------------------------------------------------------------------
</TABLE>
The fair values presented herein are based on pertinent information
available to management as of the respective year ends. Although
management is not aware of any factors that could significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and
current estimates of fair value may differ from amounts presented herein.
O. Legal Matters
In late September, 1994, the Company received summons and complaint in
three separate purported class action lawsuits. Each of the complaints
was consolidated into a single amended complaint which sought unspecified
damages and alleged a cause of action arising under certain federal
securities laws for alleged material misstatements and omissions in public
statements by the Company and five executive officers purportedly causing
the market price of the Company's common stock to be artificially inflated
during the period October 4, 1993 through September 23, 1994, inclusive.
On February 20, 1996, the District Court dismissed the plaintiff's amended
complaint in its entirety. In March, 1996, plaintiffs filed an appeal from
the District Court's decision in the United States Court of Appeals for the
Third Circuit. The Company is unable to determine the probability of any
potential loss with respect to these class actions or the materiality
thereof at this time and accordingly has not established any reserve for this
matter in the accompanying consolidated financial statements.
Page 47<PAGE>
Dividend Policy
The Company has not paid cash dividends in the past and does not currently
plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development
of the Company's business. Any payment of cash dividends in the future
will be at the discretion of the Company's Board of Directors and will
depend upon the financial condition, capital requirements and earnings of
the Company as well as other factors which the Board of Directors may deem
relevant. At June 29, 1996, $190.6 million of the Company's retained earnings
were unrestricted and available for the payment of cash dividends.
Market for the Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded on the New York Stock Exchange, Inc.
and its trading symbol is "BCF." The following table provides the high
and low closing prices on the New York Stock Exchange for each fiscal
quarter for the period from July 3, 1994 to June 29, 1996 and for the two
months ended August 31, 1996:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Period Low Price High Price
- ----------------------------------------------------------------
<S> <C> <C>
<C>
- -----------------------------------------------------------------
July 3, 1994 to 12 2/3 24 3/4
October 1, 1994
- -----------------------------------------------------------------
October 2, 1994 to 10 1/4 14 1/8
December 31, 1994
- -----------------------------------------------------------------
January 1, 1995 to 8 1/2 11 7/8
April 1, 1995
- -----------------------------------------------------------------
April 2, 1995 to 9 7/8 11 1/4
July 1, 1995
- -----------------------------------------------------------------
July 2, 1995 to 10 14 1/8
September 30, 1995
- -----------------------------------------------------------------
October 1, 1995 to 10 1/4 13 1/4
December 30, 1995
- -----------------------------------------------------------------
December 31, 1995 to 9 3/8 12 1/4
March 30, 1996
- -----------------------------------------------------------------
March 31, 1996 to 10 1/8 12 1/8
June 29, 1996
- -----------------------------------------------------------------
June 30, 1996 to 10 11 1/8
August 31, 1996
- -----------------------------------------------------------------
</TABLE>
Page 48<PAGE>
As of August 31, 1996, there were 547 record holders of the Company's
Common Stock. The number of record holders does not reflect that number
of beneficial owners of the Company's Common Stock for whom shares are
held by Cede & Co., certain brokerage firms and others.
Page 49<PAGE>
<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
Schedule II - Valuation and Qualifying Accounts
(All amounts in thousands)
- -------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E.
- -------------------------------------------------------------------------------
DESCRIPTION BALANCE AT CHARGED TO BALANCE AT
BEGINNING CHARGED TO OTHER ACCOUNTS END OF
OF PERIOD EXPENSE ACCOUNTS WRITTEN OFF PERIOD
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>
Period ended 6/29/96
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $3,711 $6,068 $0 $(8,789) $ 990
---------------------------------------------------------
Period ended 7/01/95
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,995 $5,162 $0 $(6,446) $3,711
---------------------------------------------------------
Period ended 7/02/94
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,237 $4,821 $0 $(4,063) $4,995
---------------------------------------------------------
</TABLE>
Page 50<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 51<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 52<PAGE>
File No. 1-8739
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
EXHIBITS FILED WITH
FORM 10-K
FOR FISCAL YEAR ENDED
June 29, 1996
under
The Securities Exchange Act of 1934
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(Exact Name of Registrant as specified in its Charter)
- ------------------------------------------------------------------------------
Page 53<PAGE>
INDEX TO EXHIBITS
Exhibits Page No.
3.1 Articles of Incorporation, as Amended 2/
3.2 By-laws 2/
10.1 1993 Stock Incentive Plan 2/
10.2 Revolving Credit Agreement dated 56
August 30, 1985 between the Company
and BancOhio National Bank as amended
through Amendment No. 6
10.3 Burlington Coat Factory Warehouse 154
Corporation 401(k) Profit-Sharing
Plan (as amended and restated effective
July 1, 1989)
10.4 Loan Agreement dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Burlington Coat Factory
Warehouse of New Jersey, Inc.
10.5 Assignment of Leases dated as of 1/
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity Bank,
National Association
10.6 Mortgage and Security Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
_______________
[FN]
<F1>
(1) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended July 1, 1995, File No. 1-8739.
<F2>
(2) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended July 3, 1993, File No. 1-8739.
[/FN]
Page 54<PAGE>
Exhibits Page No.
- -------- --------
10.7 Indenture of Trust dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association
10.8 Guaranty and Suretyship Agreement dated 1/
as of August 1, 1995 from the Company
to First Fidelity Bank, National
Association
10.9 Letter of Credit Reimbursement Agreement 1/
dated as of August 1, 1995 between
Burlington Coat Factory Warehouse of
New Jersey, Inc. and First Fidelity
Bank, National Association
10.10 Environmental Indemnity Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
10.11 Note Agreement dated June 27, 1990 1/
21 Subsidiaries of Registrant 199
23 Consent of Deloitte & Touche LLP 201
independent certified public accountants,
to the use of their report on the financial
statements of the Company for the fiscal
year ended June 29, 1996 in the Registration
Statements of the Company on Form S-8,
Registration No. 2-96332, No. 33-21569,
No. 33-51965 and No. 33-61351
27 Financial Data Schedule 203
Page 55<PAGE>
EXHIBIT 10.2
Page 56<PAGE>
REVOLVING CREDIT AGREEMENT dated August 30, 1985,
between BURLINGTON COAT FACTORY WAREHOUSE CORPORATION ("Borrower") and
BANCOHIO NATIONAL BANK, a National Banking Association ("Bank").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Business Day" means a day other than a Saturday, Sunday
or other day on which commercial banks are authorized or required
to close under the laws of Ohio.
"Capitalization" means the amount equal to Net Worth
plus Long-Term Liabilities.
"Code" means the Internal Revenue Code of 1954, as
amended.
"Commitment" has the meaning given to such term in
Section 2.01. hereof.
"Commitment Fee" has the meaning given to such term in
Section 2.O6 hereof.
"Commitment Termination Date" means the effective date
of the termination of the Commitment pursuant to Section 3.01
hereof.
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<PAGE>
"Consolidated" refers to the consolidation of the
accounts of Borrower and Subsidiaries in accordance with
generally accepted accounting principles, including principles of
consolidation, applied in a manner consistent with the
application of such principles in the preparation of the audited
financial statements mentioned in Section 6.04 hereof.
"Credit Obligation" means any obligation for the
payment of borrowed money, the installment purchase price of
property or sums due pursuant to capitalized leases.
"Current Assets" means all assets of Borrower on a
Consolidated basis that, in accordance with generally accepted
accounting principles consistently applied, would be classified
as current assets of Borrower on a Consolidated basis.
"Current Liabilities" means all liabilities of Borrower
on a Consolidated basis that, in accordance with generally
accepted accounting principles consistently applied, would be
classified as current liabilities of Borrower on a Consolidated
basis, except that "Current Liabilities" shall not include any
installment of principal due on the Notes or any of the notes
given by Borrower in connection with loans made by Mellon Bank
(East) National Association ("Mellon") pursuant to the loan
commitment of Mellon to Borrower being made at this time (the
"Mellon Commitment"), whether or not same would be characterized
as a short term obligation for accounting purposes. However, if
Borrower has committed letters of credit in amounts in excess of
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<PAGE>
Twenty-five Million Dollars ($25,000,000), the amount of such
letters of credit in excess of Twenty-five Million Dollars
($25,000,000) shall be included as "Current Liabilities," but
only to the extent of the first Twenty-five Million Dollars
($25,000,000) of such excess.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" has the meaning given to such term
in Section 8.02 hereof.
"Interest Rate Period" has the meaning given to such
term in Schedule A, Part 2 hereof.
"Loans" has the meaning given to such term in Section
2.01 hereof.
"Long-Term Liabilities" means the liabilities of
Borrower on a Consolidated basis other than Current Liabilities
and deferred tax.
"Net Working Capital" means the amount by which Current
Assets exceed Current Liabilities.
"Net Worth" means the amount by which the Consolidated
assets of Borrower exceed its Total Indebtedness.
"Note" has the meaning given to such term in Section
2.03 hereof.
"Plan" means an employee benefit plan or other plan
maintained by Borrower and covered by Title IV of ERISA.
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<PAGE>
"Reportable Event" has the meaning assigned to such
term in Section 4043(b) of ERISA or regulations issued thereunder,
except that the termination of a Plan or the cessation of making
contributions to a Plan shall not be deemed to be a "Reportable
Event" hereunder, provided that the Plan being terminated is not
materially underfunded or the cessation of contributions does not
cause the Plan to become materially underfunded.
"Subsidiary" means those corporations set forth on
Exhibit 6.12 hereof which are operating corporations fifty
percent (50%) or more of the voting capital stock or other
ownership interests of which is owned, directly or indirectly, by
Borrower.
"Tangible Net Worth" means the amount by which the
Consolidated tangible assets of Borrower exceed its Total
Indebtedness.
"Total Indebtedness" means all liabilities of Borrower
on a Consolidated basis.
"Working Day" means any day on which dealings in
foreign currencies and exchange between banks may be carried on
in both Columbus, Ohio and London, England at 9:00 A.M., Columbus
Time.
SECTION 1.02. Accounting Terms. All accounting terms
not specifically defined herein shall be construed, and all
financial data submitted pursuant to this Agreement shall be
prepared, in accordance with generally accepted accounting
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<PAGE>
principles and practices applied in a manner consistent with
the application of such principles and practices in the
preparation of the audited financial statements mentioned in
Section 6.04 hereof.
ARTICLE II
THE LOANS
SECTION 2.01. The Commitment. Subject to the terms and
conditions hereinafter provided, Bank shall lend Borrower, from
time to time during the period from the date hereof to and
including the Commitment Termination Date, such sums (the
"Loans") as Borrower may request in an aggregate principal amount
not to exceed at any time outstanding the amount of Twenty-five
Million Dollars ($25,000,000), as such amount may be reduced
pursuant to Section 2.08 hereof (such amount being the
"Commitment"). Each Loan shall be in an amount equal to not less
than One Million Dollars ($1,000,000). Within the limits of the
Commitment and prior to the Commitment Termination Date, Borrower
may borrow, repay and reborrow pursuant to this Section. 2.01.
SECTION 2.02. Making the Loans. Borrower shall give
Bank at least three (3) Working Days prior notice of each
proposed Loan that is to bear interest based upon "LIBOR" (as
defined in schedule A, Part 2 hereof) and at least two (2)
Business Days prior notice of each proposed Loan that is to bear
interest based on the "Certificate of Deposit Rate" (as defined
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<PAGE>
in Schedule A, Part 2 hereof). In the event any proposed Loan is
to bear interest based on any of the other rates defined in
Schedule A, Part 2 hereof, notice need not be given in advance of
the date of the Loan. Each such notice shall specify the date
and amount of the proposed Loan, the interest rate and Interest
Rate Period selected by Borrower in accordance with Sections 2.04
and 2.05 hereof, respectively. Notice may be given orally and
Bank shall give to Borrower confirmation by telex or telecopy of
its receipt of Borrower's oral notice. Bank shall make the
proceeds of each Loan available to Borrower by crediting the
amount thereof, in immediately available funds, to Borrower's
deposit account with Bank. The proceeds of Loans requiring
advance notice shall be credited to Borrower's said account not
later than 1:00 P.M., Columbus Time, on the third Working or
second Business Day, as the case may be, after notice of the
proposed Loan is given to Bank. The proceeds of all other
proposed Loans will be credited to said account on the day notice
is given unless notice is not given before 10:00 A.M., Columbus
Time, on such day, in which event the proceeds shall be credited
immediately upon the commencement of the next Business Day.
SECTION 2.03 The Note. The Loans shall be evidenced by
a promissory note of Borrower (the "Note"), dated the date of
this Agreement, payable to the order of Bank in the principal
amount of the Commitment and otherwise substantially in the form
of Exhibit 2.03 attached hereto. Bank shall endorse the Note
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<PAGE>
with an appropriate notation indicating the amount of each Loan
made by it hereunder and the amount of each payment or prepayment
on account of the principal balance of the Note. A copy of each
such annotation shall be delivered to Borrower promptly after
same is made.
SECTION 2.04. Interest Rates. The Loans shall bear
interest at the rates as selected by Borrower from the rates set
forth in Schedule A, Part 1 hereof.
SECTION 2.05. Maturities of Loans. Each Loan shall be
made payable at a maturity date as selected by Borrower in
accordance with the provisions of Schedule B annexed hereto,
except that no Loan shall be made payable at a date later than
the Commitment Termination Date.
SECTION 2.06. Rollover of Loans. If Borrower chooses
not to repay a Loan on its maturity date, Borrower may select, in
accordance with Schedules A and B hereof, a new interest rate and
Interest Rate Period for such Loan by notifying Bank of such new
interest rate and new Interest Rate Period (A) at least three (3)
Working Days in advance of the maturity date if the new interest
rate will be based upon "LIBOR," (B) at least two (2) Business
Days in advance of the maturity date if the new interest rate
will be based on the "Certificate of Deposit Rate," and (C) not
later than 10:00 A.M., Columbus Time, on the maturity date if the
new interest rate will be any of the other rates defined in
Schedule A, Part 2 hereof. If a Loan is not repaid prior to its
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<PAGE>
maturity date and Borrower fails to select a new interest rate
and Interest Rate Period in accordance with the foregoing,
Borrower shall be deemed to have chosen the "Prime Rate" (as
defined in Schedule A, Part 2 hereof) as the new interest rate
and the Loan shall be payable on demand, subject to the
provisions of Section 4.02 hereof.
SECTION 2.07. Commitment Fee. Borrower shall pay to
Bank a Commitment Fee computed at the rate of three-eighths of
one percent (0.375%) per annum on the average daily unused
portion of the Commitment (to the extent that the Commitment has
not been reduced pursuant to Section 2.08 hereof or terminated as
provided in Section 3.01 or 8.02 hereof) from the date of this
Agreement to and including the Commitment Termination Date and
payable (A) on September 30, 1985, for the period then ending,
(B) quarterly on the last day of March, June, September and
December in each year during the term of the Commitment,
commencing December 31, 1985, and (C) on the Commitment
Termination Date.
SECTION 2.08. Reduction of the Commitment. Except when
an "Event of Default" (as defined in Section 8.02 hereof) has
occurred and is continuing, Borrower shall have the right at any
time and from time to time, upon five (5) Business Days prior
written notice to Bank, to reduce the Commitment, without penalty
or premium. Any partial reduction shall be in an amount equal to
not less than One Million Dollars ($1,000,000) and the Commitment
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<PAGE>
may not be reduced to an amount equal to less than the aggregate
of the then current principal balance of the Loans unless it is
reduced by the full amount thereof. Any reduction of the
Commitment shall be permanent, and the Commitment cannot
thereafter be increased without the written consent of Bank.
ARTICLE III
TERM OF COMMITMENT
SECTION 3.01. Term. The term of the Commitment shall
commence on the date hereof and shall continue until the earlier
of August 29, 1988 and the effective date of a notice given
pursuant to Section 2.08 hereof reducing the Commitment by the
full amount thereof. This Agreement shall terminate on the later
of the Commitment Termination Date and the date of repayment in
full of all of the Loans.
SECTION 3.02. Change of Interest Rate. After the
Commitment Termination Date, interest shall accrue with respect
to each Loan at the rate designated in Schedule A, Part 1 in the
column Entitled "On and After Commitment Termination Date" as
applicable for each such Loan.
ARTICLE IV
PAYMENT TERMS
SECTION 4.01. Interest. Borrower shall pay interest on
the unpaid principal amounts of the Loans, from the respective
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<PAGE>
dates on which the Loans are made until such principal amounts
have been repaid in full, payable (A) on the last day of the
calendar quarter in which a Loan is made if the Loan remains
outstanding at the end of such calendar quarter, (B) while a Loan
remains outstanding, quarterly on the last day of March, June,
September and December in each year during the respective terms
of the Loans, commencing on the first of such dates after the
date on which payment is made pursuant to subparagraph (A) above,
and (C) on the date the principal amount of such Loan is
scheduled to be repaid in full, whether initially or as may be
extended in accordance with Section 2.06 hereof.
SECTION 4.02. Repayment of Loans. Borrower shall repay
the principal amount of the Loans outstanding on the Commitment
Termination Date in eight (8) consecutive quarterly installments
on the last day of each March, June, September and December in
each year, commencing on the second of such dates occurring after
the Commitment Termination Date. Each of the first seven (7) of
such installments shall be in the amount of whole dollars nearest
to one-eighth (1/8th) of the principal amount of the Loans, and
the last of such installments shall be in the amount necessary to
repay in full the principal amount of the Loans.
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<PAGE>
SECTION 4.03. Prepayments. Borrower may prepay the
Loans in whole at any time or in part from time to time, without
penalty or premium, except as provided below. However, no
prepayment of a Loan which would result in the unpaid principal
balance of such Loan being less than One Million Dollars
($1,000,000) may be made unless such Loan is prepaid in full.
With each prepayment, Borrower shall simultaneously pay accrued
interest to the date of such prepayment on the amount prepaid.
Each partial prepayment made after the Commitment Termination
Date shall be applied to the principal installments payable under
Section 4.02 hereof in the inverse order of their maturities.
Notwithstanding anything to the contrary herein, with respect to
all Loans except those bearing interest at the Prime Rate,
Borrower shall reimburse Bank for the expenses incurred by Bank
(including Bank's expenses in redeploying funds which expenses
include rate differences) which arise by reason of a prepayment
of any such Loan.
SECTION 4.04. Computation of Interest and Commitment
Fee. Interest on the Loans and the Commitment Fee shall be
computed on the basis of a year of three hundred sixty (360) days
for the actual number of days elapsed.
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<PAGE>
SECTION 4.05. Payments. All payments and prepayments of
principal of and interest on the Loans and all payments of
Commitment Fee shall be made to Bank in immediately available
funds and without deduction or set-off of any kind at 155 East
Broad Street, Columbus, Ohio 43251. Payments made after 3:00
P.M., Columbus Time, on a Business Day shall be deemed to have
been made on the next succeeding Business Day.
SECTION 4.06. Payment on Non-Business Days. Whenever
any payment of the Commitment Fee or under the Note shall be
stated to be due on a day which is not a Working or Business Day,
whichever is applicable, such payment may be made on the next
succeeding Working or Business Day, as the case may be, and such
extension of time in such case shall be included in the
computation of payment of the Commitment Fee or interest under
the Note, as the case may be.
SECTION 4.07. Yield Protections.
(A) If (i) on or before the date Bank is to make
or renew any Loan bearing interest based on LIBOR, Bank in good
faith determines it is unable to obtain funds in the London
Interbank Market or (ii) on or before the date Bank is to make or
renew any Loan bearing interest based on the Certificate of
Deposit Rate, Bank in good faith determines it is unable to issue
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<PAGE>
certificates of deposit, for the principal amount and the
Interest Rate Period of the Loan by reason of any change in any
law, regulation, rule, order or treaty, Bank shall promptly give
notice of such determination to Borrower and Borrower shall be
required to specify a different interest rate for such Loan or to
select a new Interest Rate Period for which Bank may obtain funds
at the rate the adjustment of which determines the specified
interest rate. In such event, the notice provisions set forth in
Article II hereof are waived.
(B) If, prior to the maturity of a Loan bearing
interest based on LIBOR or the Certificate of Deposit Rate, any
change in any law, regulation, rule, order or treaty prevents
Bank, in its good faith determination, from (i) maintaining funds
in the London Interbank Market (as to LIBOR Loans) or (ii)
issuing certificates of deposit (as to Certificate of Deposit
Rate Loans), for the principal amount and the Interest Rate
Period of the Loan and requires Bank to cease so maintaining
funds actually so maintained or to redeem certificates of deposit
previously issued prior to such maturity date, Bank shall
promptly give notice of such determination to Borrower and, on
the date of such required cessation or redemption, as the case
may be, Borrower shall select a new Interest Rate Period or
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<PAGE>
specify a new interest rate. Within thirty (30) days after such
required conversion, Borrower shall reimburse Bank with respect
to any loss or expense Bank incurs as a result of any such
required cessation or redemption.
(C) If, prior to the maturity date of a Loan
bearing interest at a "Fixed" rate (as provided and defined in
Schedule A hereof), any change in any law, regulation, rule,
order or treaty (other than changes to the tax rate[s] applicable
to Bank's income, in general) shall impose or charge any tax,
reserve, obligation, special deposit, insurance or other
requirements or charge with respect thereto, and the result is to
increase after tax the cost to Bank of obtaining, making or
maintaining such funds or to reduce the return to Bank on any
such Loan, Bank shall compute in good faith the amount required
to compensate Bank in full for such increased costs or such
reduced return and give Borrower prompt notice thereof setting
forth such computation with respect to such Loan or Loans.
Borrower shall pay to Bank within ten (10) days such additional
amount or amounts on the maturity date or dates of such Loan or
Loans. In determining such amount, Bank may use any reasonable
averaging and/or attribution methods.
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(D) If Borrower shall fail to select a new
interest rate or a new Interest Rate Period for a Loan pursuant
to Section 4.07 (A) or (B) above, or if notice under Section
4.07(A) above has been given, such Loan or portion thereof shall
bear interest at the Prime Rate.
SECTION 4.08. Compensation. Notwithstanding anything
to the contrary herein, Borrower shall reimburse Bank, upon its
written request (which request shall set forth the basis for
requesting such amounts), for all reasonable expenses, losses,
liabilities and penalties (including Bank's expenses in
redeploying funds which expenses include rate differences), which
Bank may sustain whether by reason of (A) prepayment in
accordance with Section 4.03 hereof, (B) any change in any law,
regulation, rule, order or treaty under Section 4.07 hereof, or
(C) any refusal by Borrower to accept the proceeds of any
proposed Loan after notice thereof has been given by Borrower
pursuant to Section 2.02 hereof.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. Conditions Precedent to the Initial Loan.
The obligation of Bank to make the initial Loan is subject to the
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condition precedent that Bank shall have received on or before
the day on which such initial Loan is to be made all of the
following, in form and substance reasonably satisfactory to Bank:
(A) A copy, certified in writing by the
Secretary or an Assistant Secretary of Borrower, of (1)
resolutions of the Board of Directors of Borrower
evidencing approval of this Agreement and the making of
the Loans and the delivery of the Note and other
matters contemplated hereby and (2) each document
evidencing other necessary corporate action and
governmental approvals, if any, with respect to this
Agreement, the Loans and the Note;
(B) A favorable opinion of Borrower's counsel as
to the matters mentioned in Sections 6.01, 6.02, 6.03,
6.05 and 6.09 hereof and as to such other matters as
Bank reasonably may request;
(C) A written certificate by the Secretary or an
Assistant Secretary of Borrower as to the names and
signatures of the officers of Borrower authorized to
sign this Agreement and the Notes and the other
documents or certificates of Borrower to be executed
and delivered pursuant hereto. Bank may rely
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conclusively on such certificate until it shall receive
a further certificate by the Secretary or an Assistant
Secretary of Borrower amending the prior certificate;
and
(D) The Note.
SECTION 5.02. Conditions Precedent to All Loans.
The obligation of Bank to make any Loan (including the
initial Loan) is subject to the further conditions precedent
that:
(A) The representations and warranties contained
in Article VI hereof shall be correct and accurate on
and as of the date of such Loan as though made on and
as of such date.
(B) No Event of Default shall have occurred and
be continuing or will result from the making of such
Loan, and no event shall have occurred and be
continuing which with notice or lapse of time or both
would, if unremedied, be an Event of Default. By
accepting the proceeds of any such Loan, Borrower shall
be deemed to have warranted the foregoing to Bank.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Bank as follows:
SECTION 6.01. Existence. Borrower is a corporation
duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Borrower has all requisite
power and authority, corporate and otherwise, to conduct its
business and to own its properties and is duly qualified as a
foreign corporation in good standing in all jurisdictions in
which its failure so to qualify would have a material adverse
effect on the financial condition or operations of Borrower on a
Consolidated basis.
SECTION 6.02. Authorization. The execution, delivery
and performance by Borrower of this Agreement and of the Note
have been duly authorized by all necessary corporate action, and
do not and will not violate any provision of law or of the
charter or by-laws of Borrower or any court order, judgment or
the like affecting Borrower or its properties, or result in a
breach of or constitute a default under any agreement, indenture
or instrument to which Borrower is a party or by which it or its
properties is bound or affected.
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SECTION 6.03. Validity of Agreement and Note. This
Agreement constitutes, and the Note when duly executed and
delivered will constitute, valid and legally binding obligations
of Borrower, enforceable in accordance with their respective
terms.
SECTION 6.04. Financial Information. The Consolidated
balance sheet and profit and loss and surplus statement of
Borrower as of October 31, 1984, certified by Touche Ross & Co.,
and the Consolidated balance sheet and profit and loss and
surplus statement of Borrower as of May 4, 1985, certified by the
chief financial officer of Borrower, copies of which have been
furnished to Bank, are complete and correct, show all material
liabilities, direct and contingent, and present fairly the
financial position, the results of operations and changes in
Consolidated financial position of Borrower at such dates and for
the periods ended on such dates, all in accordance with generally
accepted accounting principles consistently applied. Except as
disclosed in Exhibit 6.04 attached hereto, since May 4, 1985,
there has been no material adverse change in such financial
position or such results of operations.
SECTION 6.05. Litigation. Except as disclosed in
Exhibit 6.05 attached hereto, there are no actions, suits or
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proceedings pending or, to the knowledge of Borrower, threatened
against Borrower or any Subsidiary or any of their properties
before any court or governmental department, commission, board,
bureau, agency or instrumentality (domestic or foreign) that, if
determined adversely to Borrower or such Subsidiary, in the
aggregate would have a material adverse effect on the financial
condition or operations of Borrower on a Consolidated basis.
SECTION 6.06. Contingent Liabilities. There are no
suretyship agreements, guarantees or other contingent liabilities
of Borrower that are not disclosed by the financial statements
mentioned in Section 6.04 or by Exhibit 6.06 attached hereto or
that are permitted by Section 7.11 of which Bank is not aware.
SECTION 6.07. Taxes. Borrower has filed all tax
returns and reports required to be filed before the date of this
Agreement and has paid all taxes, assessments and charges imposed
upon it or its property, or that it is required to withhold and
pay over, to the extent that they were required to be paid over
before the date of this Agreement.
SECTION 6.08. Encumbrances. The property and assets of
Borrower are not subject to any material lien, encumbrance or
security interest that has arisen other than in the normal course
of business, except as disclosed by Exhibit 6.08 attached hereto.
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SECTION 6.09. Consents. No authorization, consent,
approval, license, exemption by or filing or registration with
any court or governmental department, commission, board (in-
cluding the Board of Governors of the Federal Reserve System),
bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for the valid execution, delivery or
performance by Borrower of this Agreement or the Notes.
SECTION 6.10. ERISA. Except as described in Exhibit
6.10 attached hereto, no Reportable Event or failure of
compliance with the Code as required by Section 7.18 hereof has
occurred and is continuing with respect to any Plan.
SECTION 6.11. Regulation U. The proceeds of the Loans
will not be used to "purchase" or "carry" "margin stock" (as such
terms are defined in Regulation U of the Board of Governors of
the Federal Reserve System).
SECTION 6.12. Subsidiaries. The name, address and
state of incorporation of each Subsidiary is set forth on Exhibit
6.12 annexed hereto. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of its state of
incorporation.
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ARTICLE VII
COVENANTS OF BORROWER
So long as any Loan shall remain unpaid or Bank shall have any
Commitment hereunder, unless Bank shall otherwise consent in writing:
SECTION 7.01. Use of Proceeds.
The proceeds of the Loans may be used for (A) working capital purposes and
(B) for temporary financing of capital projects in anticipation of term
financing for such projects. Borrower shall use its good faith
efforts to repay the sums borrowed from Bank for any such
temporary financing as promptly as reasonably practicable.
The proceeds of the Loans may not be used to purchase or carry margin
stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System and Borrower shall take
no action which would result in a violation of Regulation U or
Regulation X of the Board of Governors of the Federal Reserve
System.
SECTION 7.02. Financial Information. Borrower will
furnish to Bank (A) a Consolidated balance sheet and profit and
loss and surplus statement of Borrower within sixty (60) days
after the close of each fiscal quarter of Borrower, (B) a copy of
Borrower's annual report containing a Consolidated balance sheet,
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profit and loss and surplus statement and statement of changes in
financial condition of Borrower within one hundred (100) days
after the close of each of its fiscal years, and (C) a copy of
each filing made by Borrower with the Securities and Exchange
Commission as promptly as reasonably practicable but in no event
more than fifteen (15) days after the filing thereof. All data
will be prepared according to generally accepted accounting
principles consistently applied. Annual statements will be
certified by Touche Ross & Co., or other independent public
accountants acceptable to Bank, with only those qualifications
that relate to the outcome or disposition of pending or
threatened litigations, claims or assessments the impact of which
cannot be determined with sufficient certainty to permit
quantification in an amount which would allow the statement to be
unqualified. All other data will be certified by the chief
financial officer of Borrower. Each quarterly and annual
statement will be accompanied by a certificate by the chief
financial officer of Borrower that, except to the extent revealed
by him in such certificate, he has no knowledge that an Event of
Default has occurred or that any event has occurred that with the
passage of time or the giving of notice or both would, if
unremedied, be an Event of Default.
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SECTION 7.03. Insurance. Borrower will maintain and
will cause each Subsidiary to be covered by insurance, including
casualty and public liability insurance, with responsible and
reputable insurance companies in such amounts and covering such
risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general
areas in which Borrower or such Subsidiary operates or owns such
properties.
SECTION 7.04. Tax Covenants. Borrower will pay and
will cause each Subsidiary to pay, when due, all taxes,
assessments and charges imposed upon it or its property or that
it is required to withhold and pay over, except where contested
in good faith and where adequate reserves have been set aside.
Where a contest is undertaken which may have a material impact on
Borrower if decided adversely to Borrower, Borrower shall give
Bank notice of such contest.
SECTION 7.05. Covenants Regarding Encumbrances.
Borrower will not create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to
exist, any mortgage, pledge, lien or other encumbrance of any
kind upon, or any security interest in (collectively, "encumbrances"),
any of its property or assets, whether now owned or
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hereafter acquired, except (A) liens for taxes not yet delinquent
or being contested in good faith and by appropriate proceedings,
(B) liens in connection with worker's compensation, unemployment
insurance or other social security obligations, (C) deposits or
pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), statutory obligations, surety or
appeal bonds, and other obligations of like nature arising in the
ordinary course of business, (D) mechanic's, workman's,
materialman's, landlord's, carrier's, or other similar liens
arising in the ordinary course of business with respect to
obligations that are not due or that are being contested in good
faith, (E) the encumbrances mentioned in Section 6.08 hereof, (F)
encumbrances on newly acquired real or personal property arising
from borrowings to finance the acquisition of such real or
personal property, including, without limitation, encumbrances on
the assets of any corporation or other entity Borrower acquires
if such encumbrances secure borrowings by Borrower to acquire
said corporation or other entity, provided that the amount of any
such encumbrance is not in excess of the greater of the purchase
price or the fair market value of the acquired property, (G)
other encumbrances on property owned by Borrower or any
Subsidiary made in connection with borrowings in an aggregate
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amount equal to not more than Three Million Dollars ($3,000,000),
(H) encumbrances relating to borrowings by any Subsidiary from
Borrower or any other Subsidiary, and (I) other encumbrances
(such as easements, rights of way, covenants and restrictions)
not materially affecting the value of the property affected
thereby.
SECTION 7.06. Current Assets and Liabilities. Borrower
will maintain Current Assets in an amount which is not less than
One Hundred Twenty Percent (120%) of Current Liabilities.
SECTION 7.07. Tangible Net Worth. Borrower's Tangible
Net Worth as at the end of any of its fiscal years during the
term of this Agreement shall be equal to not less than (A) Eighty
Million Dollars ($80,000,000) plus (B) Six Million Dollars
($6,000,000) multiplied by the number of full fiscal years which
have elapsed since the end of the 1984 fiscal year. If Borrower
changes its fiscal year, the minimum Tangible Net Worth as at the
end of the new fiscal year end shall be equal to the minimum
Tangible Net Worth which would have been required had the fiscal
year end not been changed plus Six Million Dollars ($6,000,000)
multiplied by a fraction the numerator of which is the number of
months between the previous fiscal year end and the new fiscal
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year end (e.g., three (3), if the new fiscal year end is January
31) and the denominator of which is twelve (12).
SECTION 7.08. Total Indebtedness. Borrower will not
permit Total Indebtedness to exceed One Hundred Eighty Percent
(180%) of Tangible Net Worth.
SECTION 7.09. Long-Term Liabilities. Borrower will not
permit Long-Term Liabilities to exceed sixty percent (60%) of the
Capitalization.
SECTION 7.10. Disposal of Assets. Borrower will not
sell, lease, transfer or otherwise dispose of all or substan-
tially all of the assets of Borrower on a Consolidated basis.
SECTION 7.11. Guarantees, etc. Borrower will not
become, and will not permit any Subsidiary to become, liable on
the obligation of anyone other than Borrower or a Subsidiary,
except by endorsement of negotiable instruments for deposit or
collection in the usual course of business. Notwithstanding the
foregoing, in addition to any guarantees by Borrower of any
obligation of any Subsidiary, including, without limitation,
guarantees of trade indebtedness, and any guarantees by any
Subsidiaries of any obligation of Borrower or any other
Subsidiary, including, without limitation, guarantees of trade
indebtedness (all of which may be made without the approval of
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Bank as provided above), Borrower and Subsidiaries may guarantee
the obligations of the issuing authority in connection with
Industrial Revenue (or similar) Bonds issued to finance the
purchase or construction of facilities for Borrower or
Subsidiaries and may guarantee any other third party obligations
in amounts aggregating up to Twenty Million Dollars
($20,000,000).
SECTION 7.12. Loans and Investments. Borrower will not
make, and will not permit any Subsidiary to make, any loan or
investment, except:
(A) investments in and loans to Subsidiaries and
future Subsidiaries;
(B) investments in direct obligations of the
United States of America and in certificates of deposit or
commercial paper acceptable to Bank;
(C) investments in preferred stock of corpora-
tions rated single A or better provided that such investments do
not exceed ten percent (10%) of Tangible Net Worth; and
(D) any other investments provided that (1) each
such investment made under this Section 7.12(D) shall mature no
later than one (1) year after the date made, and (2) the
aggregate of such investments made under this Section 7.12
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(D) outstanding at any one time shall not exceed four percent
(4%) of Tangible Net Worth.
SECTION 7.13. Compliance with Laws. Borrower will
comply, and will cause each Subsidiary to comply, with all laws
and regulations applicable to it in the operation of its business
except where failure to comply would not have a material adverse
effect on the financial condition or operations of Borrower on a
Consolidated basis.
SECTION 7.14. Maintenance of Property. Borrower will
maintain, and will cause each Subsidiary to maintain, in
appropriate condition and repair, all of their respective
property necessary for the operation of their respective
businesses.
SECTION 7.15. Inspection by Bank. Borrower will
permit, and will cause each Subsidiary to permit, representatives
of Bank to inspect its property and its books and records at
reasonable times during business hours and to make extracts
therefrom. All information of Borrower and Subsidiaries learned
by Bank and extracts made from such books and records shall be
deemed to be confidential and proprietary information to be held
by Bank in trust, subject to banking and auditing requirements
and standards and applicable laws and regulations.
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SECTION 7.16. Indebtedness for Borrowed Money.
Borrower will not borrow, and will not permit any Subsidiary to
borrow, any funds except pursuant to the following types of
borrowings: (A) borrowings by Subsidiaries from Borrower as
provided in Section 7.12 hereof; (B) borrowings from Mellon
pursuant to the Mellon Commitment; (C) borrowings of the type
described in Sections 7.05(F), (G) and (H) hereof; and (D)
borrowings from Bank hereunder. The foregoing exceptions, in the
aggregate, are subject, however, to the provisions of Sections
7.08 and 7.09 hereof. Nothing herein contained shall be deemed
in any way to limit the right and ability of Borrower and
Subsidiaries to post letters of credit or to incur trade
indebtedness in the ordinary course of their respective
businesses.
SECTION 7.17. Reports. Borrower will furnish to Bank:
(A) as soon as possible and in any event within five
(5) business days after Borrower becomes aware of the occurrence
of any Event of Default, or any event which with notice or
passage of time or both would, if unremedied, constitute an Event
of Default, a written statement by the chief executive or chief
financial officer of Borrower setting forth details of such Event
of Default or event, stating whether or not the same is
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continuing and, if so, the action that Borrower proposes to take
with respect thereto;
(B) as soon as possible and in any event within five
(5) business days after receiving knowledge thereof, notice in
writing of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Borrower or any
Subsidiary, or any adverse determination therein, which is
material to the financial condition of Borrower on a Consolidated
basis or is material for the continued operation of Borrower;
(C) as soon as possible and in any event within
thirty (30) days after Borrower learns that any Reportable Event
has occurred with respect to any Plan, a written statement by the
chief executive or chief financial officer of Borrower setting
forth details of the Reportable Event and indicating what action,
if any, Borrower proposes to take with respect thereto, together
with a copy of any required notice of such Reportable Event to
the Pension Benefit Guaranty Corporation;
(D) as soon as possible and in any event within five
(5) business days after Borrower becomes aware of the occurrence
of a material adverse change in the business, properties or the
operations and condition (financial or otherwise) of Borrower on
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a Consolidated basis, a statement by the chief executive or chief
financial officer of Borrower setting forth details of such
material adverse change and the action that Borrower proposes to
take with respect thereto; and
(E) such other information respecting the business,
properties, condition and operations (financial or otherwise) of
Borrower or any Subsidiary as Bank may at any time and from time
to time reasonably request be furnished to it.
SECTION 7.18. ERISA. Borrower will maintain, and will
cause each Subsidiary to maintain, each Plan in material
compliance with the provisions of ERISA and the Code. The
foregoing, however, shall not be deemed to prevent any Plan from
being terminated or to prevent Borrower from ceasing to make
contributions to any Plan, provided that the Plan being
terminated is not materially underfunded and the cessation of
contributions does not cause the Plan to become materially
underfunded.
SECTION 7.19. Merger. Borrower may merge into or be
consolidated with any entity provided that the entity acquiring
or succeeding to Borrower shall expressly assume the obligations
of Borrower to Bank in writing, in form and substance reasonably
satisfactory to Bank, executed by such entity and delivered to
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Bank not later than the effective date of such acquisition,
merger or consolidation. In addition, nothing herein contained
shall prevent Borrower from being a party to any merger and
taking such actions, including, without limitation, borrowing
money and issuing stock, as are deemed necessary or appropriate
by the Board of Directors of Borrower in connection therewith,
(A) where Borrower is the surviving corporation and (B) provided
that after any such merger no event shall have occurred and be
continuing that constitutes an Event of Default or that with
notice or lapse of time or both would, if unremedied, constitute
an Event of Default. Nothing herein contained shall be construed
in any way as limiting the right or ability of any Subsidiary to
be involved in a merger or consolidation. Notwithstanding the
foregoing, Borrower shall give Bank reasonable advance notice of
any proposed merger (other than a merger of Subsidiaries or
between Borrower and any Subsidiary where Borrower is the
survivor). Borrower shall not complete any proposed merger
without the prior approval of Bank, which shall not be withheld
or delayed unreasonably, it being acknowledged by Bank that speed
may be of the utmost importance with respect to certain proposed
transactions. Except as provided in the proviso at the end of
this sentence, any disapproval by Bank shall be based solely upon
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the financial condition of Borrower or the company into which it
is merged immediately after the merger; neither the nature of the
business of the other company nor any other non-financial factors
may be utilized as a basis for disapproval, provided that the
business of the other company is of a type not inconsistent with
Bank's customary lending standards.
SECTION 7.20. Transactions with Controlling Persons.
Borrower will not enter into, and will not permit any Subsidiary
to enter into, material transactions with any person controlling
Borrower unless each such material transaction is on an arms
length, fair market value basis.
SECTION 7.21. Nature of Business. The nature of the
business of Borrower on a Consolidated basis will not be changed
materially from the nature of such business as conducted at the
date of this Agreement.
SECTION 7.22. Dividends. Borrower will not pay any
dividend (other than dividends payable in shares of its own
stock) or make any other payment on or to acquire its stock in
any fiscal year unless Borrower's Net Worth exceeds One Hundred
Ten Million Dollars ($110,000,000) in such fiscal year; Borrower
then may pay dividends of up to one-third (1/3rd) of its after-
tax earnings for such fiscal year.
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SECTION 7.23. Determining Compliance. Compliance with
the financial covenants set forth in this Article VII will be
determined on a quarterly basis at the time of the delivery of
the financial statements described in Section 7.02(A) hereof,
except for the Tangible Net Worth covenant set forth in Section
7.07 hereof, which will be determined as at the end of each of
Borrower's fiscal years during the term of this Agreement.
SECTION 7.24. New Subsidiaries. Borrower shall advise
Bank, on a quarterly basis and from time to time upon request of
Bank, of the formation and commencement of operation of any new
Subsidiary and its name, address and state of incorporation, and
of the termination of business or the merger of any Subsidiary.
ARTICLE VIII
DEFAULT
SECTION 8.01. Events of Default. Each of the
following shall constitute a default hereunder:
(A) If Borrower shall fail to pay (1) any principal
of the Loans within five (5) Business Days after the same is due
and payable and unpaid, or (2) any interest on the Loans or any
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Commitment Fee within ten (10) days after the same is due,
payable and unpaid.
(B) If any representation or warranty made in this
Agreement or in any certificate, agreement, instrument, statement
or report contemplated hereby or made or delivered pursuant
hereto or in connection herewith, shall prove to have been
incorrect as it may relate to the financial condition or
operations of Borrower on a Consolidated basis in any material
respect.
(C) If Borrower shall fail to perform or observe any
material term, covenant or agreement contained in this Agreement
on its part to be performed or observed (other than those set
forth in Section 8.01(A) hereof), and any such failure remains
unremedied for fifteen (15) calendar days after Bank has given
Borrower notice thereof in compliance herewith, or, if such
default is not remediable within said fifteen (15) day period,
Borrower is not diligently taking all necessary steps to remedy
the default as promptly as practicable.
(D) If Borrower or any Subsidiary shall fail to pay
any material Credit Obligation owing by it, or any interest or
premium thereon, when due, whether such Credit Obligation shall
become due by scheduled maturity, by required prepayment, by
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acceleration, by demand or otherwise, or shall fail to perform
any material term, covenant or agreement on its part to be
performed under any material agreement or instrument evidencing
or securing or relating to any such Credit Obligation when
required to be performed, if the effect of such failure is to
accelerate, or to permit the holder or holders of such Credit
Obligation to accelerate, the maturity of such Credit Obligation,
and such failure has a material adverse effect on the financial
condition, properties or operations of Borrower on a Consolidated
basis, whether or not such failure to perform shall be waived by
the holder or holders of such Credit Obligation, unless such
waiver has the effect of terminating the right of such holder or
holders to accelerate the maturity of such Credit Obligation as a
result of such failure.
(E) If an order for relief shall be entered against
Borrower or if Borrower shall become insolvent, or admit in
writing its inability to pay its debts as they mature, or make an
assignment for the benefit of its creditors; or if Borrower shall
apply for a consent to the appointment of any receiver, trustee,
or similar officer for it or for all or any substantial part of
its property; or such receiver, trustee or similar officer shall
be appointed without the application or consent of Borrower, and
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shall continue undischarged for a period of sixty (60) days
without Borrower seeking to have him discharged; or if Borrower
shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any
jurisdiction; or if any such proceeding shall be instituted (by
petition, application or otherwise) against Borrower and an order
for relief shall be entered in such proceeding or such proceeding
shall remain undismissed for a period of sixty (60) days without
Borrower seeking to have it dismissed, or if any judgment, writ,
warrant of attachment or execution or similar process shall be
issued or levied against property of Borrower which represents a
substantial portion of the property of Borrower on a Consolidated
basis and such judgment, writ, or similar process shall not be
released, vacated or fully bonded within sixty (60) days after
its issue or levy.
(F) If (1) any Reportable Event, or any failure of
compliance required by Section 7.18 hereof, that Bank reasonably
determines in good faith creates a reasonable possibility of the
termination of any material Plan or of the appointment by the
appropriate United States district court of a trustee to
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administer any such Plan shall have occurred and be continuing
thirty (30) days after written notice to such effect shall have
been given to Borrower by Bank, or (2) the plan administrator of
any such Plan shall file with the Pension Benefit Guaranty
Corporation a notice of intention to terminate such Plan, without
indicating an intention to create a new Plan, or (3) the Pension
Benefit Guaranty Corporation shall institute proceedings to
terminate any such Plan or to appoint a trustee to administer any
such Plan and such proceedings shall remain undismissed or
unstayed for three (3) Business Days and if, in any of the cases
described in the foregoing clauses (1) to (3), Bank further
reasonably determines in good faith that the amount of the
unfunded guaranteed benefits (within the meaning of Title IV of
ERISA) resulting upon termination of an such Plan would have a
material adverse affect on the financial condition, properties or
operations of Borrower on a Consolidated basis if a lien against
the assets of Borrower were to result under ERISA.
SECTION 8.02. Termination of Commitment; Acceleration.
If any of the events described in Section 8.01 ("Events of
Default") shall occur and be continuing beyond the applicable
notice and/or grace period, if any, relating thereto, as set
forth in said Section, Bank may (A) declare the Commitment to be
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terminated, whereupon the Commitment and the obligation of Bank
to make Loans hereunder shall forthwith terminate, and (B)
declare the entire unpaid principal amount of the Note, all
interest accrued and unpaid thereon and all other amounts payable
hereunder to be forthwith due and payable, whereupon the Note,
all such accrued interest and all such amounts shall become and
be forthwith due and payable upon notice to Borrower, without
presentment, demand, protest, or other further notice of any
kind, all of which are hereby expressly waived by Borrower.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. No Waiver; Cumulative Remedies. No
failure or delay on the part of Bank or Borrower in exercising
any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy
hereunder. No waiver of any provision hereof shall be effective
unless the same shall be in writing and signed by the party
against which enforcement is sought. The remedies herein
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provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.02. Costs and Expenses. Borrower agrees to
pay on demand all reasonable costs and expenses of Bank in
connection with the preparation, execution, delivery and
administration of this Agreement, the Note and the other
instruments and documents to be delivered hereunder (including
the reasonable fees and out-of-pocket expenses of counsel with
respect thereto). In addition, Borrower agrees to pay on demand
all reasonable costs and expenses, if any, of Bank in connection
with the enforcement by Bank of this Agreement, the Note and the
other instruments and documents to be delivered hereunder
(including the reasonable fees and out-of-pocket expenses of
legal counsel with respect thereto). Also, Borrower shall
indemnify Bank for any damages incurred by Bank by reason of the
use of the proceeds of the Loans other than as provided in
Section 7.01 hereof.
SECTION 9.03. Notice. Except as specifically
provided in Section 2.02 hereof with respect to the making of
Loans, all reports, requests, demands and notices (collectively,
"notices") required or permitted by this Agreement to be given to
a party shall be in writing and shall be deemed to be duly given
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if personally delivered or on the fourth (4th) Business Day after
being mailed (by certified or registered mail, return receipt
requested) to the party concerned at the following address (or at
such other address as a party may specify by notice to the
other):
If to Borrower: Route 130
Burlington, New Jersey 08016
Attn: Monroe G. Milstein and
Irving Yacht
With copy to: Phillips, Nizer, Benjamin, Krim & Ballon
40 West 57th Street
New York, New York 10019
Attn: Andrew R. Milstein, Esq.
If to Bank: 155 East Broad Street
Columbus, Ohio 43251
Attn: Mr. Roger St. Cyr
with copy to: BancOhio National Bank
155 East Broad Street
Columbus, Ohio 43251
Attn: Legal Division
No notice to Borrower or Bank shall be deemed duly
given unless both the notice and the aforesaid copy are delivered
as provided above.
SECTION 9.04. Title 11, United States Code. Borrower
and Bank agree to the following standards for assumption or
attempted assignment of this Agreement pursuant to Title 11 of
the United States Code, as the same may be amended from time to
time ("Title 11") :
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(A) It is expressly agreed by and between
Borrower and Bank that this Agreement constitutes a contract to
extend both a loan and financial accommodation to or for the
benefit of Borrower and that this Agreement may not be assumed or
assigned pursuant to Title 11 without the express written consent
of Bank; and
(B) It is expressly agreed and stipulated by and
between Borrower and Bank that this Agreement has been made with
Borrower: because of Borrower's reputations, abilities and
talents, and the reputations, abilities and talents of Borrower's
key employees and officers, and Bank's reliance upon such
qualifications, which are particular and unique to Borrower and,
without the express written consent of Bank, Bank is excused from
accepting performance from or rendering performance to any
assignee or successor (whether by operation of law or otherwise)
of Borrower. Any provision of this Agreement which becomes
unenforceable by reason of the commencement of a case under Title
11 shall again be valid and enforceable upon the termination of
that case.
SECTION 9.05. Governing Law. This Agreement and the
Notes shall be governed in all respects by the laws of the State
of Ohio and for all purposes shall be construed in accordance
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with such laws. Borrower hereby consents to the jurisdiction of
the courts of the State of Ohio in connection with actions
brought by Bank therein to enforce its rights hereunder or under
the Note.
SECTION 9.06. Modification. This Agreement may not be
modified, discharged or terminated orally.
SECTION 9.07. Headings. Article and Section headings
used in this Agreement are for convenience only and shall not
affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized on the date first above written.
BURLINGTON COAT FACTORY BANCOHIO NATIONAL BANK
WAREHOUSE CORPORATION
By:/s/ Monroe G. Milstein, By: /s/ Roger St.Cyr,
President Vice-President
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SCHEDULE "A"
INTEREST RATES
PART I
Rates*
Prior to Commitment Termina- On and After Commitment
tion Date Termination Date
1. Prime Rate, Floating Prime Rate + 1/4%, Floating
2. LIBOR, Fixed LIBOR + 1/4%, Fixed
3. Certificate of Deposit Rate, Certificate of Deposit Rate +
Fixed 1/4%, Fixed
4. Bank's Rate for Ineligible Bank's Rate for Ineligible
Acceptances, Fixed Acceptances + 1/4%, Fixed
5. BancOhio Cost of Funding BancOhio Cost of Funding Rate
Rate, Fixed + 1/4%, Fixed
* All terms used herein are defined in Schedule A, Part 2
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SCHEDULE "A"
PART 2
Definitions
1. "BancOhio Cost of Funding Rate" means, with
respect to any Interest Rate Period, a rate of interest equal to
50 basis points per annum in excess of Bank's "cost of funding"
for a loan of equal term, as determined by Bank, determined as if
Bank funded the term loan by a borrowing by Bank in any market
chosen by Bank (such as, but not limited to, eurodollars or
certificates of deposit matched lending) of an amount sufficient
to fund the term loan for a similar term, regardless of whether
or not Bank actually chooses so to fund the term loan. The
"costs of funding" shall include those direct costs to Bank which
would be associated with obtaining a sufficient amount of dollars
in the market chosen by Bank to lend to Borrower the amount of
the term loan requested for the period involved and also shall
include indirect costs to Bank of obtaining such funds, such as,
but not limited to, reserves, insurance (such as, but not limited
to, FDIC insurance), regulatory or governmental charges, fees,
licenses, taxes or surcharges which may be imposed, assessed or
otherwise could be incurred by reason of the acquisition of such
funds, and any indirect costs to Bank of making loans, such as,
but not limited to, reserves, insurance, regulatory or
governmental charges, fees, licenses, taxes or surcharges
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relating thereto, but exclusive of Bank's overhead costs
unrelated to making loans.
2. "Certificate of Deposit Rate" means with respect
to any Interest Rate Period, that rate per annum which is the
sum of 56 basis points, plus:
(A) the quotient of (1) the per annum rate of interest
(expressed as a percentage) offered by Bank as of 10:00
A.M. (Columbus, Ohio, time) (or as soon thereafter as
practicable) on the first day of the applicable
Interest Rate Period for the purchase of its
certificates of deposit in denominations of $500,000.00
and having a maturity comparable to such Interest Rate
Period, divided by (2) a percentage equal to 100% minus
the maximum rate of all reserve requirements (expressed
as a percentage) as specified in Regulation D of the
Board of Governors of the Federal Reserve System
(including, without limitation, any marginal,
emergency, supplemental, special or other reserves)
that for the date the Certificate of Deposit Rate is
being determined would be applicable during the
Interest Rate Period to a negotiable certificate of
deposit of Bank in an amount of $500,000.00 and with a
maturity period equal to the Interest Rate Period, plus
(B) the annual assessment rate per annum (expressed
as a percentage estimated by Bank on the first day of
the applicable Interest Rate Period for determining the
then current annual assessment payable by Bank to the
Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's)
insuring U.S. Dollar Deposits of Bank in the United
States).
3. "Bank's Rate for Ineligible Acceptances" means,
with respect to any Interest Rate Period,
(A) a rate equal to 80 basis points per annum in
excess of the bid rate for Ineligible Acceptances as quoted on
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the first day of the applicable Interest Rate Period by a New
York City broker/dealer chosen by Bank dealing in similar
operations, or
(B) in the event that there is no such quote
available on the day of delivery, then a rate equal to 100 basis
points per annum in excess of the bid rate for banker's
acceptances eligible for discount with Federal Reserve Banks
under Section 201.4(b) of Regulation A of the Board of Governors
of the Federal Reserve System as quoted on the first day of the
applicable Interest Rate Period by a New York City broker/dealer
chosen by Bank dealing in similar operations.
4. "Fixed" means that the interest rate chosen shall
remain in effect for the entire Interest Rate Period.
5. "Floating" means that the interest rate chosen
shall change during the Interest Rate Period based upon the
changes made in such interest rate from time to time during the
Interest Rate Period.
6. "Ineligible Acceptance" shall mean a banker's
acceptance not eligible for discount with Federal Reserve Banks
under Section 201.4(b) of Regulation A of the Board of Governors
of the Federal Reserve System.
7. "Interest Rate Period" means: (A) with respect to
each LIBOR Loan:
(1) initially, the period commencing on the date
of such borrowing and ending one, two, three or six months
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thereafter, as Borrower may elect in the applicable notice of
borrowing; and
(2) thereafter, each period commencing on the
last day of the next preceding Interest Rate Period applicable to
such borrowing and ending one, two three or six months
thereafter, as Borrower may elect pursuant to Section 2.06 of the
Agreement, provided that:
(a) no Interest Rate Period shall extend beyond the
Commitment Termination Date;
(b) any Interest Rate Period which would otherwise end
on a day which is not a Working Day shall be extended to the next
succeeding Working Day unless such Working Day falls in another
calendar month, in which case such Interest Rate Period shall end
on the next preceding Working Day;
(c) any Interest Rate Period which begins on the last
Working Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Rate Period) shall, subject to clause (d) below,
end on the last Working Day of a calendar month; and
(d) if any Interest Rate Period includes a date on
which a payment of principal of the Loans is required to be made
but does not end on such date, then (i) the principal amount (if
any) of each LIBOR Loan required to be repaid on such date shall
have an Interest Rate Period ending on such date, and (ii) the
A-5
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<PAGE>
remainder (if any) of each such LIBOR Loan shall have an
Interest Rate Period determined as set forth above.
(B) With respect to each Certificate of Deposit Rate,
Bank's Rate for Ineligible Acceptances or BancOhio Cost of
Funding Rate Loan:
(1) initially, the period commencing on the date
of such borrowing and ending thirty (30), sixty (60), ninety (90)
or one hundred eighty (180) days thereafter, as Borrower may
elect in the applicable notice of borrowing; and
(2) thereafter, each period commencing on the
last day of the next preceding Interest Rate Period applicable to
such borrowing and ending thirty (30), sixty (60), ninety (90),
or one hundred eighty (180) days thereafter, as Borrower may
elect pursuant to Section 2.06 of the Agreement, provided that:
(a) no Interest Rate Period shall extend beyond the
Commitment Termination Date;
(b) Any Interest Rate Period (other than an Interest
Rate Period determined pursuant to clause (c) below) which would
otherwise end on a day which is not a Working Day shall be
extended to the next succeeding Working Day; and
(c) any Interest Rate Period includes a date on which
payment of principal of the Loans is required to be made does not
end on such date, then the principal amount (if any) of each
Certificate of Deposit Rate, Bank's Rate for Ineligible
A-6
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<PAGE>
Acceptances or BancOhio Cost of Funding Rate Loan shall have an
Interest Rate Period determined as set forth above.
8. "LIBOR Loan" means any Loan which bears interest at LIBOR.
9. "LIBOR" means with respect to any Interest Rate Period that rate
which is the sum of:
(A) the rate per annum equal to 50 basis points per annum in
excess of the rate per annum at which deposits in United States Dollars are
offered to Bank in the London interbank market at approximately 10:00 A.M.
(Columbus, Ohio, time) (or as soon thereafter as practicable) two Working Days
before the first day of such Interest Rate Period in an amount approximately
equal to the principal amount of the LIBOR Loan to which such Interest
Rate Period is to apply and for a period of time comparable to
such Interest Rate Period; plus
(B) the percentage, expressed in basis points,
equivalent to the maximum rate of all reserve requirements as
specified in all applicable regulations (including, without
limitation, Regulation D of the Board of Governors of the Federal
Reserve System, any marginal, emergency, supplemental, special or
other reserves) that for the date(s) such rate is being
determined could be applicable during the Interest Rate Period.
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<PAGE>
10. "Prime Rate" means the rate of interest publicly
announced by Bank in Columbus, Ohio, from time to time as its
Prime Rate, subject to change at any time without notice, and
effective as of Bank's opening of business on each applicable
date of change in the Prime Rate.
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<PAGE>
SCHEDULE "B"
MATURITY DATES
Rate Chosen Maturity Date
Prime Rate No Fixed Time
LIBOR 30, 60, 90 or 180 days
Certificate of Deposit Rate 30, 60, 90, 120, 150 or
180 days
Bank's Rate for Ineligible 30, 60, 90, 120, 150 or
Acceptances 180 days
BancOhio Cost of Funding Rate No Fixed Time
Page 109
<PAGE>
REVOLVING LOAN PROMISSORY NOTE
$25,000,000.00 Columbus, Ohio
August 30, 1985
For Value Received, the undersigned, promises to pay to
the order of BANCOHIO NATIONAL BANK ("Bank") the principal sum of
Twenty-Five Million and 00/100 Dollars ($25,000,000.00) or so much
thereof as may be disbursed to, or for the benefit of, the
undersigned and remain unpaid, together with interest thereon from
the date hereof in the manner and at the rate or rates hereinafter
specified.
The indebtedness evidenced by this Note consists of a
revolving credit line extended to the undersigned by Bank
pursuant to a Revolving Credit Agreement of even date ("Credit
Agreement"), which Credit Agreement is incorporated herein by
reference as if fully rewritten herein. The Credit Agreement
contemplates a series of Loans (as defined therein) from Bank to
the undersigned with varying amounts, payment terms and interest
rates. It is the intent of the undersigned and Bank that this
Note shall evidence the indebtedness created by all of the Loans.
The interest rates payable on the indebtedness evidenced hereby,
the repayment terms, the maturity dates, the prepayment privilege
and the computation of interest shall be determined in accordance
with the terms of the Credit Agreement. The amount, date,
interest rate and maturity date of all advances evidenced
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<PAGE>
by this Note and whether the same have been repaid shall be noted
hereon, but failure to do so shall not affect Bank's right to
collect repayment of said advances.
If default be made in the payment of any sum due under
this Note or should an Event of Default (as defined therein)
occur in the Credit Agreement and continue beyond the applicable
notice and/or grace period, if any, relating thereto, the entire
principal sum and accrued interest evidenced by this Note shall
at once become due and payable at the option of the holder of
this Note. Failure to exercise this option shall not constitute
a waiver of the right to exercise the same in the event of any
subsequent default.
Any and all moneys now or at any time hereafter owing
to the undersigned from the holder hereof are hereby pledged for
the security of this and all other indebtedness from the
undersigned to the legal holder hereof and may be paid and
applied thereon at any time such indebtedness becomes due or is
declared due and payable.
No delay or omission on the part of the holder in
exercising any right hereunder shall operate as a waiver of such
right or of any other right under this Note. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such
right and/or remedy on any future occasion.
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<PAGE>
All persons now or hereafter liable, primarily or
secondarily, for the payment of the indebtedness evidenced
hereby or any part thereof, do hereby expressly waive presentment
for payment, notice of dishonor, protest and notice of protest,
and agree that the time for payment or payments of any part of
the indebtedness evidenced hereby may be extended without
releasing or otherwise affecting their liability hereon, or the
lien of any deed of trust, mortgage, assignment, or security
agreement, if any, then or hereafter securing this Note.
As a specifically bargained inducement for Bank to
extend credit giving rise to the indebtedness evidenced hereby,
the undersigned and Bank agree that: ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS NOTE OR
ITS MAKING, VALIDITY OR PERFORMANCE, AT THE SOLE OPTION OF THE
BANK OR LEGAL HOLDER HEREOF, SHALL BE PROSECUTED AS TO ALL
PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT COLUMBUS, OHIO. THE
UNDERSIGNED CONSENTS TO AND SUBMITS TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED AT COLUMBUS,
OHIO, AND HAVING JURISDICTION OVER THE SUBJECT MATTER. The
undersigned hereby irrevocably appoints and designates Roger St.
Cyr or Dorothy M. Horvath, whose address is 155 East Broad
Street, Columbus, Ohio 43251, or any other person whom Bank,
after giving the undersigned five (5) days written notice thereof
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<PAGE>
may appoint, as its true and lawful attorney-in-fact and duly
authorized agent for service of legal process and agrees that
service of such process upon such party shall constitute personal
service of such process upon it, provided that such attorney-in-
fact, within two (2) days after receipt of such process, shall
forward the same, by certified or registered mail, together with
all papers affixed thereto, to the undersigned at its address as
set forth in the Credit Agreement.
If any rate of interest presently or hereafter provided
for herein may not be collected from the undersigned under
applicable law, the rate of interest provided for herein shall be
reduced to, and payee may collect from the undersigned, the
maximum rate permissible under applicable law.
This Note is deemed to be executed at Columbus,
Franklin County, Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:__________________________
Monroe G. Milstein,
President
Transactions Record
Initial
Amount Interest Interest Maturity Amount
Date Disbursed Index Rate Date Repaid
-4-
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<PAGE>
Exhibit 6.04
An action entitled Irving Commercial Corporation v.
Burlington Coat Factory Warehouse Corporation was commenced in
the Fall of 1984 in the United States District Court for the
Southern District of New York alleging that Borrower failed to
pay invoices assigned to plaintiff by Tradewinds Apparel Inc. in
the total amount of $354,000. A settlement was reached by the
parties requiring that Borrower pay plaintiff $100,000 in
satisfaction, of all claims arising from the invoices at issue.
It is possible that the requirement to pay this amount to
plaintiff technically might be considered material to the
financial postion of Borrower.
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<PAGE>
Exhibit 6.05
There are no actions, suits or proceedings pending or,
to the knowledge of Borrower, threatened against Borrower or any
Subsidiary or any of their properties before any court or
governmental department, commission, board, bureau, agency or
instrumentality (domestic or foreign) that, if determined
adversely to Borrower or such Subsidiary, would have a material
adverse effect on the financial condition or operations of
Borrower and Subsidiaries on a Consolidated basis, except as set
forth below. No action or the like is even considered as
possibly having a material adverse effect unless the amount
involved currently is in excess of $100,000. Also listed are
certain matter's where the amount in controversy is not known.
These may or may not be material.
1. An action entitled Diane Lambrecht d/b/a D's
Tailor Shop v. Burlington Coat Factory Warehouse Inc. was
commenced in Kent County Circuit Court, Michigan, on July 12,
1985. Plaintiff seeks damages in the amount of $250,000 alleging
breach of contract and discrimination based on marital status in
connection with the termination of plaintiff's alteration and
tailoring services for Burlington Coat Factory Warehouse of Grand
Rapids, Inc. and Burlington Coat Factory Warehouse of Lansing,
Inc.
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<PAGE>
2. Several proceedings have been commenced by former
employees for wrongful termination, alleging sex discrimination,
racial discrimination and national origin discrimination. It is
impossible to determine the exposure of Borrower or any of its
Subsidiaries to liability in these cases. A description of said
proceedings follows.
(1) A complaint entitled Amensa S. Hamdani v.
Burlington Coat Factory Warehouse, Inc., Complaint No. 2850685,
was filed with the Texas Commission on Human Rights (the
"Commission") by a former employee of Burlington Coat Factory
Warehouse of Euless, Inc. alleging racial discrimination and
national origin discrimination. Borrower submitted a Position
Paper denying the charge and is cooperating with the Commission
in its investigation.
(2) A complaint entitled Carol Baulknight v.
Burlington Coat Factory Warehouse, Inc., Charge No.###-##-####,
was filed by a former employee of Burlington Coat Factory
Warehouse of Randall, Inc. with the Equal Employment Opportunity
Commission (the "EEOC") alleging racial discrimination. Borrower
submitted a Position Paper denying the charge. The EEOC has made
a determination on July 15, 1985 not to proceed with the charge
because it was unable to substantiate the allegations of
discrimination. Baulknight, however, has the right to bring a
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<PAGE>
civil action against the defendant within 90 days after receipt
of the EEOC's finding.
(3) A complaint entitled Ivan Rosa V. Burlington Coat
Factory Warehouse, Inc., Charge No. ###-##-####, was filed with
the EEOC by Ivan Rosa, a former employee of Burlington Coat
Factory Warehouse of Memphis, Inc., alleging national origin
discrimination. Borrower has submitted a Position Paper in
response to the charge, denying same.
-3-
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<PAGE>
Exhibit 6.06
None
-1-
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<PAGE>
Exhibit 6.08
The property and assets of Borrower and, to the best of
Borrower's knowledge of each Subsidiary, are not subject to any
material lien, encumbrance or security interest that has arisen
other than in the normal course of business, except as follows:
1. A lien search conducted in the State of Ohio
relating to Borrower uncovered a lien relating to the following
matters. Bonnise J. Character, an employee of Burlington Coat
Factory Warehouse of Columbus, Inc. ("Burlington"), in 1984 filed
a worker's compensation claim with the Ohio Bureau of Worker's
Compenation. It was subsequently discovered by the Bureau that
Burlington's Worker's Compensation Insurance had not as yet been
paid. On January 12, 1984 an Application was filed against
Burlington in Ohio for noncompliance with the statutory
requirements regarding Worker's Compensation. This resulted in
the filing uncovered by the search.
-1-
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<PAGE>
EXHIBIT 6.10
Prior to November 1, 1983, Borrower and certain of its
Subsidiaries maintained pension Plans. These Plans covered
eligible employees at approximately twenty of the Burlington Coat
Factory Warehouse stores. Borrower ceased making contributions
to its pension Plan for eligible employees in all but one of its
stores effective for the fiscal year beginning on November 1,
1983. In addition, as of such date, the Subsidiaries which
maintain separate pension Plans also ceased making contributions
to their respective pension Plans. The cessation of
contributions to such Plans (A) has not resulted and will not
result in the imposition of any lien or liens for a claim or
claims of $500,000 or more in the aggregate under ERISA on
Borrower and/or any Subsidiary or Subsidiaries and (B) otherwise
has not had and will not hiave a material adverse effect on the
financial condition of Borrower and Subsidiaries on a
Consolidated basis.
Page 120
<PAGE>
EXHIBIT 6.12
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Outlet of Eynon, Inc. Pennsylvania
Eynon Plaza-Route 6
Eynon, Pennsylvania 18403
Burlington Coat Factory Outlet, Inc. Pennsylvania
Baltimore Pike & Oak Avenue
Clifton Heights, Pennsylvania 19018
Burlington Coat Factory Warehouse of Arlington, Inc. Illinois
30 West Rand Road
Arlington Heights, Illinois 60004
Burlington Coat Factory Warehouse of Atlanta, Inc. Georgia
Buford-Claremont Shopping Center
4166 Buford Highway
Atlanta, Georgia 30345
Burlington Coat Factory Warehouse of Cicero, Inc. Illinois
8101 South Cicero Avenue
Chicago, Illinois 60625
Burlington Coat Factory Warehouse of Charlotte, Inc. North Carolina
Charlottetown Mall
601 Independence Blvd.
Charlotte, North Carolina 28204
Burlington Coat Factory Warehouse of Chicago, Inc. Illinois
7340 W. Foster Avenue
Chicago, Illinois 60656
Burlington Coat Factory Warehouse of Cincinnati, Inc. Ohio
435 E. Kemper Road
Springdale, Ohio 45246
Burlington Coat Factory Warehouse of Connecticut, Inc. Connecticut
800 Barnum Avenue
Stratford, Connecticut 06497
Burlington Coat Factory Warehouse of Detroit, Inc. Michigan
39200 Van Dyke Avenue
Sterling Heights, Michigan 48078
Burlington Coat Factory Warehouse of East Hartford, Inc. Connecticut
Silver Lane Shopping Center
820 Silver Lane Road East
Hartford, Connecticut 06118
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Warehouse of East Providence, Inc. Rhode Island
Gansett Shopping Center
60 East Newport Avenue
East Providence, Rhode Island 02916
Burlington Coat Factory Warehouse of Grand Rapids, Inc. Michigan
East Brook Shopping Center
3665 28th Street, S.E.
Grand Rapids, Michigan 49508
Burlington Coat Factory Warehouse of Illinois, Inc. Illinois
920 S. Milwaukee Avenue
Libertyville, Illinois 60048
Burlington Coat Factory Warehouse of Indianapolis, Inc. Indiana
East Gate Shopping Center
7150 E. Washington Street
Indianapolis, Indiana 46219
Burlington Coat Factory Warehouse of Long Island, Inc. New York
101 Sunrise Highway
Amityville, New York 11701
Burlington Coat Factory Warehouse of Marietta, Inc. Georgia
Town & Country Shopping Center
1255 Reswell Road N.E.
Marietta, Georgia 30062
Burlington Coat Factory Warehouse of Maryland, Inc. Maryland
Penn Marr Shopping Center
32 Donnell Road
Forestville, Maryland 20747
Burlington Coat Factory Warehouse of Memphis, Inc. Tennessee
East Gate Mall
5100 Park Avenue
Memphis, Tennessee 38117
Burlington Coat Factory Warehouse of Merrillville, Inc. Indiana
8311 Broadway
Merrillville, Indiana 46410
Burlington Coat Factory Warehouse of Milwaukee, Inc. Wisconsin
1501 W. Zellman Court
Milwaukee, Wisconsin 53221
Burlington Coat Factory Warehouse of Natick, Inc. Massachusetts
Speen Street & Route 9
Natick, Massachusetts 01760
-2-
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington of Montville, Inc. New Jersey
Route 46 West
Pinebrook, New Jersey 07652
Burlington Coat Factory Warehouse of New London, Inc. Connecticut
New London Shopping Center
208-276 Bridge Approach Road
New London, Connecticut 06320
Burlington Coat Factory Warehouse of Paramus, Inc. New Jersey
651 Route 17
North Paramus, New Jersey 07652
Burlington Coat Factory Outlet of Reading, Inc. Pennsylvania
1920 Kutztown Road
Reading, Pennsylvania 19604
Burlington Coat Factory Warehouse of Saginaw, Inc. Michigan
3375 East Holland Avenue
Saginaw, Michigan 48601
Burlington Coat Factory Warehouse of Scarsdale, Inc. New York
955 Central Avenue
Scarsdale, New York 10583
Burlington Coat Factory Warehouse of Southfield, Inc. Michigan
Southfield Plaza Shopping Center
29720 Southfield Road
Southfield, Michigan 48075
Burlington Coat Factory Warehouse of Villa Park, Inc. Illinois
174 Roosevelt Road
Villa Park, Illinois 60181
Burlington Coat Factory Warehouse of Virginia, Inc. Virginia
3524 S. Jefferson Street
Bailey's Cross Road, Virginia 22041
Georgetown Fashions, Inc. New York
2900 Middle Country Road
Lake Grove, New York 11755
Manchester Coat Factory Warehouse, Inc. New Hampshire
59 Dow & Canal Streets
Manchester, New Hampshire 03101
Burlington Coat Factory Warehouse of Colonie, Inc. New York
664 New Loudon Road
Latham, New York 12110
-3-
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Warehouse of Henrietta, Inc. New York
Southtown Plaza
3333 W. Henrietta Road
Rochester, New York 14623
Burlington Coat Factory Warehouse of Cleveland, Inc. Ohio
Southland Shopping Center
6875 Southland Drive
Middleburgh Heights, Ohio 44130
Burlington Coat Factory Warehouse of Ann Arbor, Inc. Michigan
Arborland Mall
3521 Washtenaw Avenue
Ann Arbor, Michigan 48104
Burlington Coat Factory Warehouse of Redford, Inc. Michigan
Redford Plaza
9321 Telegraph Avenue
Redford, Michigan 48239
Burlington Coat Factory Warehouse of Greensboro, Inc North Carolina
Greensboro Outlet Mall
801 Merritt Drive
Greensboro, North Carolina 27407
Burlington Coat Factory Warehouse of Aurora, Inc. Colorado
Aurora Plaza
6th Avenue & Peoria Street
Aurora, Colorado 80010
Famous Brands of Dallas, Inc. Texas
Northtown Mall
Webb Chapel Road & Interstate 635
Dallas, Texas 75234
Burlington Coat Factory Warehouse of Peoria, Inc. Illinois
Peoria Outlet Mall - 7915 N. Hale Highway
Peoria, Illinois 61615
Burlington Coat Factory Warehouse of Burlington, Inc. North Carolina
Interstate 85
Burlington, North Carolina 27215
Burlington Coat Factory Warehouse of Des Moines, Inc. Iowa
4094 Merle Hay Road
Des Moines, Iowa 50310
Burlington Coat Factory Warehouse of Wichita, Inc. Kansas
4175 E. Harry Street
Wichita, Kansas 67218
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Warehouse of York, Inc. Pennsylvania
North Mall Factory Outlet
351 Loucks Road
York, Pennsylvania 17404
Burlington Coat Factory Warehouse of Virginia Beach, Inc. Virginia
880 S. Military Highway
Virginia Beach, Virginia 23453
Burlington Coat Factory Warehouse of Randall, Inc. Ohio
4601 Northfield Road
N. Randall, Ohio 44128
Burlington Coat Factory Warehouse of Columbus, Inc. Ohio
Graceland Shopping Center
270 Graceland Blvd.
Columbus, Ohio 43214
Burlington Coat Factory Warehouse of Nashville, Inc. Tennessee
100 Oaks Shopping, Center
Nashville, Tennessee 37204
Burlington Coat Factory Warehouse of Tulsa, Inc. Oklahoma
2625 South Memorial Drive
Tulsa, Oklahoma 74129
Burlington Coat Factory Warehouse of Kansas City, Inc. Kansas
Kennedy & Cohen Bldg.
9250 Marshall Drive
Lenaxa, Kansas 66215
Burlington Coat Factory Warehouse of Eatontown, Inc. New Jersey
Tinton Falls Plaza
980 Shrewsbury Plaza
Tinton Falls, New Jersey 07724
Burlington Coat Factory Warehouse of Buffalo, Inc. New York
1551 Niagra Falls Blvd.
Amherst, New York 14226
Burlington Coat Factory Warehouse of Pittsburgh, Inc. Pennsylvania
607 Clairton Blvd.
Pittsburgh, Pennsylvania 15236
Burlington Coat Factory Warehouse of Huntsville, Inc. Alabama
Huntsville Outlet Mall Clinton
Street & Memorial Pkwy.
Huntsville, Alabama 35804
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Warehouse of Allen, Inc. Texas
Belz Factory Outlet Mall
800 Shelby Drive/Box 120
Allen, Texas 75002
C.L.B., Inc. Delaware
2625 Concord Pike
P.O. Box 7138
Wilmington, Delaware 19803
C.F.I.C. Corporation Delaware
2625 Concord Pike
P.O. Box 7138
Wilmington, Delaware 19803
C.F.B., Inc. Delaware
2625 Concord Pike
P.O. Box 7138
Wilmington, Delaware 19803
Penn Fashions, Inc. Pennsylvania
Route 130, North
Burlington, New Jersey 08016
Penn Plaza Fashions, Inc. Pennsylvania
Route 130, North
Burlington, New Jersey 08016
PNN. Ltd. New Jersey
Route 130, North
Burlington, New Jersey 08016
Monroe G. Milstein, Inc. New York
263 West 38th Street
New York, New York 10018
Burlington Coat Factory Warehouse of Colorado
Colorado Springs, Inc.*
1225 A North Circle Drive
Colorado Springs, Colorado 80909
Burlington Coat Factory Warehouse of Raleigh, Inc.* North Carolina
South Hill Shopping Mall
1213 Buck Jones Road
Raleigh, North Carolina 27606
Burlington Coat Factory Warehouse of Louisville, Inc.* Kentucky
Shelbyville Plaza
4600 Shelbyville Road
Louisville, Kentucky 40207
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<PAGE>
NAME AND ADDRESS STATE OF INCORPORATION
Burlington Coat Factory Warehouse of St. Louis, Inc.** Missouri
100 Mall Parkway
Wenzville, Missouri 63385
Burlington Coat Factory Warehouse of East St. Louis, Inc.** Missouri
Value World
4300 North Karrington Avenue Box 1
Kansas City, Missouri 61461
Burlington Coat Factory Warehouse of New Jersey, Inc.* New Jersey
Burlington Coat Factory Warehouse of Ohio, Inc.** Ohio
Burlington Coat Factory Warehouse of Pennsylvania, Inc.*** Pennsylvania
* Corporations duly incorporated and organized but business not yet
comenced.
** Corporations duly incorporated, in the process of being organized and
business not yet commenced.
*** Corporation duly incorporated, not yet organized and may not become
active.
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Page 127
<PAGE>
AMENDMENT NO. 1
TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 1 ("the Amendment") is made to the Revolving
Credit Agreement (the "Agreement") dated August 30, 1985 executed
by and between BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a
corporation duly organized under the laws of the State of Delaware
with its principal place of business located at Route 130,
Burlington, New Jersey 08016 (herein called "Borrower"), and
BANCOHIO NATIONAL BANK, a national banking association with its
principal office at 155 East Broad Street, Columbus, Ohio 43251
(herein called "Bank").
W I T N E S S E T H:
WHEREAS, Borrower and Bank entered into the Agreement
pursuant to which Bank extended credit to Borrower up to a maximum
principal amount of Twenty-five Million and no/100 Dollars
($25,000,000) pursuant to the terms of the Agreement; and
WHEREAS, Borrower an Bank desire to amend the Agreement in
part to provide for an extension of time with respect to the
availability of the Commitment as defined in the Agreement.
NOW THEREFORE, the parties hereto, in consideration of the
mutual promises and covenants herein contained, agree as follows:
1. Section 3.0 of the Agreement is hereby amended by
deleting the date "August 29, 1988" as written and substituting
the date "August 28, 1989" in substitution therefor.
2. Borrower hereby expressly acknowledges and confirms that
the representations and warranties of Borrower set forth in
Article VI of the Agreement are true and accurate on this date
with the same effect as if made on and as of this date; that
except as previously disclosed to Bank, no financial conditions or
circumstance exists as to Borrower which would inevitably result
in the occurrence of an Event of Default under Article VIII of the
Agreement; and that except as previously disclosed to Bank, no
event has occurred or no condition exists which constitutes, or
with the running of time or the giving of notice would constitute
an event of Default under Article VIII of the Agreement.
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<PAGE>
3. Except as herein expressly modified, the parties hereto
ratify and confirm all of the terms, conditions, warranties and
covenants of the Agreement, including provisions for the payment
of the Revolving Loan Promissory Note pursuant to the terms of the
Agreement. This Amendment does not constitute the extinguishment
of any obligation or indebtedness previously incurred.
4. This Agreement shall be binding upon Borrower and Bank
and their respective successors and assigns, and shall inure to
the benefit of Bank and its respective successors and assigns.
Executed by the parties hereto in manner and form sufficient
to bind then on this ____ day of ___________, 1987 at Columbus,
Ohio.
BURLINGTON COAT FACTORY WAREHOUSE
CORPORATION
By:/s/ Robert L. LaPenta, Jr.
Its: Chief Accounting Officer
BANCOHIO NATIONAL BANK
By:/s/ Roger St. Cyr
Its: Vice President
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<PAGE>
AMENDMENT NO. 2
TO REVOLVING CREDIT AGREEMENT
This Amendment No. 2 (the "Amendment") is made to the Revolving
Credit Agreement (the "Agreement") dated August 30, 1985 executed
by and between BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a
corporation duly organized under the laws of the State of
Delaware, with its principal place of business at Route 130,
Burlington, New Jersey 08016 (hereinafter "Borrower") and BANCOHIO
NATIONAL BANK, 155 East Broad Street, Columbus, Ohio 43251
(hereinafter "Bank").
WITNESSETH:
WHEREAS, Borrower and Bank entered into the Agreement pursuant to
which the Bank committed to extend credit to Borrower up to a
maximum principal amount of Twenty-five Million Dollars
($25,000,000.00) pursuant to the terms of the Agreement; and
WHEREAS, Borrower and Bank entered into Amendment No. 1 to the
Agreement providing for an extension of the commitment termination
date as defined in Section 3.1 of the Agreement to August 28 1989;
and
WHEREAS, the parties hereto desire to further amend the Agreement
to add Borrower's subsidiary Burlington Coat Factory Warehouse of
New Jersey, Inc. as an additional borrower under the Agreement and
to further amend the Agreement as hereinafter provided pursuant to
the terms and conditions of this Amendment.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby expressly acknowledged, the
parties hereto agree as follows:
1. Upon the execution of this Agreement, Burlington Coat Factory
Warehouse of New Jersey, Inc., a corporation duly organized
under the laws of the State of New Jersey, with its principal
place of business located at Route 130,
Burlington, New Jersey 08016, is hereby added to the Agreement as a
borrower
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<PAGE>
and it is hereby expressly agreed that Burlington Coat Factory
Warehouse Corporation and Burlington Coat Factory
Warehouse of New Jersey, Inc. shall have joint and several
liability for any and all obligations created pursuant to the
Agreement and any amendments, extensions or substitutions
therefor. All singular references in the Agreement or any
amendments, substitutions therefor. All singular references
in the Agreement or any amendments, substitutions or
extensions thereto shall mean Burlington Coat Factory
Warehouse Corporation and Burlington Coat Factory Warehouse
of New Jersey, Inc. and all terms and conditions of the
Agreement shall apply to Burlington Coat Factory Warehouse
Corporation and Burlington Coat Factory Warehouse of New
Jersey, Inc. as if both has been original parties to the
Agreement when executed.
2. Section 3.01 of the Agreement is hereby amended by deleting
that Section in its entirety and substituting therefor the
following:
Section 3.01. Term. The term of the commitment shall be for
a period commencing on August 30, 1985, and expiring three
(3) years after April 29, 1988. On April 29, 1988, and on
April 29 of each year thereafter the then current term of the
Commitment shall automatically be extended for a period of
one (1) additional year unless Bank notifies Borrower, not
later than thirty (30) days prior to such annual anniversary
date of April 29, that Bank desires the Commitment to
terminate at the end of such then current term. The
Commitment also shall terminate on the effective date of a
notice given pursuant to Section 2.08 hereof reducing the
Commitment by the full amount thereof. This Agreement shall
terminate on the later of the Commitment Termination Date and
the date of repayment in full of all of the Loans.
3. Section 4.02 of the Agreement is hereby amended by deleting
that Section in its entirety and substituting therefor the
following:
Section 4.02. Repayment of Loans. Borrower shall repay the
principal amount of the Loans outstanding on the Commitment
Termination Date in twelve (12) consecutive quarterly
installments on the last day of each March, June, September
and December in each year commencing on the second of such
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dates occurring after the Commitment Termination Date. Each
of the first eleven (11) of such installments shall be in the
amount of whole dollars nearest to 1/12th of the principal
amount of the Loans, and the last of such installments shall
be in the amount necessary to repay in full the principal
amount of the Loans.
4. Except as herein expressly modified, the parties hereto
ratify and confirm all of the terms, conditions, warranties
and covenants of the Agreement, including provisions for the
payment of the Revolving Loan Promissory Note pursuant to the
terms of the Agreement. This Amendment does not constitute
the extinguishment of any obligation or indebtedness
previously incurred.
5. This Agreement shall be binding upon Borrower and Bank and
their respective successors and assigns, and shall inure to
the benefit of Bank and its respective successors and
assigns.
Executed by the parties hereto in manner and form sufficient to
bind them on this 3rd day of February, 1987 at Columbus, Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:/s/ Robert L. LaPenta, Jr.
Its: Chief Accounting Officer
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By:/s/ Robert L. LaPenta, Jr.
Its: Chief Accounting Officer
BANCOHIO NATIONAL BANK
By:/s/ Roger St.Cyr
Roger St.Cyr
Its: Vice-President
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<PAGE>
AMENDMENT NO. 3 TO
REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 3 (the "Amendment") is made to the
Revolving Credit Agreement (the "Agreement") dated August 30, 1985
executed by and among BURLINGTON COAT FACTORY WAREHOUSE
CORPORATION, a corporation duly organized under the laws of the
State of Delaware with its principal place of business located at
1830 Route 130, Burlington, New Jersey 08016; BURLINGTON COAT
FACTORY WAREHOUSE OF NEW JERSEY, INC., a corporation organized
under the laws of the State of New Jersey with its principal place
of business located at 1830 Route 130, Burlington, New Jersey
08016, jointly and severally, (herein collectively called
"Borrower"), and BANCOHIO NATIONAL BANK, a national banking
association with its principal office at 155 East Broad Street,
Columbus, Ohio 43251 (herein called "Bank").
WITNESSETH:
WHEREAS, the Agreement provides for extensions of credit to
Borrower by Bank up to a maximum principal amount of Twenty-five
Million Dollars ($25,000,000.00) pursuant to the terms of the
Agreement; and
WHEREAS, Borrower and Bank have previously entered into
amendments of the Agreement, as evidenced by an Amendment No. 1
dated January 7, 1987 and by an Amendment No. 2 dated February 3,
1987 (the "Prior Amendments") which Prior Amendments modified
certain provisions of the Agreement with respect to the term of
the Commitment, as defined in the Agreement, and with respect to
the repayment of the Loans, as defined in the Agreement; and
WHEREAS, Borrower and Bank desire to amend the Agreement in
part to provide for an increase in the Commitment as defined in
the Agreement and to evidence such increase in the Commitment
pursuant to the terms of a substitute promissory note to be
executed and delivered by Borrower in favor of Bank.
NOW THEREFORE, the parties hereto, in consideration of the
mutual promises and covenants herein contained, agree as follows:
l. The definition of a certain term appearing in Section
1.01 of the Agreement is hereby amended by deleting the definition
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for such term appearing therein, and substituting therefor the
following new definition for such term:
"Current Liabilities" means all liabilities of Borrower
on a Consolidated basis that, in accordance with
generally accepted accounting principles consistently
applied, would be classified as current liabilities of
Borrower on a Consolidated basis, except that "Current
Liabilities" shall not include any installment of
principal due on the Note or any of the notes given by
Borrower in connection with loans made by Mellon Bank
(East) National Association ("Mellon")pursuant to the
loan commitment of Mellon to Borrower being made at
this time (the "Mellon Commitment"), whether or not
same would be characterized as a short term obligation
for accounting purposes. However, if Borrower has
committed letters of credit in amounts in excess of
Forty Million Dollars ($40,000,000.00), the amount of
such letters of credit in excess of Forty Million
Dollars ($40,000,000.00) shall be included as "Current
Liabilities," but only to the extent of the first Forty
Million Dollars ($40,000,000.00) of such excess
2. Section 2.01 of the Agreement is hereby amended by
deleting the phrase "Twenty-five Million Dollars ($25,000,000.00)"
as it appears in such section and substituting therefor the phrase
"Forty Million Dollars ($40,000,000.00)."
3. Section 2.03 of the Agreement is hereby amended by
deleting such section in its entirety as written and substituting
therefor the following:
Section 2.03 The Note. The Loans shall be evidenced by
a substitute revolving loan promissory note of Borrower
(the "Note"), dated the date of Amendment No. 3 to this
Agreement, payable to the order of Bank in the principal
amount of the Commitment and otherwise substantially in
the form of Replacement Exhibit 2.03 attached hereto.
The Note shall be in substitution for and shall now
evidence the unpaid principal indebtedness existing
under a former promissory note dated as of August 30,
1985 executed and delivered by Borrower to Bank in the
original principal amount of $25,000,000.00 and payable
in accordance with its terms. Upon the execution and
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<PAGE>
delivery of the Note, all existing indebtedness under
such previous note shall be considered refinanced and
transferred to the Note in the principal amount thereof.
In such event, the previous note shall be deemed
satisfied and replaced by the Note. Bank shall endorse
the Note with an appropriate notation indicating the
amount of each Loan made by it hereunder and the amount
of each payment or prepayment on account of the
principal balance of the Note. A copy of each such
annotation shall be delivered to Borrower promptly after
same is made.
4. Section 2.07 of the Agreement is hereby amended by
deleting the phrase "three-eighths of one percent (0.375%)" as it
appears in such section and substituting therefor the phrase "one-
fourth of one percent (0.250%)."
5. Section 9.03 of the Agreement is hereby amended by
deleting the addresses stated in such section and substituting
therefor the following:
If to Borrower: 1830 Route 130
Burlington, New Jersey 08016
Attn: Monroe G. Milstein and
Elisabeth R. Stout
With copy to: Myerson & Kuhn
237 Park Avenue
New York City, New York 10017
Attn: Paul Tang
If to Bank: 155 East Broad Street
Columbus, Ohio 43251-0030
Attn: Roger J. St. Cyr
With copy to: BancOhio National Bank
155 East Broad Street
Columbus, Ohio 43251-0073
Attn: Legal Division
6. Borrower hereby expressly acknowledges and confirms that
the representations and warranties of Borrower set forth in
Article VI of the Agreement are true and accurate on this date
with the same effect as if made on and as of this date; that
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<PAGE>
except as previously disclosed to Bank, no financial condition or
circumstance exists as to Borrower which would inevitably result
in the occurrence of at Event of Default under Article VIII of the
Agreement; and that except as previously disclosed to Bank, no
event has occurred or no condition exists which constitutes, or
with the running of time or the giving of notice would constitute
an Event of Default under Article VIII of the Agreement.
7. Except as herein expressly modified, the parties hereto
ratify and confirm all of the terms, conditions, warranties and
covenants of the Agreement, as previously amended, and all other
instruments executed in connection with the Agreement, including
provisions for the payment of the Note pursuant to the terms of
the Agreement. This Amendment does not constitute the
extinguishment of any obligation or indebtedness previously
incurred, nor does it in any manner affect or impair any right or
remedy previously granted to Bank, all of such rights and remedies
to be continued in full force and effect until the indebtedness
described herein is fully satisfied.
8. This Amendment shall be binding upon Borrower, and Bank
and their respective successors and assigns, and shall inure to
the benefit of Bank and its respective successors and assigns.
Executed by the parties hereto in manner and form sufficient to
bind them on this 1st day of June, 1989 and deemed to be executed at
Columbus, Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:/s/ Andrew R. Milstein
Its: Vice-President
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By:/s/ Andrew R. Milstein
Its: Vice-President
BANCOHIO NATIONAL BANK
By:/s/ Roger J. St. Cyr
Its: Vice-President
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<PAGE>
REPLACEMENT EXHIBIT 2.03
SUBSTITUTE REVOLVING LOAN PROMISSORY NOTE
$40,000,000.00 Columbus, Ohio
June 1, 1989
For Value Received, the undersigned, jointly and severally,
promise to pay to the order of BANCOHIO NATIONAL BANK ("Bank") the
principal sum of Forty Million and 00/100 Dollars ($40,000,000.00)
or so much thereof as may be disbursed to, or for the benefit of,
the undersigned and remain unpaid, together with interest thereon
from the date hereof in the manner and at the rate or rates
hereinafter specified.
The indebtedness evidenced by this Note consists of a
revolving credit line extended to the undersigned by Bank pursuant
to a Revolving Credit Agreement dated August 30, 1985 ("Credit
Agreement"), as previously amended, which Credit Agreement, as
amended, is incorporated herein by reference as if fully rewritten
herein. The Credit Agreement contemplates a series of Loans (as
defined therein) from Bank to the undersigned with varying
amounts, payment terms and interest rates. It is the intent of
the undersigned and Bank that this Note shall evidence the
indebtedness created by all of the Loans. The interest rates
payable on the indebtedness evidenced hereby, the repayment terms,
the maturity dates, the prepayment privilege and the computation
of interest shall be determined in accordance with the terms of
the Credit Agreement. The amount, date, interest rate and
maturity date of all advances evidenced by this Note and whether
the same have been repaid shall be noted hereon, but failure to do
so shall not affect Bank's right to collect repayment of said
advances.
This Note shall be in substitution for and shall now evidence
the unpaid principal indebtedness existing under a former
revolving loan promissory note dated as of August 30, 1985
executed and delivered by the undersigned to Bank in connection
with the Credit Agreement in the original principal amount of
$25,000,000.00 and payable in accordance with its terms. Upon the
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execution and delivery of this Note, all existing indebtedness
under such previous note shall be considered refinanced and
transferred to this Note in the principal amount thereof. In such
event, the previous note shall be deemed satisfied and replaced by
this Note.
If default be made in the payment of any sum due under this
Note or should an Event of Default (as defined therein) occur in
the Credit Agreement and continue beyond the applicable notice
and/or grace period, if any, relating thereto, the entire
principal sum and accrued interest evidenced by this Note shall at
once become due and payable at the option of the holder of this
Note. Failure to exercise this option shall not constitute a
waiver of the right to exercise the same in the event of any
subsequent default.
Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof are hereby pledged for the
security of this and all other indebtedness from the undersigned
to the legal holder hereof and may be paid and applied thereon at
any time such indebtedness becomes due or is declared due and
payable.
No delay or omission on the part of the holder in exercising
any right hereunder shall operate as a waiver of any such right or
of any other right under this Note. A waiver on any one occasion
shall not be construed as a bar to or waiver of any such right
and/or remedy on any future occasion.
All persons now or hereafter liable, primarily or
secondarily, for the payment of the indebtedness evidenced hereby
or any part thereof, do hereby expressly waive presentment for
payment, notice of dishonor, protest and notice of protest, and
agree that the time for payment or payments of any part of the
indebtedness evidenced hereby may be extended without releasing or
otherwise affecting their liability hereon, or the lien of any
deed of trust, mortgage, assignment, or security agreement, if
any, then or hereafter securing this Note.
As a specifically bargained inducement for Bank to extend
credit giving rise to the indebtedness evidenced hereby, the
undersigned and Bank agree that: ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING FROM OR OUT OF THIS NOTE OR ITS MAKING,
VALIDITY OR PERFORMANCE, AT THE SOLE OPTION OF THE BANK OR LEGAL
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<PAGE>
HOLDER HEREOF, SHALL BE PROSECUTED AS TO ALL PARTIES AND THEIR
SUCCESSORS AND ASSIGNS AT COLUMBUS, OHIO. THE UNDERSIGNED
CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS
PERSON BY ANY COURT SITUATED AT COLUMBUS, OHIO, AND HAVING
JURISDICTION OVER THE SUBJECT MATTER. The undersigned hereby
irrevocably appoints and designates Roger St. Cyr, whose address
is 155 East Broad Street, Columbus, Ohio 43251, or any other
person whom Bank, after giving the undersigned five (5) days
written notice thereof may appoint, as its true and lawful
attorney-in-fact and duly authorized agent for service of legal
process and agrees that service of such process upon such party
shall constitute personal service of such process upon it,
provided that such attorney-in-fact, within two (2) days after
receipt of such process, shall forward the same, by certified or
registered mail, together with all papers affixed thereto, to the
undersigned at its address as set forth in the Credit Agreement.
If any rate of interest presently or hereafter provided for herein
may not be collected from the undersigned under applicable law,
the rate of interest provided for herein shall be reduced to, and
payee may collect from the undersigned, the maximum rate
permissible under applicable law.
This Note is deemed to be executed at Columbus, Franklin County,
Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:/s/ Andrew R. Milstein
Its: Vice President
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By:/s/ Andrew R. Milstein
Its: Vice President
Transactions Record
Initial
Amount Interest Interest Maturity Amount
Date Disbursed Index Rate Date Repaid
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<PAGE>
AMENDMENT NO. 4 TO
REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 4 (the "Amendment") is made to the Revolving
Credit Agreement (the "Agreement") dated August 30, 1985 executed
by and among BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a
corporation duly organized under the laws of the State of Delaware
with its principal place of business located at 1830 Route 130,
Burlington, New Jersey 08016; BURLINGTON COAT FACTORY WAREHOUSE OF
NEW JERSEY, INC., a corporation organized under the laws of the
State of New Jersey with its principal place of business located
at 1830 Route 130, Burlington, New Jersey 08016, jointly and
severally, (herein collectively called "Borrower"), and NATIONAL
CITY BANK, COLUMBUS, successor to BANCOHIO NATIONAL BANK, a
national banking association with its principal office at 155 East
Broad Street, Columbus, Ohio 43251 (herein called "Bank").
WITNESSETH:
WHEREAS, the Agreement as amended provides for extensions of
credit to Borrower by Bank up to a maximum principal amount of
Forty Million Dollars ($40,000,000.00) pursuant to the terms of
the Agreement; and
WHEREAS, Borrower and Bank have previously entered into amendments
of the Agreement, as evidenced by an Amendment No. 1 dated January
7, 1987, by an Amendment No. 2 dated February 3, 1987 and by
Amendment No. 3 dated June 1, 1989 (the "Prior Amendments") which
Prior Amendments modified certain provisions of the Agreement with
respect to the term of the Commitment, as defined in the
Agreement, and with respect to the repayment of the Loans, as
defined in the Agreement; and
WHEREAS, Borrower and Bank desire to amend the Agreement in part
to provide for issuance of Letters of Credit under the Commitment
as defined in the Agreement.
NOW THEREFORE, the parties hereto, in consideration of the mutual
promises and covenants herein contained, agree as follows:
1. The definition of terms appearing in Section 1.01 of the
Agreement is hereby amended by adding the following, new
definition:
"Letter of Credit" means a letter of credit or similar
instrument which is issued by Bank upon the application of
Borrower for which Borrower is obligated to reimburse Bank
for drawings thereunder.
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<PAGE>
2. Section 2.01 of the Agreement is hereby amended by deleting
such section in its entirety as written and substituting therefor
the following:
Section 2.01 - The Commitment
A. Loans
Subject to the terms and conditions hereinafter
provided, Bank shall lend Borrower, from time to
time during the period from the date hereof to and
including the Commitment Termination Date, such
sums (the "Loans") as Borrower may request in an
aggregate principal amount not to exceed at any
time outstanding the amount of Forty Million
Dollars ($40,000,000.00), as such amount may be
reduced pursuant to Section 2.08 hereof (such
amount being the "Commitment"). Each Loan shall be
in an amount equal to not less than One Million
Dollars ($1,000,000.00). Within the limits of the
Commitment and prior to the Commitment Termination
Date, Borrower may borrow, repay and reborrow
pursuant to this Section 2.01.
B. Letters of Credit
From and including the date hereof and through one
hundred twenty (120) days prior to the Commitment
Termination Date, the Bank agrees on the terms and
conditions set forth in this Agreement, to make
available to the Borrower, Letters of Credit up to
a maximum aggregate amount outstanding of
$40,000,000.00 at such rate and fees as the Bank
and the Borrower may mutually agree. The Company
agrees to execute the Bank's standard Application
for Letter of Credit and Reimbursement Agreement
(the "Application") prior to any request for a
Letter of Credit and the executed Application is a
condition precedent to the Bank's commitment to
provide any Letter of Credit hereunder. Upon any
draw under any Letter of Credit hereunder, the
Borrower shall be deemed to have requested a Loan
in the amount of such draw. Issuance of any Letter
of Credit for Borrower under this Agreement shall
be so designated by Borrower at the time of
issuance as "Issued under the Revolving Credit
Agreement." Each such issuance shall constitute
usage under the Agreement for purposes of
determining the total available Commitment. Such
usage, however, shall not reduce the Commitment Fee
as provided for in Section 2.07. It is further
understood that from time to time Borrower may have
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<PAGE>
other Letters of Credit outstanding not issued
under the Agreement either with the Bank or another
institution as permitted in Section 7.16 of the
Agreement.
3. Section 9.03 of the Agreement is hereby amended by deleting
the addresses stated in such section and substituting therefor the
following:
If to Borrower: 1830 Route 130
Burlington, New Jersey 08016
Attn: Monroe G. Milstein and
Elisabeth R. Stout
With copy to: Myerson & Kuhn
237 Park Avenue
New York City, New York 10017
Attn: Paul Tang
If to Bank: 155 East Broad Street
Columbus, Ohio 43251-0035
Attn: Richard A. Ray
With copy to: National City Bank, Columbus
155 East Broad Street
Columbus, Ohio 43251-0073
Attn: Legal Division
4. Borrower hereby expressly acknowledges and confirms that the
representations and warranties of Borrower set forth in Article VI
of the Agreement are true and accurate on this date with the same
effect as if made on and as of this date; that except as
previously disclosed to Bank, no financial condition or
circumstance exists as to Borrower which would inevitably result
in the occurrence of an Event of Default under Article VIII of the
Agreement; and that except as previously disclosed to Bank, no
event has occurred or no condition exists which constitutes, or
with the running of time or the giving of notice would constitute
an Event of Default under Article VIII of the Agreement.
5. Except as herein expressly modified, the parties hereto
ratify and confirm all of the terms, conditions, warranties and
covenants of the Agreement, as previously amended, and all other
instruments executed in connection with the Agreement, including
provisions for the payment of the Note pursuant to the terms of
the Agreement. This Amendment does not constitute the
extinguishment of any obligation or indebtedness previously
incurred, nor does it in any manner affect or impair any right or
remedy previously granted to Bank, all of such rights and remedies
to be continued in full force and effect until the indebtedness
described herein is fully satisfied.
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<PAGE>
6. This Amendment shall be binding upon Borrower, and Bank and
their respective successors and assigns, and shall inure to the
benefit of Bank and its respective successors and assigns.
Executed by the parties hereto in manner and form sufficient to
bind them on this 18th day of August, 1993 and deemed to be
executed at Columbus, Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By: /s/ Robert L. LaPenta, Jr.
Its: Chief Accounting Officer
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By: /s/ Robert L. LaPenta, Jr.
Its: Chief Accounting Officer
NATIONAL CITY BANK, COLUMBUS
By:/s/ Richard A. Ray
Its: Senior Vice-President
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<PAGE>
National City Bank National City Bank, Columbus
155 East Broad Street
Columbus, Ohio 43251
614-463-7466
Richard A. Ray
Senior Vice-President
September 28, 1995
Mr. Robert L. LaPenta
Controller & Chief Accounting Officer
Burlington Coat Factory Warehouse Corp.
1830 Route 130
Burlington, NJ 08016
AMENDMENT NO. 5 TO REVOLVING CREDIT AGREEMENT
Dear Bob:
This letter will confirm to you our verbal representation and
hereby serve to amend the Revolving Credit Agreement (the
"Agreement") dated August 30, 1985 between Burlington Coat Factory
Warehouse Corporation (the "Borrower") and National City Bank,
Columbus (the "Bank"). Whereas, Borrower and Bank desire to amend
the Agreement in part to provide for indebtedness of Borrower
outside of the Agreement. Now therefore, the parties hereto agree
as follows:
Section 7.16(B) of the Agreement is hereby amended by deleting the
words "from Mellon pursuant to the Mellon Commitment" and
substituting therefor the following:
"from other sources up to $125,000,000.00 in total for the
period from December 1, 1994 to December 31, 1995,
thereafter, reducing to $10,000,000.00"
It is our understanding that Burlington Coat Factory fully expects
to be out of its short term borrowings by the end of December
1995. It is also our understanding that the company intends to
further modify these provisions to maintain full compliance prior
to the end of its fiscal year 1996.
If the provisions of this amendment are acceptable to you, please
indicate your acceptance below.
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<PAGE>
Accepted and agreed to this 28th day of September 1995.
NATIONAL CITY BANK, COLUMBUS BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:/s/ Richard A. Ray By:/s/ Robert L. LaPenta, Jr.
Its: Senior Vice-President Its: Controller
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<PAGE>
National City Bank National City Bank, Columbus
155 East Broad Street
Columbus, Ohio 43251
September 30, 1994
Mr. Robert L. LaPenta
Controller & Chief Accounting Officer
Burlington Coat Factory Warehouse Corp.
1830 Route 130
Burlington, NJ 08016
Dear Bob,
This letter will confirm the extension of waiver which we
discussed for other borrowings under your revolving credit
agreement. Section 7.16 of the Revolving Credit Agreement dated
August 30, 1985, between Burlington Coat Factory Warehouse
Corporation and National City Bank substantially limits
indebtedness from others. In a letter to you dated July 21, 1994,
we provided a limited waiver of compliance for this provision for
the period June 1, 1994, to December 1, 1994.
This letter hereby extends the limited waiver of Section 7.16 from
December 1, 1994, to June 30, 1995. Bob, we continue to be
supportive of your company and hope that this letter will be
satisfactory in addressing any concern over this issue.
Sincerely,
/s/ Richard A. Ray
Richard A. Ray
Senior Vice President
Metropolitan Banking
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<PAGE>
AMENDMENT NO. SIX TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. SIX TO REVOLVING CREDIT AGREEMENT (the
"Amendment No. Six") is made to the Revolving Credit Agreement
(the "Agreement") dated August 30, 1985, executed by and between
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a corporation duly
organized under the laws of the State of Delaware and BURLINGTON
COAT FACTORY WAREHOUSE OF NEW JERSEY, INC., a corporation duly
organized under the laws of the State of New Jersey (herein
collectively referred to as the "Borrower"), and NATIONAL CITY
BANK, COLUMBUS, fka BancOhio National Bank, a national banking
association with its principal office at 155 East Broad Street,
Columbus, Ohio 43251 (herein called "Bank").
WITNESSETH:
WHEREAS, Borrower and Bank entered into the Agreement pursuant to
which Bank extended a revolving loan up to a maximum principal
amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00),
said maximum principal amount having previously been increased to
$40,000,000.00, and each loan having been made pursuant to the
terms of the Agreement; and
WHEREAS, Borrower and Bank have previously entered into amendments
of the Agreement, as evidenced by an Amendment No. 1 dated January
7, 1987, by an Amendment No. 2 dated February 3, 1987, by
Amendment No. 3 dated August 30, 1985, by Amendment No. 4 dated
August 30, 1985, and by Amendment No. 5 dated September 28, 1995
(the "Amendments") (the Agreement together with the Amendments
hereinafter collectively referred to as the "Agreement") and
WHEREAS, Borrower and Bank desire to amend the Agreement in part
to increase the maximum principal amount and to provide for
certain changes in covenants contained in the Agreement.
NOW THEREFORE, the parties hereto, in consideration of the mutual
promises and covenants herein contained, agree as follows:
1. Section 2.01 of the Agreement is hereby amended by deleting
such section in its entirety and substituting therefor the
following:
"The Commitment. Subject to the terms and conditions
hereinafter provided, Bank shall lend Borrower, from time to
time during the period from the date hereof to and including
the Commitment Termination Date, such sums (the "Loans") as
Borrower may request in an aggregate principal amount not to
exceed at any time outstanding the amount of Fifty Million
Dollars ($50,000,000.00), as such amount may be reduced
pursuant to Section 2.08 hereof (such amount being the
"Commitment"). Each Loan shall be in an amount equal to not
less than One Million Dollars ($1,000,000.00). Within the
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limits of the Commitment and prior to the Commitment
Termination Date, Borrower may borrow, repay and reborrow
pursuant to this Section 2.01."
2. Section 2.03 of the Agreement is hereby amended by deleting
such section in its entirety and substituting therefor the
following:
"The Note. The Loans shall be evidenced by a substitute
revolving loan promissory note of Borrower (the "Note"),
dated the date of Amendment No. Six to this Agreement,
payable to the order of Bank in the principal amount of the
Commitment and otherwise substantially in the form of
Replacement Exhibit 2.03 attached hereto. The Note shall be
in substitution for and shall now evidence the unpaid
principal indebtedness existing under a former promissory
note dated as of June 1, 1989 executed and delivered by
Borrower to Bank in the original principal amount of
$40,000,000.00 and payable in accordance with its terms.
Upon the execution and delivery of the Note, all existing
indebtedness under such previous note shall be considered
refinanced and transferred to the Note in the principal
amount thereof. In such event, the previous note shall be
deemed satisfied and replaced by the Note. Bank shall
endorse the Note with an appropriate notation indicating the
amount of each Loan made by it hereunder and the amount of
each payment or prepayment on account of the principal
balance of the Note. A copy of each such annotation shall be
delivered to Borrower promptly after same is made."
3. Section 7.07 of the Agreement is hereby amended by deleting
such section in its entirety and substituting therefor the
following:
"Tangible Net Worth. Borrower's Tangible Net Worth as at the
end of any of its fiscal years during the term of this
Agreement shall be equal to not less than (A) Three Hundred
Million Dollars ($300,000,000.00) plus (B) Thirty percent
(30%) of Borrower's Net income for each fiscal year after
June 30, 1996 (This Tangible Net Worth requirement shall not
be reduced in the event the Borrower sustains a net loss in
any fiscal year). If Borrower changes its fiscal year, the
minimum Tangible Net Worth as at the end of the new fiscal
year end shall be equal to the minimum Tangible Net Worth at
the end of the immediately preceding fiscal year plus thirty
percent (30%) of Borrower's Net Income for the shortened
fiscal year period."
4. Section 7.16 of the Agreement is hereby amended by deleting
such section in its entirety as written and substituting
therefor the following:
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<PAGE>
"Indebtedness for Borrowed Money. Borrower will not borrow,
and will not permit any Subsidiary to borrow, any funds
except pursuant to the following types of borrowings: (A)
borrowings by Subsidiaries from Borrower as provided in
Section 7.12 hereof; (B) from other sources (excluding
letters of credit, the Revolving Credit and Long-Term
Liabilities) up to fifty percent (50%) of Borrower's Tangible
Net Worth; (C) borrowings of the type described in Sections
7.05(F), (G) and (H) hereof; (D) borrowings from Bank
hereunder; and (E) Long-Term Liabilites, except as otherwise
restricted or conditioned in the Agreement. The foregoing
exceptions, in the aggregate, are subject, however, to the
provisions of Sections 7.08 and 7.09 hereof. Nothing herein
contained shall be deemed in any way to limit the right and
ability of Borrower and Subsidiaries to post letters of
credit or to incur trade indebtedness in the ordinary course
or their respective businesses."
5. Borrower hereby expressly acknowledges and confirms that the
representations and warranties of Borrower set forth in
Article VI of the Agreement are true and accurate on this
date with the same effect as if made on and as of this date;
that except as previously disclosed to Bank, no financial
condition or circumstances exists as to Borrower which would
inevitably result in the occurrence of an Event of Default
under Article VII of the Agreement; and that except as
previously disclosed to Bank, no event has occurred or no
condition exists which constitutes, or with the running of
time or the giving of notice would constitute an Event of
Default under Article VIII of the Agreement.
6. Except as herein expressly modified, the parties hereto
ratify and confirm all of the terms, conditions, warranties
and covenants of the Agreement, and all security agreements,
pledge agreements, or mortgage deeds executed in connection
with the Agreement, including provisions for the payment of
the Note pursuant to the terms of the Agreement. This
Amendment does not constitute the extinguishment of any
obligation or indebtedness previously incurred, nor does it
in any manner effect or impair any security interest granted
to Bank, all of such security interests to be continued in
full force and effect until the indebtedness described herein
is fully satisfied.
7. This Amendment shall only be effective upon the
acknowledgment and acceptance by any guarantor, guaranteeing
the performance of Borrower's obligations under the
Agreement and the Note pursuant to any separate contract of
guaranty or guaranty contained in the Note, that the terms of
any such contract of guaranty shall continue in full force
and effect with respect to the liability referenced under the
Agreement irrespective of any modification made by this
-3-
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<PAGE>
Amendment which acknowledgment and acceptance shall be
evidenced by the execution of this Amendment by the guarantor
at the space indicated below.
8. This Amendment shall be binding upon Borrower, and Bank and
their respective successors and assigns, and shall inure to
the benefit of Bank and its respective successors and
assigns.
Executed by the parties hereto in manner an form sufficient to
bind them on this 28th day of March, 1996, and deemed to be
executed at Columbus, Ohio.
NATIONAL CITY BANK, COLUMBUS BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:/s/ Richard A. Ray By:/s/ Monroe G. Milstein
Its:Senior Vice-President Its: President
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By:/s/ Monroe G. Milstein
Its: President
-4-
Page 150
<PAGE>
SECOND SUBSTITUTE
REVOLVING LOAN PROMISSORY NOTE
$50,000,000.00 Executed at _____________
March __, 1996
For value received, the undersigned, jointly and severally,
promise to pay to the order of NATIONAL CITY BANK, COLUMBUS fka
BankOhio National Bank, a national banking association ("Bank")
the principal sum of Fifty Million and No/100 Dollars
($50,000,000.00) or so much thereof as may be disbursed to, or for
the benefit of, the undersigned and remain unpaid together with
the interest thereon from the date hereof in the manner and at the
rate or rates hereinafter described.
The indebtedness evidenced by this Note consists of a revolving
credit line extended to the undersigned by Bank pursuant to a
Revolving Credit Agreement dated August 30, 1985 ("Credit
Agreement"), as previously amended, which Credit Agreement, as
amended, is incorporated herein by reference as if fully rewritten
herein. The Credit Agreement contemplates a series of Loans (as
defined therein) from Bank to the undersigned with varying
amounts, payment terms and interest rates. It is the intent of
the undersigned and Bank that this Note shall evidence the
indebtedness created by all of the Loans. The interest rates
payable on the indebtedness evidenced hereby, the repayment terms,
the maturity dates, the prepayment privilege and the computation
of interest shall be determined in accordance with the terms of
the Credit Agreement. The amount, date, interest rate and
maturity date of all advances evidenced by this Note and whether
the same have been repaid shall be noted hereon, but failure to do
so shall not affect Bank's right to collect repayment and said
advances.
This Note shall be in substitution for and shall now evidence the
unpaid principal indebtedness existing under a form revolving loan
promissory note dated as of June 1, 1989 executed and delivered by
the undersigned to Bank in connection with the Credit Agreement in
the original principal amount of $40,000,000.00 and payable in
accordance with its terms. Upon the execution and delivery of
this Note, all existing indebtedness under such previous note
shall be considered refinanced and transferred to this Note in the
principal amount thereof. In such event, the previous note shall
be deemed satisfied and replaced by this Note.
If default be made in the payment of any sum due under this Note
or should an Event of Default (as defined therein) occur in the
Credit Agreement and continue beyond the applicable notice and/or
grace period, if any, relating thereto, the entire principal sum
and accrued interest evidenced by this Note shall at once become
due and payable at the option of the holder of this Note. Failure
-1-
Page 151
<PAGE>
to exercise this option shall not constitute a waiver of the right
to exercise the same in the event of any subsequent default.
Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof are hereby pledged for the
security of this and all other indebtedness from the undersigned
to the legal holder hereof and may be paid and applied thereon at
any time such indebtedness become due or is declared due and
payable.
No delay or omission on the part of the holder in exercising any
right hereunder shall operate as a waiver of any such right or of
any other right under this Note. A waiver on any one occasion
shall not be construed as a bar to or waiver of any such right
and/or remedy on any future occasion.
All persons now or hereafter liable, primarily or secondarily, for
the payment of the indebtedness evidenced hereby or any part
thereof, do hereby expressly waive presentment for payment, notice
of dishonor, protest and notice of protest, and agree that the
time for payment or payments of any part of the indebtedness
evidenced hereby may be extended without releasing or otherwise
affecting their liability hereon, or the lien of any deed of
trust, mortgage, assignment, or security agreement, if any, then
or hereafter securing this Note.
As a specifically bargained inducement for Bank to extend credit
giving rise to the indebtedness evidenced hereby, the undersigned
and Bank agree that: ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF
OR ARISING FROM OR OUT OF THIS NOTE OR ITS MAKING, VALIDITY OR
PERFORMANCE MAY BE PROSECUTED AS TO ALL PARTIES AND THEIR
SUCCESSORS AND ASSIGNS AT COLUMBUS, OHIO, AND THE UNDERSIGNED
CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS
PERSON BY ANY COURT SITUATED IN COLUMBUS, OHIO, AND HAVING
JURISDICTION OVER THE SUBJECT MATTER. The undersigned hereby
irrevocably appoints and designates Richard A. Ray, whose address
is 155 East Broad Street, Columbus, Ohio 43251, or any other
person whom Bank, after giving the undersigned five (5) days
written notice thereof may appoint, as its true and lawful
attorney-in-fact and duly authorized agent for service of legal
process and agrees that service of such process upon such party
shall constitute personal service of such process upon it,
provided that such attorney-in-fact, within two (2) days after
receipt of such process, shall forward the same, by certified or
registered mail, together with all papers affixed thereto, to the
undersigned at its address as set forth in the Credit Agreement.
If any rate of interest presently or hereafter provided for herein
may not be collected from the undersigned under applicable law,
the rate of interest provided for herein shall be reduced to, and
payee may colect from the undersigned, the maximum rate
permissible under applicable law.
-2-
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<PAGE>
This Note is deemed to be executed at Columbus, Franklin County,
Ohio.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By: ____________________
Its: ____________________
BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.
By: ____________________
Its: ____________________
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Page 153
Exhibit 10.3
Page 154<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
401(k) PROFIT SHARING PLAN
(As Amended and Restated Effective July 1, 1989,
incorporating amendments with certain later effective dates)
July, 1996
Page 155
<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
401(k) PROFIT SHARING PLAN
TABLE OF CONTENTS
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I Participation . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE II Participant Deferral Contributions. . . . . . . . . . . . 10
ARTICLE III Employer Matching Contributions . . . . . . . . . . . . . 15
ARTICLE IV Profit Sharing Contributions. . . . . . . . . . . . . . . 20
ARTICLE V Rollover Contributions; Direct Transfers. . . . . . . . . 21
ARTICLE VI Contribution Limitations. . . . . . . . . . . . . . . . . 25
ARTICLE VII Investment of Funds . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII Vesting of Interest . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX Payments From Accounts. . . . . . . . . . . . . . . . . . 35
ARTICLE X Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI Administration. . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XII Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XIII Termination and Amendment . . . . . . . . . . . . . . . . 47
ARTICLE XIV Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XV Top Heavy Provisions. . . . . . . . . . . . . . . . . . . 49
APPENDIX A
APPENDIX B
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<PAGE>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
401(k) PROFIT SHARING PLAN
This Burlington Coat Factory Warehouse Corporation
Employees' Profit Sharing Plan was originally established by the
Board of Directors of Burlington Coat Factory Warehouse
Corporation, effective November 1, 1983, for the exclusive benefit
of eligible employees of the Company and their beneficiaries. The
Plan has been amended and restated in order to comply with the
provisions of the Tax Reform Act of 1986 as well as certain other
subsequent legislative changes. This restatement of the Plan is
generally effective January 1, 1989, except for Article II, Article
III, Sections 7.2 through 7.5, and Section 9.9, which are effective
September 1, 1995. The Plan, as so amended effective September 1,
1995, is designed as a profit sharing plan which incorporates a
cash or deferred arrangement under section 401(k) of the Internal
Revenue Code of 1986, as amended, and Plan provisions shall be
interpreted accordingly.
Definitions:
The following words and phrases shall have the meanings
provided below, except as otherwise required by the context. As
used in the Plan, the masculine pronoun shall be deemed to include
the feminine, and the singular number, the plural, unless a
different meaning is clearly indicated by the context.
"Accounts" means the Profit Sharing Account, Company
Account, Deferral Account, Rollover Account, Transfer Account
and Prior Plan Account, as applicable, maintained for a
Participant.
"Affiliate" means the Company and any corporation which Is a member
of a controlled group of corporations (as defined in Code section 414(b))
which includes the
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Company, or any trade or business (whether or not incorporated) which is
under common control (within the meaning of Code section 414(c))
with the Company.
"Board of Directors" means the Board of Directors of the
Company.
"Break in Service" means a Plan Year during which a
Participant fails to complete at least five hundred and one
(501) Hours of Service. For purposes of determining whether
a Break in Service has occurred, a Participant who is absent
from employment because of a Leave of Absence, pregnancy, the
birth of the Participant's child, the placement of a child
with the Participant for adoption, or the need to care for
such child during the period immediately following such birth
or placement shall be given credit for each Hour of Service
which otherwise would normally have been credited to such
Participant but for such absence. If the Committee is unable
to determine the number of such hours, eight Hours of Service
shall be credited per day of absence. No more than 501 Hours
of Service shall be credited to a Participant under this
paragraph because of such Leave of Absence, pregnancy or
placement. Hours of Service shall not be credited to a
Participant under this paragraph unless such Participant
furnishes to the Committee such timely information as the
Committee may require to establish that the absence from
employment is for reasons described above and to establish the
number of days for which there was such an absence. Hours of
Service credited under this paragraph shall be credited only
for the Plan Year in which the absence begins, if the
Participant would be prevented from incurring a Break in
Service in such Plan Year solely because the period of absence
is treated as Hours of Service or, in any other case, in the
immediately following Plan Year.
"Code" means the Internal Revenue Code of 1986, as may
be amended from time to time and the regulations promulgated
thereunder.
"Company" means Burlington Coat Factory Warehouse Corpo-
ration, or any successor entity.
"Committee" means the committee appointed by the Board
of Directors pursuant to Section 11.1.
"Company Account" means the separate account maintained
for each Participant to which Employer matching contributions
and related earnings are credited under ARTICLE III.
"Compensation" means the total annual wages and salary (not in
excess of $150,000, as may be adjusted by the Secretary of the Treasury
from time to time) of an Employee from the Employer, but excluding
other contributions to this Plan or con-
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-3-
tributions to other employee benefit plans of the Employer. In
determining the Compensation of an Employee for purposes of the
immediately preceding sentence, the rules of Code section 414(q)(6)
shall apply, except that in applying such rules, the term "family"
shall include only the spouse of the Employee and lineal descendants of
the Employee who have not attained age 19 before the close of the year.
The dollar limitation, as adjusted, will be allocated among the members
of the family unit in proportion to each member's Compensation.
"Deferral Account" means the separate account maintained
for each Participant to which a Participant's deferral
contributions and related earnings are credited under ARTICLE
II.
"Effective Date" means July 1, 1989, the effective date
of the amendment and restatement of the Prior Plan.
"Eligible Employee" means each Employee who meets the
eligibility requirements for Plan participation under Article
I. Notwithstanding the foregoing, for purposes of Sections
2.4 and 2.5, an Eligible Employee includes an Employee whose
eligibility to make contributions to the Plan has been
suspended because of a hardship withdrawal pursuant to Section
9.9.
"Employee" means an individual in the regular employment
of the Employer, but excluding an independent contractor, a
non-resident alien, and an employee covered by a collective
bargaining unit whose retirement benefits were the subject of
good faith bargaining between the Employer and the Employee's
representative representing such unit unless agreed upon
between such representative and Employer.
"Employer" means the Company or a Participating
Affiliate.
"Highly Compensated Employee" means an Employee who
performs service during the determination year and who is
described in one or more of the following groups:
(1) an Employee who is a five percent owner, as defined
in Code section 416(i)(1)(A)(iii), at any time
during the determination year or the look-back
year;
(2) an Employee who receives compensation in excess of
$75,000 (indexed in accordance with Code section
415(d)) during the look-back year;
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<PAGE>
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(3) an Employee who receives compensation in excess of
$50,000 (indexed in accordance with Code section
415(d)) during the look-back year and is a member
of the top-paid group for the look-back year;
(4) an Employee who is an officer, within the meaning
of Code section 416(i), during the look-back year
and who receives compensation in the look-back year
greater than fifty percent of the dollar limitation
in effect under Code section 415(b)(1)(A) for the
calendar year in which the look-back year begins;
or
(5) an Employee who is both described in subparagraph
2, 3, or 4 above when such subparagraphs are
modified to substitute the determination year for
the look-back year and one of the 100 Employees who
receive the most compensation from the Employer
during the determination year.
For purposes of determining who is a "Highly Compensated
Employee," the following will apply:
(1) the determination year means the Plan Year for
which the determination of who is a "Highly
Compensated Employee" is being made;
(2) the look-back year means the twelve-month period
immediately preceding the determination year, or,
if the Employer elects, the calendar year ending
within the determination year;
(3) the top-paid group means the top twenty percent of
Employees ranked on the basis of compensation
received during the year. For purposes of
determining the number of Employees in the top-paid
group, Employees described in Code section
414(q)(8) and in Q & A 9(b) of temporary Treasury
Regulation section 1.414(q)-1T are excluded;
(4) the number of officers is limited to fifty (or, if
lesser, the greater of three Employees or ten
percent of all Employees), excluding those
Employees who may be excluded in determining the
top-paid group;
(5) in the event that no officer has compensation in
excess of fifty percent of the Code section
415(b)(1)(A) limit, the highest paid officer is
treated as a Highly Compensated Employee;
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<PAGE>
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(6) compensation means compensation within the meaning
of Code section 415(c)(3), including elective or
salary reduction contributions to a cafeteria plan,
cash or deferred arrangement, or tax-sheltered
annuity; and
(7) Employers aggregated under Code section 414(b),
(c), (m), or (o) are treated as a single employer.
"Hour of Service" means each hour for which an Employee
either is directly or indirectly paid, or entitled to payment
by the Employer or an Affiliate. The number of Hours of
Service, and the period to which such hours shall be credited,
will be determined in accordance with Department of Labor
regulations Section 2530.200b-2. An hour for which an
Employee is paid at an overtime or premium rate shall be
included only as a single hour. An Employee with respect to
whom the Employer or an Affiliate does not maintain records
reflecting the number of hours for which he is paid shall be
credited with 45 Hours of Service for each week or part
thereof he is paid or entitled to be paid by the Employer or
an Affiliate.
"Investment Funds" means each of the investment funds
provided for in Section 7.2 and set forth in Appendix A.
"Key Employee" means an individual described in Code
section 416(i)(1).
"Leave of Absence" means a period of absence from
employment because (i) an Employer grants an Employee a leave
of absence for a specified period of time (not to exceed two
years) and such leaves are granted on a nondiscriminatory
basis; (ii) an Employee is on active military duty but not
only to the extent his employment rights are protected by the
Military Selective Service Act or the Uniformed Services
Employment and Reemployment Rights Act of 1994; or (iii) the
Employee is temporarily laid off by an Employer.
"Participant" means an Eligible Employee participating
in the Plan in accordance with ARTICLE I.
"Participating Affiliate" means an Affiliate to which the
Board of Directors has extended the Plan and which adopts the
Plan as a participating employer by action of its board of
directors or other governing body.
"Plan" means the Burlington Coat Factory Warehouse
Corporation 401(k) Profit Sharing Plan, as set forth herein
(including any Appendices hereto) and as may be amended from
time to time.
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"Plan Year" means the 12 month period beginning on the
first day of the Company's fiscal year and ending on that
Saturday of the following calendar year which falls closest to
June 30.
"Prior Plan" means the Burlington Coat Factory Warehouse
Corporation Employees Profit Sharing Plan, as in effect prior
to September 1, 1995.
"Prior Plan Account" means the separate account for a
Participant in which the Participant's account balance under
the Prior Plan and related earnings are credited. The Trustee
may establish one or more subaccounts within a Participant's
Prior Plan Account to reflect the portion of such Prior Plan
Account which is invested in one or more of the Investment
Funds, in accordance with Section 7.3(b).
"Profit Sharing Account" means the separate account for
a Participant in which the Participant's profit sharing
contributions and related earnings are credited under ARTICLE
IV.
"Retirement" means the later of (i) a Participant's
termination of employment with the Employer on or after age 65
or (ii) the fifth anniversary of the date on which he
commenced participation in the Plan.
"Rollover Account" means the separate account maintained
for a Participant to which the Participant's rollover
contributions and related earnings are credited under Section
5.1.
"Stock" means the Company's common stock, par value $1.00
per share.
"Total Disability" means the incapacity of a Participant,
either mental or physical, to perform the usual duties of his
employment with his Employer, such incapacity to be deemed to
exist when so declared by the Committee in its judgment and
discretion, supported by the written opinion of at least one
physician approved by the Committee.
"Transfer Account" means the separate account maintained
for a Participant to which amounts transferred on behalf of a
Participant and related earnings are credited under Section
5.2.
"Trust Agreement" means the agreement between the Trustee
and the Company pursuant to which the Trust Fund is
established and maintained, as provided in ARTICLE XII.
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<PAGE>
-7-
"Trustee" means the trustee under the Trust Agreement.
"Trust Fund" means the trust under the Plan established
pursuant to the Trust Agreement, as provided for in ARTICLE
XII.
"Valuation Date" means the last business day of each Plan
Year, and such other date as may be determined by the
Committee in its sole discretion.
"Year of Service" means a Plan Year during which a
Participant completes at least 1,000 Hours of Service;
provided, that for purposes of determining an Employee's
eligibility to participate in the Plan, pursuant to ARTICLE I,
a Year of Service shall mean any twelve (12) consecutive month
period, beginning on or after the Employee's date of
employment with an Affiliate, during which he completes at
least 1,000 Hours of Service; and further provided, that an
Employee who is credited with at least 1,000 Hours of Service
in both his first 12 consecutive months of employment and the
Plan Year which begins during such 12 month period shall be
credited with two Years of Service at the end of such Plan
Year.
ARTICLE I
PARTICIPATION
1.1 Participation in the Plan shall be offered only to
Eligible Employees of the Employer. Each Employee shall become an
Eligible Employee immediately following the attainment of age 21
and the completion of one Year of Service. Once an Employee has
become an Eligible Employee, he will continue to be an Eligible
Employee until he ceases to be an Employee.
1.2 Each Employee on the Effective Date who was a participant
in the Prior Plan shall become a Participant in the profit sharing
feature of the Plan, as described in ARTICLE IV, as of the
Effective Date. Each other Employee shall be become a Participant
in the profit sharing feature immediately upon becoming an Eligible
Employee.
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<PAGE>
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1.3 Effective September 1, 1995, at the time an Employee
becomes an Eligible Employee, he will be provided with a written
application for participation in the salary deferral feature of the
Plan and an explanation of the Plan. Each such Eligible Employee
shall become a Participant with respect to the salary deferral
feature of the Plan as soon as administratively feasible following
the date on which his properly completed application is received by
the Committee.
1.4 A Participant who (a) ceases to be an Employee or (b)
enters the military service of the United States, shall be an
inactive Participant. Any interest of such inactive Participant in
the Investment Funds shall be allowed to remain, subject to ARTICLE
IX.
ARTICLE II
PARTICIPANT DEFERRAL CONTRIBUTIONS
2.1 Subject to Sections 2.4 and 2.5 and ARTICLE VI, a
Participant may elect to defer prospectively by payroll deduction
from 1% to 15% of his Compensation, in whole percentages.
2.2 A Participant may change or suspend his deferral per-
centage as of the first payroll date of any future month subsequent
to his becoming a Participant by timely delivering the appropriate
form to the Committee.
2.3 The Employer shall contribute to the Plan, on behalf of
each Participant who elects pursuant to Section 2.1 to defer a
percentage of his Compensation, an amount in cash equal to the
amount deferred by the Participant. All such contributions,
together with any related earnings, shall be credited to the
Participant's Deferral Account.
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-9-
2.4 (a) If the actual deferral percentage (as defined in
paragraph (c) below) of Compensation paid during the Plan Year, or
within two and one-half months thereafter attributable to services
performed in such Plan Year, for Participants who are Highly
Compensated Employees is more than the amount permitted under the
deferral limitations set forth in paragraph (b) below, there shall
be a reduction in the portion of the contributions credited to the
Deferral Accounts of those Participants who are Highly Compensated
Employees and who elected to defer the highest percentage of
Compensation such that the deferral limitations are satisfied. The
Employer shall attempt to distribute to such Participants any
excess deferral contributions, and any related earnings, no later
than 2-1/2 months following the Plan Year in which such excess
deferral contributions are made. In addition, if the Employer
believes that contributions would be in excess of the deferral
limitations set forth in paragraph (b) below, the Employer may in
its sole discretion suspend, in whole or part, deferral
contributions to the Plan made on behalf of Participants who are
Highly Compensated Employees. In such case the amounts which would
ordinarily be deferred in a payroll period shall be paid directly
to such Participants.
(b) The actual deferral percentage for any Plan Year of
all Eligible Employees who are Highly Compensated Employees shall
not exceed, alternatively: (A) 125% of the actual deferral
percentage for all Eligible Employees who are not Highly
Compensated Employees; or (B) 200% of the actual deferral
percentage for Eligible Employees who are not Highly Compensated
Employees; provided that, solely for purposes of clause (B) above,
the actual deferral percentage for all Eligible Employees who are
Highly Compensated Employees does
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not exceed the actual deferral percentage for all Eligible Employees who are
not Highly Compensated Employees by more than 2%, or such other amount that
the Secretary of the Treasury shall prescribe.
(c) For purposes of this Section 2.4, the actual
deferral percentage for a specified group of Eligible Employees for
a Plan Year shall be the average of the ratios, calculated
separately for each Eligible Employee in such group, of (i) the
amount of contributions under all plans of the Employer which are
subject to Code section 401(k) (other than plans which may not be
permissively aggregated) to the Deferral Account and Company
Account (to the extent taken into account for purposes of the
actual deferral percentage test) made on behalf of each Eligible
Employee for such Plan Year to (ii) the Eligible Employee's
Compensation for such Plan Year. However, for purposes of
determining the actual deferral percentage for a Plan Year of an
Employee who is a 5% owner of the Company or who is one of the ten
most highly-paid Highly Compensated Employees, the deferral
contributions (and Employer matching contributions, if treated as
deferral contributions for purposes of the actual deferral percent-
age test) and Compensation of such Highly Compensated Employee
shall include the deferral contributions (and Employer matching
contributions, if treated as deferral contributions for purposes of
the actual deferral percentage test) and Compensation for the Plan
Year of "family members" (as defined in Code section 414(q)(6)).
"Family members," with respect to such Highly Compensated
Employees, shall be disregarded as separate employees in
determining the actual deferral percentage both for Eligible
Employees who are not Highly Compensated Employees and for Eligible
Employees who are Highly Compensated Employees. In addition,
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for purposes of determining the actual deferral percentage test,
deferral contributions and Employer matching contributions must be
made before the last day of the 12-month period immediately
following the Plan Year to which contributions relate.
(d) If a reduction in the amount of deferral
contributions on behalf of a Participant is required because of the
application of paragraph (a) above, the reduction shall be treated
as taxable earnings to the Participant for the pay period in which
the reduction occurs, and the Employer shall withhold any taxes
required by law on such taxable earnings.
(e) If a distribution of excess deferral contributions
(and related earnings) is required because of the application of
paragraph (a) above, the Employer shall withhold any taxes required
by law on such distribution.
2.5 Notwithstanding anything contained herein to the
contrary, the maximum amount of contributions credited to the
Deferral Account on behalf of a Participant in any calendar year
may not exceed $9,240 (as may be adjusted by the Secretary of the
Treasury to reflect increases in the cost of living), and any such
contributions made to the Deferral Account in excess of such amount
(as adjusted), plus any related earnings on such excess amount,
shall be distributed to the Participant no later than April 15
following the close of the calendar year in which such excess
contributions are made.
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ARTICLE III
EMPLOYER MATCHING CONTRIBUTIONS
3.1 Subject to the provisions of Sections 3.2 and 3.3 and
ARTICLE VI, the Employer shall contribute in cash to the Plan an
amount equal to 100% of a Participant's deferral contributions (but
not in excess of $250 annually for any Participant) made pursuant
to Section 2.1 on behalf of each Participant; provided however,
that the Company may, in its discretion, contribute Stock, valued
at its fair market value, in lieu of cash for all or any part of
its contribution under this Section 3.1. Employer matching
contributions shall be credited as soon as practicable after the
end of each Plan Year to the Company Accounts of Participants who
are in the employ of an Employer on the last day of the Plan Year.
Notwithstanding the foregoing, the Company may, in its sole
discretion, make matching contributions at such other times during
the Plan Year as it determines.
3.2 (a) If the contribution percentage (as defined in
paragraph (c) below) of Compensation for Participants who are
Highly Compensated Employees is more than the amount permitted
under the special limitations set forth in paragraph (b) below,
there shall be a reduction in the Employer matching contributions
credited to the Company Accounts of those Participants who are
Highly Compensated Employees and whose contribution percentages are
the highest so that such special limitations are satisfied. Any
excess Employer matching contributions made to the Trust Fund (plus
any related earnings) shall be distributed to such Participants
before the end of the Plan Year following the Plan Year in which such excess
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Employer matching contributions are made. In addition, if the Employer or
the Committee determines that Employer matching contributions would be in
excess of the special limitations set forth in paragraph (b) below,
the Employer may, in its sole discretion, suspend, in whole or in part,
deferral contributions to the Plan made on behalf of Participants who are
Highly Compensated Employees and, therefore, related Employer matching
contributions with respect to such Participants (in which case the deferral
contributions that would ordinarily be contributed to the Trust
Fund on such Participants' behalf in a payroll period shall be paid
directly to such Participants).
(b) The contribution percentage for any Plan Year of all
Eligible Employees who are Highly Compensated Employees shall not
exceed, alternatively: (A) 125% of the contribution percentage for
all Eligible Employees who are not Highly Compensated Employees, or
(B) 200% of the contribution percentage for Eligible Employees who
are not Highly Compensated Employees; provided that, solely for
purposes of clause (B) above, the contribution percentage for
Eligible Employees who are Highly Compensated Employees does not
exceed the contribution percentage for Eligible Employees who are
not Highly Compensated Employees by more than 2%, or such other
amount that the Secretary of the Treasury shall prescribe.
(c) For purposes of this Section 3.2, the contribution
percentage for a specified group of Eligible Employees for a Plan
Year shall be the average of the ratios, calculated separately for
each Eligible Employee in such group, of (i) the amount of Employer
matching contributions under all plans of the Employer which are
subject to Code section 401(k) (other than plans which may not be
permissively aggregated) made on behalf of each Eligible Employee
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for such Plan Year (to the extent not taken into account for
purposes of the actual deferral percentage test) to (ii) the
Eligible Employee's Compensation for such Plan Year. However, for
purposes of determining the contribution percentage for a Plan Year
of a 5% owner of the Company or one of the ten most highly-paid
Highly Compensated Employees, the Employer matching contributions
(to the extent not taken into account for purposes of the actual
deferral percentage test) of such Highly Compensated Employee shall
include the Employer matching contributions (to the extent not
taken into account for purposes of the actual deferral percentage
test) and Compensation for the Plan Year of "family members" (as
defined in Code section 414(q)(6)). "Family members," with respect
to such Highly Compensated Employees, shall be disregarded as
separate employees in determining the average contribution
percentage both for Eligible Employees who are not Highly
Compensated Employees and for Eligible Employees who are Highly
Compensated Employees. In addition, for purposes of determining
the contribution percentage test, Employer matching contributions
will be considered made for a Plan Year if made before the last day
of the 12-month period immediately following the Plan Year to which
contributions relate.
(d) If a distribution of excess Employer matching
contributions (and related earnings) is required because of the
application of (a) above, the Employer shall withhold any taxes
required by law on such distribution.
(e) In the event an active Participant is required to
reduce his deferral contributions to the Plan as a result of the
application of the provisions of Sections 2.4(a), the
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Employer matching contribution under Section 3.1(a) made on behalf of the
Participant for the remainder of the Plan Year shall be applied to
the reduced amount of deferral contributions.
3.3 If both the actual deferral percentage and the average
contribution percentage of Highly Compensated Employees exceeds
1.25 multiplied by the actual deferral percentage and contribution
percentage of the non-Highly Compensated Employees, multiple use
will occur. In the event of multiple use, if one or more Highly
Compensated Employees participate in a plan(s) subject to both the
actual deferral percentage and contribution percentage tests and
the sum of the two percentages of those Highly Compensated
Employees subject to either or both tests exceeds the "aggregate
limit," then the average contribution percentage of those Highly
Compensated Employees who also participate in a salary deferral
arrangement will be reduced (beginning with the Highly Compensated
Employee whose contribution percentage is the highest) so that the
limit is not exceeded. For the purposes of this Section,
"aggregate limit" shall mean the sum of (i) 125% of the greater of
the actual deferral percentage or the average contribution
percentage for non-Highly Compensated Employees for the Plan Year
and (ii) the lesser of 200% of, or two percentage points plus, the
smaller of such actual deferral percentage or average contribution
percentage.
ARTICLE IV
PROFIT SHARING CONTRIBUTIONS
4.1 Subject to Article VI, the Company shall contribute to
the Plan for each Plan Year such amount in cash as shall be authorized by
the Board of Directors in its sole discretion.
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4.2 The amount contributed for any Plan Year shall be
allocated proportionately among the Profit Sharing Accounts of
Eligible Employees. The Profit Sharing Account of each Eligible
Employee shall be credited with a proportionate amount of the
contribution for such Plan Year equal to the proportion that his
Compensation for such Plan Year bears to the total Compensation of
all those Eligible Employees who are employed on the last day of
the Plan Year.
ARTICLE V
ROLLOVER CONTRIBUTIONS; DIRECT TRANSFERS
5.1 Subject to the provisions of the Plan and to rules of
uniform application to be promulgated by the Committee, an Eligible
Employee, or Employee who is not yet an Eligible Employee, may make
a contribution to the Plan in cash which qualifies as a "rollover
amount", "rollover contribution," or "eligible rollover
distribution" under Code section 403(a)(4), 408(d)(3) or
402(f)(2)(A), respectively. An Employee who wishes to make such a
contribution shall timely file with the Committee a written notice
requesting approval for such contribution, affirming that his
contribution qualifies as a rollover amount, rollover contribution
or eligible rollover distribution. Investment of such
contribution, as between or among the Investment Funds, as
applicable, shall be as directed by the Employee in accordance with
the provisions of Sections 7.3 and 7.4. In addition to the written
notice required under this Section 5.1, the Committee may require
such further documentation from the Employee, or the applicable
trustee, plan sponsor, custodian or other appropriate person, as
evidence of the contribution
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being qualified as a rollover amount, rollover contribution or eligible rollover
distribution, and until such written notice and documentary evidence
satisfactory to the Committee have been so provided, the Committee shall not
approve such contribution to the Plan. The Committee shall be fully
protected in relying on such written and documentary evidence
presented by or on behalf of the Employee. Contributions made by
the Employee pursuant to this Section 5.1 shall be credited to the
Employee's Rollover Account.
5.2 Subject to the provisions of the Plan and to rules of
uniform application to be promulgated by the Committee, and in
addition to deferral contributions or rollover contributions to the
Plan in accordance with ARTICLE II and Section 5.1, an Eligible
Employee, or Employee who has not yet become an Eligible Employee,
may have transferred directly to the Plan on his behalf his accrued
benefit in another retirement plan qualified under Code section
401(a) (provided such plan is not described in Code section
401(a)(11)(B)). An Employee who wishes to have such an amount
transferred shall timely file with the Committee a written notice
requesting approval for such transfer, affirming that the transfer
is from a tax-qualified plan. Such transfer shall be effected
directly from the transferor plan without distribution to the
Employee, as soon as practicable after receipt of such notice and
approval by the Committee. Investment of such transferred amount,
as between or among the Investment Funds, as applicable, shall be
as directed by the Employee in accordance with the provisions of
Sections 7.3 and 7.4. In addition to the written notice required
under this Section 5.2, the Committee may require such further
documentation from the Employee, or the applicable trustee, plan
sponsor, custodian or other appropriate person, as evidence of the
transfer being from a plan
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qualified under Code section 401(a), and until such written notice and
documentary evidence satisfactory to the Committee have been so provided,
the Committee shall not approve such transfer to the Plan. The Committee
shall be fully protected in relying on such written and documentary evidence
presented by or on behalf of the Employee. Transfers made by the Employee
pursuant to this Section 5.2 shall be credited to the Employee's Transfer
Account.
5.3 Effective January 1, 1993, upon the occurrence of an
event of distribution as described in Section 9.1, and
notwithstanding any other provisions of the Plan to the contrary
that would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the manner
prescribed by the Company, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. For purposes of
this Section 5.3, the following definitions apply:
"Eligible rollover distribution" is any
distribution of all or any portion of the
balance to the credit of the distributee,
except that an eligible rollover distribution
does not include: any distribution that is one
of a series of substantially equal periodic
payments (not less frequently than annually)
made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated beneficiary, or for
a specified period of ten years or more; any
distribution to the extent such distribution
is required under Code section 401(a)(9); and
the portion of any distribution that is not
includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer
securities).
"Eligible retirement plan" is an individual
retirement account described in Code section
408(a), an individual retirement annuity
described in Code section 408(b), an annuity
plan described in Code section 403(a), or a
qualified trust described in Code section
401(a), that accepts the distributee's
eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
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surviving spouse, an eligible retirement plan
is an individual retirement account or individual
retirement annuity.
"Distributee" includes an Employee or former
Employee. In addition, the Employee's or
former Employee's surviving spouse and the
Employee's or former Employee's spouse or
former spouse who is the alternate payee under
a qualified domestic relations order, as
defined in Code section 414(p), are
distributees with regard to the interest of
the spouse or former spouse.
"Direct rollover" is a payment by the Plan to
the eligible retirement plan specified by the
distributee.
ARTICLE VI
CONTRIBUTION LIMITATIONS
6.1 (a) Any provision of the Plan to the contrary
notwithstanding, no Employer contributions or other annual
additions to a Participant's Accounts will be made in any Plan Year
in excess of the lesser of $30,000 (as adjusted from time to time
by the Secretary of the Treasury) or 25% of the Participant's
"compensation" (within the meaning of Code section 415(c)(3)).
(b) Any provision of the Plan to the contrary
notwithstanding, in the case of a Participant who is a participant
in a defined benefit plan of the Company, his maximum annual
additions shall not exceed the amount which will result in a
defined contribution plan fraction which when added to the defined
benefit plan fraction of such Participant will exceed 1.0 for any
Plan Year.
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(c) For purposes of applying this Section 6.1, all
defined benefit plans of the Company and any Affiliates (as
determined in accordance with Code section 415(h)), and all defined
contribution plans of the Company and any Affiliates (as determined
in accordance with Code section 415(h)), including the Plan, shall
be combined or aggregated and the maximum benefit or annual
additions limitation shall be determined on the basis of a
Participant's annual additions and benefits under all such plans.
(d) For purposes of this Section 6.1, (i) annual
additions means, for each Plan Year, (A) a Participant's deferral
contributions; plus (B) such Participant's share of Employer
matching contributions; plus (C) such Participant's share of
Company profit sharing contributions (if any); plus (D) any
forfeitures allocated to such Participant's Accounts; (ii) defined
contribution plan means a plan which provides for an individual
account for each participant and for benefits based solely upon the
amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant's ac-
counts except to the extent provided in (ii) below; (iii) a defined
benefit plan means any plan which is not a defined contribution
plan; however, in the case of a defined benefit plan which provides
a benefit derived from employer contributions which is based partly
on the balance of the separate account of a participant, such plan
shall be treated as a defined contribution plan to the extent bene-
fits are based on the separate account of a participant and as a
defined benefit plan with respect to the remaining portion of the
benefits under the plan; (iv) the defined benefit plan fraction for
a participant shall be a fraction the numerator of which is the
lesser of (a) the product of 1.25 multiplied by the
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dollar limitation in effect for the plan, or (b) the product of 1.4
multiplied by an amount equal to 100% of the Participant's average
compensation for his high three years projected annual benefit
under the plan, if such plan provided the maximum benefit allowed
by law; and (v) the defined contribution plan fraction for a
Participant shall be a fraction the numerator of which is the sum
of the annual additions to the Participant's accounts under a
defined contribution plan of the Company and Affiliates (as
determined in accordance with Code section 415(h)) and the
denominator of which is the sum of the lesser of the following
amounts for such Plan Year and for each prior Plan Year: (a) the
product of 1.25 multiplied by the dollar limitation in effect for
such Plan Year, or (b) the product of 1.4 multiplied by the 25% of
Participant's compensation (within the meaning of Code section
415(c)(3)).
ARTICLE VII
INVESTMENT OF FUNDS
7.1 The Employer on a monthly basis, or more frequently, will
pay over to the Trustee, or its agent, contributions made to the
Plan to be held in trust and invested as provided herein and in the
Trust Agreement.
7.2 The Trust Fund will be invested in those Investment Funds
set forth in Appendix A.
7.3 (a) Subject to Section 7.3(b), each Participant's Profit
Sharing Account, Company Account, Deferral Account, Rollover
Account, Transfer Account and the Participant-directed portion of
his Prior Plan Account, as applicable, will be invested in one or more of the
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Investment Funds. Each Participant will designate the
proportion (expressed as a percentage in multiples of 10%) of his
Accounts (other than the portion of his Prior Plan Account which is
not Participant-directed) to be invested in each Investment Fund.
Such designation, once made, may be changed at any time. The
Participant may also transfer the amount equivalent to his
interest, or any partial interest (expressed as a percentage in
multiples of 10%), in an Investment Fund from such Investment Fund
to another Investment Fund at any time. Changes will be made by a
Participant's direction in writing to the Committee, or pursuant to
a voice response system approved by the Committee, and will be made
effective as soon as possible after receipt of such direction.
(b) Notwithstanding the foregoing, if the Company
contributes Stock to the Plan pursuant to Section 3.1, the portion
of a Participant's Company Account represented by such Stock shall
continue to be invested in Stock until distributed.
7.4 Each Participant shall have an interest in each In-
vestment Fund in which he has elected to have invested all or any
part of his deferral contributions under Section 2.1, his Employer
matching contributions under Section 3.1, his profit sharing
contribution under Section 4.1, his rollover contributions under
Section 5.1 and transfer amounts under Section 5.2. His interest
at any time in the Investment Funds shall be equal to the sum of
such contributions and transfer amounts, adjusted from time to time
to reflect his proportionate share of the income and losses
realized by such Investment Funds and of the net appreciation or
depreciation in the value of such Investment Funds. The Committee
shall maintain accounts to reflect the interest of each Participant
in each Investment Fund. As of each Valuation Date, the Committee shall
ascertain
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from the Trustee the value of each Investment Fund
and shall on such basis determine the value of the interests of
Participants. The determinations of the Trustee and the Committee
shall be conclusive. Each Participant will be furnished a
statement of his Accounts at least quarterly.
7.5 (a) Each Participant's Prior Plan Account, if any, will
be invested by the Trustee in its sole discretion and in accordance
with the terms of the Trust Agreement. Each such Participant's
Prior Plan Account shall be credited with a proportionate share of
all income, gains or profits earned from the investment of the
portion of the Trust Fund containing Participant's Prior Plan
Account as provided in the Trust Agreement. Each such
Participant's Prior Plan Account shall be debited with a
proportionate share of any losses sustained by the Trustee from the
investment of the Trust Fund containing Participant's Prior Plan
Account on other transactions, and of any expense incurred by the
Trustee in the administration of the Prior Plan Account under the
Trust Fund, as provided in the Trust Agreement.
(b) The Trustee may, in its discretion and on a uniform
and nondiscriminatory basis, designate that the investment of any
portion of the assets in a Participant's Prior Plan Account shall
be governed by the Participant's designation of Investment Funds
pursuant to Section 7.3(a).
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ARTICLE VIII
VESTING OF INTEREST
8.1 A Participant's interest in his Deferral Account,
Rollover Account and Transfer Account, adjusted for his share of
income or losses and appreciation or depreciation therein, shall be
fully vested at all times.
8.2 (a) A Participant's interest in his Profit Sharing
Account, Company Account and Prior Plan Account, adjusted for the
share of income or losses and appreciation or depreciation therein,
shall become vested in accordance with the following schedule based
on the Participant's Years of Service:
Years of Service Vested Percentage
less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
(b) Notwithstanding the foregoing,
(i) a Participant's interest in his Profit Sharing
Account, Company Account and Prior Plan Account shall
become fully and immediately vested upon the first to
occur of the following:
(1) the Participant's Retirement,
(2) the Participant's Total Disability, or
(3) the Participant's death; and
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(ii) a Participant who was a participant in the
Prior Plan shall be no less vested in his Prior Plan
Account than he was under the Prior Plan.
Notwithstanding anything contained herein to the contrary, a
Participant shall become fully and immediately vested upon the later of
(i) his attainment of age 65 or (ii) the fifth anniversary of the date on
which he commenced participation in the Plan.
(c) For purposes of this Section 8.2, a Participant's
Years of Service shall include his entire Years of Service; pro-
vided however:
(i) in the case of a Participant who was not vested
in any portion of his Profit Sharing Account, Company
Account and Prior Plan Account, his Years of Service
shall not include his Years of Service completed before
a Break in Service if the number of consecutive one-year
Breaks in Service equals or exceeds the greater of five
or the aggregate number of Years of Service, whether or
not consecutive, completed before such Break in Service
(such aggregate number of Years of Service shall not
include any Years of Service not taken into account by
reason of any prior Break in Service);
(ii) in the case of a Participant who has a Break in
Service of less than 12 months, his Years of Service
shall include both the Years of Service before and after
such Break in Service; and
(iii) in the case of a Participant who was a
participant in the Prior Plan, his Years of Service shall
include the period of his service for which he was
credited for vesting purposes under the Prior Plan prior
to the Effective Date.
8.3 In the event a Participant's employment terminates before
his interests in his Profit Sharing Account, Company Account and
Prior Plan Account become fully vested, the portion of such
Accounts which is not vested shall be forfeited and, subject to the
provisions of Section 8.5, allocated in the manner described in
Section 4.2 to the Profit Sharing Accounts of the remaining active
Participants for the Plan Year in which such forfeiture occurs.
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8.4 Notwithstanding the provisions of Section 8.2, in the
event the Plan shall be terminated or partially terminated, or upon
a complete discontinuance of contributions, the interest of an
affected Participant in his Profit Sharing Account, Company Account
and Prior Plan Account shall become fully vested.
8.5 In the case of a former Participant who has received a
distribution of his entire vested benefit under the Plan and
forfeited his nonvested interest in his Accounts by reason of
termination of employment for any reason, and who subsequently
becomes a Participant prior to the occurrence of five consecutive
one-year Breaks in Service, he shall be entitled to repay to the
Plan the full amount of such distribution. Upon such repayment,
any interest in such Participant's Accounts which was forfeited at
the time of his termination of employment shall be restored and his
right to receive such interest upon a subsequent termination of
employment shall be determined in accordance with Section 8.2 based
upon his total Years of Service at that time, if applicable. Such
restoration shall be made from amounts forfeited under Section 8.3
in the year in which an Employee's right to such restoration
arises. To the extent that current forfeitures are insufficient to
make such restoration, the Company shall make a special
contribution to the Plan to restore the forfeited amount.
ARTICLE IX
PAYMENTS FROM ACCOUNTS
9.1 The entire vested interest of a Participant in his
Accounts shall become payable upon any of the following events:
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(i) the Participant's Retirement;
(ii) the Participant's Total Disability;
(iii) the Participant's death;
(iv) the Participant's other termination of
employment with the Employer; or
(v) upon the Participant's request in
accordance with Section 9.8, on or
after the Participant's attainment
of age 59-1/2; or
(vi) as a hardship withdrawal under
Section 9.9.
9.2 A Participant may, prior to termination of his employment
with the Employer, designate a beneficiary to whom distribution of
his interest in the Trust Fund shall be paid in the event of his
death prior to the full receipt of such interest; provided,
however, that in the event the Participant is married on the date
of his death, such beneficiary shall be deemed to be the
Participant's surviving spouse. The Participant may elect to
change or revoke his designated beneficiary at any time; provided,
however, that in the event prior to such change or revocation such
beneficiary is the Participant's surviving spouse, such election
shall not be effective unless such surviving spouse provides
written consent which acknowledges the effect of such election and
is witnessed by a Plan representative or a notary public. The
affirmative designation of any beneficiary and any elected change
or revocation thereof by a Participant shall be made on forms
provided by the Committee and shall not in any event be effective
unless and until filed with the Committee. If no designated or
deemed beneficiary survives the Participant or former
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Participant or if an unmarried Participant or former Participant fails to
designate a beneficiary under the Plan, the amount payable upon the
death of the Participant or former Participant shall be paid to his
estate.
9.3 Upon termination of employment for any reason, any part
of a Participant's interest in his Accounts that has not vested
shall be forfeited and applied in accordance with Section 8.3, and
his active participation under the Plan will terminate subject to
the provisions of Section 9.4.
9.4 Notwithstanding the foregoing provisions of this ARTICLE
IX, and subject to Section 9.10, payments will be made from a
Participant's Accounts only upon the approval and direction of the
Committee, at the time and in the manner determined by the
Committee in accordance with the provisions of the Plan. When the
vested interest of a Participant becomes payable in accordance with
the provisions of Section 9.1 or 9.3, the Committee shall direct
the Trustee to pay from the Trust Fund an amount equal to the value
of such vested interest as determined under Sections 7.4 and 7.5 as
of the next Valuation Date; provided however, that, unless the
Participant or his beneficiary elects otherwise, pursuant to
Section 9.5, any such amount shall be paid to the Participant no
later than the earlier of (i) 60 days after the close of the Plan
Year in which his employment terminates or (ii) the date payment
first became administratively feasible.
9.5 The amounts payable from the Trust Fund shall be paid as
a single sum; provided, however, that such single sum payment shall
not be made without the consent of the Participant (or, if
applicable, his beneficiary) if such amount exceeds $3,500.
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9.6 If any person who is entitled to receive a payment from
the Plan shall die prior to such payment, the amount remaining to
be paid shall be paid in a single sum to the beneficiary previously
designated by the Participant whose interest is involved, or, if no
such beneficiary survives, to the estate of the Participant.
9.7 Except as otherwise provided by law or the issuance of a
"qualified domestic relations order" (within the meaning of Code
section 414(p)), no person shall have the right to assign,
alienate, transfer, hypothecate or otherwise subject to lien his
interest in or his benefit under the Plan, nor shall benefits under
the Plan be subject to the claims of any creditor. Any other
provision of the Plan to the contrary notwithstanding, if a
qualified domestic relations order requires the distribution of all
or part of an Employee's benefits under the Plan, the establishment
or acknowledgment of the alternate payee's right to benefits under
the Plan in accordance with the terms of such qualified domestic
relations order shall in all events be deemed to be consistent with
the terms of the Plan.
9.8 Subject to Section 10.4, upon written application to the
Committee, in such form and manner as the Committee may prescribe,
a Participant who is also an Employee may on or after attainment of
age 59-1/2 make a cash withdrawal once in each Plan Year from any or
all of his Accounts. The minimum cash withdrawal a Participant may
make under this Section 9.8 shall be the lesser of $500 or the
balance in his Accounts, as applicable.
9.9 (a) Upon written application of a Participant, the Committee shall
determine whether the Participant is entitled to make a hardship withdrawal
from his Deferral Account (excluding earnings on such Account), from the
vested portion of his Company Account, or from
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his Profit Sharing Account, Prior Plan Account,
Rollover Account or Transfer Account, as applicable, subject to the
provisions of this Section 9.9. A hardship entitling a Participant
to make a withdrawal will exist if the Committee determines that
the Participant has an immediate and heavy financial need. A
distribution based upon financial hardship cannot exceed the amount
required to meet the immediate financial need created by the
hardship and not reasonably available from reserves or other
resources of the Participant. The amount of immediate financial
need may include any amount necessary to pay any Federal, state or
local income taxes or penalties anticipated to result from the
distribution. The determination of the existence of financial
hardship and the amount required to be distributed to meet the need
created by the hardship shall be made by the Committee in
accordance with uniform and nondiscriminatory standards. Such
withdrawal shall be made in cash upon 30 days' prior written
application to the Committee. In no event may the amount of such
hardship withdrawal exceed the amount necessary to constitute
security for repayment of any outstanding loan made pursuant to
ARTICLE X.
(b) For purposes of this Section 9.9:
(i) A distribution will be deemed to be made on
account of an immediate and heavy financial need of the
Participant if the distribution is on account of (1)
medical expenses described in Code section 213(d)
incurred by the Participant, his spouse, or any
dependents (as defined in Code section 152) or necessary
for these persons to obtain medical care described in
Code section 213(d); (2) the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) the payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
Participant, his spouse, or any dependents; (4) the need to prevent
the eviction of the Participant from, or the foreclosure on the
mortgage of, the Participant's principal residence; or (5) other
Page 186
<PAGE>
-31-
events or conditions as prescribed or permitted by the Internal
Revenue Service through publication of documents of general
applicability;
(ii) In addition to the events described in (b)(i)
above, the Committee may determine on a nondiscriminatory
basis other events or conditions which establish a
Participant's immediate and heavy financial need;
(iii) A distribution will be deemed necessary to
satisfy an immediate and heavy financial need of a
Participant if (1) the distribution is not in excess of
the amount of the immediate and heavy financial need of
the Participant and (2) the Participant has obtained all
distributions, other than hardship withdrawals, and all
nontaxable loans available under the Plan and any other
plan maintained by the Company in which the Participant
participates; and
(iv) A Participant who receives a hardship with-
drawal in accordance with this Section shall have
contributions to his Deferral Account (as well as other
employee elective contributions under any other plan of
the Employer) suspended for 12 months after receipt of
the hardship withdrawal; the maximum amount of contri-
butions to his Deferral Account made on behalf of such
Participant under this Plan or any other plan of the
Employer in the tax year following the tax year in which
he receives a hardship withdrawal shall be the applicable
amount described in Section 2.5 for such tax year reduced
by the amount of contributions to his Deferral Account
made on behalf of such Participant in the tax year in
which he receives the hardship withdrawal.
9.10 Any other provision of the Plan to the contrary
notwithstanding, payment of a benefit under the Plan to a
Participant shall commence no later than the April 1st next
following the Plan Year in which the Participant attains age 70-1/2,
regardless of whether such Participant has retired as of such date.
Page 187
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ARTICLE X
LOANS
10.1 Upon application to the Committee in writing, or pursuant
to a voice response system approved by the Committee, a Participant
shall be permitted to borrow from his Accounts in accordance with
criteria established by the Committee on a uniform and
nondiscriminatory basis. A Participant shall be permitted to have
no more than two loans outstanding at one time. Any such loan
shall be evidenced by a note.
10.2 The minimum amount that a Participant shall be permitted
to borrow is $500. The maximum aggregate amount of all outstanding
loans to a Participant under this Plan and any other plan of the
Employer is the lesser of (i) $50,000 (reduced by the highest
outstanding balance of any prior Plan loan during the one-year
period ending on the day before the date the Plan loan is made), or
(ii) 50% of such Participant's accrued vested balances in his
Accounts (less the value of any Stock in the Participant's Company
Account).
10.3 Each loan shall be repaid by the Participant through
equal payroll deductions, on a level amortization basis, commencing
with the date of the loan, over a period of not more than 60
months. Notwithstanding the preceding sentence, the Committee may
permit repayment of a loan over a period in excess of five, but not in excess
of twenty, years when the loan is used to acquire any dwelling unit which
within a reasonable time is to be used as a primary residence of the
Participant. Interest on loans shall be charged at a reasonable rate, as
determined by the
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Committee on a uniform and nondiscriminatory basis. Such rate will remain
fixed for the term of the loan. A Participant may prepay the entire
balance of his loan at any time without penalty.
10.4 No distributions pursuant to ARTICLE IX (other than
Section 9.9) shall be made until the outstanding balance of any
loan plus interest thereon is repaid in full.
10.5 If a loan is in default, the Committee shall liquidate
all or any portion of the Participant's collateral account balance
as necessary to discharge the Participant's obligation under the
loan agreement before any amounts are paid to or on behalf of such
Participant. In no event shall such liquidation occur prior to the
time the Participant is entitled to a distribution under Article
IX. The following events will be considered a default:
(1) death or disability of the Participant;
(2) termination of the Plan;
(3) retirement or separation from service by the Participant and
(4) failure to make any required payment of loan principal
and interest.
10.6 All loans granted under this ARTICLE X shall be granted
in a uniform and nondiscriminatory manner in accordance with
written loan procedures established by the Committee. To the
extent required by law and under such rules as the Committee shall
adopt, loans shall be made available on a reasonably equivalent
basis to any beneficiary or former Employee (i) who maintains a
balance in one of more Accounts under the Plan, and (ii) who is
still a party-in-interest (within the meaning of Section 3(14) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")).
Page 189
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10.7 The Company may amend the terms of, or discontinue, the
loan program as it deems appropriate. The Company or the Committee
may also restrict or suspend the making of loans if it determines
that the program is having adverse effects on Plan investment
earnings or on Participants in general.
ARTICLE XI
ADMINISTRATION
11.1 The Plan shall be administered by a Committee of not less
than three persons appointed by the Board of Directors. The
Company shall be the Plan Administrator and "named fiduciary"
(within the meaning of ERISA section 402(a)) and the Committee
shall assume the responsibilities and duties set forth in this
ARTICLE XI.
11.2 The Committee shall establish rules for the administration of
the Plan. It shall interpret the Plan in its sole discretion and its
determinations shall be conclusive and binding upon all Participants
and their beneficiaries.
11.3 All expenses attributable to the administration of the
Plan and the expenses of the Trustee shall be paid out of the Trust
Fund except to the extent paid by the Employer.
11.4 The Committee shall have the power to assign any of its
responsibilities to subcommittees or members of the Committee and
may designate one or more subcommittees or other persons to carry
out any of its responsibilities.
Page 190
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11.5 The Committee may employ such agents and such clerical
and other services as it may deem advisable in carrying out the
provisions of the Plan, and may consult with counsel, who may be
counsel for the Company.
ARTICLE XII
TRUSTEE
12.1 All assets of the Plan shall be held pursuant to a Trust
Agreement between a Trustee designated by the Board of Directors
and the Company. The Trust Agreement shall provide, among other
things, for a Trust Fund, to be administered by the Trustee, with
respect to which all contributions shall be paid, and the Trustee
shall have such rights, powers and duties as the Board of Directors
shall from time to time determine. All assets of the Trust Fund
shall be held, invested and reinvested in accordance with the
provisions of the Trust Agreement.
12.2 All Employer contributions to the Plan are expressly
conditioned upon being deductible under Code section 404(a). At no
time prior to the satisfaction of all liabilities with respect to
Participants and their beneficiaries shall any part of the assets
of the Plan be used for or diverted to purposes other than for the
exclusive benefit of such persons; provided, however, Employer
contributions may be returned to the Employer (a) within one year
after the payment of a contribution, if made by the Employer by
reason of a mistake of fact, (b) within one year after the date of
denial of initial qualification of the Plan under Code section
401(a) if a contribution is conditioned upon such initial
qualification and the Plan does not so qualify, or
Page 191
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-36-
(c) within in year of the disallowance of a deduction, to the extent a
deduction is disallowed for such contribution under Code section 404(a).
ARTICLE XIII
TERMINATION AND AMENDMENT
13.1 The Company expects to continue the Plan indefinitely,
but the continuance of the Plan and the payment of contributions
are not assumed as contractual obligations.
13.2 The Plan may be terminated at any time by adoption of
resolutions by the Board of Directors. If the Plan shall be
terminated, the Trustee shall continue to hold, invest and
administer the Trust Fund in accordance with the provisions of the
Trust Agreement and shall make distributions therefrom in accor-
dance with the provisions of the Plan, as then in effect, pursuant
to instructions filed with the Trustee by the Committee upon such
termination or from time to time thereafter. Upon a complete
discontinuance of contributions, or upon termination or partial
termination of the Plan, each affected Participant or beneficiary
shall have a nonforfeitable interest in his Accounts in the Plan.
13.3 The Plan may be amended at any time and from time to time, including
retroactively, by adoption of resolutions by the Board of Directors; provided,
however, that no amendment shall reduce the vested percentage of a
Participant's accrued benefit derived from Employer contributions below
the vested percentage thereof on the date such amendment is
Page 192
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-37-
adopted or becomes effective, whichever is later; and provided further,
that no amendment shall decrease the accrued benefit of a Participant.
ARTICLE XIV
MISCELLANEOUS
14.1 Participation or non-participation in the Plan shall have
no effect upon the employment status of any Employee.
14.2 All benefits payable under the Plan shall be paid solely
from the Plan, and the Employer assumes no liability or
responsibility with respect to such payments.
14.3 In the event of any merger or consolidation of the Plan
with, or transfer of any assets or liabilities of the Plan to, any
other plan each Participant shall be entitled to receive a benefit
immediately after such merger, consolidation, or transfer (computed
as if such other plan had then terminated) which is equal to or
greater than the benefit he would have been entitled to receive
immediately before such merger, consolidation, or transfer
(computed as if the Plan had then terminated).
14.4 The Plan shall be construed and enforced in accordance
with the laws of the State of New Jersey, except to the extent
preempted by the laws of the United States.
Page 193
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ARTICLE XV
TOP HEAVY PROVISIONS
The provisions of this ARTICLE XV shall become applicable
only under the circumstances described hereunder.
15.1 For purposes of this ARTICLE XV, the Plan shall be "top
heavy" if, as of the determination date (the last day of the
preceding Plan Year or, in the case of the first Plan Year, the
last day of such year), the present value of the cumulative account
balances for Key Employees under the Plan and all other plans in
the "aggregation group," as defined in Code section 416(g)(2)(A),
exceeds 60% of the present value of the cumulative account balances
under all such plans for all Employees determined as of the appli-
cable "valuation date." For purposes of this ARTICLE XV,
"valuation date" shall mean the most recent Valuation Date within
a 12-month period ending on the determination date. The present
value of such account balances shall be computed in accordance with
Code section 416(g), and the above percentage ratio shall be
determined by a fraction, the numerator of which is the sum of the
present value of the account balances of Key Employees under the
Plan and all other plans in the aggregation group, and the denomi-
nator of which is the sum of the present value of the account
balances under all such plans, including the Plan, for all
Employees. If an individual has not performed any service for the
Employer at any time during the five-year period ending on a
determination date, any accrued benefit of such individual shall
not be taken into account.
Page 194
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-39-
15.2 The following provisions shall be applicable to members
only for any Plan Year with respect to which the Plan is top heavy:
(a) Notwithstanding ARTICLE III, the Employer shall make
a special contribution on behalf of each non-Key Employee who has
satisfied the eligibility requirements of the Plan, whether or not
a Participant in the Plan and who is in service at the end of the
Plan Year, with respect to such Plan Year in an amount which equals
the lesser of (i) 3% of his Compensation (as defined in Code
section 414(s)), or, to the extent required by the Code and
regulations) or (ii) the largest percentage of Compensation
provided under the Plan for any Key Employee for such Plan Year
without regard to this Section 15.2. Any such special Employer
contribution shall be credited to such Participant's Company
Account. Notwithstanding the foregoing provisions of this Section
15.2(a), if a Participant in the Plan is also a participant in any
defined benefit plan of the Employer, then for each Plan Year with
respect to which the Plan is top heavy, such Participant's accrual
of a minimum benefit under such defined benefit plan in accordance
with Code section 416(c)(1) shall be deemed to satisfy the special
Employer contribution requirement of this Section 15.2(a).
Employer contributions resulting from a salary reduction election
by an Employee or matching contributions shall not be counted
toward meeting the minimum required allocations under this section.
The minimum allocation required (to the extent required to be
nonforfeitable under Code section 416(b)) may not be forfeited
under Code section 411(a)(3)(B) or 411(a)(3)(D).
(b) Notwithstanding the provisions of Section 6.1, if
during any Plan Year an Employee participates in both a defined
contribution plan and a defined benefit plan maintained
Page 195
<PAGE>
-40-
by the Company which comprise a "top heavy group," as defined in Code
section 416(g)(2)(B), the denominators of the defined benefit plan
fraction and the defined contribution plan fraction, as described
in Section 6.1(d), shall be calculated by substituting "1.0" for
"1.25" each place it appears in such Section; provided, however,
that this Section 15.2(b) shall not apply with respect to a plan in
the top heavy group if (i) such plan would satisfy the requirements
of Code section 416(h)(2)(A) and (ii) the aggregate accrued
benefits and cumulative account balances of Key Employees under all
plans in the top heavy group do not exceed 90% of the aggregate
accrued benefits and cumulative account balances under all such
plans for all Employees.
Page 196
<PAGE>
APPENDIX A
INVESTMENT FUNDS
This Appendix A shall be incorporated in, and be deemed
an integral part of the Plan. Terms used in this Appendix A shall
have the same meanings as ascribed in the Plan document, unless the
context otherwise clearly requires.
The Accounts of a Participant (other than the portion of
his Prior Plan Account which is not Participant-directed) shall be
invested in one or more of the following Investment Funds, in
accordance with the election of the Participant pursuant to Section
7.3 of the Plan:
A - Fixed Income Account - invested principally in
intermediate-term public and private bonds and
commercial mortgages.
B - Balanced Account - invest in a balanced portfolio
of common stocks and fixed-income securities.
C - Growth Account 1 - invested primarily in domestic,
dividend paying common stocks.
D - Growth Account 2 - invested primarily in
undervalued common stock and securities convertible
into common stock.
E - Emerging Growth Account - invested primarily in
common stocks of medium-sized companies that have
passed their start-up phase and show positive
earnings.
F - Money Market Account - invested primarily in short-
term obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Page 197
<PAGE>
APPENDIX B
GRANDFATHER PROVISIONS
This Appendix B shall apply to a Participant in the Prior
Plan with respect to his Prior Plan Account. Terms in this
Appendix B shall have the same meanings as described in the Plan
document, unless the context otherwise clearly requires.
Upon the retirement of a Participant on or after the date
on which such Participant attains age 65 or the fifth anniversary
of the date on which he commenced participation in the Plan,
whichever is later, such Participant shall be entitled to have his
Prior Plan Account paid in one of the following manners:
(1) Such amounts shall be paid or applied in monthly,
quarterly, semi-annual or annual installments as nearly equal as
practicable, over a fixed reasonable period of time not to exceed
the life expectancy of such Participant, of the joint life
expectancy of the Participant and his designated Beneficiary; or
(2) Such amounts shall be paid in a lump sum; or
(3) Such amounts shall be used to purchase from an
insurance company selected by the Committee, a nontransferable
immediate or deferred annuity contract which shall provide for a
fixed number of payments over a reasonable period of time not to
exceed the life expectancy of such Participant or the joint life
expectancy of the Participant and his designated beneficiary and
which shall not require the survival of the Participant or his
designated beneficiary as a condition of payment.
Page 198
EXHIBIT 21
Page 199<PAGE>
SUBSIDIARIES OF THE COMPANY
Burlington Coat Factory Warehouse Corporation is the parent
corporation of two hundred forty-four subsidiaries which operate
"off-price" retail apparel stores in the United States.
Burlington Coat Factory Realty Corp., a Delaware corporation,
which buys, sells and otherwise deals in real estate in
connection with the Company's business.
Burlington Coat Factory Warehouse, Inc., a Pennsylvania
corporation, which leases the Company's store in Clifton Heights,
Pennsylvania to one of the Company's operating subsidiaries.
Monroe G. Milstein, Inc., a New York corporation, which operates
a wholesale apparel business.
LC Acquisition Corp., a New York corporation, which owns an
interest in a manufacturer of coats.
C.L.B., Inc., a Delaware corporation, through which the Company
collects royalties from its subsidiaries for the use of its trade
names.
C.F.I.C. Corporation, a Delaware corporation, through which the
Company invests excess funds.
C.F.B., Inc., a Delaware corporation, through which the Company
provides financing for its subsidiaries for the acquisition of
their merchandise inventory and store fixtures.
Page 200<PAGE>
EXHIBIT 23
Page 201<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Registration Statements No.
2-96332, No. 33-21569, No. 33-51965 and No. 33-61351 of Burlington Coat Factory
Warehouse Corporation and subsidiaries on Form S-8 of our report dated
September 13, 1996, and appearing in this Annual Report on Form 10-K of
Burlington Coat Factory Warehouse Corporation and subsidiaries for the year
ended June 29, 1996.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 26, 1996
Page 202<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION FROM THE REGISTRANT'S AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 29, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> JUN-29-1996
<CASH> 73,560,000
<SECURITIES> 0
<RECEIVABLES> 15,993,000
<ALLOWANCES> 990,000
<INVENTORY> 370,437,000
<CURRENT-ASSETS> 488,570,000
<PP&E> 331,962,000
<DEPRECIATION> 125,380,000
<TOTAL-ASSETS> 704,731,000
<CURRENT-LIABILITIES> 200,463,000
<BONDS> 74,907,000
0
0
<COMMON> 41,165,000
<OTHER-SE> 372,580,000
<TOTAL-LIABILITY-AND-EQUITY> 704,731,000
<SALES> 1,591,964,000
<TOTAL-REVENUES> 1,610,892,000
<CGS> 1,040,388,000
<TOTAL-COSTS> 1,040,388,000
<OTHER-EXPENSES> 503,697,000
<LOSS-PROVISION> 6,068,000
<INTEREST-EXPENSE> 11,735,000
<INCOME-PRETAX> 49,004,000
<INCOME-TAX> 19,991,000
<INCOME-CONTINUING> 29,013,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,013,000
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
</TABLE>
