<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 27, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 1-8210
PAYLESS CASHWAYS, INC.
(Exact name of registrant as specified in its charter)
Iowa 42-0945849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Pershing Square
2300 Main, P.O. Box 419466
Kansas City, Missouri 64141-0466
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 234-6000
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value, outstanding as of September 16, 1994:
Voting -- 37,624,222 shares
Class A Non-Voting -- 2,250,000 shares
<PAGE> 2
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
August 27, August 28, August 27, August 28,
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income
Net sales $ 744,112 $ 716,853 $ 2,020,380 $ 1 ,908,482
Other income (7) 2,008 1,077 5,975 3,693
-------------- -------------- -------------- --------------
746,120 717,930 2,026,355 1,912,175
Costs and expenses
Cost of merchandise sold 530,402 509,862 1,424,342 1,340,033
Selling, general and administrative 149,569 146,367 443,809 425,949
Provision for depreciation
and amortization 15,116 14,260 43,979 41,858
Interest 16,348 31,415 49,416 104,256
-------------- -------------- -------------- --------------
711,435 701,904 1,961,546 1,912,096
-------------- -------------- -------------- --------------
INCOME BEFORE INCOME TAXES 34,685 16,026 64,809 79
Federal and state income taxes 15,635 7,888 29,040 6,055
-------------- -------------- -------------- --------------
Income (loss) before equity in loss
of joint venture and extraordinary item 19,050 8,138 35,769 (5,976)
Equity in loss of joint venture (6) (705) -- (1,149) --
-------------- -------------- -------------- --------------
Income (loss) before extraordinary item 18,345 8,138 34,620 (5,976)
Extraordinary item: early
extinguishment of debt (4) and (5) 288 (9,471) 343 (18,582)
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 18,633 $ (1,333) $ 34,963 $ (24,558)
============== ============== ============== ==============
Income (loss) per common share
before extraordinary item $ .42 $ .17 $ .76 $ (.36)
Extraordinary item: early
extinguishment of debt (4) and (5) .01 (.24) .01 (.70)
============== ============== ============== ==============
Net income (loss) per
common share (3) $ .43 $ (.06) $ .77 $ (1.05)
============== ============== ============== ==============
Weighted average common and
dilutive common equivalent
shares outstanding 40,320 40,355 40,321 26,662
============== ============== ============== ==============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 3
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1)
(In thousands)
<TABLE>
<CAPTION>
August 27, November 27, August 28,
1994 1993 1993
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 12,040 $ 3,673 $ 15,805
Trade receivables 7,397 14,773 14,969
Merchandise inventories (2) 406,738 382,403 393,249
Prepaid expenses and other
current assets 27,967 17,056 20,368
Deferred income taxes 7,364 9,797 6,238
-------------- -------------- --------------
TOTAL CURRENT ASSETS 461,506 427,702 450,629
OTHER ASSETS
Real estate held for sale 6,710 7,149 8,799
Cost in excess of net assets
acquired, less accumulated
amortization of $79,101,
$69,339 and $66,084,
respectively 441,565 451,327 454,582
Deferred financing costs 23,810 26,326 33,979
Other 14,728 8,861 8,268
LAND, BUILDINGS AND EQUIPMENT 790,230 749,115 737,197
Allowance for depreciation and
amortization (234,767) (211,999) (201,737)
-------------- -------------- --------------
555,463 537,116 535,460
-------------- -------------- --------------
$ 1,503,782 $ 1,458,481 $ 1,491,717
============== ============== ==============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 4
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued (Unaudited) (1)
(In thousands)
<TABLE>
<CAPTION>
August 27, November 27, August 28,
1994 1993 1993
-------------- -------------- --------------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Advances under bank facilities $ 20,000 $ 5,000 $ --
Current portion of long-term debt 58,033 55,978 15,374
Trade accounts payable 152,634 145,265 154,930
Other current liabilities 131,372 121,176 143,766
Income taxes payable 17,988 15,141 13,103
-------------- -------------- --------------
TOTAL CURRENT LIABILITIES 380,027 342,560 327,173
LONG-TERM DEBT, less portion
classified as current liability (4) and (5) 605,423 640,127 678,010
NONCURRENT LIABILITIES
Deferred income taxes 68,765 64,624 64,593
Other 23,034 23,859 23,910
SHAREHOLDERS' EQUITY (5) and (3)
Preferred Stock, $1.00 par value,
25,000,000 shares authorized; issued:
Series A Cumulative Convertible Preferred Stock,
406,000 shares at redemption value 40,600 40,600 40,600
Common Stock, $.01 par value:
Voting, 150,000,000 shares authorized,
37,624,222, 36,161,771, and 36,095,277
shares issued 376 361 361
Class A Non-Voting, 5,000,000 shares
authorized, 2,250,000 shares issued 23 23 23
Class B Non-Voting, 5,000,000 shares
authorized, 0, 1,125,000 and 1,125,000
shares issued -- 11 11
Additional paid-in capital 486,830 482,575 481,695
Retained deficit (101,296) (136,259) (124,659)
-------------- -------------- --------------
TOTAL SHAREHOLDERS' EQUITY 426,533 387,311 398,031
-------------- -------------- --------------
$ 1,503,782 $ 1,458,481 $ 1,491,717
============== ============== ==============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 5
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1)
(In thousands)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-------------------------------------------------
August 27, August 28,
1994 1993
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ 34,963 $ (24,558)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 43,979 41,858
Noncash interest 3,442 38,751
(Gain) loss on early extinguishment of debt (343) 18,582
Equity in loss of joint venture 1,149 --
Deferred income taxes 6,574 (5,897)
Other 1,873 (635)
Changes in assets and liabilities (7,841) 17,849
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 83,796 85,950
Cash Flows from Investing Activities
Additions to land, buildings and equipment (52,598) (37,394)
Proceeds from sale of land, buildings and equipment 1,224 377
Increase in other assets (8,047) (979)
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (59,421) (37,996)
Cash Flows from Financing Activities
Proceeds from long-term debt 21,307 200,000
Retirements of long-term debt and related penalties (4) and (5) (53,033) (630,035)
Increase in short-term borrowings 15,000 --
Fees and financing costs paid in connection with
debt refinancing (5) -- (20,220)
Sale of Common Stock (5) -- 385,450
Sale of Common Stock under stock option plan 2,517 1,941
Sale of Common Stock under warrants 89 --
Other (1,888) (200)
-------------- --------------
NET CASH USED IN FINANCING ACTIVITIES (16,008) (63,064)
-------------- --------------
Net increase (decrease) in cash and cash equivalents 8,367 (15,110)
Cash and cash equivalents, beginning of period 3,673 30,915
-------------- --------------
Cash and cash equivalents, end of period $ 12,040 $ 15,805
============== ==============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 6
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Thirty-nine weeks ended August 27, 1994 and August 28, 1993.
(1) The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. To the extent
that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or
consistent with the audited consolidated financial statements
incorporated by reference in the Company's Form 10-K for the year ended
November 27, 1993, such information and footnotes have not been
duplicated herein. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation of financial statements have been reflected herein. The
November 27, 1993, condensed consolidated balance sheet has been derived
from the audited consolidated financial statements as of that date.
Certain reclassifications have been made to prior period amounts to
conform with the 1994 presentation.
(2) Approximately 79% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the
LIFO method is only made at the end of each fiscal year based on the
inventory levels and costs at that time, interim LIFO determinations
must necessarily be based on management's estimates of expected year-end
inventory levels and costs. Since future estimates of inventory levels
and costs are subject to change, interim financial results reflect the
Company's most recent estimate of the effect of inflation and are
subject to final year-end LIFO inventory amounts. If the FIFO (first-in,
first-out) method of inventory accounting had been used by the Company,
inventories would have been $24.4 million, $20.2 million and $22.4
million higher than reported at August 27, 1994, November 27, 1993, and
August 28, 1993, respectively.
(3) Net income (loss) per common share has been computed based on the
weighted average number of common shares outstanding during the period
plus common stock equivalents, when dilutive, consisting of certain
stock options and warrants. For purposes of this computation, net income
(loss) was adjusted for dividend requirements on preferred stock.
Additional shares of common stock issuable upon the conversion of
convertible preferred stock (which is not a common stock equivalent) was
considered only when the impact was dilutive. The conversion feature of
the preferred stock expired on August 1, 1994.
(4) Long-term debt consisted of the following:
<TABLE>
<CAPTION>
August 27, November 27, August 28,
(In thousands) 1994 1993 1993
------------ ------------ ------------
<S> <C> <C> <C>
1994 Credit Agreement $ 21,306 $ -- $ --
1993 Credit Agreement 304,546 325,000 --
Mortgage loan payable to insurance company 158,025 168,072 171,240
Senior subordinated notes - 9-1/8% 178,000 200,000 200,000
Senior subordinated debentures - 14-1/2% -- -- 318,414
Other senior debt 1,579 3,033 3,730
------------ ------------ ------------
663,456 696,105 693,384
Less portion classified as current liability (58,033) (55,978) (15,374)
------------ ------------ ------------
$ 605,423 $ 640,127 $ 678,010
============ ============ ============
</TABLE>
As of August 27, 1994, the Company had borrowed $21.3 million under the
1994 Credit Agreement to repurchase and retire $22 million aggregate
principal amount of 9-1/8% Senior Subordinated Notes. The 1994 Credit
Agreement is a $25 million multiple- draw term loan agreement dated May
6, 1994, which provides for draws until December 31, 1994, proceeds from
which must be used to purchase or redeem Senior Subordinated Notes at a
price less than their par value. The 1994 Credit Agreement is
unsecured, bears interest at fluctuating rates based on either an
alternate base rate or LIBOR, and requires principal payment on November
25, 2000, or upon earlier receipt of proceeds from the issuance of
additional shares of the Company's stock.
<PAGE> 7
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
Thirty-nine weeks ended August 27, 1994 and August 28, 1993.
(5) During fiscal 1993, the Company completed a recapitalization plan (the
"Recapitalization Plan") consisting of a series of transactions which
were designed to increase shareholders' equity, reduce the Company's
debt and interest expense, improve the Company's access to capital
markets and improve the Company's operating and financial flexibility.
The transactions included (i) the initial public offering of 32,200,000
shares of Common Stock, which was completed on March 15, 1993 for net
proceeds of $385.4 million, (ii) the repayment on March 15, 1993 of
$175.8 million of indebtedness outstanding under the Company's
previously existing bank credit agreement, (iii) the prepayment on March
16, 1993 of $50 million of indebtedness outstanding under the Company's
$226.6 million mortgage loan payable to an insurance company, (iv) the
issuance of 9-1/8% senior subordinated notes due 2003, which was
completed on April 20, 1993 for the aggregate principal amount of $200
million, (v) the repurchase on April 15 and 16, 1993 of $99.9 million
aggregate principal amount of the Company's 16-1/2% junior subordinated
debentures due August 1, 2008 and the redemption of the remaining $291.1
million aggregate principal amount of the junior subordinated debentures
on July 30, 1993, (vi) borrowings on November 1, 1993 of $325 million
under an amended and restated bank credit agreement entered into by the
Company and certain banks, the 1993 Credit Agreement, and (vii) the
redemption on November 1, 1993 of $332.5 million aggregate principal
amount of the Company's 14-1/2% senior subordinated debentures due
November 1, 2000. The 1993 Credit Agreement also provides for a
revolving credit facility of $85 million which was used to provide a
portion of the funds necessary to complete the Recapitalization Plan and
which has been and will continue to be used to finance the working
capital requirements of the Company in the ordinary course of business.
(6) The Company is a 49% investor in Total Home de Mexico, S.A. de C.V., a
joint venture with a Mexican company, Alfa, S.A. de C.V., which plans to
open stores in Mexico. The Company accounts for this investment on the
equity method.
(7) In July, 1993, two of the Company's retail facilities were severely
damaged by the midwestern floods. Settlement proceeds in excess of net
book value of $2.8 million related to the flood-damaged real estate,
fixtures and equipment have been reflected in the accompanying 1994
consolidated statements of operations as other income.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Income
Net sales for the quarter ended August 27, 1994 increased 3.8% over the same
period of 1993 in total and 2.4% on a comparable-store sales basis. (Comparable
stores are those open one full year.) Net sales for the first three quarters of
1994 increased 5.9% over the same period of 1993 in total and 4.8% on a
comparable-store sales basis. One new store opened in the first three quarters
of 1993 and five new stores, one of which was a replacement store, opened in the
first three quarters of 1994.
Included in other income for the third quarter and first three quarters of 1994
were gains of $.9 million and $2.8 million, respectively, from flood-related
settlements.
Costs and Expenses
Cost of merchandise sold as a percent of sales was 71.3% and 71.1% for the third
quarter of 1994 and 1993, respectively. For the first three quarters of 1994
and 1993, cost of merchandise sold as a percent of sales was 70.5% and 70.2%,
respectively.
Selling, general and administrative expenses were 20.1% and 20.4% of sales for
the third quarter of 1994 and 1993, respectively. For the first three quarters
of 1994 and 1993, selling, general and administrative expenses were 22.0% and
22.3% of sales, respectively.
The provision for depreciation and amortization increased over the third quarter
of 1993 due to higher capital expenditures in fiscal 1993 and the first three
quarters of 1994. The completion of the Recapitalization Plan increased the
Company's funds available for capital expenditures.
<PAGE> 8
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
RESULTS OF OPERATIONS - Continued
Interest expense for the third quarter and the first three quarters of 1994
decreased to $16.3 million and $49.4 million compared to $31.4 million and
$104.3 million, respectively, for the same periods of 1993 due primarily to the
retirement of long-term debt in connection with the Recapitalization Plan.
The provision for income taxes for the first three quarters of 1994 was $29.0
million compared to $6.1 million for the first three quarters 1993. The
effective tax rates for both periods were different from the 35% statutory rate
primarily due to the effect of goodwill amortization, which is nondeductible for
income tax purposes.
Net Income (Loss)
Net income for the quarter ended August 27, 1994 was $18.6 million compared to a
net loss of $1.3 million for the same period of 1993. For the first three
quarters of 1994 net income was $35.0 million compared to a $24.6 million net
loss for the same period of 1993. The improved results for both periods were
primarily due to increased operating earnings and the decreased interest expense
discussed above. In addition, the 1993 net loss reflected extraordinary charges
in connection with the early retirement of debt related to the 1993
Recapitalization Plan. Net income for the 1994 periods also reflects the flood-
related settlement gains described above, the equity in the loss attributed to
Total Home de Mexico, S.A. de C.V. and extraordinary income in connection with
the early retirement of a portion of the 9-1/8% senior subordinated notes.
During 1993, the Company completed the Recapitalization Plan consisting of a
series of transactions, which were designed to increase shareholders' equity,
reduce the Company's debt and interest expense, improve the Company's access to
capital markets and improve the Company's operating and financial flexibility.
The following table presents summary unaudited historical consolidated operating
data of the Company for the thirteen and thirty-nine weeks ended August 27, 1994
and summary unaudited pro forma consolidated operating data of the Company ("Pro
Forma Data") for the thirteen and thirty-nine weeks ended August 28, 1993 which
gives effect to the Recapitalization Plan as if it had occurred at the beginning
of fiscal 1993. The Pro Forma Data is based upon available information and
certain assumptions that management believes are reasonable. The Pro Forma Data
does not purport to represent what the Company's results of operations would
actually have been if the transactions had occurred at the beginning of fiscal
1993 or to project the Company's results of operations for any future period.
<TABLE>
<CAPTION>
Historical Pro Forma Data Historical Pro Forma Data
------------------------------------- --------------------------------------
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
(In thousands, except per share amounts) August 27, 1994 August 28, 1993 August 27, 1994 August 28, 1993
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales and other income $ 746,120 $ 717,930 $ 2,026,355 $ 1,912,175
Interest expense 16,348 17,299 49,416 53,403
Income before income taxes 34,685 30,142 64,809 50,932
Net income 18,633 17,118 34,963 27,660
Net income per common share $ .43 $ .40 $ .77 $ .60
Weighted average common and dilutive
common equivalent shares outstanding 40,320 40,240 40,321 40,240
</TABLE>
During the third quarter, the Company's results were affected by comparable
store sales gains of only 2.4%. If this trend were to continue, fourth quarter
net income would be comparable to the prior year's fourth quarter pro forma
results of $.39.
<PAGE> 9
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of cash is from operations. Cash provided by
operating activities was $83.8 million for the first three quarters of 1994
compared to $86.0 million for the same period of 1993.
Borrowings are available under a revolving credit facility to supplement cash
generated by operations. At August 27, 1994, $55.1 million was available for
borrowing under the revolving credit facility. At August 27, 1994, working
capital was $81.5 million compared to $85.1 million and $123.5 million at
November 27, 1993 and August 28, 1993, respectively. The current ratios at
August 27, 1994, November 27, 1993, and August 28, 1993 were 1.21 to 1, 1.25 to
1 and 1.38 to 1, respectively.
The Company's primary investing activities continue to be capital expenditures
for existing and new stores and distribution centers. The 1993 Credit Agreement
governs the amount of capital expenditures which can be made. The Company spent
approximately $52.6 million and $37.4 million for new stores, equipment and
renovation of retail facilities and distribution centers during the first three
quarters of 1994 and 1993, respectively. During the first three quarters of
1994, five new stores were opened, one of which was a replacement store. The
Company intends to finance the remaining fiscal 1994 budgeted capital
expenditures of approximately $17 million, consisting primarily of two new
stores, additional equipment, and renovation of existing stores, with funds
generated from operations.
The Company's most significant financing activity is and will continue to be the
retirement of indebtedness. Although the Company's consolidated indebtedness
is and will continue to be substantial, management believes that, based upon its
analysis of the Company's financial condition, the cash flow generated from
operations during the past 12 months and the expected results of operations in
the future, cash flow from operations and borrowings under the revolving credit
facility should provide sufficient liquidity to meet all cash requirements for
the next 12 months without additional borrowings.
<PAGE> 10
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
REVIEW BY INDEPENDENT AUDITORS
The condensed consolidated financial statements of Payless Cashways, Inc.
and its subsidiary for the thirteen and thirty-nine week periods ended
August 27, 1994 and August 28, 1993, have been reviewed by KPMG Peat
Marwick LLP, independent auditors. Their report is included in this filing.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
3.1 By-laws of the Company.
4.0 Long-term debt instruments of Payless in amounts not
exceeding ten percent (10%) of the total assets of
Payless and its subsidiaries on a consolidated basis
will be furnished to the Commission upon request.
4.1 Second Waiver dated as of August 1, 1994 to the 1993
Credit Agreement, dated as of March 8, 1993, among
Payless, the Banks listed on the signature pages thereof
and Canadian Imperial Bank of Commerce, New York Agency
("CIBC"), as Administrative Agency, and Second Waiver
dated as of August 1, 1994 to the Standby Letter of
Credit Issuance and Reimbursement Agreement, dated as of
February 14, 1994, among Payless, the Banks and other
financial institutions listed on the signature pages
thereof and CIBC, as Issuing Bank.
4.2 Seventh Amendment dated as of August 1, 1994, to the
1993 Credit Agreement, dated as of March 8, 1993, among
Payless, the Banks listed on the signature pages thereof
and Canadian Imperial Bank of Commerce, New York Agency,
as Administrative Agency, and Second Amendment to the
Standby Letter of Credit Issuance and Reimbursement
Agreement, dated as of February 14, 1994, among Payless,
the Banks and other financial institutions listed on the
signature pages thereof and CIBC, as Issuing Bank.
10.1(a) Third Amendment dated as of August 31, 1994, to The
Payless Cashways, Inc. Supplemental Retirement Plan
dated as of January 1, 1988.
10.1(b) Agreement for Supplemental Retirement Benefits between
Payless and David Stanley as of the 31st day of August,
1994, effective date of participation in The
Supplemental Retirement Plan of April 15, 1980.
11.1 Computation of per share earnings.
15.1 Letter re unaudited financial information - KPMG Peat
Marwick LLP.
27.1 Financial data schedule.
b. Reports on Form 8-K.
No reports on Form 8-K were filed by Payless during the quarter
ended August 27, 1994.
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAYLESS CASHWAYS, INC.
(Registrant)
Date: September 22, 1994 By s/Stephen A. Lightstone
---------------------------------------------
Stephen A. Lightstone, Senior Vice President,
Finance and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
<PAGE> 1 Exhibit 3.1
BY-LAWS
OF
PAYLESS CASHWAYS, INC.
ARTICLE I
MEETING OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of shareholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
state of incorporation of the Corporation, and at such time and date as the
board of directors, by resolution, shall determine and as set forth in the
notice of the meeting. If the board of directors fails so to determine the
time, date and place of meeting, the annual meeting of shareholders shall be
held at the principal office of the Corporation on the first Tuesday in April.
If the date of the annual meeting shall fall upon a legal holiday, the meeting
shall be held on the next succeeding business day. At each annual meeting, the
shareholders entitled to vote shall elect a board of directors and they may
transact such other corporate business as shall be stated in the notice of the
meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the shareholders for
any purpose or purposes may be called by the Chairman, or President or by
resolution of the board of directors.
SECTION 3. NOTICE OF MEETINGS -- Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each shareholder entitled to vote thereat at the
address as it appears on the records of the Corporation, not less than 10 nor
more than 60 days before the date of the meeting.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER AND TERM -- The number of directors shall be no less
than nine and no more than twelve, as determined from time to time by resolution
adopted by the affirmative vote of a majority of the entire board of directors.
SECTION 2. RESIGNATIONS; VACANCIES -- Any director may resign at any time.
Such resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Corporation. The acceptance of a resignation shall not be necessary to make
it effective. Any vacancy occurring in the board of directors may be filled by
the affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. Any directorship to be filled by reason of an
increase in the number of directors may be filled by the board of directors for
a term of office continuing only until the next election of directors by the
shareholders.
<PAGE> 2
SECTION 3. POWERS -- The board of directors shall exercise all of the
powers of the Corporation except such as are by law, or by the Articles of
Incorporation of the Corporation or by these By-Laws, conferred upon or reserved
to the shareholders.
SECTION 4. COMMITTEES -- The board of directors may designate one or more
committees, each committee to consist of two or more directors of the
Corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee.
Any committee established in accordance with this Section 4 or the Articles
of Incorporation, shall have and may exercise, to the extent permitted by the
Articles of Incorporation and provided in either a resolution of the board of
directors or these By-Laws, all the powers and authority of the board of
directors in the management of the business and affairs of the Corporation, but
no such committee shall have authority to (a) authorize distributions, (b)
approve or propose shareholder action or proposals required by law to be
approved by shareholders, (c) fill vacancies on the board of directors or on any
of its committees, (d) amend the articles of incorporation or adopt, amend or
repeal the bylaws, (e) approve a plan of merger not requiring shareholder
approval, (f) authorize or approve reacquisition of shares, except according to
a formula or method prescribed by the board of directors, and (g) authorize or
approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, except that the board of directors may authorize a committee
or a senior executive officer of the corporation to do so within limits
specifically prescribed by the board of directors.
SECTION 5. MEETINGS -- Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to time
by resolution of the directors.
Special meetings of the board may be called by the Chairman, President or
by the Secretary on the written request of any director on at least two days'
notice to each director (except that notice to any director may be waived by
attendance or in writing by such director) and shall be held at such place or
places as may be determined by the directors, or as shall be stated in the call
of the meeting.
SECTION 6. QUORUM -- A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
The vote of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the board of directors unless the Articles of
Incorporation or these By-Laws shall require the vote of a greater number.
SECTION 7. ACTION WITHOUT MEETING -- Any action required or permitted to
be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the board or such committee.
<PAGE> 3
ARTICLE III
OFFICERS
SECTION 1. OFFICERS -- The officers of the corporation shall be a Chairman
of the Board, a Chief Executive Officer, a President, one or more Vice
Presidents, a Treasurer and a Secretary. The Executive Officers (as such term
may be defined from time to time by the board of directors in one or more
resolutions) shall be elected by the board of directors and shall hold office
until their successors are elected and qualified. The Chief Executive Officer
may appoint such other officers, including Assistant Secretaries and Assistant
Treasurers, and agents as he may deem advisable, which officers shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Chief Executive Officer.
SECTION 2. CHAIRMAN -- The Chairman of the Board shall preside at all
meetings of the board of directors and shall have and perform such other duties
as may be assigned by the board of directors.
SECTION 3. CHIEF EXECUTIVE OFFICER -- The Chief Executive Officer shall
have general charge and management of the business of this Corporation, shall
carry out such duties as are delegated by the board; shall see that all orders
and resolutions of the board are carried out, shall have power to execute all
contracts and agreements authorized by the board, shall make reports to the
board of directors and shareholders, and shall perform such other duties as are
incident to the office or are properly required by the board of directors. The
Chief Executive Officer shall be responsible for the direction and supervision
of all personnel within his appointive powers and shall also have the power to
discipline or discharge such personnel. The Chief Executive Officer shall sit
with the board of directors in deliberation upon all matters pertaining to the
general business and policies of the Corporation.
SECTION 4. PRESIDENT -- The President shall have the general powers and
duties of supervision and management usually vested in the office of President
of a corporation. Except as the board of directors shall authorize execution
thereof in some other manner, the President shall execute bonds, mortgages and
other contracts on behalf of the Corporation.
SECTION 5. VICE PRESIDENT -- Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him by the board of
directors or Chief Executive Officer, as appropriate pursuant to Section 1
above.
SECTION 6. TREASURER -- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation, shall deposit
all moneys and other valuables in the name and to the credit of the Corporation
in such depositaries as may be designated by the board of directors, shall
disburse the funds of the Corporation as may be ordered by the board of
directors, or the Chairman, Chief Executive Officer, or President, taking proper
vouchers for such disbursement, and shall render to the board of directors at
the regular meetings of the board of directors, or whenever they may request it,
an account of all transactions as Treasurer and
<PAGE> 4
of the financial condition of the Corporation. If required by the board of
directors, the Treasurer shall give the Corporation a bond for the faithful
discharge of the Treasurer's duties in such amount and with such surety as the
board shall prescribe.
SECTION 7. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and directors and all other notices
required by law or by these By-Laws, and in case of the absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman, Chief Executive Officer or President, or by the directors, or
shareholders, upon whose request the meeting is called as provided in these By-
Laws. The Secretary shall record all the proceedings of the meetings of the
board of directors, any committees thereof and the shareholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned by the board of directors or the Corporation.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be appointed by the Chief
Executive Officer and shall have such powers and shall perform such duties as
shall be assigned to them, respectively, by the Chief Executive Officer.
ARTICLE IV
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be issued
to each shareholder certifying the number of shares owned by such shareholder in
the Corporation.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued
in the place of any certificate theretofore issued by the Corporation, alleged
to have been lost or destroyed, and the board of directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferrable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the Corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the board of directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. SHAREHOLDERS RECORD DATE -- In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or
<PAGE> 5
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful actions,
the board of directors may fix, in advance, a record date, which shall not be
more than 70 nor less than 10 days before the date of such meeting, nor more
than 70 days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall apply
to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
SECTION 5. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the board of directors. In absence of a resolution
by the board of directors, the fiscal year of the Corporation shall end on the
last Saturday in the month of November.
SECTION 6. CHECKS -- All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, agent or agents of the
Corporation, and in such manner as shall be determined from time to time by
resolution of the board of directors.
<PAGE> 1 Exhibit 4.1
SECOND WAIVER TO THE CREDIT AGREEMENT AND
-----------------------------------------
SECOND WAIVER TO THE STANDBY LETTER OF CREDIT AGREEMENT
-------------------------------------------------------
SECOND WAIVER, dated as of August 1, 1994 (this "Second Waiver"), to the
Amended and Restated Credit Agreement, dated as of March 8, 1993 (as heretofore
amended, the "Credit Agreement"), among Payless Cashways, Inc., an Iowa
corporation (the "Borrower"), the banks and other financial institutions parties
thereto (the "Banks"), Canadian Imperial Bank of Commerce, New York Agency
("CIBC"), as Administrative Agent (in such capacity, the "Administrative Agent")
and as Collateral Agent (in such capacity, the "Collateral Agent"), CIBC, The
Bank of Nova Scotia and NationsBank of Texas, N.A., as Managing Agents (in such
capacity, the "Managing Agents") and Bank of America National Trust and Savings
Association, as Co-Agent (in such capacity, the "Co-Agent"); and
SECOND WAIVER, dated as of August 1, 1994 (this "Second Waiver"), to the
Standby Letter of Credit Issuance and Reimbursement Agreement, dated as of
February 14, 1994 (the "Standby Letter of Credit Agreement"), among the
Borrower, the banks and other financial institutions parties thereto (the
"Standby Letter of Credit Banks") and CIBC, as Issuing Bank (in such capacity,
the "Issuing Bank").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Banks, the Administrative Agent, the Collateral
Agent, the Letter of Credit Bank, the Managing Agents and the Co-Agent are
parties to the Credit Agreement, and the Issuing Bank and the Standby Letter of
Credit Banks are parties to the Standby Letter of Credit Agreement;
WHEREAS, certain provisions of the Credit Agreement are incorporated by
reference into the Standby Letter of Credit Agreement;
WHEREAS, the Borrower has requested that the Banks waive certain provisions
of the Credit Agreement and the Standby Letter of Credit Banks waive certain
provisions of the Standby Letter of Credit Agreement in the manner set forth
below; and
WHEREAS, the Banks and the Standby Letter of Credit Banks are willing to
accede to the requests of the Borrower upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Borrower, the Banks, the Administrative Agent, the
Collateral Agent, the Letter of Credit
<PAGE> 2
Bank, the Managing Agents, the Co-Agent, the Issuing Bank and the Standby Letter
of Credit Banks hereby agree as follows:
SECTION I. DEFINED TERMS
-------------
Unless otherwise defined herein, terms defined in the Credit Agreement or
the Standby Letter of Credit Agreement and used herein are so used as so
defined.
SECTION II. WAIVERS OF THE CREDIT AGREEMENT
-------------------------------
1. Consolidations, Mergers and Sales of Assets. The Banks and the
Standby Letter of Credit Banks hereby waive any Default or Event of Default
under Section 7.11 of the Credit Agreement resulting from the sale of (i) the
property located in Kansas City, Kansas which is listed as Site No. 37 on
Exhibit 7.10 to the Credit Agreement, (ii) approximately 1-1/2 acres of the
property located in Tucson, Arizona which is listed as Site No. 136 on Exhibit
7.10, and (iii) the property located in Sioux Falls, South Dakota which is
listed as Site No. 216 on Exhibit 7.10 to the Credit Agreement, solely to the
extent such properties are not listed on Schedule 7.11 to the Credit Agreement
and, for purposes of this waiver, such properties shall be treated as if they
were listed on Schedule 7.11.
2. Future Real Property. The Banks and the Standby Letter of Credit Banks
hereby waive any Default or Event of Default under Section 7.27 of the Credit
Agreement resulting from (i) the release of the mortgages on Site Nos. 37 and
136 upon the sale of such properties in accordance with the terms hereof and
(ii) the failure to obtain a mortgage on Site No. 216; provided that the Net
Cash Proceeds from the sale of Site No. 216 shall be applied to the Term Loans
as provided in Section 2.07 of the Credit Agreement
SECTION III. CONDITIONS PRECEDENT
--------------------
The amendments and waivers contained in this Second Waiver to the Credit
Agreement and Second Waiver to the Standby Letter of Credit Agreement shall
become effective on and as of the date on which the following conditions
precedent are satisfied:
1. Waiver. The Administrative Agent and the Issuing Bank shall have
received counterparts of this Second Waiver to the Credit Agreement and Second
Waiver to the Standby Letter of Credit Agreement duly executed by the Borrower
and the Required Banks.
2. Consent of Guarantor. Somerville shall have executed this Second
Waiver to the Credit Agreement and Second Waiver to the Standby Letter of Credit
Agreement, in the appropriate space
<PAGE> 3
below the caption "Consent of Guarantor" on the signature pages hereto.
SECTION IV. MISCELLANEOUS
-------------
1. Representations and Warranties. The Borrower hereby confirms,
reaffirms and restates the representations and warranties set forth in Section 6
of the Credit Agreement and Section 5 of the Standby Letter of Credit Agreement,
provided that all references in said Sections 6 and 5 to the "Agreement" shall
be deemed to be references to the Credit Agreement and the Standby Letter of
Credit Agreement, respectively, as amended by this Second Waiver to the Credit
Agreement and Second Waiver to the Standby Letter of Credit Agreement.
2. Limited Effect. This Second Waiver to the Credit Agreement and Second
Waiver to the Standby Letter of Credit Agreement is limited precisely as written
and shall not be deemed (a) to be a consent to any modification or amendment of
any other term or condition of the Credit Agreement, the Standby Letter of
Credit Agreement or of any other term or condition of the instruments or
agreements referred to therein or (b) to prejudice any other right or rights
that the Administrative Agent, the Collateral Agent, the Managing Agents, the
Co-Agent, any Bank, the Issuing Bank or any Standby Letter of Credit Bank may
now have or may have in the future under or in connection with the Credit
Agreement, the Standby Letter of Credit Agreement or the agreements referred to
therein. Except as expressly amended and modified by this Second Waiver to the
Credit Agreement and Second Waiver to the Standby Letter of Credit Agreement,
all of the provisions and covenants of the Credit Agreement and the Standby
Letter of Credit Agreement are and shall continue to remain in full force and
effect in accordance with the terms thereof.
3. Counterparts. This Second Waiver to the Credit Agreement and Second
Waiver to the Standby Letter of Credit Agreement may be executed by one or more
of the parties hereto in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
4. GOVERNING LAW. THIS SECOND WAIVER TO THE CREDIT AGREEMENT AND SECOND
WAIVER TO THE STANDBY LETTER OF CREDIT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5. Expenses. The Borrower agrees to pay or reimburse CIBC, in its
capacity as Administrative Agent and Issuing Bank, for all its reasonable out-
of-pocket costs and expenses incurred in connection with the preparation and
execution of this Second Waiver to the Credit Agreement and Second Waiver to the
Standby Letter of Credit Agreement, including, without limitation, the
reasonable fees and disbursements of counsel to CIBC in its capacity as
Administrative Agent and Issuing Bank. The Borrower
<PAGE> 4
expressly acknowledges and further agrees that nothing in the preceding sentence
shall be construed to limit in any way the provisions of Section 10.03 of the
Credit Agreement or Section 9.03 of the Standby Letter of Credit Agreement.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
to the Credit Agreement and Second Waiver to the Standby Letter of Credit
Agreement to be executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PAYLESS CASHWAYS, INC.
By: s/Stephen A. Lightstone
-------------------------------
Title: Sr. Vice President-
Finance
BANKS PARTIES TO THE CREDIT AGREEMENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Administrative Agent,
Collateral Agent, Managing
Agent and Letter of Credit
Bank
By: s/David McGowan
-------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA,
as Managing Agent and Bank
By: s/Amanda Norsworthy
-------------------------------
Title: Assistant Agent
NATIONSBANK OF TEXAS, N.A.,
as Managing Agent and Bank
By: s/Perry B. Stephenson
-------------------------------
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Agent and Bank
By: s/Burton Queen
-------------------------------
Title: Vice President
<PAGE> 6
CIBC INC.
By: s/David McGowan
-------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By: s/Jeffrey D. Dodd
-------------------------------
Title: Vice President
By: s/R. Michael Schwartz
-------------------------------
Title: Vice President
BANCA COMMERCIALE
ITALIANA
By: s/Julian M. Teodori
-------------------------------
Title: Sr.Vice Pres./Branch Mgr
By: s/Diana R. Lamb
-------------------------------
Title: Vice President
BANK OF MONTREAL
By: s/Jonathan D. Hook
-------------------------------
Title: Director
THE BANK OF NEW YORK
By: s/David S. Stueber
-------------------------------
Title: Vice President
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By: s/Thomas J. Butkus
-------------------------------
Title: Vice President
<PAGE> 7
BANQUE PARIBAS
By: s/Robert E. Taubenheim
-------------------------------
Title: Group Vice President
By: s/Peter Toal
-------------------------------
Title: Regional General Manager
DAI-ICHI KANGYO BANK
LTD., CHICAGO BRANCH
By: s/Tetsuya Kaneko
-------------------------------
Title: Vice President
FIRST BANK NATIONAL
ASSOCIATION
By: s/Merri Bernhardson
-------------------------------
Title: Vice President
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By: s/Hidekazu Seo
-------------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF
JAPAN, LTD.
By: s/Hiroaki Nakamura
-------------------------------
Title: Joint General Manager
THE MITSUBISHI BANK, LTD.
By: s/Hiroaki Fuchida
-------------------------------
Title: Vice President, Manager
MITSUI NEVITT CAPITAL
CORPORATION
By: s/Dan Jozefov
-------------------------------
Title: Vice President
<PAGE> 8
MITSUBISHI TRUST AND
BANKING CORPORATION
By: s/Masaaki Yamagishi
-------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By: s/J. Runk, Jr.
-------------------------------
Title: Account Rep.
PILGRIM PRIME RATE TRUST
By: s/Michael Hatley
-------------------------------
Title: Assistant Portfolio Mgr.
THE SUMITOMO BANK, LTD.
By: s/Katsuyasu Iwasawa
-------------------------------
Title: Joint General Manager
UNION BANK
By: s/Cecilia M. Valente
-------------------------------
Title: Vice President
UNITED STATES NATIONAL
BANK OF OREGON
By: s/Blake R. Howells
-------------------------------
Title: Vice President
VAN KAMPEN MERRITT
PRIME RATE INCOME TRUST
By: s/Jeffrey W. Maillet
-------------------------------
Title:Vice Pres.&Portfolio Mgr.
<PAGE> 9
BANKS PARTIES TO THE STANDBY LETTER OF CREDIT AGREEMENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Issuing Bank
By: s/David McGowan
-------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA
By: s/Amanda Norsworthy
-------------------------------
Title: Assistant Agent
NATIONSBANK OF TEXAS, N.A.
By: s/Perry B. Stephenson
-------------------------------
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: s/Burton Queen
-------------------------------
Title: Vice President
CIBC INC.
By: s/David McGowan
-------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By: s/Jeffrey D. Dodd
-------------------------------
Title: Vice President
By: s/R. Michael Schwartz
-------------------------------
Title: Vice President
<PAGE> 10
BANCA COMMERCIALE
ITALIANA
By: s/Julian M. Teodori
-------------------------------
Title:Sr.Vice Pres./Branch Mgr.
By: s/Diana R. Lamb
-------------------------------
Title: Vice President
BANK OF MONTREAL
By: s/Jonathan D. Hook
-------------------------------
Title: Director
THE BANK OF NEW YORK
By: s/David S. Stueber
-------------------------------
Title: Vice President
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By: s/Thomas J. Butkus
-------------------------------
Title: Vice President
BANQUE PARIBAS
By: s/Robert E. Taubenheim
-------------------------------
Title: Group Vice President
By: s/Peter Toal
-------------------------------
Title: Regional General Manager
DAI-ICHI KANGYO BANK
LTD., CHICAGO BRANCH
By: s/Tetsuya Kaneko
-------------------------------
Title: Vice President
FIRST BANK NATIONAL
ASSOCIATION
By: s/Merri Bernhardson
-------------------------------
Title: Vice President
<PAGE> 11
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By: s/Hidekazu Seo
-------------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF
JAPAN, LTD.
By: s/Hiroaki Nakamura
-------------------------------
Title: Joint General Manager
THE MITSUBISHI BANK, LTD.
By: s/Hiroaki Fuchida
-------------------------------
Title: Vice President, Manager
MITSUI NEVITT CAPITAL
CORPORATION
By: s/Dan Jozefov
-------------------------------
Title: Vice President
MITSUBISHI TRUST AND
BANKING CORPORATION
By: s/Masaaki Yamagishi
-------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By: s/J. Runk, Jr.
-------------------------------
Title: Account Rep.
THE SUMITOMO BANK, LTD.
By: s/Katsuyasu Iwasawa
-------------------------------
Title: Joint General Manager
<PAGE> 12
UNION BANK
By: s/Cecilia M. Valente
-------------------------------
Title: Vice President
UNITED STATES NATIONAL
BANK OF OREGON
By: s/Blake R. Howells
-------------------------------
Title: Vice President
<PAGE> 13
CONSENT OF GUARANTOR
--------------------
The undersigned, pursuant to the Amended and Restated Guarantee, dated
as of March 15, 1993, made by the undersigned in favor of Canadian Imperial Bank
of Commerce, New York Agency, as Collateral Agent for the Banks, hereby consents
to the provisions of the above Second Amendment to the Credit Agreement and
Second Waiver to the Standby Letter of Credit Agreement and agrees that the
Amended and Restated Guarantee remains in full force and effect after giving
effect to the above Second Waiver to the Credit Agreement and Second Waiver to
the Standby Letter of Credit Agreement.
SOMERVILLE LUMBER AND SUPPLY CO., INC.
By: s/Stephen A. Lightstone
-------------------------------
Title: Treasurer
<PAGE> 1 Exhibit 4.2
SEVENTH AMENDMENT TO THE CREDIT AGREEMENT AND
---------------------------------------------
SECOND AMENDMENT TO THE STANDBY LETTER OF CREDIT AGREEMENT
----------------------------------------------------------
SEVENTH AMENDMENT, dated as of August 1, 1994 (this Seventh Amendment"), to
the Amended and Restated Credit Agreement, dated as of March 8, 1993 (as
heretofore amended, the "Credit Agreement"), among Payless Cashways, Inc., an
Iowa corporation (the "Borrower"), the banks and other financial institutions
parties thereto (the "Banks"), Canadian Imperial Bank of Commerce, New York
Agency ("CIBC"), as Administrative Agent (in such capacity, the "Administrative
Agent") and as Collateral Agent (in such capacity, the "Collateral Agent"),
CIBC, The Bank of Nova Scotia and NationsBank of Texas, N.A., as Managing Agents
(in such capacity, the "Managing Agents") and Bank of America National Trust and
Savings Association, as Co-Agent (in such capacity, the "Co-Agent"); and
SECOND AMENDMENT, dated as of August 1, 1994 (this "Second Amendment"), to
the Standby Letter of Credit Issuance and Reimbursement Agreement, dated as of
February 14, 1994 (the "Standby Letter of Credit Agreement"), among the
Borrower, the banks and other financial institutions parties thereto (the
"Standby Letter of Credit Banks") and CIBC, as Issuing Bank (in such capacity,
the "Issuing Bank").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Banks, the Administrative Agent, the Collateral
Agent, the Letter of Credit Bank, the Managing Agents and the Co-Agent are
parties to the Credit Agreement, and the Issuing Bank and the Standby Letter of
Credit Banks are parties to the Standby Letter of Credit Agreement;
WHEREAS, certain provisions of the Credit Agreement are incorporated by
reference into the Standby Letter of Credit Agreement;
WHEREAS, the Borrower has requested that the Banks amend the Credit
Agreement and the Standby Letter of Credit Banks amend the Standby Letter of
Credit Agreement in the manner set forth below; and
WHEREAS, the Banks and the Standby Letter of Credit Banks are willing to
accede to the requests of the Borrower upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Borrower, the Banks, the Administrative Agent, the
Collateral Agent, the Letter of Credit
<PAGE> 2
Bank, the Managing Agents, the Co-Agent, the Issuing Bank and the Standby Letter
of Credit Banks hereby agree as follows:
SECTION I. DEFINED TERMS
-------------
Unless otherwise defined herein, terms defined in the Credit Agreement or
the Standby Letter of Credit Agreement and used herein are so used as so
defined.
SECTION II. AMENDMENTS TO THE CREDIT AGREEMENT
----------------------------------
1. Definitions. (a) Section 1.01 of the Credit Agreement is hereby
amended by inserting the following terms in their proper alphabetic locations:
"'1994 Bank' has the meaning assigned to the term "Bank" in the 1994
Credit Agreement.
'1994 Commitments' means the Commitments (as defined in the 1994
Credit Agreement) under the 1994 Credit Agreement, or after the expiration or
the termination of such Commitments, the outstanding Term Loans (as defined in
the 1994 Credit Agreement) under the 1994 Credit Agreement.".
(b) Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definition of "Required Accelerating Banks" therefrom and
substituting, in lieu thereof, the following:
"'Required Accelerating Banks' means at any time the Required Banks;
provided that for the purposes of this definition of Required Accelerating Banks
only, the Standby Commitments of the Standby Participating Banks and the 1994
Commitments of the 1994 Banks, respectively, shall be disregarded in any
calculation of the Required Banks at any time after the obligations under the
Standby Letter of Credit Agreement or the 1994 Credit Agreement, respectively,
shall have been accelerated.".
c) Section 1.01 of the Credit Agreement is hereby further amended by
deleting the definition of "Required Banks" therefrom and substituting, in lieu
thereof, the following:
"'Required Banks' means at any time Banks, Standby Participating Banks
and 1994 Banks having an aggregate amount of the Revolving Commitments, Term
Loan Commitments (or, after the Term Loan Commitments expire, are terminated or
are fully utilized, Term Loans), Standby Commitments and 1994 Commitments which
constitute at least 51% of the aggregate amount of all Revolving Commitments,
Term Loan Commitments (or, after the Term Loan Commitments expire, are
terminated or are fully utilized, Term Loans), Standby Commitments and 1994
Commitments then in effect or outstanding; provided that for the purposes of
this
<PAGE> 3
definition, (a) the Commitments of any Bank shall be disregarded if and for so
long as such Bank (each, a "Defaulting Bank") shall have not theretofore made
available to (i) the Administrative Agent its pro rata share of a given
Borrowing in accordance with Section 2.02(c) or (ii) the Letter of Credit Bank
its pro rata share of a given unreimbursed reimbursement obligation in
accordance with Section 3.04, (b) the Standby Commitment of any Standby
Participating Bank shall be disregarded if and for so long as such Standby
Participating Bank is a Defaulting Standby Participating Bank and (c) the 1994
Commitment of any 1994 Bank shall be disregarded if and for so long as such 1994
Bank is a Defaulting Bank (as defined in the 1994 Credit Agreement).".
2. Amendments and Waivers. (a) Section 10.05 of the Credit Agreement is
hereby amended by deleting that portion of the proviso to such section beginning
with the word "provided" and ending with the designation "(i)" and substituting
the following therefor:
"provided that no such amendment or waiver shall, unless signed by all the
Banks (other than Defaulting Banks) affected thereby, all the Standby
Participating Banks (other than Defaulting Standby Participating Banks)
affected thereby and all the 1994 Banks (other than Defaulting Banks (as
defined in the 1994 Credit Agreement)) affected thereby, (i)".
(b) Section 10.05 of the Credit Agreement is hereby further amended by
deleting clause (vi) of the proviso to such section and substituting the
following therefor:
"(vi) change the percentage of the Revolving Commitments, Tranche A Term
Commitments, Tranche B Term Commitments, Standby Commitments, 1994
Commitments or the aggregate unpaid principal amount of the Notes or of the
Term Notes (as defined in the 1994 Credit Agreement), or the number of
Banks, Standby Participating Banks or 1994 Banks, which shall be required
for the Administrative Agent, the Managing Agents, the Administrative Agent
under the 1994 Credit Agreement, the Issuing Bank under the Standby Letter
of Credit Agreement, the Banks, the Standby Participating Banks and the
1994 Banks or any of them to take any action under this Section or any
other provision of this Agreement,".
(c) Section 10.05 of the Credit Agreement is hereby further amended by
inserting at the end of such section the following:
"Without limitation of any other events or conditions by which any Bank,
Standby Participating Bank or 1994 Bank may not be "affected" within the
meaning of the immediately preceding proviso, (x) no Standby Participating
Bank or 1994 Bank shall be deemed to be "affected" by any of the events or
conditions specified in clauses (i), (ii), (iii) or
<PAGE> 4
(viii) of this Section 10.05 and (y) no 1994 Bank shall be deemed to be
"affected" by any of the events or conditions specified in clause (vii) of
this Section 10.05."
3. Successors and Assigns. Section 10.06(a) of the Credit Agreement is
hereby amended by deleting clauses (i) and (ii) thereof in their entireties and
substituting the following therefor:
"(i) Section 10.05 and the definition of "Required Banks" shall inure to
the benefit of and be enforceable by the Standby Participating Banks and
the 1994 Banks and (ii) the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior written
consent of each Bank, each Standby Participating Bank and each 1994 Bank.".
SECTION III. AMENDMENTS TO THE STANDBY LETTER OF CREDIT AGREEMENT
----------------------------------------------------
1. Definitions. (a) Section 1.01 of the Standby Letter of Credit
Agreement is hereby amended by deleting the definition of "Required Acceleration
Lenders" therefrom and substituting, in lieu thereof, the following:
"'Required Accelerating Lenders' means at any time the Required Banks;
provided that for the purposes of this definition of Required
Accelerating Lenders only, the Revolving Commitments, Term Loan
Commitments and Term Loans of the Banks and the 1994 Commitments of
the 1994 Banks, respectively, shall be disregarded in any calculation
of the Required Banks at any time after the obligations under the
Credit Agreement or the 1994 Credit Agreement, respectively, shall
have been accelerated.".
2. Amendments and Waivers. (a) Section 9.05 of the Standby Letter of
Credit Agreement is hereby amended by deleting that portion of the proviso to
such section beginning with the word "provided" and ending with the designation
"(i)" and substituting the following therefor:
"provided that no such amendment or waiver shall, unless signed by all the
Participating Banks (other than Defaulting Participating Banks) affected
thereby, all the Banks (other than Defaulting Banks) affected thereby and
all the 1994 Banks (other than Defaulting Banks (as defined in the 1994
Credit Agreement)) affected thereby, (i)".
(b) Section 9.05 of the Standby Letter of Credit Agreement is hereby
further amended by deleting clause (vi) of the proviso to such section and
substituting the following therefor:
"(vi) change the percentage of the Standby Commitments, Revolving
Commitments, Tranche A Term Commitments, Tranche B
<PAGE> 5
Term Commitments or 1994 Commitments or the aggregate unpaid principal
amount of the Notes or of the Term Notes (as defined in the 1994 Credit
Agreement), or the number of Participating Banks, Banks or 1994 Banks,
which shall be required for the Administrative Agent, the Managing Agents,
the Administrative Agent under the 1994 Credit Agreement, the Issuing Bank,
the Participating Banks, the Banks and the 1994 Banks or any of them to
take any action under this Section or any other provision of this
Agreement,".
(c) Section 9.05 of the Standby Letter of Credit Agreement is hereby
further amended by inserting at the end of such section the following:
"Without limitation of any other events or conditions by which any Bank,
Participating Bank or 1994 Bank may not be "affected" within the meaning of
the immediately preceding proviso, (x) no Bank or 1994 Bank shall be deemed
to be "affected" by any of the events or conditions specified in clauses
(i), (ii), (iii) or (viii) of this Section 9.05 and (y) no 1994 Bank shall
be deemed to be "affected" by any of the events or conditions specified in
clause (vii) of this Section 9.05."
3. Successors and Assigns. Section 9.06(a) of the Standby Letter of
Credit Agreement is hereby amended by deleting clauses (i) and (ii) thereof in
their entireties and substituting the following therefor:
"(i) Section 9.05 and the definition of "Required Banks" as incorporated by
reference to the Credit Agreement shall inure to the benefit of and be
enforceable by the Banks and the 1994 Banks and (ii) the Borrower may not
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Participating Bank, each Bank and
each 1994 Bank.".
SECTION IV. CONDITIONS PRECEDENT
--------------------
The amendments contained in this Seventh Amendment to the Credit Agreement
and Second Amendment to the Standby Letter of Credit Agreement shall become
effective on and as of the date on which the following conditions precedent are
satisfied:
1. Amendment. The Administrative Agent and the Issuing Bank shall have
received counterparts of this Seventh Amendment to the Credit Agreement and
Second Amendment to the Standby Letter of Credit Agreement duly executed by the
Borrower and each of the Banks and each of the Standby Letter of Credit Banks.
2. Consent of Guarantor. Somerville shall have executed this Seventh
Amendment to the Credit Agreement and Second Amendment to the Standby Letter of
Credit Agreement, in the
<PAGE> 6
appropriate space below the caption "Consent of Guarantor" on the signature
pages hereto.
3. Amendment to 1994 Agreement. The Administrative Agent and the Issuing
Bank shall have received counterparts of the amendment to the 1994 Agreement,
substantially in the form previously provided to the Banks and Standby Letter of
Credit Banks, duly executed by the Borrower and each of the 1994 Banks.
SECTION V. MISCELLANEOUS
-------------
1. Representations and Warranties. The Borrower hereby confirms,
reaffirms and restates the representations and warranties set forth in Section 6
of the Credit Agreement and Section 5 of the Standby Letter of Credit Agreement,
provided that all references in said Sections 6 and 5 to the "Agreement" shall
be deemed to be references to the Credit Agreement and the Standby Letter of
Credit Agreement, respectively, as amended by this Seventh Amendment to the
Credit Agreement and Second Amendment to the Standby Letter of Credit Agreement.
2. Limited Effect. This Seventh Amendment to the Credit Agreement and
Second Amendment to the Standby Letter of Credit Agreement is limited precisely
as written and shall not be deemed (a) to be a consent to any modification or
amendment of any other term or condition of the Credit Agreement, the Standby
Letter of Credit Agreement or of any other term or condition of the instruments
or agreements referred to therein or (b) to prejudice any other right or rights
that the Administrative Agent, the Collateral Agent, the Managing Agents, the
Co-Agent, any Bank, the Issuing Bank or any Standby Letter of Credit Bank may
now have or may have in the future under or in connection with the Credit
Agreement, the Standby Letter of Credit Agreement or the agreements referred to
therein. Except as expressly amended and modified by this Seventh Amendment to
the Credit Agreement and Second Amendment to the Standby Letter of Credit
Agreement, all of the provisions and covenants of the Credit Agreement and the
Standby Letter of Credit Agreement are and shall continue to remain in full
force and effect in accordance with the terms thereof.
3. Counterparts. This Seventh Amendment to the Credit Agreement and
Second Amendment to the Standby Letter of Credit Agreement may be executed by
one or more of the parties hereto in any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
4. GOVERNING LAW. THIS SEVENTH AMENDMENT TO THE CREDIT AGREEMENT AND
SECOND AMENDMENT TO THE STANDBY LETTER OF CREDIT AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
<PAGE> 7
5. Expenses. The Borrower agrees to pay or reimburse CIBC, in its
capacity as Administrative Agent and Issuing Bank, for all its reasonable out-
of-pocket costs and expenses incurred in connection with the preparation and
execution of this Seventh Amendment to the Credit Agreement and Second Amendment
to the Standby Letter of Credit Agreement, including, without limitation, the
reasonable fees and disbursements of counsel to CIBC in its capacity as
Administrative Agent and Issuing Bank. The Borrower expressly acknowledges and
further agrees that nothing in the preceding sentence shall be construed to
limit in any way the provisions of Section 10.03 of the Credit Agreement or
Section 9.03 of the Standby Letter of Credit Agreement.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Amendment to the Credit Agreement and Second Amendment to the Standby Letter of
Credit Agreement to be executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
PAYLESS CASHWAYS, INC.
By: s/Stephen A. Lightstone
-------------------------------
Title: Sr. Vice President-
Finance
BANKS PARTIES TO THE CREDIT AGREEMENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Administrative Agent,
Collateral Agent, Managing
Agent and Letter of Credit
Bank
By: s/David McGowan
-------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA,
as Managing Agent and Bank
By: s/Amanda Norsworthy
-------------------------------
Title: Assistant Agent
NATIONSBANK OF TEXAS, N.A.,
as Managing Agent and Bank
By: s/Perry B. Stephenson
-------------------------------
Title: Sr. Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Agent and Bank
By: s/Burton Queen
-------------------------------
Title: Vice President
<PAGE> 9
CIBC INC.
By: s/David McGowan
-------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By: s/Jeffrey D. Dodd
-------------------------------
Title: V.P.
By: s/R. Michael Schwartz
-------------------------------
Title: V.P.
BANCA COMMERCIALE
ITALIANA
By: s/Julian M. Teodori
-------------------------------
Title:Sr.Vice Pres./Branch Mgr.
By: s/Diana R. Lamb
-------------------------------
Title: Vice President
BANK OF MONTREAL
By: s/Jonathan D. Hook
-------------------------------
Title: Director
THE BANK OF NEW YORK
By: s/David S. Stueber
-------------------------------
Title: Vice President
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By: s/Thomas J. Butkus
-------------------------------
Title: Vice President
<PAGE> 10
BANQUE PARIBAS
By: s/Robert E. Taubenheim
-------------------------------
Title: Group Vice President
By: s/Peter Toal
-------------------------------
Title: Regional General Manager
DAI-ICHI KANGYO BANK
LTD., CHICAGO BRANCH
By: s/Tetsuya Kaneko
-------------------------------
Title: Vice President
FIRST BANK NATIONAL
ASSOCIATION
By: s/Merri Bernhardson
-------------------------------
Title: Vice President
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By: s/Hidekazu Seo
-------------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF
JAPAN, LTD.
By: s/Hiroaki Nakamura
-------------------------------
Title: Joint General Manager
THE MITSUBISHI BANK, LTD.
By: s/Hiroaki Fuchida
-------------------------------
Title: Vice President, Manager
MITSUI NEVITT CAPITAL
CORPORATION
By: s/Dan Jozefov
-------------------------------
Title: Vice President
<PAGE> 11
MITSUBISHI TRUST AND
BANKING CORPORATION
By: s/Masaaki Yamagishi
-------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By: s/J. Runk, Jr.
-------------------------------
Title: Account Rep.
PILGRIM PRIME RATE TRUST
By: s/Michael Hatley
-------------------------------
Title: Asst. Portfolio Mgr.
THE SUMITOMO BANK, LTD.
By: s/Katsuyasu Iwasawa
-------------------------------
Title: Joint General Manager
UNION BANK
By: s/Cecilia M. Valente
-------------------------------
Title: Vice President
UNITED STATES NATIONAL
BANK OF OREGON
By: s/Blake R. Howells
-------------------------------
Title: Vice President
VAN KAMPEN MERRITT
PRIME RATE INCOME TRUST
By: s/Jeffrey W. Maillet
-------------------------------
Title:Vice Pres.&Portfolio Mgr.
<PAGE> 12
BANKS PARTIES TO THE STANDBY LETTER OF CREDIT AGREEMENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,
as Issuing Bank
By: s/David McGowan
-------------------------------
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA
By: s/Amanda Norsworthy
-------------------------------
Title: Assistant Agent
NATIONSBANK OF TEXAS, N.A.
By: s/Perry B. Stephenson
-------------------------------
Title: Sr. Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: s/Burton Queen
-------------------------------
Title: Vice President
CIBC INC.
By: s/David McGowan
-------------------------------
Title: Vice President
ABN AMRO BANK N.V.
By: s/Jeffrey D. Dodd
-------------------------------
Title: V.P.
By: s/R. Michael Schwartz
-------------------------------
Title: V.P.
<PAGE> 13
BANCA COMMERCIALE
ITALIANA
By: s/Julian M. Teodori
-------------------------------
Title:Sr.Vice Pres./Branch Mgr.
By: s/Diana R. Lamb
-------------------------------
Title: Vice President
BANK OF MONTREAL
By: s/Jonathan D. Hook
-------------------------------
Title: Director
THE BANK OF NEW YORK
By: s/David S. Stueber
-------------------------------
Title: Vice President
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By: s/Thomas J. Butkus
-------------------------------
Title: Vice President
BANQUE PARIBAS
By: s/Robert E. Taubenheim
-------------------------------
Title: Group Vice President
By: s/Peter Toal
-------------------------------
Title: Regional General Manager
DAI-ICHI KANGYO BANK
LTD., CHICAGO BRANCH
By: s/Tetsuya Kaneko
-------------------------------
Title: Vice President
FIRST BANK NATIONAL
ASSOCIATION
By: s/Merri Bernhardson
-------------------------------
Title: Vice President
<PAGE> 14
THE FUJI BANK, LIMITED,
CHICAGO BRANCH
By: s/Hidekazu Seo
-------------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF
JAPAN, LTD.
By: s/Hiroaki Nakamura
-------------------------------
Title: Joint General Manager
THE MITSUBISHI BANK, LTD.
By: s/Hiroaki Fuchida
-------------------------------
Title: Vice President, Mgr.
MITSUI NEVITT CAPITAL
CORPORATION
By: s/Dan Jozefov
-------------------------------
Title: Vice President
MITSUBISHI TRUST AND
BANKING CORPORATION
By: s/Masaaki Yamagishi
-------------------------------
Title: Chief Manager
NATIONAL CITY BANK
By: s/J. Runk, Jr.
-------------------------------
Title: Account Rep.
THE SUMITOMO BANK, LTD.
By: s/Katsuyasu Iwasawa
-------------------------------
Title: Joint General Manager
<PAGE> 15
UNION BANK
By: s/Cecilia M. Valente
-------------------------------
Title: Vice President
UNITED STATES NATIONAL
BANK OF OREGON
By: s/Blake R. Howells
-------------------------------
Title: Vice President
<PAGE> 16
CONSENT OF GUARANTOR
--------------------
The undersigned, pursuant to the Amended and Restated Guarantee, dated
as of March 15, 1993, made by the undersigned in favor of Canadian Imperial Bank
of Commerce, New York Agency, as Collateral Agent for the Banks, hereby consents
to the provisions of the above Seventh Amendment to the Credit Agreement and
Second Amendment to the Standby Letter of Credit Agreement and agrees that the
Amended and Restated Guarantee remains in full force and effect after giving
effect to the above Seventh Amendment to the Credit Agreement and Second
Amendment to the Standby Letter of Credit Agreement.
SOMERVILLE LUMBER AND SUPPLY
CO., INC.
By: s/Stephen A. Lightstone
-------------------------------
Title: Treasurer
<PAGE> 1 Exhibit 10.1(a)
THIRD AMENDMENT TO THE PAYLESS CASHWAYS, INC.
SUPPLEMENTAL RETIREMENT PLAN
Third Amendment, dated as of August 31, 1994, (the "Third Amendment") to
the Payless Cashways, Inc. Supplemental Retirement Plan, said Plan being
effective as of January 1, 1988 (the "Plan").
WHEREAS, Payless Cashways, Inc. (the "Company") established the Plan for
the purpose of providing certain retirement benefits to eligible employees in
addition to those available pursuant to the Company's then existing retirement
plans and in recognition of the contribution to the Company by eligible
employees; and
WHEREAS, the Company desires to amend the Plan to provide discretionary
authority to the Chief Executive Officer to determine which non-executive
officers who are not currently covered by the Plan and which future non-
executive officers will be eligible for benefits under the Plan and on what
terms and conditions;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 3.1 of the Plan is hereby amended by deleting the Section in
its entirety and substituting the following Section 3.1 therefor:
3.1 Participation
-------------
(a) Each Executive Officer of the Company as that term may be
defined from time to time by one or more resolutions of the Board of
Directors) shall be or become a Participant under this Plan. Any
Executive Officer who became an Executive Officer prior to August 31,
1994 but was not a Participant prior to August 31, 1994, shall become
a Participant on such date on or before August 31, 1994 as the Chief
Executive Officer, in his sole discretion, determines. Any employee
who is elected or designated an Executive Officer on or after August
31, 1994, shall become a Participant on his/her first day of work
after being duly elected or designated an Executive Officer by the
Board of Directors.
(b) The Chief Executive Officer of the Company shall have the
authority to determine, in his sole discretion, which officers of the
Company (other than Executive Officers as that term may be defined
from time to time by one or more resolutions of the Board of
Directors) will be
<PAGE> 2
eligible to become Participants under this Plan, and shall have the
authority to determine, in his sole discretion, what the terms,
conditions and effective date of such each such participation shall
be. Notwithstanding the foregoing, any non-Executive Officer who was
already a Participant in the Plan prior to August 31, 1994, shall
continue to be covered by the Plan as it is existed on August 31,
1994, including this Third Amendment, subject only to such amendments
to same as may be mutually agreed upon in writing by the Chief
Executive Officer on behalf of the Company and by the Participant.
(c) The Company shall enter into an Agreement for Supplemental
Retirement Benefits with each officer who is or becomes a Participant
under this Plan which shall set forth in full or by incorporation by
reference such terms, conditions and effective date for supplemental
retirement benefits as may apply to said officer. To the extent that
the terms and conditions of any such Agreement for Supplemental
Retirement Benefits may conflict or be inconsistent with the terms and
conditions of any written employment agreement which may exist between
said officer and the Company, the provisions of the written employment
agreement will control.
2. Article VI of said Plan is hereby amended by deleting the section in
its entirety and substituting the following Article VI therefor:
Article VI. Amendment and Termination
---------------------------------------
6.1 Executive Officers
------------------
This Plan, as it applies to Executive Officers, may only be amended or
terminated by the Compensation Committee of the Board of Directors,
provided, however, that any such amendment or termination will be
applied prospectively only, shall not apply to Executive Officers who
are Participants prior to said amendment or termination without their
written consent, and shall not have the effect of reducing or
eliminating any amounts previously credited on the books of the
Company pursuant to the provisions of this Plan nor shall such
amendment or termination reduce or eliminate any benefits payable
under the terms of this Plan as of the date of the amendment or
termination.
<PAGE> 3
6.2 Non-Executive Officers
----------------------
The Chief Executive Officer of the Company has the authority to
determine, in his sole discretion, the extent to which this Plan shall
apply to any non-Executive Officer, and is authorized to amend any
provision of this Plan as such provision may apply to a non-Executive
Officer, subject only to the provisions of Section 3.1(b) hereof.
6.3 Agreements for Supplemental Retirement Benefits
-----------------------------------------------
An Agreement for Supplemental Retirement Benefits may only be amended
by the mutual consent of the Chief Executive Officer and the
Participant to whom it applies and any such amendment must be in
writing and executed by both parties. If any such amendment applies
to an Executive Officer, the Compensation Committee of the Board of
Directors must approve said amendment for it to be effective.
IN WITNESS WHEREOF, PAYLESS CASHWAYS, INC. has caused this Third Amendment
to be executed by its duly authorized officers on this 31st day of August, 1994.
PAYLESS CASHWAYS, INC.
By: s/E.J. Holland, Jr.
-------------------------------
E. J. Holland, Jr.
Senior Vice President -
Human Resources
ATTEST:
s/Linda J. French
- -------------------------------
Linda J. French, Secretary
<PAGE> 1 Exhibit 10.1(b)
AGREEMENT FOR SUPPLEMENTAL RETIREMENT BENEFITS
This Agreement is entered into between PAYLESS CASHWAYS, INC. ("PCI") and
DAVID STANLEY ("Officer") as of the 31st day of August, 1994.
WHEREAS, the Officer has been designated as a Participant in the Payless
Cashways, Inc. Supplemental Retirement Plan by virtue of his Officer status or
designation by the Chief Executive Officer; and
WHEREAS, the Officer consents to and accepts such benefits on the terms and
conditions set forth below;
NOW THEREFORE, PCI and the Officer hereby mutually agree as follows:
1. Description of Benefits
-----------------------
a. PCI agrees to provide such supplemental retirement benefits
as are set forth in the attached Payless Cashways, Inc.
Supplemental Retirement Plan (the "Plan"), which was
effective January 1, 1988, as modified thereafter from time
to time, and which Plan is hereby incorporated by reference
as though fully set forth herein.
b. Notwithstanding the foregoing and in accordance with Section
3.1(b) of the Plan, the benefits set forth in said Plan are
hereby modified with respect to the Officer as follows: None
c. Except as modified above, the remaining terms and provisions
of the Plan shall apply.
d. The effective date of Participation in said Plan for the
Officer shall be the 15th day of April, 1980.
2. Binding Effect
--------------
This Agreement constitutes a contractual obligation of PCI and any
amendment hereto must be in writing and executed by both PCI and the
Officer. To the extent that the terms and conditions of this Agreement
conflict or are inconsistent with the terms and conditions of any written
employment agreement which may now or hereafter exist between the Officer
and PCI, the provisions of the
<PAGE> 2
agreement which has the terms most favorable to the Officer shall control.
IN WITNESS WHEREOF, PCI and the Officer have executed this Agreement on the
dates set forth below.
PAYLESS CASHWAYS, INC. OFFICER
s/E.J. Holland Jr. s/David Stanley
- ------------------------- -------------------------
E. J. HOLLAND, JR. DAVID STANLEY
SR. VP-HUMAN RESOURCES
DATE: 9/10/94 DATE: 9/13/94
------------------- -------------------
<PAGE> 3
NOTE TO SUPPLEMENTAL RETIREMENT BENEFITS AGREEMENT
Substantially identical agreements in all material respects except as to the
parties thereto and the effective dates of participation in the Plan have also
been approved. The additional parties and their respective participation dates
are as follows: Harold Cohen - December 1, 1983, Larry P. Kunz - August 14,
1986, Susan M. Stanton - September 1, 1985, Gerald M. Buchen - November 28,
1993, Ronald H. Butler - September 30, 1991, Linda J. French - October 17, 1991,
E.J. Holland, Jr. - June 30, 1992, Stephen A. Lightstone - November 1, 1983,
Richard E. Nawrot - August 19, 1991, Richard G. Luse - August 31, 1994.
<PAGE> 1
PAYLESS CASHWAYS, INC. AND SUBSIDIARY Exhibit 11.1
COMPUTATION OF PER SHARE EARNINGS
- ---------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
August 27, August 28, August 27, August 28,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY
- -------
Income (loss) before extraordinary item $ 18,345 $ 8,138 $ 34,620 $ (5,976)
Deduct:
Preferred stock dividends (1,289) (1,191) (3,792) (3,503)
---------- ---------- ---------- ----------
Income before equity in loss of joint
venture and extraordinary item
available to common shareholders $ 17,056 $ 6,947 $ 30,828 $ (9,479)
Extraordinary item: early
extinguishment of debt 288 (9,471) 343 (18,582)
---------- ---------- ---------- ----------
Net income (loss) available to
common shareholders $ 17,344 $ (2,524) $ 31,171 $ (28,061)
Weighted average common and
dilutive common equivalent
shares outstanding 40,320 40,355 40,321 --
---------- ---------- ---------- ----------
Weighted average common shares
outstanding (1) -- 39,457 -- 26,662
---------- ---------- ---------- ----------
Income (loss) per common share
before extraordinary item $ .42 $ .17 $ .76 $ (.36)
Extraordinary item per common share .01 (.24) .01 (.70)
---------- ---------- ---------- ----------
Net income (loss) per common share $ .43 $ (.06) $ .77 $ (1.05)
========== ========== ========== ==========
FULLY DILUTED
- -------------
Income (loss) before extraordinary item $ 18,345 $ 8,138 $ 34,620 $ (5,976)
Deduct:
Preferred stock dividends (1,289) -- (3,792) --
---------- ---------- ---------- ----------
Income before equity in loss of joint
venture and extraordinary item
available to common shareholders $ 17,056 $ 8,138 $ 30,828 $ (5,976)
Extraordinary item: early
extinguishment of debt 288 (9,471) 343 (18,582)
---------- ---------- ---------- ----------
Net income (loss) available to
common shareholders $ 17,344 $ (1,333) $ 31,171 $ (24,558)
Weighted average common and
dilutive common equivalent
shares outstanding 40,321 43,026 41,133 26,662 (1)
---------- ---------- ---------- ----------
Income (loss) per common share
before extraordinary item $ .42 $ .19 $ .75 $ -- (2)
Extraordinary item per common share .01 -- (2) .01 -- (2)
---------- ---------- ---------- ----------
Net income (loss) per common share $ .43 $ -- (2) $ .76 $ -- (2)
========== ========== ========== ==========
<FN>
(1) Excludes dilutive common equivalent shares for computation of loss per common share.
(2) Not applicable. Due to the loss incurred for period, fully diluted earnings per share would be antidilutive and have not been
presented.
</TABLE>
<PAGE> 1
EXHIBIT 15.1
- ------------
[Letterhead of KPMG Peat Marwick]
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Payless Cashways, Inc.:
We have reviewed the accompanying condensed consolidated balance sheets of
Payless Cashways, Inc. and subsidiary as of August 27, 1994 and August 28, 1993
and the related condensed consolidated statements of operations and cash flows
for the thirteen and thirty-nine week periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Payless Cashways, Inc. and
subsidiary as of November 27, 1993 and the related consolidated statements of
operations, shareholders' equity and cash flows for the fiscal year then ended
(not presented herein); and in our report dated January 7, 1994, we expressed an
unqualified opinion on these consolidated financial statements. Our report
referred to a change in the method of accounting for postretirement benefits
other than pensions in fiscal 1992. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of November 27, 1993
is fairly presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
s/ KPMG Peat Marwick LLP
Kansas City, Missouri
September 12, 1994
<PAGE> 2
EXHIBIT 15.1
- ------------
[Letterhead of KPMG Peat Marwick]
Payless Cashways, Inc.
Kansas City, Missouri
Gentlemen:
With respect to the subject registration statements on Form S-8 and Form S-3, we
acknowledge our awareness of the use therein of our report dated September 12,
1994 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1993, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
s/ KPMG Peat Marwick LLP
Kansas City, Missouri
September 26, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUGUST
27, 1994 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-26-1994
<PERIOD-START> NOV-28-1993
<PERIOD-END> AUG-27-1994
<CASH> 12,040
<SECURITIES> 0
<RECEIVABLES> 7,397
<ALLOWANCES> 0
<INVENTORY> 406,738
<CURRENT-ASSETS> 461,506
<PP&E> 790,230
<DEPRECIATION> 234,767
<TOTAL-ASSETS> 1,503,782
<CURRENT-LIABILITIES> 380,027
<BONDS> 605,423
<COMMON> 399
0
40,600
<OTHER-SE> 385,534
<TOTAL-LIABILITY-AND-EQUITY> 1,503,782
<SALES> 2,020,380
<TOTAL-REVENUES> 2,026,355
<CGS> 1,424,342
<TOTAL-COSTS> 1,424,342
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,416
<INCOME-PRETAX> 64,809
<INCOME-TAX> 29,040
<INCOME-CONTINUING> 34,620
<DISCONTINUED> 0
<EXTRAORDINARY> 343
<CHANGES> 0
<NET-INCOME> 34,963
<EPS-PRIMARY> .77
<EPS-DILUTED> 0
</TABLE>
