<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended July 29, 1995 COMMISSION FILE NO. 0-17870
LECHTERS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY No. 13-2821526
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(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
1 Cape May Street, Harrison, NEW JERSEY 07029
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (201) 481-1100
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, and (2) has been
subject to such filing requirements for the past 90 days.
YES x NO
The number of shares of the Registrant's common stock, without par
value, outstanding at September 1, 1995: 17,151,886
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LECHTERS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR QUARTER ENDED JULY 29, 1995
INDEX
PAGE NO.
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
July 29, 1995 and January 28, 1995 1
Consolidated Statements of Income
for the Thirteen and Twenty-Six Weeks
Ended July 29, 1995 and July 30, 1994 2
Consolidated Statements of Cash Flows
for the Twenty-Six Weeks Ended
July 29, 1995 and July 30, 1994 3
Consolidated Statement of Shareholders'
Equity for the Twenty-Six Weeks Ended
July 29, 1995 4
Notes to Consolidated Financial
Statements 5-6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-9
PART II. Other Information
Item 6. Exhibits and Reports 10-11
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<TABLE>
<CAPTION>
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
<S> <C> <C>
July 29, January 28,
1995 1995
A S S E T S (unaudited)
Current Assets:
Cash and Cash Equivalents $ 9,940 $ 14,774
Available for Sale Securities 28,463 43,339
Accounts Receivable 7,108 6,668
Merchandise Inventories 112,143 97,323
Prepaid Expenses 9,634 4,601
Total Current Assets 167,288 166,705
Property and Equipment - at Cost:
Fixtures and Equipment 58,149 53,786
Leasehold Improvements 97,209 92,954
155,358 146,740
Less Accumulated Deprec & Amort 54,038 47,265
101,320 99,475
Other Assets 4,614 4,530
Total Assets $273,222 $270,710
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current Portion Long-Term Debt $ 3,000 $ 3,000
Accounts Payable 20,104 15,453
Salaries, Wages and Other Accd Exp 11,293 9,906
Taxes, Other Than Income Taxes 2,999 2,806
Federal and State Income Taxes 519 755
Total Current Liabilities 37,915 31,920
Long-term Debt
Notes Payable 21,000 21,000
5% Convertible Subordinated Debentures
due September 27, 2001 (Net of
Unamortized Discount of $7,738 and
$8,222, respectively) 57,262 56,777
Total Long-term Debt 78,262 77,777
Def Income Taxes and Other Def Credits 17,253 17,472
Shareholders' Equity:
Preferred Stock, $100 Par Value
Authorized 1,000,000 Shares,
Issued and Outstanding - None -- --
Common Stock, Without Par Value,
Authorized 50,000,000 Shares,
Issued and Outstanding 17,140,386
and 17,118,646 Shares, Respectively 58 58
Unrealized Holding Loss on Available
for Sales Securities (16) (210)
Additional Paid-in Capital 62,690 62,423
Retained Earnings 77,060 81,270
Total Shareholders' Equity 139,792 143,541
Total Liabilities and Shareholders'
Equity $273,222 $270,710
======== ========
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
<S> <C> <C> <C> <C>
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 29, July 30, July 29, July 30,
1995 1994 1995 1994
(unaudited) (unaudited)
Net Sales $ 88,671 $ 81,582 $168,987 $155,274
Cost of Goods Sold (including
occupancy and indirect costs) 65,926 58,978 126,002 112,885
Gross Profit 22,745 22,604 42,985 42,389
Selling, General and
Administrative Expenses 24,626 21,903 47,914 42,301
Restructuring Charge -- 11,000 -- 11,000
Operating Loss (1,881) (10,299) (4,929) (10,912)
Other Expenses (Income):
Interest Expense 1,818 1,814 3,456 3,714
Interest Income (506) (352) (1,219) (733)
(Gain) Loss on Sale of
Government Securities (30) 29 (30) 50
Total Other Expenses (Income) 1,282 1,491 2,207 3,031
Loss Before Income Taxes (3,163) (11,790) (7,136) (13,943)
Income Tax Benefit (1,297) (4,834) (2,926) (5,717)
Net Loss $ (1,866) $ (6,956) $ (4,210) $ (8,226)
======== ======== ======== ========
Net Loss Per Share ($0.11) ($0.41) ($0.24) ($0.48)
======== ======== ======== ========
Weighted Average Shares
Outstanding 17,333,000 17,053,000 17,374,000 17,068,000
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<S> <C> <C>
Twenty-Six Weeks Ended
July 29, July 30,
1995 1994
(unaudited)
Cash Flows From Operating Activities:
Net Loss ($4,210) ($8,226)
Adjustments to Reconcile Net Loss to Net
Cash Used In Operating Activities:
Restructuring Charge -- 11,000
Depreciation and Amortization 7,768 7,000
Other 422 578
Changes in Assets and Liabilities, Net of
Effects of Restructuring:
Increase in Accounts Receivable (440) (5,564)
Increase in Merchandise Inventories (14,123) (7,015)
Increase in Prepaid Expenses (5,033) (4,088)
Increase in Accounts Payable,
Accrued Expenses and Taxes Other
Than Income Taxes 5,534 3,778
Decrease in Income Taxes Payable (236) (97)
Increase in Other Assets (175) (640)
Net Cash Used In Operating Activities: (10,493) (3,274)
Cash Flows From Investing Activities:
Capital Expenditures (9,813) (9,457)
Decrease in Available for Sale
Securities 15,205 9,794
Net Cash Provided By Investing
Activities 5,392 337
Cash Flows From Financing Activities:
Exercise of Stock Options 267 213
Net Cash Provided by Financing
Activities 267 213
Net Decrease in Cash and Cash Equivalents (4,834) (2,724)
Cash and Cash Equivalents, Beginning of
Period 14,774 8,963
Cash and Cash Equivalents, End of Period $ 9,940 $ 6,239
======= =======
Supplemental Disclosure of Cash Flows
Information:
Non Cash Investing Activities:
Unrealized Holding Loss Adjustment
on Available for Sale Securities $ 329 $ 420
======= =======
Cash Paid During the Period for:
Interest Paid $ 1,207 $ 1,608
======= =======
Income Taxes (Refunded)/Paid ($1,190) $ 98
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
LECHTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Common Additional Unrealized
Stock Paid-In Retained Holding
Issued Capital Earnings Gain(Loss) Total
Balance, January 28, 1995 $58 $62,423 $81,270 (210) $143,541
Net Loss Twenty-Six Weeks
Ended July 29, 1995 -- -- (4,210) -- (4,210)
Unrealized Holding Loss
Adjustment -- -- -- 194 194
Exercise of Stock Options -- 267 -- -- 267
Balance, July 29, 1995
(unaudited) $58 $62,690 $77,060 $(16) $139,792
===== ======= ======= ===== ========
See accompanying notes to consolidated financial statements.
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LECHTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. General
The accompanying unaudited Consolidated Financial Statements have
been prepared in accordance with the instructions for Form 10-Q
and do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary
for a fair presentation for interim periods have been included.
The Company's results of operations for the thirteen and twenty-
six weeks ended July 29, 1995 are not necessarily indicative of
the operating results for the full year.
Certain reclassifications have been made to the financial
statements of the prior year to conform with the classification
used for fiscal 1995.
2. Net Loss Per Share
Net loss per share data was computed by dividing net loss by the
weighted average number of common shares and common share
equivalents outstanding during the thirteen and twenty-six weeks
ended July 29, 1995 and July 30, 1994. Common stock equivalents
include outstanding stock options. The Company's 5% Convertible
Subordinated Debentures issued in September 1991 did not qualify
as a common stock equivalent at the time of issue and were not
included in the calculation of primary net loss per share for the
periods ended July 29, 1995 and July 30, 1994. For the purpose
of computing fully diluted net loss per share, the assumed
conversion of such debentures would have an anti-dilutive effect
on the thirteen and twenty-six weeks ended July 29, 1995 and July
30, 1994.
3. Restructuring Charge
During June 1994, the Company recorded a pretax restructuring
charge of approximately $11,000,000 (approximately $6,500,000
after tax or $0.38 per share) related to its initial plan to
close 15 unprofitable stores and discontinue various unprofitable
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merchandise lines. The plan called for the termination of the
employment of approximately 19 associates from store operations,
the service office and distribution centers. During the fourth
quarter of Fiscal 1994, the Company revised its estimate of the
number of store closings to 10 stores and reduced the related
store closing provision by $3,000,000. However, the Company also
increased its estimate of the provision to markdown discontinued
merchandise by a similar amount. The revised estimated
restructuring charge includes the following:
Inventory writedown $ 7,400,000
Store closing:
Property and equipment writeoffs 1,800,000
Store closing and lease
termination costs 1,200,000
Severance costs 600,000
$11,000,000
===========
During Fiscal 1994, the Company used approximately $6,800,000 to
markdown discontinued merchandise lines, approximately $1,500,000
to close five of the 10 stores, and approximately $300,000 to pay
related severance costs.
During the twenty-six weeks ended July 29, 1995 the Company used
approximately $700,000 to markdown discontinued merchandise
lines, approximately $300,000 to pay costs related to the five
stores closed and approximately $30,000 to pay related severance
costs. The remaining restructuring reserve as of July 29, 1995
was approximately $1,370,000, and it is estimated by management
to be sufficient for any obligations still outstanding relating
to the Company's restructuring plan.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Thirteen Weeks Ended July 29, 1995 in Comparison with Thirteen Weeks
Ended July 30, 1994
Net sales of $88,671,000 for the thirteen weeks ended July 29,
1995 increased by $7,089,000 (8.8%) over net sales of $81,582,000 for
the thirteen weeks ended July 30, 1994. This increase was primarily
attributable to an increase in the number of stores open during the
period and partially attributable to the Company's remodeling program.
During the thirteen weeks ended July 29, 1995, the Company's
comparable store sales decreased 0.5%, as compared to prior year's
comparable period. There were 618 stores open on July 29, 1995
compared with 579 stores open at the end of the comparable period of
the prior year, an increase of 39 stores (6.7%). During the thirteen
weeks ended July 29, 1995, the Company opened nine new stores and
remodeled an additional two stores.
Gross profit for the thirteen weeks ended July 29, 1995 was
$22,745,000, or 25.7% of net sales, compared with $22,604,000, or
27.7% of net sales, during the prior year's comparable period. The
decrease in gross profit as a percentage of sales is primarily due to
a transitional imbalance in the Company's product mix and under-
absorption of allocated fixed expenses, namely occupancy and indirect
costs, due to the 0.5% decline in the Company's comparable store
sales. During the second quarter approximately 100 of the Company's
stores were repositioned with the new merchandise mix, which places
greater emphasis on products for the kitchen, private label and higher
margin, direct and foreign sourced goods.
Selling, general and administrative expenses increased as a
percentage of net sales to 27.8% during the thirteen weeks ended July
29, 1995 from 26.8% during the thirteen weeks ended July 30, 1994.
This increase was primarily attributable to an increase in general
administrative expenses associated with the additional 39 stores in
operation during the thirteen week period ended July 29, 1995, and the
effect of a decrease in the Company's comparable store sales as
compared to the same period of the prior year.
Other expenses decreased by $209,000 to $1,282,000 for the
thirteen weeks ended July 29, 1995. This decrease was primarily
attributable to an increase in interest income of $154,000 resulting
from greater excess cash balances invested at higher rates.
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Twenty-Six Weeks Ended July 29, 1995 in Comparison with Twenty-Six
Weeks Ended July 30, 1994
Net sales of $168,987,000 for the twenty-six weeks ended July 29,
1995 increased by $13,713,000 (8.8%) over net sales of $155,274,000
for the twenty-six weeks ended July 30, 1994. This increase was
primarily attributable to an increase in the number of stores open
during the period and partially attributable to the Company's
remodeling program. During the twenty-six weeks ended July 29, 1995,
the Company's comparable store sales decreased 0.3%, as compared to
prior year's comparable period. There were 618 stores open on July
29, 1995 compared with 579 stores open at the end of the comparable
period of the prior year, an increase of 39 stores (6.7%). During the
twenty-six weeks ended July 29, 1995, the Company opened 16 new
stores, closed three stores, and remodeled an additional seven stores.
This resulted in a net addition of 67,744 square feet, bringing the
Company's total retail space to 2,295,947 square feet.
Gross profit for the twenty-six weeks ended July 29, 1995 was
$42,985,000, or 25.4% of net sales, compared with $42,389,000, or
27.3% of net sales, during the prior year's comparable period. The
decrease in gross profit as a percentage of sales is primarily due to
a transitional imbalance in its product mix and under-absorption of
fixed allocated costs due to lower comparable store sales. The
Company is in the process of converting its stores with a new
merchandise assortment emphasizing lower cost, foreign sourced
merchandise. As of the twenty-six week period ended July 29, 1995,
approximately 105 of the Company's stores had been converted to the
new merchandise assortment, and it is expected that, by the end of the
third quarter, an additional 160 stores will have been converted.
Selling, general and administrative expenses increased as a
percentage of net sales to 28.3% during the twenty-six weeks ended
July 29, 1995 from 27.2% during the twenty-six weeks ended July 30,
1994. This increase was primarily attributable to an increase in
general administrative expenses associated with the additional
stores in operation during the twenty-six week period ended July 29,
1995, together with additional advertising expenses.
Other expenses decreased by $824,000 to $2,207,000 for the
twenty-six weeks ended July 29, 1995. This decrease was primarily
attributable to a decrease in interest expense of $258,000 resulting
from the Company reducing its debt by repaying $6,000,000 of 10.5%
Notes during the third quarter of 1994, and the increase in interest
income of $486,000, representing greater excess cash and cash
equivalents invested at higher rates versus the prior year.
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<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents and available for sale securities
decreased by $19,710,000 and $12,938,000 respectively for the twenty-
six weeks ended July 29, 1995 and July 30, 1994.
Net cash used in operating activities was $10,493,000 for the
twenty-six weeks ended July 29, 1995 versus net cash used in operating
activities of $3,274,000 for the twenty-six weeks ended July 29, 1994.
The increase in net cash used in operating activities of $7,219,000
was mainly attributable to an increase in the growth of merchandise
inventory of $7,108,000.
Capital expenditures of $9,813,000 primarily consisted of the
costs of construction and fixtures for 16 new stores, and the
remodeling of seven existing stores. Capital expenditures were funded
by available cash. Capital expenditures for the comparable 1994
period were $9,457,000.
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LECHTERS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.
10.1 Amendment to the Company's Credit Agreement dated July
28, 1995. (Incorporated herein by reference to Exhibit
1 to the Company's Form 10-Q, for the period ended
October 29, 1994).
10.2 Amendment No. 1 to Deferred Compensation Agreement
between the Company and Ira S. Rosenberg dated June 15,
1995. (Incorporated herein by reference to Exhibit
10.5.2 to Amendment No. 1 to the Registration Statement
on Form S-1 File No. 33-29465).
10.3 Amendment No. 3 to Deferred Compensation Agreement
between the Company and Albert Lechter dated June 15,
1995. (Incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1995).
10.4 Amendment No. 3 to Deferred Compensation Agreement
between the Company and Leonard Pfeffer dated June 15,
1995. (Incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1995).
10.5 Amendment No. 3 to Deferred Compensation Agreement
between the Company and Bernard Nebenzahl dated June
15, 1995. (Incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1995).
10.6 Amendment No. 3 to Deferred Compensation Agreement
between the Company and Donald Jonas dated June 15,
1995. (Incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended
January 28, 1995).
10.7 Lease for Distribution Center space dated June 19,
1995. (Incorporated herein by reference to Exhibit 1
to the Company's Current Report on Form 8-K, dated
January 2, 1992).
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LECHTERS, INC.
By:________________________________
John W. Smolak
Vice President and
Chief Financial Officer
Date: September 11, 1995
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<PAGE>
EXECUTION COPY
AMENDMENT NO. 2
Dated as of July 28, 1995
to the
CREDIT AGREEMENT
Dated as of November 19, 1993
WHEREAS, LECHTERS, INC. (the "Borrower"), the BANKS listed on
signature pages to the Credit Agreement (the "Banks") and THE BANK OF
MONTREAL, as Agent (the "Agent") are parties to the Credit Agreement,
dated as of November 19, 1993, as amended by Amendment No. 1, dated as
of September 6, 1994 (the "Credit Agreement"); and
WHEREAS, the Borrower, the Banks and the Agent wish to amend
the Credit Agreement in the manner hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, and promises herein contained and for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Banks and the Agent agree as follows:
Section 1. Definitions. Terms used in this Amendment No. 2
that are defined in the Credit Agreement are used with the meanings
therein ascribed to them.
Section 2. Amendments. Upon and after the Effective Date (as
defined in Section 3 hereof), the Credit Agreement shall be amended as
follows:
(a) Section 1.1 shall be amended by deleting the last
sentence thereof in its entirety and substituting the
following sentence therefor:
"The aggregate amount of the Commitments on the Agreement
Date is $40,000,000.";
(b) Section 1.7 shall be amended by deleting subsection (a)
thereof in its entirety and substituting the following
therefor:
"(a) [intentionally omitted]";
<PAGE>
(c) Section 1.8 shall be amended by deleting subsection (a)
thereof in its entirety and substituting the following
therefor:
"(a) [intentionally omitted]";
(d) Section 1.9 shall be amended by deleting subsection (a)
thereof in its entirety and substituting the following
therefor:
"(a) Determination of Applicable Margins and Fees. The
applicable Base Rate Margin, Eurodollar Rate Margin and
Facility Fee for any fiscal quarter of the Borrower shall
be determined on the basis of the ratio of the average
outstanding Consolidated Indebtedness as of the last day
of each of the immediately preceding four consecutive
fiscal quarters of the Borrower to Consolidated EBITDA
for the period of the immediately preceding four
consecutive fiscal quarters of the Borrower as determined
pursuant to the financial statements of the Borrower
delivered to the Agent pursuant to Section 5.1(a) or
5.1(b), as the case may be, immediately prior to the most
recent Adjustment Date, as follows:
Euro-
dollar Base
Rate Rate Facility
Ratio Margin Margin Fee
Greater than 2.50 1.25% 0.25% 0.375%
or equal to
Greater than 2.00 0.75% 0.00% 0.25%
or equal to
Less than 2.00 0.50% 0.00% 0.25%
Any increase or decrease in applicable margins or fees
shall be effective from the most recent Adjustment Date
provided that such ratio shall be 2.00 to 1.00 during the
period from the Agreement Date to the first Adjustment
Date to occur thereafter, and shall be deemed to be
greater than 2.50 to 1.00 (x) during such time as an
Event of Default has occurred and is continuing and (y)
in the event that the financial statements and officer's
certificate required to be delivered pursuant to Section
5.1(a) or 5.1(b), as the case may be, and Section 5.1(c)
are not delivered on or prior to the date when due,
during the period from the date when due to the date
which is two Business Days after such financial
statements and officer's certificate are so delivered.";
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(e) Section 1.9 shall be amended by deleting the second
sentence of subsection (b) thereof in its entirety and
substituting the following sentence therefor:
"Interest calculated on the basis of the Prime Rate or
the Federal Funds Rate, and the facility fees shall be
computed on the basis of a year of 365 or 366 days, as
applicable, and paid for the actual number of days
elapsed.";
(f) Section 4.14 shall be deleted in its entirety and the
following substituted therefor:
"Section 4.14. Capital Expenditures. Make or be
obligated at any time to make capital expenditures, in
the aggregate for the Borrower and its Consolidated
Subsidiaries, on a consolidated basis, in excess of (i)
$30,000,000 in any fiscal year of the Borrower ending in
or prior to January 1996, and (ii) in any fiscal year of
the Borrower thereafter, the sum of (A) $30,000,000 plus
(B) the lesser of (x) the excess, if any, of the maximum
amount of capital expenditures that the Borrower and its
Consolidated Subsidiaries were permitted to have made
during the previous fiscal year over the amount of
capital expenditures actually made in the previous fiscal
year and (y) $30,000,000.";
(g) Section 4.19 shall be deleted in its entirety and the
following substituted therefor:
"Section 4.19. Ratio of Consolidated Indebtedness to
Consolidated Indebtedness plus Consolidated Stockholders'
Equity. Permit the ratio of Consolidated Indebtedness to
Consolidated Indebtedness plus consolidated stockholders'
equity of the Borrower and its Consolidated Subsidiaries
to exceed 0.50 to 1.00 at any time.";
(h) Section 4.20 shall be deleted in its entirety and the
following substituted therefor:
"Section 4.20. Ratio of Consolidated EBIRTDA to
Consolidated Fixed Charges. Permit the ratio of
Consolidated EBIRTDA to Consolidated Fixed Charges to be
less than 0.98 to 1.00, as determined as of the last day
of each fiscal quarter for the period of the four
consecutive fiscal quarters ending on such day.";
(i) Section 4.21 shall be deleted in its entirety and the
following substituted therefor:
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"Section 4.21. Ratio of Consolidated Indebtedness to
Consolidated EBITDA. Permit the ratio of Consolidated
Indebtedness to Consolidated EBITDA to be greater than,
or equal to, 2.80 to 1.00, as determined as of the last
day of each fiscal quarter for the period of the four
consecutive fiscal quarters ending on such day.";
(j) Section 9.8 shall be amended by deleting the word
"commitment" appearing on line 12 of subsection (a) thereof
and substituting the word "facility" therefor;
(k) Definition of "Active Commitment" appearing in Section
10.1 shall be deleted in its entirety and the following
substituted therefor:
"'Active Commitment' of any Bank means the Commitment of
such Bank.";
(l) Definition of "Inactive Commitment" appearing in Section
10.1 shall be deleted in its entirety and the following
substituted therefor:
"'Inactive Commitment' of any Bank means $0.";
(m) Annex A shall be deleted in its entirety and a new Annex
A in the form of Exhibit A hereto substituted therefor.
Section 3. Effective Date. This Amendment No. 2 shall be
effective as of July 28, 1995 (the "Effective Date") when each of the
following shall have occurred:
(a) the Borrower, the Banks and the Agent shall have
executed and delivered this Amendment No. 2; and
(b) the Borrower shall have paid the amendment fees as
provided by Section 4 hereof; and
(c) each Representation and Warranty shall be true and
correct in all material respects at and as of the Effective Date
after giving effect to this Amendment No. 2.
Section 4. Amendment Fees. On or prior to the Effective
Date, the Borrower shall pay to the Agent for the account of each Bank
amendment fees in the amount of $5,000 per Bank.
Section 5. Representations and Warranties. The Borrower
hereby represents and warrants to the Banks and the Agent that:
(a) this Amendment No. 2 has been duly authorized,
executed and delivered by the Borrower and constitutes a legal,
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valid and binding obligation of the Borrower, enforceable against
the Borrower in accordance with its terms;
(b) the execution, delivery and performance of this
Amendment No. 2 does not require any Governmental Approval; and
(c) no Default or Event of Default has occurred and is
continuing at and as of the Effective Date after giving effect to
this Amendment No. 2.
Section 6. Counterparts. This Amendment No. 2 may be
executed in any number of counterparts, each of which shall be deemed
to be an original, but all such separate counterparts shall together
constitute one and the same instrument.
Section 7. Ratification. Except to the extent hereby
amended, the Credit Agreement is and shall continue to be in full
force and effect and is hereby in all respects confirmed, approved and
ratified.
Section 8. Captions. Section captions in this Amendment No.
2 are included herein for convenience of reference only and shall not
constitute a part of this Amendment No. 2 for any other purpose or in
any way affect the meaning or construction of any provisions of this
Amendment No. 2.
Section 9. Governing Law. This Amendment No. 2 shall be
construed in accordance with and governed by the law of the State of
New York (without giving effect to its choice of law principles).
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to the Credit Agreement to be executed and delivered
by their duly authorized officers as of the day first written above.
LECHTERS, INC.
By ___________________________
Name: John W. Smolak
Title:Vice President and Chief Financial Officer
BANK OF MONTREAL,
as Agent and as a Bank
By ___________________________
Name:Jack Darrow
Title:Director
THE BANK OF NEW YORK (NJ) (formerly
known as THE BANK OF NEW YORK, N.A.)
By ___________________________
Name:Gregory J. Smith
Title:Senior Vice President
CHEMICAL BANK NEW JERSEY, N.A.
By ___________________________
Name:Kathryn T. Murphy
Title:Vice President
-6-
<PAGE>
Exhibit A to Amendment No. 2
ANNEX A
Banks, Lending Offices
and Notice Addresses Commitments
BANK OF MONTREAL $20,000,000
Domestic Lending Office:
Bank of Montreal
430 Park Avenue, 14th Floor
New York, NY 10022
Eurodollar Lending Office:
Bank of Montreal
430 Park Avenue, 14th Floor
New York, NY 10022
Notice Address:
Funding Requests:
Bank of Montreal
430 Park Avenue, 14th Floor
New York, NY 10022
Telecopy No.: (212) 605-1525
Attention: Maggie Gaglin
Other Notices:
Bank of Montreal
430 Park Avenue, 14th Floor
New York, NY 10022
Telecopy No.: (212) 605-1454
Attention: Jack Darrow
<PAGE>
Banks, Lending Offices
and Notice Addresses Commitments
THE BANK OF NEW YORK (NJ) $10,000,000
Domestic Lending Office:
The Bank of New York
New York, New York
For Further Credit to The
Bank of New York (NJ)
Eurodollar Lending Office:
The Bank of New York
New York, New York
For Further Credit to The
Bank of New York (NJ)
Notice Address:
Funding Requests:
The Bank of New York (NJ)
385 Rifle Camp Road, 4th Floor
West Paterson, NJ 07024
Telecopy No.: 201-357-7705
Attention: Dee Gillespie
Other Notices:
The Bank of New York (NJ)
385 Rifle Camp Road, 4th Floor
West Paterson, NJ 07024
Telecopy No.: 201-357-7705
Attention: Linda Mae Coppa
<PAGE>
Banks, Lending Offices
and Notice Addresses Commitments
CHEMICAL BANK NEW $10,000,000
JERSEY, N.A.
Domestic Lending Office:
Chemical Bank New Jersey, N.A.
E. 36 Midland Avenue
Paramus, NJ 07652
Eurodollar Lending Office:
Chemical Bank New Jersey, N.A.
E. 36 Midland Avenue
Paramus, NJ 07652
Notice Address:
Funding Requests:
Chemical Bank New Jersey, N.A.
E. 36 Midland Avenue
Paramus, NJ 07652
Telecopy No.: 201-599-6672
Attention: Catherine Frasco
Other Notices:
Chemical Bank New Jersey, N.A.
E. 36 Midland Avenue
Paramus, NJ 07652
Telecopy No.: 201-599-6672
Attention: Elizabeth A. McNeilly
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial statement.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JAN-27-1996 JAN-27-1996
<PERIOD-END> JUL-29-1995 JUL-29-1995
<CASH> 9,940 0
<SECURITIES> 28,463 0
<RECEIVABLES> 7,108 0
<ALLOWANCES> 0 0
<INVENTORY> 112,143 0
<CURRENT-ASSETS> 167,288 0
<PP&E> 101,320 0
<DEPRECIATION> 3,949 7,768
<TOTAL-ASSETS> 273,222 0
<CURRENT-LIABILITIES> 37,915 0
<BONDS> 57,262 0
<COMMON> 58 0
0 0
0 0
<OTHER-SE> (16) 0
<TOTAL-LIABILITY-AND-EQUITY> 139,792 0
<SALES> 88,671 168,987
<TOTAL-REVENUES> 88,671 168,987
<CGS> 65,926 126,002
<TOTAL-COSTS> 24,626 47,914
<OTHER-EXPENSES> 1,282 2,207
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,818 3,456
<INCOME-PRETAX> (3,163) (7,136)
<INCOME-TAX> (1,297) (2,926)
<INCOME-CONTINUING> (1,866) (4,210)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,866) (4,210)
<EPS-PRIMARY> (0.11) (0.24)
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
AMENDMENT NO. 1
TO
DEFERRED COMPENSATION AGREEMENT
Amendment No. 3, dated June 15, 1995, between LECHTERS, INC. a
New Jersey Corporation (the "Corporation") and Ira S. Rosenberg
("Employee") to Deferred Compensation Agreement, dated September 20,
1991 (the "Agreement").
WHEREAS, the parties desire to amend said Agreement as follows:
1. The Corporation agrees that during the period of the payments
to be made in accordance with Paragraph 3 thereof, the Employee shall
be eligible to participate the Group Life Insurance Plan of the
Corporation, as the same may be amended from time to time ("Plan"), on
the same terms and conditions as officers of the Corporation may
participate in the Plan, including the obligation to contribute to the
cost incurred by the Corporation to provide the Plan benefits. The
right of the Employee to participate in the Plan shall be subject to
the Corporation obtaining the consent of the insurer under the Plan,
and the Corporation agrees to use reasonable efforts to obtain such
consent. In the event, such consent is not obtained, then, the
Corporation shall reimburse the costs incurred by the Employee to
obtain life insurance coverage providing benefits similar to those
provided under the Plan, but the obligation of the Corporation shall
not exceed the cost, less the Employee's contribution, which would
have been incurred by the Corporation had the consent of the Plan
insurer been obtained.
The parties acknowledge that the Plan currently provides for life
1
<PAGE>
insurance coverage in an amount equal to 200% of the annual wage
payable to eligible participants. The parties agree that annual
amount payable by the Corporation to the Employee in accordance with
Paragraph 3 thereof, as amended, shall be deemed the annual wage of
the Employee, and that the obligation of the Corporation with respect
to said life insurance coverage shall terminate at the time the final
payment in accordance with said Paragraph 3 is made.
2. The Corporation agrees for the life of the Employee, that the
Employee shall be eligible to participate the Group Medical and Dental
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the cost incurred by the
Employee to obtain medical and dental insurance coverage providing
benefits similar to those provided under the Plan, but the obligation
of the Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
3. The Corporation agrees for the life of the Employee to
continue to pay the insurance premiums on the split-dollar life
insurance policy of Connecticut Mutual Life Insurance Company, Policy
Number 4024991 on the life of the Employee provided that the
Corporation has the right to receive from the benefits payment
pursuant to such policy, an amount equal to the aggregate premium cost
incurred by the Corporation for the maintenance of the policy.
2
<PAGE>
4. Except as hereby amended, the Agreement is in all respects
approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3
to be executed as of the date first written above.
LECHTERS, INC.
BY: /s/ Donald Jonas
Donald Jonas
Chairman of the Board
/s/ Ira S. Rosenberg
Ira S. Rosenberg
3
<PAGE>
AMENDMENT NO. 3
TO
DEFERRED COMPENSATION AGREEMENT
Amendment No. 3, dated June 15, 1995, between LECHTERS, INC. a
New Jersey Corporation (the "Corporation") and Albert Lechter
("Employee") to Deferred Compensation Agreement, dated December 9,
1987 as amended June 16, 1989 and August 15, 1989 (the "Agreement").
WHEREAS, the parties desire to further amend said Agreement as
follows:
1. In addition to the amount of $100,000 per year payable
beginning on the first day of the first calendar month after the date
of his termination of Employment, in accordance with Paragraph 3
thereof as amended, the Corporation shall at its expense provide the
Employee during the period of said payments with a car allowance of
$800 per month and with the services similar to those currently being
provided to the Employee consisting of a secretary and office, at the
offices of the Corporation presently in Harrrison, New Jersey.
2. The Corporation agrees that during the period of said
payments the Employee shall be eligible to participate the Group Life
Insurance Plan of the Corporation, as the same may be amended from
time to time ("Plan"), on the same terms and conditions as officers of
the Corporation may participate in the Plan, including the obligation
to contribute to the cost incurred by the Corporation to provide the
Plan benefits. The right of the Employee to participate in the Plan
shall be subject to the Corporation obtaining the consent of the
1
<PAGE>
insurer under the Plan, and the Corporation agrees to use reasonable
efforts to obtain such consent. In the event, such consent is not
obtained, then, the Corporation shall reimburse the costs incurred by
the Employee to obtain life insurance coverage providing benefits
similar to those provided under the Plan, but the obligation of the
Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
The parties acknowledge that the Plan currently provides for life
insurance coverage in an amount equal to 200% of the annual wage
payable to eligible participants. The parties agree that annual
amount payable by the Corporation to the Employee in accordance with
Paragraph 3 thereof, as amended, shall be deemed the annual wage of
the Employee, and that the obligation of the Corporation with respect
to said life insurance coverage shall terminate at the time the final
payment in accordance with said Paragraph 3 is made.
3. The Corporation agrees for the life of the Employee, that the
Employee shall be eligible to participate the Group Medical and Dental
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
2
<PAGE>
then, the Corporation shall reimburse the cost incurred by the
Employee to obtain medical and dental insurance coverage providing
benefits similar to those provided under the Plan, but the obligation
of the Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
4. The Corporation agrees for the life of the Employee to
continue to pay the insurance premiums on the split-dollar life
insurance policy of Transamerica Occidental Life Insurance Company,
Policy Number 92314801 on the life of the Employee, provided that the
Corporation has the right to receive from the benefits payment
pursuant to such policy, an amount equal to the aggregate premium cost
incurred by the Corporation for the maintenance of the policy.
5. Except as hereby amended, the Agreement is in all respects
approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3
to be executed as of the date first written above.
LECHTERS, INC.
BY: \S\ Donald Jonas
Donald Jonas
Chairman of the Board
\S\ Albert Lechter
Albert Lechter
3
<PAGE>
AMENDMENT NO. 3
TO
DEFERRED COMPENSATION AGREEMENT
Amendment No. 3, dated June 15, 1995, between LECHTERS, INC. a
New Jersey Corporation (the "Corporation") and Leonard Pfeffer
("Employee") to Deferred Compensation Agreement, dated December 9,
1987 as amended June 16, 1989 and August 15, 1989 (the "Agreement").
WHEREAS, the parties desire to further amend said Agreement as
follows:
1. The Corporation agrees that during the period of the payments
to be made in accordance with Paragraph 3 thereof, as amended, the
Employee shall be eligible to participate the Group Life Insurance
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the costs incurred by the
Employee to obtain life insurance coverage providing benefits similar
to those provided under the Plan, but the obligation of the
1
<PAGE>
Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
The parties acknowledge that the Plan currently provides for life
insurance coverage in an amount equal to 200% of the annual wage
payable to eligible participants. The parties agree that annual
amount payable by the Corporation to the Employee in accordance with
Paragraph 3 thereof, as amended, shall be deemed the annual wage of
the Employee, and that the obligation of the Corporation with respect
to said life insurance coverage shall terminate at the time the final
payment in accordance with said Paragraph 3 is made.
2. The Corporation agrees for the life of the Employee, that the
Employee shall be eligible to participate the Group Medical and Dental
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the cost incurred by the
Employee to obtain medical and dental insurance coverage providing
2
<PAGE>
benefits similar to those provided under the Plan, but the obligation
of the Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
3. The Corporation agrees for the life of the Employee to
continue to pay the insurance premiums on the split-dollar life
insurance policy of Guardian Life Insurance Company, Policy Number
3763692 on the life of the Employee provided that the Corporation has
the right to receive from the benefits payment pursuant to such
policy, an amount equal to the aggregate premium cost incurred by the
Corporation for the maintenance of the policy.
4. Except as hereby amended, the Agreement is in all respects
approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3
to be executed as of the date first written above.
LECHTERS, INC.
BY: /s/ Donald Jonas
Donald Jonas
Chairman of the Board
/s/ Leonard Pfeffer
Leonard Pfeffer
3
<PAGE>
AMENDMENT NO. 3
TO
DEFERRED COMPENSATION AGREEMENT
Amendment No. 3, dated June 15, 1995, between LECHTERS, INC. a
New Jersey Corporation (the "Corporation") and Bernard Nebenzahl
("Employee") to Deferred Compensation Agreement, dated December 9,
1987 as amended June 16, 1989 and August 15, 1989 (the "Agreement").
WHEREAS, the parties desire to further amend said Agreement as
follows:
1. The Corporation agrees that during the period of the payments
to be made in accordance with Paragraph 3 thereof, as amended, the
Employee shall be eligible to participate the Group Life Insurance
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the costs incurred by the
Employee to obtain life insurance coverage providing benefits similar
to those provided under the Plan, but the obligation of the
1
<PAGE>
Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
The parties acknowledge that the Plan currently provides for life
insurance coverage in an amount equal to 200% of the annual wage
payable to eligible participants. The parties agree that annual
amount payable by the Corporation to the Employee in accordance with
Paragraph 3 thereof, as amended, shall be deemed the annual wage of
the Employee, and that the obligation of the Corporation with respect
to said life insurance coverage shall terminate at the time the final
payment in accordance with said Paragraph 3 is made.
2. The Corporation agrees for the life of the Employee, that the
Employee shall be eligible to participate the Group Medical and Dental
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the cost incurred by the
Employee to obtain medical and dental insurance coverage providing
2
<PAGE>
benefits similar to those provided under the Plan, but the obligation
of the Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
3. The Corporation agrees for the life of the Employee to
continue to pay the insurance premiums on the split-dollar life
insurance policy of Connecticut Mutual Life Insurance Company, Policy
Number 4024990A and 4333245 on the life of the Employee provided that
the Corporation has the right to receive from the benefits payment
pursuant to such policy, an amount equal to the aggregate premium cost
incurred by the Corporation for the maintenance of the policy.
4. Except as hereby amended, the Agreement is in all respects
approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3
to be executed as of the date first written above.
LECHTERS, INC.
BY: /S/ Donald Jonas
Donald Jonas
Chairman of the Board
/S/ Bernard Nebenzahl
Bernard Nebenzahl
3
<PAGE>
AMENDMENT NO. 3
TO
DEFERRED COMPENSATION AGREEMENT
Amendment No. 3, dated June 15, 1995, between LECHTERS, INC. a
New Jersey Corporation (the "Corporation") and Donald Jonas
("Employee") to Deferred Compensation Agreement, dated December 9,
1987 as amended June 16, 1989 and August 15, 1989 (the "Agreement").
WHEREAS, the parties desire to further amend said Agreement as
follows:
1. In addition to the amount of $100,000 per year payable
beginning on the first day of the first calendar month after the date
of his termination of Employment, in accordance with Paragraph 3
thereof as amended, the Corporation shall at its expense during the
period of said payments provide the Employee or, in the event of the
death of the Employee, his spouse, with the services similar to those
currently being provided to the Employee consisting of a secretary, an
office at a location of Employee's choice, driver and car or at the
option of the Employee or, in the event of death of the Employee, his
spouse, the cost equivalent of such services.
In the event the Employee or his spouse exercises his option to
receive the cost equivalent of services, effective thirty (30) days
after the exercise of said option, (i) the Corporation's obligation to
provide such services shall terminate, and (ii) the Corporation shall
reimburse the costs incurred by the Employee or his spouse to provide
such services during the year beginning upon the expiration of said
1
<PAGE>
thirty (30) day period. Said year is referred to herein as the "Base
Year", and the costs incurred by the Employee during the Base Year as
the "Base Year Costs." Thereafter, the Corporation shall pay to the
Employee or his spouse in equal monthly installments, in advance, an
amount equal to the Base Year Costs, increased on each anniversary of
the first day of the Base Year by a percentage increase equal to the
percentage increase, if any, in the Consumer Price Index for the
United States as a whole (or, if publication of that Index is
terminated, any substantially equivalent successor thereto) for the
calendar month immediately preceding such anniversary date, as
published by the Bureau of Labor Statistics of the United States
Department of Labor, over such Index at December of the previous year.
The annual amount payable pursuant to paragraph 4 of Agreement
dated December 9, 1987, as amended, shall be deemed to include
payments for the cost equivalent of services pursuant to this
paragraph, except for the purpose of determining the amount of
coverage under the Group Life Insurance Plan of the Corporation.
2. The Corporation agrees that during the period of said
payments the Employee shall be eligible to participate the Group Life
Insurance Plan of the Corporation, as the same may be amended from
time to time ("Plan"), on the same terms and conditions as officers of
the Corporation may participate in the Plan, including the obligation
to contribute to the cost incurred by the Corporation to provide the
Plan benefits. The right of the Employee to participate in the Plan
shall be subject to the Corporation obtaining the consent of the
insurer under the Plan, and the Corporation agrees to use reasonable
2
<PAGE>
efforts to obtain such consent. In the event, such consent is not
obtained, then, the Corporation shall reimburse the costs incurred by
the Employee to obtain life insurance coverage providing benefits
similar to those provided under the Plan, but the obligation of the
Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
The parties acknowledge that the Plan currently provides for life
insurance coverage in an amount equal to 200% of the annual wage
payable to eligible participants. The parties agree that annual
amount payable by the Corporation to the Employee in accordance with
Paragraph 3 thereof, as amended, shall be deemed the annual wage of
the Employee, and that the obligation of the Corporation with respect
to said life insurance coverage shall terminate at the time the final
payment in accordance with said Paragraph 3 is made.
3. The Corporation agrees for the life of the Employee, that the
Employee shall be eligible to participate the Group Medical and Dental
Plan of the Corporation, as the same may be amended from time to time
("Plan"), on the same terms and conditions as officers of the
Corporation may participate in the Plan, including the obligation to
contribute to the cost incurred by the Corporation to provide the Plan
benefits. The right of the Employee to participate in the Plan shall
be subject to the Corporation obtaining the consent of the insurer
under the Plan, and the Corporation agrees to use reasonable efforts
to obtain such consent. In the event, such consent is not obtained,
then, the Corporation shall reimburse the cost incurred by the
3
<PAGE>
Employee to obtain medical and dental insurance coverage providing
benefits similar to those provided under the Plan, but the obligation
of the Corporation shall not exceed the cost, less the Employee's
contribution, which would have been incurred by the Corporation had
the consent of the Plan insurer been obtained.
4. The Corporation agrees for the lives of Barbara and Donald
Jonas to continue to pay the insurance premiums on the split-dollar
life insurance polices of Prudential Life Insurance Company, Policy
Numbers 79,699,276; 79,713,181 and 79,713,191 on the lives of Donald
Jonas and Barbara Jonas provided that the Corporation has the right to
receive from the benefits payment pursuant to such policies, an amount
equal to the aggregate premium cost incurred by the Corporation for
the maintenance of the policies.
5. Except as hereby amended, the Agreement is in all respects
approved, ratified and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3
to be executed as of the date first written above.
LECHTERS, INC.
BY: /s/ Steen Kanter
Vice Chairman of the Board
/s/ Donald Jonas
Donald Jonas
4
<PAGE>
LEASE MODIFICATION AGREEMENT
THIS AGREEMENT, made as of the 19th day of June 1995 by and
between LESTER M. ENTIN ASSOCIATES, a New Jersey partnership having
offices at 1033 Clifton Avenue, P.O. Box 2189, Clifton, New Jersey
07015 ("Landlord"), and LECHTERS, INC., a New Jersey corporation
having offices at One Cape May Street, Harrison, New Jersey 07029
("Tenant").
W I T N E S S E T H:
R E C I T A L S
A. On December 23, 1991, Landlord and Tenant entered into an
Agreement of Lease (the "Lease") wherein Landlord leased to Tenant,
and Tenant leased from Landlord, approximately 490,116 square feet of
space (the "Premises") in the building (the "Building") located at One
Cape May Street in the Township of Harrison, Hudson County, New
Jersey.
B. Tenant wishes to lease from Landlord, and Landlord wishes to
lease to Tenant, approximately 43,040 square feet of the Building
shown on Schedule "A" hereto (the "Additional Space") presently leased
by Tri-Chem, Inc. ("Tri-Chem"), effective as of July 1, 1995 (the
"Effective Date").
NOW, THEREFORE, for and in consideration of the terms and
conditions contained hereinbelow, and intending to be legally bound
thereby, Landlord and Tenant hereby agree as follows:
1. The Recitals set forth above are hereby incorporated by
reference as if fully set forth in the main body of this Agreement.
2. As of the Effective Date, the Lease shall be deemed amended
as follows:
(a) The Premises shall consist of approximately 533,156
square feet of space in the Building as shown on
Schedule "A" hereto, inclusive of the Additional Space.
(b) Tenant shall continue to pay Basic Rent for the 490,116
square feet constituting the Premises prior to the
Effective Date on the terms and conditions of Section 2
of the Lease. Tenant shall pay Basic Rent for the
Additional Space in accordance with the following
schedule:
Period Monthly Basic Rent
07/1/95-07/31/95 $16,140.00
08/1/95-08/31/95 -0-
09/1/95-11/30/95 $16,140.00
12/1/95-01/31/96 $16,624.20
02/1/96-01/31/98 $17,457.53
02/1/98-05/31/98 $16,624.20
06/1/98-11/30/00 $17,621.65
12/1/00-05/31/03 $18,678.95
06/1/03-11/30/05 $19,799.69
12/1/05-01/31/07 $20,987.67
First Renewal Term
02/1/07-05/31/08 $20,987.67
06/1/08-11/30/10 $22,246.93
12/1/10-01/31/12 $23,581.74
Second Renewal Term
02/1/12-05/31/13 $23,581.74
06/1/13-11/30/15 $24,996.65
12/1/15-01/31/17 $26,496.45
Third Renewal Term
02/1/17-05/31/18 $26,496.45
06/1/18-11/30/20 $28,086.23
12/1/20-01/31/22 $29,771.41
-1-
<PAGE>
Notwithstanding the foregoing, the Basic Rent for the
Additional Space for July 1995 will only be due and
payable as long as Landlord completes the work
described on Schedule "B" hereto by July 15, 1995,
failing which Tenant's obligation to pay Basic Rent for
the Additional Space for July 1995 shall be deemed
waived.
(c) Tenant's Proportionate Share as set forth in Section 3
of the Lease shall be increased from 78.26% to 85.13%.
(d) Tenant's monthly estimated payments on account of its
Proportionate Share of annual Operating Costs as set
forth in Section 4 of the Lease shall be increased from
$76,625.54 to $82,254.46.
(e) Tenant's percentage of heating costs as set forth in
Section 14(a) of the Lease shall be increased from
37.46% to 56.93%, which latter percentage is determined
from the ratio of the square footage of the Premises
which will be heated (125,831) to the square footage of
the Building which is heated (221,018).
(f) Section 55 of the Lease shall be amended to provide
that during the option period(s), Basic Rent for the
490,116 square feet constituting the Premises prior to
the Effective Date shall be payable in accordance with
the terms and conditions of Section 2 of the Lease, and
Basic Rent for the Additional Space shall be payable in
accordance with the terms and conditions of Paragraph
2(b) of this Agreement.
3. Landlord and Tenant acknowledge and agree that the terms and
conditions of Section 57 of the Lease, respecting Tenant's right to
lease adjacent space presently leased by Tri-Chem as it becomes
vacant, does not apply to the Additional Space, inasmuch as Landlord
and Tenant have agreed to lease the Additional Space on the terms and
conditions contained in this Agreement.
4. Promptly upon the vacating of the Additional Space by Tri-
Chem, Landlord shall commence the work described on Schedule "B"
hereto, at its sole cost and expense, and shall thereafter proceed to
complete same in a reasonably diligent manner, with work to continue
uninterrupted (subject to force majeure) during normal business hours.
Under no circumstances shall the completion of such work be deemed a
condition to any of Tenant's obligations and responsibilities under
the Lease, as modified herein, to include but not be limited to the
obligation to pay Rent for the Additional Space, except as
specifically provided to the contrary in the last sentence of Section
2(b) of this Agreement.
5. Except as specifically modified herein, the Lease is hereby
confirmed and ratified in its entirety.
6. Capitalized terms not defined herein shall have the same
meaning as provided for in the Lease.
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<PAGE>
7. This is a negotiated Agreement, and shall not be construed
against Landlord by virtue of its having been prepared by Landlord's
attorneys.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease
Modification Agreement as of the day and year first above written.
WITNESS: LESTER M. ENTIN ASSOCIATES,
Landlord
\S\ Suzanne Mazeuka By:\s\ Joseph Waters
Joseph Waters, Partner
ATTEST: LECHTERS, INC., Tenant
\s\ Ira S. Rosenberg By:\s\ L. David Davis
Ira S. Rosenberg, Secretary L. David Davis,
Vice President-Administration
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<PAGE>
W J M ARCHITECT
William J. Martin
96 Kinderkamack Road
Suite 305
Westwood, NJ 07675
(201) 666-5576
Blueprint of OVERALL BUILDING PLAN. Building is existing - 629,572
SF.
Lechters Tenant Space Existing - 490,116 SF.
Lechters Tenant Space to be Added - 43,040 SF.
Trichem Tenant Space - 96,416 SF.
Prepared for:
ENTIN ASSOC.
Mr. Joseph Waters
1033 Clifton Avenue
Clifton, New Jersey
Date: 5-12-95
Building Tenants
LECHTERS, INC.
TRICHEM, INC.
1 Cape May Street
Harrison, New Jersey
SCHEDULE "A"
<PAGE>
RENOVATION OF NEW LECHTER'S WAREHOUSE
(1). CARPENTRY:
Build a deck high sheetrock alcove for fork-lift access with
4 ft. plywood base for security (metal/studs, track,
sheetrock, tape, spackle, screws, shots, and stabilizers)
Make a 3' x 6'8" opening from cafeteria to "low bay"
receiving area with masonry ramp.
Make two (2) 12' x 12' openings in sheetrock to existing
Lechters space.
(2). MASONRY:
Seal all masonry openings as shown on plan by William J.
Martin including sealing of all pipe penetrations through
masonry file wall, openings to be closed:
min doors (5) 10 x 10 openings (7)
(3). ELECTRIC:
Install new 400 watts metal halide fixtures as per existing
warehouse layout.
Remove existing 8' fluorescent fixtures.
Wire four (4) new exhaust fans and one (1) new air supply
unit.
Power to existing light circuits to be re-wired and placed
on Lechters meter (sub-metered).
New switches for warehouse to be installed at employee
entrance (near boiler room).
(4). ARCHITECTURALS:
All plans, specifications and code review for construction
permits and approvals for issuance of a Certificate of
Occupancy (see enclosed contract).
(5). ACM REMOVAL
SCHEDULE "B"
