FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended January 30, 1994 Commission File No. 33-25621
KASH N' KARRY FOOD STORES, INC.
(Exact name of registrant as specified in charter)
Delaware 95-4161591
(State of incorporation) (IRS employer identification number)
6422 Harney Road, Tampa, Florida 33610
(Address of registrant's principal executive offices)
(813) 621-0200
(Registrant's telephone number, including area code)
The registrant 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 has been subject to such filing requirements for the past 90 days.
As of March 11, 1994, there were 2,819,589 shares outstanding of the
registrant's common stock, $0.01 par value.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
BALANCE SHEETS
(Dollar Amounts in Thousands, Except Per Share Amounts)
ASSETS
January 30, August 1,
1994 1993
----------- ---------
Current assets: (Unaudited)
Cash and cash equivalents $ 5,000 $ 2,145
Accounts receivable 10,043 10,888
Inventories 85,952 95,385
Prepaid expenses and other current assets 12,693 13,151
--------- ---------
Total current assets 113,688 121,569
Property and equipment, at cost, less
accumulated depreciation 165,518 164,937
Favorable lease interests, less accumulated
amortization of $12,700 and $7,506 13,155 18,349
Deferred financing costs, less accumulated
amortization of $21,171 and $19,622 13,282 15,153
Excess of cost over net assets acquired, less
accumulated amortization of $14,872 and $13,457 98,174 99,589
Other assets 4,337 3,611
--------- ---------
Total assets $408,154 $423,208
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 26,951 $ 22,628
Accounts payable 44,213 42,561
Accrued payroll and benefits 5,343 4,492
Accrued interest 15,920 15,080
Taxes, other than income 8,338 5,708
Other accrued expenses 13,290 11,963
--------- ---------
Total current liabilities 114,055 102,432
Long-term debt, less current obligations 326,772 329,262
Other long-term liabilities 12,718 10,023
Series B Cumulative Preferred Stock of $.01 par
value and a stated value of $100 a share.
Authorized 50,000 shares; 38,750 shares outstanding. 3,875 3,875
Series C Convertible Preferred Stock of $.01 par value.
Authorized 100,000 shares; 77,500 shares outstanding. 775 775
Stockholders' deficit:
Common Stock of $.01 par value. Authorized 4,000,000
shares; 2,819,589 shares outstanding. 28 28
Capital in excess of par value 77,695 77,695
Accumulated deficit (127,727) (100,845)
Less cost of treasury stock - 2,437 shares (37) (37)
--------- ---------
Total stockholders' deficit (50,041) (23,159)
--------- ---------
Total liabilities and stockholders' deficit $408,154 $423,208
========= =========
See accompanying notes to condensed financial statements.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
Thirteen Weeks Ended Thirteen Weeks Ended
January 30, 1994 January 31, 1993
-------------------- --------------------
Sales $278,166 $286,858
Cost of sales 221,706 226,859
--------- ---------
Gross profit 56,460 59,999
Selling, general and
administrative expenses 45,300 44,305
Depreciation and amortization 6,220 5,380
--------- ---------
Operating income 4,940 10,314
Interest expense 11,372 10,959
--------- ---------
Net loss (6,432) (645)
Undeclared dividends on Preferred Stock 116 116
--------- ---------
Loss attributable to Common Stock $ (6,548) $ (761)
========= =========
Twenty-Six Weeks Twenty-Six Weeks
Ended January 30, 1994 Ended January 31, 1993
---------------------- ----------------------
Sales $534,801 $537,773
Cost of sales 425,915 426,842
--------- ---------
Gross profit 108,886 110,931
Selling, general and
administrative expenses 90,128 85,223
Depreciation and amortization 12,111 10,658
Store closing and other costs 11,016 --
--------- ---------
Operating income (loss) (4,369) 15,050
Interest expense 22,513 21,887
--------- ---------
Net loss (26,882) (6,837)
Undeclared dividends on Preferred Stock 232 232
--------- ---------
Loss attributable to Common Stock $(27,114) $ (7,069)
========= =========
See accompanying notes to condensed financial statements.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Twenty-Six Twenty-Six
Weeks Ended Weeks Ended
January 30, 1994 January 31, 1993
---------------- ----------------
Net cash flow from operating activities:
Net loss $(26,882) $ (6,837)
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation and amortization, excluding
deferred financing costs 12,111 10,658
Store closing and other costs 11,016 --
Amortization of deferred financing costs 1,549 1,416
(Increase) decrease in assets:
Accounts receivable 660 (2,978)
Inventories 9,433 (11,576)
Prepaid expenses and other assets (454) (514)
Increase (decrease) in liabilities:
Accounts payable 1,652 6,645
Accrued expenses and other liabilities 2,697 (1,253)
--------- ---------
Net cash provided (used) by
operating activities 11,782 (4,439)
--------- ---------
Cash used by investing activities:
Additions to property and equipment (6,194) (7,104)
Leased/financed asset additions (4,412) (17,117)
Proceeds from sale of property and equipment 359 71
--------- ---------
Net cash used by investing
activities (10,247) (24,150)
--------- ---------
Cash provided by financing activities:
Borrowings under revolving loan facility 15,700 36,200
Additions to obligations under capital leases
and notes payable 799 8,217
Repayments on revolving loan facility (9,100) (12,300)
Repayments on term loan facility (2,925) (860)
Repayments of other long-term liabilities (2,642) (2,179)
Other financing activities (512) (548)
--------- ---------
Net cash provided by financing
activities 1,320 28,530
--------- ---------
Net increase (decrease) in cash and
cash equivalents 2,855 (59)
Cash and cash equivalents at beginning of period 2,145 4,479
--------- ---------
Cash and cash equivalents at end of period $ 5,000 $ 4,420
========= =========
See accompanying notes to condensed financial statements.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
1. The condensed financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all of
the information and note disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with
the fiscal 1993 Form 10-K filed by the Company. The accompanying condensed
financial statements have not been audited by independent accountants in
accordance with generally accepted auditing standards, but in the opinion of
management such condensed financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to summarize
fairly the Company's financial position and results of operations. The
results of operations for the twenty-six weeks may not be indicative of the
results that may be expected for the fiscal year ending July 31, 1994.
2. Inventories consist of merchandise held for resale and are stated at the
lower of cost or market; cost is determined using average cost, which
approximates the first-in, first-out (FIFO) method.
3. The Company has reported a pretax loss for all fiscal years since
October 1988 and, consequently, no income tax expense has been reported.
Financial Accounting Standards Board Statement 109 (SFAS 109) was adopted by
the Company as of August 2, 1993. There was no cumulative effect of this
change in accounting for income taxes determined as of August 2, 1993. Prior
years' financial statements have not been restated to apply the provisions of
SFAS 109. The effect on prior years' financial statements of retroactively
implementing SFAS 109 would be immaterial.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at January
30, 1994 are presented below:
Deferred tax assets:
Inventory, principally due to reserves and
additional costs inventoried for tax purposes
pursuant to the Tax Reform Act of 1986 $ 1,100
Insurance and other reserves 5,500
Net operating loss carryforward 30,900
General business credit carryforward 1,100
Charitable contributions carryforward 2,900
Other, net 2,900
---------
Total gross deferred tax assets 44,400
Less valuation allowance (44,400)
---------
Net deferred tax assets $ --
=========
<PAGE>
KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
Upon adoption of SFAS 109, effective August 2, 1993, the Company
determined a valuation allowance requirement in the amount of $36,200. The
valuation allowance as of January 30, 1994 has been determined to be
$44,400, resulting in a change in the valuation allowance in the amount of
$8,200.
4. During the first quarter, the Company recorded a non-recurring charge of
$11,016 which reflects expenses associated with a program of closing twelve
underperforming stores, reducing administrative staff, and expensing costs
associated with unsuccessful financing activities.
5. Cumulative undeclared dividends on Preferred Stock are $2,331 from
October 12, 1988 through January 30, 1994.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
This analysis should be read in conjunction with the condensed financial
statements.
Results of Operations
Operating cash flow (earnings before interest, taxes, depreciation and
amortization and store closing and other costs) for the quarter ended January
30, 1994 was $11.2 million versus $15.7 million for the quarter ended January
31, 1993. Operating cash flow for the twenty-six weeks ended January 30,
1994 was $18.8 million compared to $25.7 million for the twenty-six weeks
ended January 31, 1993. The decreases in operating cash flow were attributed
to the factors indicated below.
Sales.
Thirteen Weeks Twenty-Six Weeks
1994 1993 1994 1993
------ ------ ------ ------
Sales (in millions) $278.2 $286.9 $534.8 $537.8
Change in same store sales (0.40)% (2.96)%
Average sales per
store week (in thousands) $209 $193 $190 $184
Sales have been favorably impacted by additional advertising and
promotional activities and the continued strong performance of new stores and
recently acquired and remodeled stores. Additionally, the Company
experienced the fewest number of new store openings by traditional
competitors in over five years. However, sales growth continues to be
adversely affected by the sluggish economy, low overall price inflation and
by pricing and promotional changes, particularly in grocery, initiated by
certain competitors over the last year. In addition, the Company chose to
close seventeen underperforming food stores over the last twelve months as a
part of an overall strategic consolidation and upgrade of its store network.
The Company was able to mitigate the sales impact of these store closings by
transferring a portion of the sales from the closed stores to operating Kash
n' Karry's. The improving sales trend has continued into the third quarter
as reflected by slightly positive same store sales results for the last
thirteen weeks of operations ended March 13, 1994.
Gross Profit. The Company had gross profit of $56.5 million, or 20.3%
as a percentage of sales, for the thirteen weeks ended January 30, 1994 and
gross profit of $60.0 million, or 20.9% of sales, for the thirteen weeks
ended January 31, 1993. The decrease in gross profit is attributable to the
impact of lower sales volumes (approximately $1.8 million), lower grocery
margins (approximately $1.1 million) and reduced investment in forward buy
inventory (approximately $1.5 million), offset by improved efficiencies in
distribution and product preparation and handling costs. Gross profit was
20.4% of sales for the twenty-six weeks of operations ended January 30, 1994
and 20.6% of sales for the twenty-six weeks of operations ended January 31,
1993. The decrease in gross profit for the twenty-six week period is
primarily attributable to the factors indicated above.
<PAGE>
KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Selling, General and Administrative Expenses. The Company had selling,
general and administrative expenses of $45.3 million, or 16.3% as a
percentage of sales, for the thirteen weeks ended January 30, 1994 and $44.3
million, or 15.4% as a percentage of sales, for the thirteen weeks ended
January 31, 1993. The increase in selling, general and administrative
expenses was attributable to an increase in advertising expenses of
approximately $1.0 million and an increase in repairs and maintenance
expenses offset by lower utilities expense. For the twenty-six weeks ended
January 30, 1994, selling, general and administrative expenses were $90.1
million, or 16.9% of sales, compared to $85.2 million, or 15.8% of sales, for
the twenty-six weeks ended January 31, 1993. The increase of $4.9 million is
primarily the result of increased occupancy costs and other expenses related
to stores opened, acquired or remodeled, and an increase in insurance
reserves and advertising expenses, offset by reduced operating costs due to
store closings during the last twelve months. The increase as a percentage
of sales is attributable to operating costs of stores open in both periods
declining at a lesser rate than the rate of sales decline in those stores.
Depreciation and Amortization. The Company's depreciation and
amortization expenses were $6.2 million for the quarter ended January 30,
1994 compared to $5.4 million for the quarter ended January 31, 1993. For
the twenty-six weeks ended January 30, 1994 depreciation and amortization
was $12.1 million compared to $10.7 million for the twenty-six weeks ended
January 31, 1993. The increase in depreciation and amortization is primarily
attributable to new stores and major remodels.
Store Closing and Other Costs. As discussed in Footnote 4 to the
condensed financial statements, during its first fiscal quarter the Company
recorded a non-recurring charge of $11.0 million. This charge included $1.9
million of costs associated with unsuccessful financing activities, $4.2
million of favorable lease interests written off in connection with the
closing of twelve underperforming stores, $4.0 million representing an
adjustment to the expected lease liability on closed stores, net of sublease
income, and $.9 million of other store closing and related expenses.
Interest Expense. The Company's net interest expense for the twenty-six
weeks ended January 30, 1994 was $22.5 million and $21.9 million for the
twenty-six weeks ended January 31, 1993. The increase in interest expense
was primarily attributable to higher average outstanding working capital and
capital improvement loan balances and increases in capital leases offset
slightly by lower interest rates and decreased interest hedge costs.
Income Taxes. As discussed in Footnote 3 to the condensed financial
statements, Financial Accounting Standards Board Statement No. 109 (SFAS 109)
was adopted by the Company as of August 2, 1993; however, the adoption of
SFAS 109 had no impact on the financial statements of the Company.
<PAGE>
Financial Condition
The Company continues to explore alternatives for refinancing
approximately $25 million of new store costs (land, building and equipment)
advanced through its revolving credit facility. Until such refinancing is
completed, availability under the working capital line of the Company's
revolving credit facility has been reduced. The Company's sales increase
from November through April with the traditional holiday season and the
influx of winter residents and visitors and, consequently, inventories
normally increase substantially during the second quarter to meet this
demand. This year, because of its reduced working capital availability, the
Company has had to fund the seasonal inventory build-up by divesting of its
profitable investment in forward buy inventories. Management believes that
this has cost the Company approximately $1.5 million in the second quarter
and will cost the Company between $2.0 million and $2.5 million each quarter
until its investment in forward buy inventory can be restored. Additionally,
the Company has focused on improving its cash position by managing working
capital and reducing capital expenditures, and approximately $6.3 million of
cash was generated as a result of closing thirteen underperforming stores
throughout the quarter. Inventories typically increase approximately $10
million from fiscal year end through the end of the second quarter. However,
as a result of the abovementioned reduction of forward buy inventories and
store closings, inventories were actually reduced by $9.4 million during this
period without reducing inventory in-stock conditions in the stores.
The Company's Bank Credit Agreement provides for a revolving credit
facility with individual sublimits of $30 million for working capital loans,
$25 million for letters of credit and $20 million for capital improvement
loans, with a maximum of $60 million outstanding under the total facility at
any one time. As of January 31, 1994 the Company had $20.7 million borrowed
under the working capital line, $13.7 million in capital improvement loans,
and $16.7 million of letters of credit outstanding. As previously disclosed,
the Company has retained Morgan Stanley & Co., Incorporated ("Morgan
Stanley") to assist in evaluating a number of strategic options for the
Company. In this regard, Morgan Stanley has had discussions with several
industry participants, a subset of which has expressed an interest in further
considering an equity investment in the Company. As these discussions are of
a preliminary nature, there can be no assurance as to the timing, terms or
ultimate completion of any transaction, but it is the Company's intent to
complete any ensuing process prior to the end of its current fiscal year.
The Company believes that it has always maintained excellent
relationships with its suppliers and that a key to this has been its openness
in informing the trade of its operating performance and financial condition
on an ongoing basis. Management of the Company has willingly met with a
committee of credit directors representing the trade, and believes that it
has been responsive in answering questions and addressing concerns regarding
the Company's financial condition. Management is confident that credit terms
will remain substantially consistent with past practices during the period of
time it takes to complete the Morgan Stanley engagement; however, if credit
with its major suppliers is curtailed to any material extent, the Company's
liquidity would decrease.
<PAGE>
The Company's capital expenditures totalled $10.6 million for the
twenty-six weeks ended January 30, 1994, over half of which was funded
through the capital improvement line and through capitalized store equipment
leases, and the remainder through funds generated from operations and
borrowings under the working capital line. During this period the Company
completed one major remodel of an existing store and continued construction
of two new stores begun last summer. One of these stores opened in early
February and the second is expected to open in mid-May. The Company's
capital expenditure program for the remainder of fiscal 1994 is subject to
various factors including, but not limited to, availability of capital,
restrictions under various of the Company's debt instruments, and working
capital requirements. The Company has previously reported that it will not
commence any further new store construction pending the results of Morgan
Stanley's engagement, but it is committed to continue its maintenance capital
program. In the near term, if the Company were to substantially reduce or
postpone its new store program, there would be no substantial impact on
current operations and it is likely that more cash would be available for
debt servicing. In the long term, if these programs were substantially
reduced, in the Company's opinion, its operating business and ultimately its
cash flow would be adversely impacted.
In addition to capital expenditures, the Company has certain fixed
obligations during the year, including scheduled principal payments on its
long-term debt and cash interest. Although operating cash flow for the year
is expected to be significantly below historical levels for the reasons
explained above under "Results of Operations," the Company believes that its
management of working capital will provide the liquidity to meet its fixed
obligations for the current fiscal year.
Due to the non-recurring charges incurred during the first quarter as
well as its operating performance, the Company breached several financial
covenants under its Bank Credit Agreement that were subsequently waived by
the banks. Certain of these covenants require revision in order that the
Company be able to comply on an ongoing basis. It is anticipated that
appropriate revisions will be negotiated in connection with the results of
the Morgan Stanley engagement.
The Company has entered into a series of interest rate hedging
transactions to reduce its exposure to increases in short-term interest rates
on the majority of its floating rate debt. These transactions include swaps
and collars and extend through August 1994. The Company estimates the cost
to liquidate these contacts to be approximately $2.2 million at January 30,
1994.
Effects of Inflation
The Company's primary costs, inventory and labor, are affected by a
number of factors that are beyond its control, including availability and
price of merchandise, the competitive climate and general and regional
economic conditions. As is typical of the supermarket industry, the Company
has generally been able to maintain margins by adjusting its retail prices,
but competitive conditions may from time to time render it unable to do so
while maintaining its market share.
<PAGE>
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:
Exhibit No. Description
- ----------- -----------
4.1 Indenture entered into between the Company and First
Florida Bank, N.A., relating to the $105 million 14%
Subordinated Debentures due February 1, 2001, dated as of
February 8, 1989 (previously filed as Exhibit 4.2(a) to
the Company's Annual Report on Form 10-K for the period
ended July 30, 1989, which exhibit is hereby incorporated
by reference).
4.2 Piggyback Registration Rights Agreement between the
Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated dated February 8, 1989 (previously filed as
Exhibit 4.5 to the Company's Annual Report on Form 10-K
for the period ended July 30, 1989, which exhibit is
hereby incorporated by reference).
4.3 Indenture entered into between the Company and NCNB
National Bank of Florida, as Trustee, relating to the $85
million Senior Floating Rate Notes due August 2, 1996,
dated as of September 14, 1989 (previously filed as
Exhibit 4.6(a) to the Company's Annual Report on Form
10-K for the period ended July 30, 1989, which exhibit is
hereby incorporated by reference).
4.4(a) Indenture entered into between the Company and AmeriTrust
Texas, N.A., as Trustee, relating to the $50 Million
Senior Notes due 1999 dated as of January 29, 1992
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
February 2, 1992, which exhibit is hereby incorporated by
reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
4.4(b) Registration Rights Agreement dated as of January 29,
1992, between the Company and the purchasers of the
Senior Notes due 1999 (previously filed as Exhibit 28.1
to the Company's Quarterly Report on Form 10-Q for the
period ended February 2, 1992, which exhibit is hereby
incorporated by reference).
4.4(c) Indenture Amendment No. 1 entered into between the
Company and AmeriTrust Texas, N.A., as Trustee, relating
to the Series B Senior Notes due 1999 dated as of July 2,
1992 (previously filed as Exhibit 4.7(c) to the Company's
Amendment No. 3 to Registration Statement on Form S-1,
Registration No. 33-47324, which exhibit is hereby
incorporated by reference).
10.1(a) Amended and Restated Credit Agreement dated as of
September 14, 1989, among the Company, certain lenders,
and Security Pacific National Bank, as Agent (previously
filed as Exhibit 10.4(g) to the Company's Annual Report
on Form 10-K for the period ended July 30, 1989, which
exhibit is hereby incorporated by reference).
10.1(a)(i) Agreement to Amend and Restate the Credit Agreement,
dated as of October 12, 1988 among the Company, certain
senior lenders, and Security Pacific National Bank, as
Agent, dated as of September 14, 1989, among the Company,
certain senior lenders and Security Pacific National
Bank, as Agent (previously filed as Exhibit 10.1(a)(i) to
the Company's Registration Statement on Form S-1,
Registration No. 33-65070, which exhibit is hereby
incorporated by reference).
10.1(a)(ii) Assignment and Acceptance Agreement among the Company,
Security Pacific National Bank, and California Federal
Bank, dated as of September 14, 1989 (previously filed as
Exhibit 10.1(a)(ii) to the Company's Registration
Statement on Form S-1, Registration No. 33-65070, which
exhibit is hereby incorporated by reference).
10.1(b) First Amendment to Amended and Restated Credit Agreement
and Limited Waiver among the Company, certain lenders,
and Security Pacific National Bank, as Agent, dated
December 28, 1989 (previously filed as Exhibit 10.4(h) to
the Company's Annual Report on Form 10-K for the period
ended July 29, 1990, which exhibit is hereby incorporated
by reference).
10.1(c) Second Amendment to Amended and Restated Credit Agreement
among the Company, certain lenders, and Security Pacific
National Bank, as Agent, dated as of July 10, 1990
(previously filed as Exhibit 10.4(i) to the Company's
Annual Report on Form 10-K for the period ended July 29,
1990, which exhibit is hereby incorporated by reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
10.1(d) Third Amendment to Amended and Restated Credit Agreement
dated as of November 27, 1990, among the Company, certain
lenders, and Security Pacific National Bank, as Agent
(previously filed as Exhibit 28.1 to the Company's
Quarterly Report on Form 10-Q for the period ended April
28, 1991, which exhibit is hereby incorporated by
reference).
10.1(e) Fourth Amendment to Amended and Restated Credit Agreement
and Limited Waiver among the Company, certain senior
lenders, and Security Pacific National Bank, as Agent,
dated as of November 25, 1991 (previously filed as
Exhibit 28.1 to the Company's Quarterly Report on Form
10-Q for the period ended November 3, 1991, which exhibit
is hereby incorporated by reference).
10.1(f) Fifth Amendment to Amended and Restated Credit Agreement
and Limited Waiver and Instruction dated as of January
29, 1992, among the Company, certain lenders, and
Security Pacific National Bank (previously filed as
Exhibit 28.2 to the Company's Quarterly Report on Form
10-Q for the period ended February 2, 1992, which exhibit
is hereby incorporated by reference).
10.1(g) Sixth Amendment to Credit Agreement dated as of January
4, 1993, among the Company, certain lenders, and Bank of
America National Trust and Savings Association, as
successor by merger to Security Pacific National Bank, as
Agent (previously filed as Exhibit 10.1(g) to the
Company's Registration Statement on Form S-1,
Registration No. 33-65070, which exhibit is hereby
incorporated by reference).
10.1(h) Limited Waiver dated as of July 1, 1993, among the
Company, certain lenders, and Bank of America National
Trust and Savings Association, as successor by merger to
Security Pacific National Bank, as Agent (previously
filed as Exhibit 10.1(i) to the Company's Registration
Statement on Form S-1, Registration No. 33-65070, which
exhibit is hereby incorporated by reference).
10.1(i) Limited Waiver dated as of December 15, 1993, among the
Company, certain lenders, and Bank of America National
Trust and Savings Association, as successor by merger to
Security Pacific National Bank, as Agent.
10.2 Form of Indemnity Agreement between the Company and its
directors and certain of its officers (previously filed
as Exhibit 10.3 to the Company's Registration Statement
on Form S-1, Registration No. 33-25621, which exhibit is
hereby incorporated by reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
10.3(a) Restated 1988 Management Stock Option Plan (effective for
the Plan Years beginning on and after July 30, 1990)
(previously filed as Exhibit 10.3(a) to the Company's
Annual Report on Form 10-K for the period ended July 28,
1991, which exhibit is hereby incorporated by reference).
10.3(b) Form of Management Stock Option Agreement to be entered
into between the Company and certain key employees with
respect to options granted for Plan Years beginning on
and after July 30, 1990 (previously filed as Exhibit
10.3(b) to the Company's Annual Report on Form 10-K for
the period ended July 28, 1991, which exhibit is hereby
incorporated by reference).
10.3(c) Form of Amendment to the Management Stock Option
Agreement under the 1988 Restated Management Stock Option
Plan dated as of June 19, 1992, entered into between the
Company and the holder of each outstanding option granted
under the Restated 1988 Management Stock Option Plan
(previously filed as Exhibit 10.3(c) to the Company's
Annual Report on Form 10-K for the period ended August 2,
1992, which exhibit is hereby incorporated by reference).
10.3(d) Form of Second Amendment to Stock Option Agreement dated
December 1988 under Restated 1988 Management Stock Option
Plan, dated as of December 9, 1993, entered into by and
between the Company and the holder of each outstanding
option granted under the Restated 1988 Management Stock
Option Plan for the Plan Year ended July 31, 1989.
10.3(e) Form of Restricted Stock Agreement to be entered into
between the Company and certain key employees with
respect to stock issued pursuant to options granted under
the Restated 1988 Management Stock Option Plan
(previously filed as Exhibit 10.3(d) to the Company's
Registration Statement on Form S-1, Registration No.
33-65070, which exhibit is hereby incorporated by
reference).
10.4(a) 1991 Management Stock Option Plan (previously filed as
Exhibit 28.2(a) to the Company's Quarterly Report on Form
10-Q for the period ended November 3, 1991, which exhibit
is hereby incorporated by reference).
10.4(b) Form of Stock Option Agreement entered into between the
Company and certain key employees with respect to the
options granted pursuant to the 1991 Management Stock
Option Plan (previously filed as Exhibit 28.2(b) to the
Company's Quarterly Report on Form 10-Q for the period
ended November 3, 1991, which exhibit is hereby
incorporated by reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
10.4(c) Form of Restricted Stock Agreement to be entered into
among the Company, Green Equity Investors, L.P. ("GEI")
and certain key employees with respect to stock issued
pursuant to options granted pursuant to the 1991
Management Stock Option Plan (previously filed as Exhibit
28.2(c) to the Company's Quarterly Report on Form 10-Q
for the period ended November 3, 1991, which exhibit is
hereby incorporated by reference).
10.5 Amended and Restated Kash n' Karry Retirement Estates and
Trust dated October 14, 1993, effective as of January 1,
1992 (previously filed as Exhibit 10.5 to the Company's
Annual Report on Form 10-K for the period ended August 1,
1993, which exhibit is hereby incorporated by reference).
10.6 Key Employee Stock Purchase Plan (previously filed as
Exhibit 10.6 to the Company's Registration Statement on
Form S-1, Registration No. 33-25621, which exhibit is
hereby incorporated by reference).
10.7 Deferred Compensation Agreement dated October 12, 1988,
between the Company and Ronald J. Floto (previously filed
as Exhibit 10.7 to the Company's Registration Statement
on Form S-1, Registration No. 33-25621, which exhibit is
hereby incorporated by reference).
10.8 Trademark License Agreement dated as of October 12, 1988,
between the Company and Lucky Stores, Inc. (previously
filed as Exhibit 10.11 to the Company's Registration
Statement on Form S-1, Registration No. 33-25621, which
exhibit is hereby incorporated by reference).
10.9 Warrant Agreement dated as of October 12, 1988, between
the Company and Lucky Stores, Inc. (previously filed as
Exhibit 10.15 to the Company's Registration Statement on
Form S-1, Registration No. 33-25621, which exhibit is
hereby incorporated by reference).
10.10 Management Bonus Plan (previously filed as Exhibit 10.16
to the Company's Registration Statement on Form S-1,
Registration No. 33-25621, which exhibit is hereby
incorporated by reference).
10.11(a) Mortgage, Fixture Filing, Security Agreement and
Assignment of Rents between the Company, as Mortgagor,
and Sun Life Insurance Co. of America ("Sun Life"), dated
as of September 7, 1989 (previously filed as Exhibit
28.1(a) to the Company's Quarterly Report on Form 10-Q
for the period ended October 29, 1989, which exhibit is
hereby incorporated by reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
10.11(b) Assignment of Rents and Leases and Other Income between
the Company and Sun Life dated as of September 7, 1989
(previously filed as Exhibit 28.1(b) to the Company's
Quarterly Report on Form 10-Q for the period ended
October 29, 1989, which exhibit is hereby incorporated by
reference).
10.11(c) Fixture Financing Statement between the Company and Sun
Life filed with the Clerk of Hillsborough County,
Florida, on September 11, 1989 (previously filed as
Exhibit 28.1(c) to the Company's Quarterly Report on Form
10-Q for the period ended October 29, 1989, which exhibit
is hereby incorporated by reference).
10.11(d) Partial Release of Mortgage executed by Security Pacific
National Bank as of September 7, 1989 (previously filed
as Exhibit 28.1(d) to the Company's Quarterly Report on
Form 10-Q for the period ended October 29, 1989, which
exhibit is hereby incorporated by reference).
10.12(a) Mortgage between the Company, as Mortgagor, and Ausa Life
Insurance Company ("Ausa"), as Mortgagee, dated as of
November 21, 1989 (previously filed as Exhibit 28.2(a) to
the Company's Quarterly Report on Form 10-Q for the
period ended October 29, 1989, which exhibit is hereby
incorporated by reference).
10.12(b) Conditional Assignment of Leases, Rents and Contracts
between the Company and Ausa dated as of November 21,
1989 (previously filed as Exhibit 28.2(b) to the
Company's Quarterly Report on Form 10-Q for the period
ended October 29, 1989, which exhibit is hereby
incorporated by reference).
10.12(c) Financing Statement between the Company and Ausa filed
with the Clerk of Hillsborough County, Florida, on
November 22, 1989 (previously filed as Exhibit 28.2(c) to
the Company's Quarterly Report on Form 10-Q for the
period ended October 29, 1989, which exhibit is hereby
incorporated by reference).
10.13(a) Form of Deferred Compensation Agreement dated as of
December 21, 1989, between the Company and key employees
and a select group of management (KESP) (previously filed
as Exhibit 28.3(a) to the Company's Quarterly Report on
Form 10-Q for the period ended January 28, 1990, which
exhibit is hereby incorporated by reference).
10.13(b) Form of Deferred Compensation Agreement dated as of
December 21, 1989, between the Company and Ronald J.
Floto (KESP) (previously filed as Exhibit 28.3(b) to the
Company's Quarterly Report on Form 10-Q for the period
ended January 28, 1990, which exhibit is hereby
incorporated by reference).
<PAGE>
Exhibit No. Description
- ----------- -----------
10.13(c) Master First Amendment to Deferred Compensation
Agreements, dated as of November 11, 1991, between the
Company and the key employees party thereto (previously
filed as Exhibit 28.3 to the Company's Quarterly Report
on Form 10-Q for the period ended November 3, 1991, which
exhibit is hereby incorporated by reference).
10.13(d) Master Second Amendment to Deferred Compensation
Agreements, dated as of December 30, 1993, between the
Company and the key employees party thereto.
10.14(a) Stockholders Agreement dated as of November 26, 1991,
among The Fulcrum III Limited Partnership and The Second
Fulcrum III Limited Partnership (collectively, the
"Fulcrum Partnership"), GEI and the Company (previously
filed as Exhibit 28.2 to the Company's Current Report on
Form 8-K dated November 26, 1991, which exhibit is hereby
incorporated by reference).
10.14(b) Stock Purchase Agreement dated as of November 15, 1991,
among the Company, GEI and the Fulcrum Partnerships
(previously filed as Exhibit 10.15(b) to the Company's
Registration Statement on Form S-1, Registration No.
33-65070, which exhibit is hereby incorporated by
reference).
10.15 Stockholders Agreement dated as of June 19, 1992, between
the Company, GEI and certain employee-stockholders
(previously filed as Exhibit 10.17 to the Company's
Annual Report on Form 10-K for the period ended August 2,
1992, which exhibit is hereby incorporated by reference).
10.16 Stockholders Agreement dated as of May 3, 1993, between
the Company, GEI and certain employee-stockholders
(previously filed as Exhibit 10.17 to the Company's
Registration Statement on Form S-1, Registration No. 33-
65070, which exhibit is hereby incorporated by
reference).
10.17 Leave Agreement dated as of November 30, 1992, between
the Company and Thomas A. Whipple (previously filed as
Exhibit 10.18 to the Company's Registration Statement on
Form S-1, Registration No. 33-65070, which exhibit is
hereby incorporated by reference).
10.18 Ronald J. Floto Severance Pay Agreement dated as of
February 9, 1994, by and between the Company and Ronald
J. Floto.
10.19 Form of Senior Management Severance Pay Agreement dated
as of February 9, 1994, by and between the Company and
the key employees party thereto.
<PAGE>
(B) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter ended January
30, 1994.
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.
KASH N' KARRY FOOD STORES, INC.
Date: March 16, 1994 /s/ Raymond P. Springer
-------------------------------
Raymond P. Springer
Executive Vice President,
Administration
Date: March 16, 1994 /s/ Richard D. Coleman
-------------------------------
Richard D. Coleman
Vice President, Controller
and Secretary
LIMITED WAIVER
THIS LIMITED WAIVER, (this "Waiver"), dated as of December
15, 1993, relates to that certain Credit Agreement dated as of
October 12, 1988, and amended and restated as of September 14,
1989 (as further amended through the date hereof, the "Credit
Agreement"), among Kash n' Karry Food Stores, Inc. (the
"Borrower"), the Senior Lenders referred to therein and Bank of
America National Trust & Savings Association (as successor in
interest to Security Pacific National Bank) as agent (in such
capacity, the "Agent") for the Senior Lenders. Unless otherwise
defined herein, terms defined in the Credit Agreement are used
herein with the same meanings ascribed to them therein. In
additions to the covenants and agreements made in the Credit
Agreement, Borrower, the Senior Lenders and the Agent further
covenant and agree as follows:
1. Limited Waiver. Subject to the terms and
conditions set forth herein, the Requisite Senior Lenders hereby
agree to waive, from the Effective Date (as defined below) to the
Expiration Date (as defined below), the provisions of:
(a) Section 9.01 of the Credit Agreement in
respect (and solely in respect) of Borrower's failure to
comply with the Minimum Net Worth amount set forth therein
for the first quarter of Fiscal Year 1994;
(b) Section 9.03 of the Credit Agreement in
respect (and solely in respect) of Borrower's failure to
comply with the Fixed Charge Coverage Ratio set forth
therein for the first quarter of Fiscal Year 1994; and
(c) Section 9.04 of the Credit Agreement in
respect (and solely in respect) of Borrower's failure to
comply with the Interest Coverage Ratio set forth therein
for the first quarter of Fiscal Year 1994.
In addition to the foregoing, and for the duration of this
Waiver, none of the Senior Lenders shall be obligated to make a
Fixed Rate Loan.
2. Effective Date. This Waiver shall become
effective upon the date (the "Effective Date") on or before
December 15, 1993, on which the Agent has received each of the
following:
(a) Counterparts hereof signed by Borrower, the
Requisite Senior Lenders and the Agent; and
(b) Payment in the amount of $50,000 in cash in
same day funds to be shared pro rata among the Senior
Lenders.
<PAGE>
3. Termination Date. This Waiver shall expire and
cease to be of any force or effect automatically (without any
action by the Agent or any Senior Lender) at 5:00 p.m., Los
Angeles time, on the date (the "Termination Date") which is the
earlier of (a) March 31, 1994 and (b) the earliest date on which
any of the conditions set forth below fails to be satisfied:
(i) No Potential Event of Default shall have
occurred (other than those expressly waived by this Waiver);
(ii) No event shall have occurred and be
continuing (for at least two Business Days after notice
thereof from Agent to Borrower) which materially adversely
affects the business, condition, properties or prospects of
Borrower and any Subsidiary of Borrower, taken as a whole;
and
(iii) Borrower shall have executed and delivered,
on or before December 22, 1993, a restricted account
agreement with respect to each of Borrower's existing
deposit accounts in form and substance acceptable to the
Requisite Senior Lenders and Barnett Bank of Tampa (in its
capacity as the depositary institution with which such
deposit accounts are maintained).
4. Representations and Warranties. The Borrower
hereby represents and warrants that, as of the date hereof, and
after giving effect to this Waiver:
(a) The execution, delivery and performance by
Borrower of this Waiver has been duly authorized by all
necessary corporate action;
(b) No Event of Default or Potential Event of
Default (other than those expressly waived by this Waiver)
has occurred or is continuing; and
(c) The representations and warranties of Borrower
contained in Section 5.03 of the Credit Agreement and any
other Loan Document (other than representations and
warranties which expressly speak as of a different date) are
true, correct and complete in all material respects, except
that such representations and warranties need not be true,
correct and complete to the extent that changes in the facts
and conditions on which such representations and warranties
are based are required or permitted under the Credit
Agreement.
<PAGE>
5. Limitation on Waiver. This Waiver shall be
limited solely to the matters expressly set forth herein and
shall not (i) constitute a waiver or amendment of any other term
or condition of the Credit Agreement, or of any instruments or
agreements referred to therein, (ii) prejudice any right or
rights which the Agent or any of the Senior Lenders may now have
or may have in the future under or in connection with the Credit
Agreement or any instruments or agreements referred to therein,
or (iii) require the Senior Lenders to agree to similar waiver or
grant a similar waiver for a similar transaction or on a future
occasion. Except to the extent specifically waived herein, the
provisions of the Credit Agreement shall not be amended,
modified, impaired or otherwise affected hereby, and the Credit
Agreement and all of the Obligations are hereby confirmed in full
force and effect.
6. Miscellaneous. This Waiver is a Loan Document and,
together with the Credit Agreement and the other Loan Documents,
comprises the complete and integrated agreement of the parties on
the subject matter hereof. The headings herein are for
convenience of reference only and shall not alter or otherwise
affect the meaning hereof.
7. Governing Law. This Amendment shall be governed
by, and shall be construed and enforced in accordance with, the
laws of the State of New York.
8. Counterparts. This Amendment may be executed in
any number of counterparts which, when taken together, shall be
deemed to constitute one and the same instrument.
WITNESS the due execution hereof as of the date first
above written.
KASH N' KARRY FOOD STORES, INC.,
as Borrower
By: /s/ R. P. Springer
Title: Executive Vice President
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION (as successor
in interest to SECURITY PACIFIC
NATIONAL BANK), as Agent
By: /s/ Laura Knight
Title: Vice President
<PAGE>
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION (as successor
in interest to SECURITY PACIFIC
NATIONAL BANK), as a Senior Lender
By:
Title: Vice President
WELLS FARGO BANK, N.A.
By: /s/ [illegible]
Title:
BARNETT BANK OF TAMPA (as successor
in interest to FIRST FLORIDA BANK,
N.A.)
By: /s/ Emily D. Waterman
Title: Vice President
NATIONSBANK OF FLORIDA, N.A.
By:
Title:
4/c:/lwh/K6036.LW
KASN N' KARRY FOOD STORES, INC.
SECOND AMENDMENT TO STOCK OPTION AGREEMENT
DATED DECEMBER 1988
UNDER RESTATED 1988 MANAGEMENT STOCK OPTION PLAN
THIS SECOND AMENDMENT to that certain Stock Option Agreement
dated on or about December 1988 between Kash n' Karry Food
Stores, Inc. (the "Company"), and the person executing this
Second Amendment as optionee (the "Optionee"), as amended by that
certain First Amendment dated as of June 19, 1992 (as so amended,
the "Option Agreement"), is dated as of December 9, 1993.
In consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Amendment. Appendix A to the Option Agreement is
hereby amended to extend the Expiration Date to December 27,
1994.
2. Miscellaneous. This Second Amendment is hereby
incorporated into and made a part of the Option Agreement as if
fully set forth therein. Except as modified herein, the Option
Agreement remains in full force and effect. To the extent of any
conflict between the provisions of this Second Amendment and the
provisions of the Option Agreement, the provisions of this Second
Amendment shall govern.
IN WITNESS WHEREOF, the Company has caused this Second
Amendment to be executed on its behalf by its officers, and the
Optionee has hereunto set his or her hand as of the day and year
first above written.
KASH n' KARRY FOOD STORES, INC.
By: /s/ Ronald J. Floto
Ronald J. Floto, President
and Chief Executive Officer
OPTIONEE
Signature
Print Name
13/stockopt.ion/K6053-a.93E
MASTER SECOND AMENDMENT TO THE
DEFERRED COMPENSATION AGREEMENTS
This Master Second Amendment to the Deferred Compensation
Agreements is entered into this 30th day of December, 1993, by
Kash n' Karry Food Stores, Inc.
BACKGROUND
In December of 1989, Kash n' Karry Food Stores, Inc., a
Delaware corporation (the "Company"), entered into those certain
Deferred Compensation Agreements (collectively referred to as the
"Agreements" and singularly referred to as "Agreement") with
certain of its key employees (collectively referred to as "Key
Employees" and singularly referred to as "Key Employee"). Under
subparagraph 7.2 of each Agreement the Company reserved the right
to amend the Plan with or without consent of the Employee. The
Company in order to reward the past and future loyalty and
valuable efforts of its Key Employees, and pursuant to such
reserved amendment power, hereby amends the Agreements as set
forth below.
TERMS
1. Paragraph 1.24 of the Agreement is hereby amended and
restated in its entirety as follows:
1.24 "Vested" means that portion (as determined
in accordance with the schedule set forth below) of the
Company's Matching Allocations, and Income allocated
thereto, allocated for the benefit of the Key Employee
under the Plan, as set forth in the Key Employee's
Account, that will be distributed to the Key Employee
upon the occurrence of a Distribution Event:
Years of Service Percentage
Less than 3 0%
3 but less than 4 40%
4 but less than 5 80%
5 or more 100%
Notwithstanding any contrary provision of this
Agreement, upon the Key Employee's Termination of
Employment by reason of the Key Employee's death or
Disability, upon a Change in Control, or upon the
termination of this Agreement, the Key Employee shall
be 100% vested in the aggregate amount of the Company's
Matching Allocation, and Income allocated thereto,
allocated for the benefit of the Key Employee under the
Plan, as set forth in the Key Employee's Account.
<PAGE>
Notwithstanding any contrary provision of this
Agreement, the Key Employee shall, at all times, be
100% vested in the aggregate amount of the Elective
Deferred Compensation, and Income allocated thereto,
allocated for the benefit of the Key Employee under the
Plan, as set forth in the Key Employee's Account.
2. A new paragraph 16 is hereby added to the Agreement and
shall read in its entirety as follows:
16. Limited Withdrawal Right Subject to
Substantial Limitation. Notwithstanding any contrary
provision of this Agreement, prior to the occurrence of
a Distribution Event the Key Employee shall have the
right to make an election to receive a distribution
equal to ninety percent (90%) of the Key Employee's
Benefit. The election shall be effective, and the
amount of such Benefit shall be determined, on the date
that the election is received by the Plan Administrator
(the "Withdrawal Election Date"). The other ten
percent (10%) of the Key Employee's Benefit shall be
forfeited and lost by the Key Employee. In addition,
the portion of the Key Employee's Matching Allocation,
and the Income allocable thereto, that is not Vested on
the Withdrawal Election Date shall also be forfeited
and lost by the Key Employee. If the Key Employee
elects to receive a distribution under this paragraph
16, then the Key Employee shall not be eligible to
again participate in the Plan until the beginning of
the first Plan Year that follows the one year
anniversary of the Withdrawal Election Date. The Key
Employee shall make an election to receive a
distribution under this paragraph 16 by delivering a
written statement signed and dated by the Key Employee
to the Plan Administrator. The Company shall pay the
ninety percent amount (90%) of the Key Employee's
Benefit, less all deductions required by law, to the
Key Employee not less than sixty (60) days after the
Withdrawal Election Date by either hand delivery to the
Key Employee at the Company's office or delivery in
accordance with paragraph 15.5 of the Agreement.
3. Unless otherwise provided under this Amendment, the
capitalized terms used herein shall have the meanings ascribed to
them under the Agreement.
4. Except as hereinabove amended, the Company does hereby
republish and affirm all provisions of the Agreements.
<PAGE>
IN WITNESS WHEREOF, the Company has executed this
Master Second Amendment on this 30th day of December, 1993.
ATTEST: KASH N' KARRY FOOD STORES,
INC.
/S/ Richard D. Coleman By: /S/ Ronald J. Floto
Secretary
Its: CEO
4/c:/mdm/pp/K6727-3nd.AMD
RONALD J. FLOTO
SEVERANCE PAY AGREEMENT
This Severance Pay Agreement (the "Agreement") is entered
into this 9th day of February, 1994, by and between KASH N' KARRY
FOOD STORES, INC., a Delaware corporation (the "Company"), and
the person executing this Agreement as key employee (the "Key
Employee"). To induce the Key Employee to remain in the employ
of the Company, to reward the Key Employee's continued loyalty
and valuable efforts, and to provide security to the Key Employee
in the event of a change in control of the Company, and in
consideration of their mutual covenants and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Key Employee agree as
follows:
1. Definitions.
As used in this Agreement and unless the context
otherwise plainly requires, the terms defined in this paragraph
shall have the meanings ascribed to them and shall include the
plural as well as the singular number.
1.1 "Agreement" means this Severance Pay Agreement, as
originally executed and as from time to time amended or
supplemented.
1.2 "Annual Compensation" means the total amounts paid
or projected to be paid by the Company to the Key Employee
(determined without regard to this Plan) for services rendered to
the Company during the Applicable Plan Year of the Company,
including, but not limited to, base salary and target bonuses;
but excluding (a) any amount that is not includable in the Key
Employee's gross income by reason of sections 125, 132,
402(a)(8), 402(h), or 403(b) of the Internal Revenue Code; (b)
any short term or long term disability payment whether paid by
the Company or any third party under a program sponsored by the
Company; and (c) any automobile allowance paid by the Company.
In determining Annual Compensation, the target bonus means the
target bonus payable to the Key Employee for the Applicable Plan
Year under the Company's Management Incentive Plan (or any
successor Plan) computed as if the Company and the Key Employee
achieve 100% of their targeted goals for the Applicable Plan
Year. Provided, further, if the Key Employee becomes entitled to
a Benefit under this Agreement prior to the Company's
determination of target bonus goals for the Applicable Plan Year,
then the Key Employee's and the Company's target bonus goals for
the Company's preceding fiscal year will be deemed still in
effect for the Applicable Plan Year, and the Key Employee's
target bonus, for purposes of this Agreement, will be computed as
if the Company and the Key Employee achieved 100% of the
preceding fiscal year's goals, notwithstanding the Company's and
the Key Employee's actual performance in the preceding year.
<PAGE>
1.3 "Applicable Period" means the period beginning 183
days prior to a Change in Control and ending 730 days after a
Change in Control.
1.4 "Applicable Plan Year" means the Plan Year in
which occurs the Involuntary Termination of employment, or the
termination of the Plan, as applicable, whichever results in the
Key Employee's entitlement to the Benefit under Paragraph 3.1.
1.5 "Beneficiary" means the Person or Persons
designated by the Key Employee in Schedule A to this Agreement to
receive the remaining unpaid Benefit, if any, payable by reason
of the Key Employee's death after the date of the Key Employee's
entitlement to the Benefit, but before payment of the Benefit.
The Key Employee may change the designated Beneficiary at any
time and from time to time, without the consent of any previous
Beneficiary, by executing a new Schedule A and delivering it to
the Plan Administrator prior to the Key Employee's death. The
last Beneficiary designated by the Key Employee in a Schedule A
duly executed by the Key Employee and timely delivered to the
Plan Administrator shall receive the remaining Benefit. If no
Beneficiary is properly designated by the Key Employee in
accordance with the provisions of this subparagraph 1.5, then the
Key Employee's estate shall be deemed the Beneficiary.
1.6 "Benefit" means an amount equal to twice the Key
Employee's Annual Compensation.
1.7 "Change in Control" means the date that any of the
following events first occurs:
(a) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (hereafter referred to as the "Exchange Act")),
other than (i) Green Equity Investors, L. P. ("GEI"),
or The Fulcrum III Limited Partnership or The Second
Fulcrum III Limited Partnership (collectively referred
to as the "Fulcrum Partnerships"), or (ii) any Person,
including, but not limited to, the partners of GEI or
either Fulcrum Partnership, to whom GEI or either
Fulcrum Partnership is required to transfer any of its
securities as determined in accordance with its
respective partnership agreement), becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of
the combined voting power of the Company's then
outstanding securities in any transaction or
transactions other than by reason of an initial public
offering by the Company of voting securities (or
securities convertible into, or exchangeable for,
voting securities or any other instrument that grants
rights to acquire voting securities);
<PAGE>
(b) individuals who constitute the Company's
Board of Directors as of the date that this Agreement
is executed by the parties (hereafter referred to as
the "Incumbent Board") cease for any reason to
constitute at least two-thirds thereof; provided,
however, any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by
a vote of at least two-thirds of the directors
comprising the Incumbent Board shall be, for purposes
of this subparagraph 1.7(b), considered as though such
individual were a member of the Incumbent Board;
provided, however, that any decrease in the number of
Directors on the Incumbent Board, or any resignation or
removal of a member of the Incumbent Board will not be
deemed a Change in Control if approved by a vote of at
least two-thirds of the Directors of the Incumbent
Board; provided, further, the Incumbent Board will be
deemed to be reconstituted for purposes of this
subparagraph 1.7(b) each time a two-thirds vote
approves a change;
(c) the merger, consolidation, share
exchange, or other reorganization of the Company, with
or into one or more entities, as a result of which less
than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting entity are, or
are to be, owned by former holders of voting securities
of the Company as determined immediately before such
event;
(d) the sale of all or substantially all of
the Company's business, or assets, or both, to a Person
that is not a Subsidiary of the Company; or
(e) approval by the Company's shareholders
or Board of Directors of an agreement the consummation
of which would result in the occurrence of any event
described under subparagraphs (a) through (d),
inclusive, of this subparagraph 1.7.
1.8 "Company" means Kash n' Karry Food Stores, Inc., a
Delaware corporation, and any Successor Company.
1.9 "For Cause" means if (a) the Key Employee is
convicted of a criminal violation involving fraud or dishonesty
with respect to the Company or Successor Company; (b) the Key
Employee commits an act of gross dishonesty or intentional
wrongdoing that results in a substantial economic harm, including
any contingent liability or loss, to the Company or Successor
Company; (c) the Key Employee dies; or (d) the Key Employee is
absent without leave from work for any reason not considered by
the Company's senior management as Company business or is unable
to perform a majority of the Key Employee's duties for a
continuous period of six (6) months.
<PAGE>
1.10 "Internal Revenue Code" means the Internal
Revenue Code of 1986, as in effect on the date that this
Agreement is executed by the parties.
1.11 "Involuntarily Terminated" or "Involuntary
Termination" means the Company's or Successor Company's
termination of the Key Employee's employment for any reason other
than For Cause or if the Key Employee voluntarily terminates
employment with the Company immediately following a deemed
termination (as hereafter defined). For purposes of this
subparagraph 1.11, a deemed termination occurs if:
(a) There is a significant diminution in the
scope of the Key Employee's authority;
(b) The Key Employee is assigned duties
materially different from the Key Employee's duties as of the
date of this Agreement;
(c) There is a more than 10% reduction in
the Key Employee's base salary; provided, however, a more than
10% reduction in the Key Employee's base salary will not be
deemed a termination if the percentage reduction is part of a
uniformly applied percentage salary reduction affecting all
senior management, including the Chief Executive Officer of the
Company; or,
(d) The Key Employee is required to
relocate his day-to-day place of business more than fifty (50)
miles from the Key Employee's current residence in order to
continue employment, and the Company or Successor Company fails
to pay or reimburse promptly the Key Employee for all reasonable
costs incurred or actual economic losses sustained by the Key
Employee as a result of such relocation (and for this purpose the
failure to pay or reimburse promptly any Key Employee for any
expenses or losses arising from a relocation incurred during the
Applicable Period shall also be deemed to be an Involuntary
Termination that occurs within the Applicable Period).
Notwithstanding anything in this paragraph 1.11 to the contrary,
the events described above in subparagraphs (a) through (d) will
not be deemed a termination of employment unless and until the
Key Employee objects to the event, and the Key Employee will have
up to 365 days after the occurrence of the event in which to note
his objection in writing, and if such objection in writing is
made, then the termination will be deemed to have occurred as of
the date of receipt of the objection by the Company.
1.12 "Key Employee" means the individual who signs this
Agreement, who is a highly compensated employee or a member of a
select management group of the Company, and who has been selected
by the Company's chief executive officer to be eligible for the
Benefit provided by the Plan.
<PAGE>
1.13 "Person" means one or more of the individuals or
entities set forth in section 7701(a)(1) of the Internal Revenue
Code.
1.14 "Plan" means this Severance Pay Agreement.
1.15 "Plan Administrator" means the Company, unless the
Company designates a different person as Plan Administrator.
1.16 "Plan Year" means the fiscal year of the Company,
as it may change from time to time. Currently, the Company's
fiscal year period ends on the Sunday nearest July 31 of each
year. If the Company changes its fiscal year, and that change
results in a Plan Year of less than 52 weeks, then the Plan Year
referred to in this Agreement shall mean the last preceding
fiscal year of the Company containing at least 52 weeks.
1.17 "Subsidiary" means any corporation or other entity
a majority or more of whose outstanding voting stock or voting
power is beneficially owned directly or indirectly by the
Company.
1.18 "Successor Company" means after a Change in
Control any Person that owns all or a substantial portion of the
Company's business or assets, and any Person that has an
ownership interest in the Company.
2. Employment. Unless otherwise agreed by the Company,
the Key Employee agrees to devote his full time and attention to
the business and affairs of the Company and to use his best
efforts to provide satisfactory services to the Company.
3. Benefit.
3.1 Entitlement to Benefit. If, during the Applicable
Period, the Key Employee's employment with the Company or
Successor Company is Involuntarily Terminated, or the Plan is
terminated by the Company or Successor Company, then the Benefit
shall accrue and shall be paid by the Company (or the Successor
Company, as applicable) to the Key Employee or to the Key
Employee's Beneficiary, as the case may be, in accordance with
the terms of Paragraph 3.2. If the Key Employee's entitlement to
a Benefit does not accrue during the Applicable Period, then this
Agreement shall terminate upon the expiration of the Applicable
Period.
3.2 Payment of Benefit. The Benefit amount, if any,
less all deductions required by law, shall be paid by the Company
(or the Successor Company, as applicable) to the Key Employee or
Beneficiary, as the case may be, in a single lump sum payment not
later than seven (7) days after the later of the date of the Key
Employee's Involuntary Termination, or the date of the
termination of the Agreement, as applicable, and payment shall,
<PAGE>
in the discretion of the Company (or Successor Company), either
be made to the Key Employee or Beneficiary, as applicable, by
hand delivery at the office of the Company or delivery in
accordance with the provisions of subparagraph 11.5 of this
Agreement. Notwithstanding any contrary provisions of this
Agreement, the Benefit accrued shall not be paid until the Key
Employee terminates employment with the Company or Successor
Company, as applicable.
4. Termination or Amendment of Agreement.
4.1 Termination of Agreement. This Agreement shall
terminate upon the date that any of the following events first
occurs:
(a) cessation of the Company's business;
(b) approval by the Company's shareholders or
directors to dissolve or liquidate the Company;
(c) upon the date that the Company breaches any
obligation imposed on it under this Agreement (including, but not
limited to, adopting an amendment in violation of subparagraph
4.2 of this Agreement) or under any other deferred compensation
agreement between the Company and the Key Employee, including,
but not limited to, failing to pay all or any portion of any
benefits required to be paid to the Key Employee under this
Agreement, or any other deferred compensation agreement with the
Key Employee, but only if such employee first delivers written
notice by certified or registered mail of such breach to the
Company pursuant to subparagraph 11.5, and the Company fails to
cure such breach during the period that terminates twenty (20)
days after the date such notice is delivered to the Company; or
(d) the decision of the Company to terminate the
Plan at any time, with or without cause; or,
(e) the failure of any Successor Company to
assume expressly the obligations of this Agreement.
Notwithstanding the foregoing, this Agreement shall remain
in full force and effect and shall survive any termination until
the Key Employee's entire Benefit, if any, accrued under
subparagraph 3.1 of this Agreement as of the date that causes the
Agreement's termination, less all deductions required by law, is
distributed to the Key Employee in accordance with the provisions
of subparagraphs 3.1 and 3.2 of this Agreement.
4.2 Amendment of Agreement. Except as otherwise
provided under this Agreement, the Company may terminate, amend
or supplement this Agreement, at any time prior to the beginning
of the Applicable Period with or without the consent of the Key
Employee. The Company shall deliver a copy of the amendment to
<PAGE>
the Key Employee. Provided, however, notwithstanding the
foregoing, during the Applicable Period, the Company shall not
amend this Agreement to: (a) reduce the amount of, or alter the
time, method, or form of distributing, the Benefit payable
pursuant to this Agreement determined as of the date immediately
prior to the date of such amendment; (b) shorten the Applicable
Period; or (c) limit the circumstances under which a Change in
Control may occur or a Key Employee may be entitled to the
Benefit payable pursuant to this Agreement.
5. Funding. The Plan shall be "unfunded" for purposes of
federal income taxation and for purposes of the Employee
Retirement Income Security Act of 1974, as amended, as that term
is interpreted, from time to time, for such purposes; provided,
however, the Company may obtain life insurance, disability
insurance, or both, to informally fund its obligations hereunder,
and the Company shall be the owner and beneficiary of the policy
or policies. The Key Employee shall submit to medical
examinations, supply information, and execute documents as may be
required by the insurance company or companies. Neither the Key
Employee, nor the Plan, shall be deemed to have any right, title,
or interest in or to any specific assets of the Company,
including any insurance policies or the proceeds therefrom, and
any such policies shall not in any way be considered to be
security for the performance of the obligations under this
Agreement. Nothing contained in this Agreement and no action
taken pursuant to its provisions shall create or be construed to
create a trust of any kind or a fiduciary relationship between
the Company and the Key Employee or the Beneficiary. Any funds
that may be invested to meet the provisions of this Agreement
shall continue for all purposes to be a part of the general funds
of the Company. To the extent any person acquires a right to
receive payments from the Company under this Agreement, that
right will be no more secure than the right of an general
unsecured creditor of the Company. The Benefit payable under
this Agreement, if the conditions of Paragraph 3.1 are met,
constitutes a mere promise by the Company to make payments in the
future.
6. Non-Assignability. The Key Employee or Beneficiary
shall not have any right to commute, encumber, transfer, convey,
or dispose of the right to the Benefit payable under this
Agreement. The Benefit and the right to it are not subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Key Employee or Beneficiary. Except to the
extent contrary to applicable law, the Benefit under this
Agreement is not transferable by operation of law if the Key
Employee or Beneficiary becomes insolvent or bankrupt. Any
attempt by the Key Employee or Beneficiary to commute, encumber,
transfer, convey, or dispose of the right to the Benefit payable
under this Agreement, shall be void and ineffectual.
<PAGE>
7. Participation in Other Plans. Nothing contained in
this Agreement shall be construed to alter, abridge, or affect
the rights and privileges of the Key Employee to participate in
and be covered by any employee plans that the Company now has or
may hereafter adopt. Any payment under this Plan shall be
independent of, and in addition to, those payable under any other
plan or agreement that may be in effect with respect to the Key
Employee.
8. Employment Rights. This Agreement shall not be deemed
to constitute a contract of employment between the Company and
the Key Employee and shall create no right of the Key Employee to
continue in the Company's employ, nor shall this Agreement
restrict the right of the Company to discharge the Key Employee
or to terminate the Key Employee's employment.
9. Plan Administration.
9.1 Plan Administrator. This Agreement and the Plan
shall be administered by the Plan Administrator. The Plan
Administrator shall make all determinations as to the right of
the Key Employee or the Beneficiary, as applicable, to receive
the Benefit provided by this Agreement.
9.2 Claims Procedure. If a Benefit under this Agree-
ment is not paid to the Key Employee or the Beneficiary, as
applicable, and such person feels entitled to it, such person
shall make a claim in writing to the Plan Administrator. If the
claim is denied, in whole or in part, the Plan Administrator
shall inform the claimant in writing within 45 days setting forth
the reasons for denial in layman's terms, with specific reference
to the provisions of this Agreement upon which the denial is
based, and with a description of the review procedures set forth
in subparagraph 9.3.
9.3 Review Procedure. If a claim for the Benefit
under this Agreement is denied, the claimant may, within 60 days
after the denial, submit to the Plan Administrator, in writing,
such information that will, in the claimant's opinion, support
the claimant's right to the Benefit. If the Plan Administrator,
after reviewing the information submitted by the claimant,
determines that the claimant is not entitled to the Benefit
claimed, the Plan Administrator shall afford the claimant or his
representative a reasonable opportunity to appear personally
before the Plan Administrator, to submit oral or written
comments, and to review any documents pertinent to the Plan
Administrator's decision. The Plan Administrator shall render
its final decision, in writing, within 60 days after the
appearance, with the specific reasons therefor.
10. Expenses. All costs and expenses of administering the
Plan shall be paid by the Company.
<PAGE>
11. Miscellaneous.
11.1 Binding Effect. This Agreement shall be binding
on the legal representatives, successors, heirs, and assignees of
the Company and the Key Employee; provided, further, unless the
context clearly provides otherwise, any reference to, or duty or
obligation imposed on, the Company shall also be deemed to refer
to, and be the binding duty and obligation of, the Successor
Company.
11.2 Governing Law. This Agreement has been negotiated
and prepared in the State of Florida, and the validity,
construction, and enforcement of this Agreement shall be governed
by, and construed in accordance with, the laws of Florida
(excluding its choice of law provisions if such laws would result
in the application of laws of a jurisdiction other than Florida).
Each party consents and agrees that Tampa, Hillsborough County,
Florida, shall be the proper, exclusive, and convenient venue for
any legal proceeding in federal or state court relating to this
Agreement, and each party to this Agreement waives any defense,
whether asserted by motion or by pleading, that Tampa,
Hillsborough County, Florida, is an improper or inconvenient
venue.
11.3 Entire Agreement. This instrument contains the
final, complete, and exclusive expression of the parties' under-
standing and agreement concerning the transactions contemplated
by this Agreement and supersedes any prior or contemporaneous
agreement or representation, oral or written, by either of them.
Any vagueness or ambiguity in the meaning of this Agreement shall
be interpreted in a manner most favorable to the Key Employee.
11.4 Descriptive Headings. The titles preceding the
text of the paragraphs and subparagraphs of this Agreement are
inserted solely for convenience of reference and shall neither
constitute a part of this Agreement nor affect its meaning,
interpretation, or effect.
11.5 Notices. Any notice, communication, or payment of
Benefit required or permitted to be sent by either party under
this Agreement shall be made in writing and shall be deemed
delivered when presented by hand delivery or when deposited in a
United States postal service office or letter box for mailing by
first class mail or certified mail, return receipt requested
(whether or not the return receipt is subsequently received),
postage prepaid and addressed to the appropriate party as fol-
lows:
If to the Company:
Executive Vice President-Administration
Kash n' Karry Food Stores, Inc.
P.O. Box 11675
Tampa, Florida 33680
<PAGE>
If to the Key Employee:
The address set forth in Schedule A
or at such other addresses as either party may designate in
writing to the other party.
11.6 Gender. Throughout this Agreement, except where
the context otherwise requires, the masculine gender shall be
deemed to include the feminine and the neuter and the singular
number shall be deemed to include the plural and vice-versa.
11.7 Attorneys' Fees. If any suit or action shall be
instituted to enforce or to interpret this Agreement, the
prevailing party shall be entitled to recover from the non-
prevailing party all costs, and reasonable attorneys' fees,
expended as part of such suit, action, or appeal thereof.
IN WITNESS WHEREOF, the Company and the Key Employee have
executed this Agreement this 9th day of February, 1994.
ATTEST: KASH N' KARRY FOOD STORES, INC.
/s/ R.P. Springer By: /s/ Ronald J. Floto
Executive Vice President Its: CEO
(Corporate Seal)
"COMPANY"
WITNESSES:
/s/ Brenda L. Barrow /s/ Ronald J. Floto
/s/ Robin Jackman
"Key Employee"
4/c:/mdm/pp/K6727-RF.SEV
<PAGE>
SCHEDULE A
Beneficiary Designation Form
1. I hereby designate Ronald J. Floto Spousal Revocable
Trust of 1992 as my Beneficiary to receive the Benefit remaining
unpaid on the date of my death, and if N/A is
not then living, then I designate N/A to be
my secondary Beneficiary.
2. My current residence address and telephone number for
purposes of giving notice under subparagraph 11.5 of the
Agreement is:
1110 Flores de Avila
Street
Tampa, FL 33613
City, State, and Zip Code
813-962-4636
Telephone Number
Dated this 14 day of February , 1994.
WITNESSES:
/s/ Jackie L. Heers /s/ Ronald J. Floto
/s/ Robin Jackman
"Key Employee"
4/c:/mdm/pp/K6727-RF.SVE
SENIOR MANAGEMENT
SEVERANCE PAY AGREEMENT
This Severance Pay Agreement (the "Agreement") is entered
into this 9th day of February, 1994, by and between KASH N' KARRY
FOOD STORES, INC., a Delaware corporation (the "Company"), and
the person executing this Agreement as key employee (the "Key
Employee"). To induce the Key Employee to remain in the employ
of the Company, to reward the Key Employee's continued loyalty
and valuable efforts, and to provide security to the Key Employee
in the event of a change in control of the Company, and in
consideration of their mutual covenants and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Key Employee agree as
follows:
1. Definitions.
As used in this Agreement and unless the context
otherwise plainly requires, the terms defined in this paragraph
shall have the meanings ascribed to them and shall include the
plural as well as the singular number.
1.1 "Agreement" means this Severance Pay Agreement, as
originally executed and as from time to time amended or
supplemented.
1.2 "Annual Compensation" means the total amounts paid
or projected to be paid by the Company to the Key Employee
(determined without regard to this Plan) for services rendered to
the Company during the Applicable Plan Year of the Company,
including, but not limited to, base salary and target bonuses;
but excluding (a) any amount that is not includable in the Key
Employee's gross income by reason of sections 125, 132,
402(a)(8), 402(h), or 403(b) of the Internal Revenue Code; (b)
any short term or long term disability payment whether paid by
the Company or any third party under a program sponsored by the
Company; and (c) any automobile allowance paid by the Company.
In determining Annual Compensation, the target bonus means the
target bonus payable to the Key Employee for the Applicable Plan
Year under the Company's Management Incentive Plan (or any
successor Plan) computed as if the Company and the Key Employee
achieve 100% of their targeted goals for the Applicable Plan
Year. Provided, further, if the Key Employee becomes entitled to
a Benefit under this Agreement prior to the Company's
determination of target bonus goals for the Applicable Plan Year,
then the Key Employee's and the Company's target bonus goals for
the Company's preceding fiscal year will be deemed still in
effect for the Applicable Plan Year, and the Key Employee's
target bonus, for purposes of this Agreement, will be computed as
<PAGE>
if the Company and the Key Employee achieved 100% of the
preceding fiscal year's goals, notwithstanding the Company's and
the Key Employee's actual performance in the preceding year.
1.3 "Applicable Period" means the period beginning 92
days prior to a Change in Control and ending 365 days after a
Change in Control.
1.4 "Applicable Plan Year" means the Plan Year in
which occurs the Involuntary Termination of employment, or the
termination of the Plan, as applicable, whichever results in the
Key Employee's entitlement to the Benefit under Paragraph 3.1.
1.5 "Beneficiary" means the Person or Persons
designated by the Key Employee in Schedule A to this Agreement to
receive the remaining unpaid Benefit, if any, payable by reason
of the Key Employee's death after the date of the Key Employee's
entitlement to the Benefit, but before payment of the Benefit.
The Key Employee may change the designated Beneficiary at any
time and from time to time, without the consent of any previous
Beneficiary, by executing a new Schedule A and delivering it to
the Plan Administrator prior to the Key Employee's death. The
last Beneficiary designated by the Key Employee in a Schedule A
duly executed by the Key Employee and timely delivered to the
Plan Administrator shall receive the remaining Benefit. If no
Beneficiary is properly designated by the Key Employee in
accordance with the provisions of this subparagraph 1.5, then the
Key Employee's estate shall be deemed the Beneficiary.
1.6 "Benefit" means an amount equal to the Key
Employee's Annual Compensation.
1.7 "Change in Control" means the date that any of the
following events first occurs:
(a) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (hereafter referred to as the "Exchange Act")),
other than (i) Green Equity Investors, L. P. ("GEI"),
or The Fulcrum III Limited Partnership or The Second
Fulcrum III Limited Partnership (collectively referred
to as the "Fulcrum Partnerships"), or (ii) any Person,
including, but not limited to, the partners of GEI or
either Fulcrum Partnership, to whom GEI or either
Fulcrum Partnership is required to transfer any of its
securities as determined in accordance with its
respective partnership agreement), becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of
the combined voting power of the Company's then
outstanding securities in any transaction or
transactions other than by reason of an initial public
<PAGE>
offering by the Company of voting securities (or
securities convertible into, or exchangeable for,
voting securities or any other instrument that grants
rights to acquire voting securities);
(b) individuals who constitute the Company's
Board of Directors as of the date that this Agreement
is executed by the parties (hereafter referred to as
the "Incumbent Board") cease for any reason to
constitute at least two-thirds thereof; provided,
however, any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by
a vote of at least two-thirds of the directors
comprising the Incumbent Board shall be, for purposes
of this subparagraph 1.7(b), considered as though such
individual were a member of the Incumbent Board;
provided, however, that any decrease in the number of
Directors on the Incumbent Board, or any resignation or
removal of a member of the Incumbent Board will not be
deemed a Change in Control if approved by a vote of at
least two-thirds of the Directors of the Incumbent
Board; provided, further, the Incumbent Board will be
deemed to be reconstituted for purposes of this
subparagraph 1.7(b) each time a two-thirds vote
approves a change;
(c) the merger, consolidation, share
exchange, or other reorganization of the Company, with
or into one or more entities, as a result of which less
than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting entity are, or
are to be, owned by former holders of voting securities
of the Company as determined immediately before such
event;
(d) the sale of all or substantially all of
the Company's business, or assets, or both, to a Person
that is not a Subsidiary of the Company; or
(e) approval by the Company's shareholders
or Board of Directors of an agreement the consummation
of which would result in the occurrence of any event
described under subparagraphs (a) through (d),
inclusive, of this subparagraph 1.7.
1.8 "Company" means Kash n' Karry Food Stores, Inc., a
Delaware corporation, and any Successor Company.
<PAGE>
1.9 "For Cause" means if (a) the Key Employee is
convicted of a criminal violation involving fraud or dishonesty
with respect to the Company or Successor Company; (b) the Key
Employee commits an act of gross dishonesty or intentional
wrongdoing that results in a substantial economic harm, including
any contingent liability or loss, to the Company or Successor
Company; (c) the Key Employee dies; or (d) the Key Employee is
absent without leave from work for any reason not considered by
the Company's senior management as Company business or is unable
to perform a majority of the Key Employee's duties for a
continuous period of six (6) months.
1.10 "Internal Revenue Code" means the Internal
Revenue Code of 1986, as in effect on the date that this
Agreement is executed by the parties.
1.11 "Involuntarily Terminated" or "Involuntary
Termination" means the Company's or Successor Company's
termination of the Key Employee's employment for any reason other
than For Cause or if the Key Employee voluntarily terminates
employment with the Company immediately following a deemed
termination (as hereafter defined). For purposes of this
subparagraph 1.11, a deemed termination occurs if:
(a) There is a significant diminution in the
scope of the Key Employee's authority;
(b) The Key Employee is assigned duties
materially different from the Key Employee's duties as of the
date of this Agreement;
(c) There is a more than 10% reduction in
the Key Employee's base salary; provided, however, a more than
10% reduction in the Key Employee's base salary will not be
deemed a termination if the percentage reduction is part of a
uniformly applied percentage salary reduction affecting all
senior management, including the Chief Executive Officer of the
Company; or,
(d) The Key Employee is required to
relocate his day-to-day place of business more than fifty (50)
miles from the Key Employee's current residence in order to
continue employment, and the Company or Successor Company fails
to pay or reimburse promptly the Key Employee for all reasonable
costs incurred or actual economic losses sustained by the Key
Employee as a result of such relocation (and for this purpose the
failure to pay or reimburse promptly any Key Employee for any
expenses or losses arising from a relocation incurred during the
Applicable Period shall also be deemed to be an Involuntary
Termination that occurs within the Applicable Period).
<PAGE>
Notwithstanding anything in this paragraph 1.11 to the contrary,
the events described above in subparagraphs (a) through (d) will
not be deemed a termination of employment unless and until the
Key Employee objects to the event, and the Key Employee will have
up to 365 days after the occurrence of the event in which to note
his objection in writing, and if such objection in writing is
made, then the termination will be deemed to have occurred as of
the date of receipt of the objection by the Company.
1.12 "Key Employee" means the individual who signs this
Agreement, who is a highly compensated employee or a member of a
select management group of the Company, and who has been selected
by the Company's chief executive officer to be eligible for the
Benefit provided by the Plan.
1.13 "Person" means one or more of the individuals or
entities set forth in section 7701(a)(1) of the Internal Revenue
Code.
1.14 "Plan" means this Severance Pay Agreement.
1.15 "Plan Administrator" means the Company, unless the
Company designates a different person as Plan Administrator.
1.16 "Plan Year" means the fiscal year of the Company,
as it may change from time to time. Currently, the Company's
fiscal year period ends on the Sunday nearest July 31 of each
year. If the Company changes its fiscal year, and that change
results in a Plan Year of less than 52 weeks, then the Plan Year
referred to in this Agreement shall mean the last preceding
fiscal year of the Company containing at least 52 weeks.
1.17 "Subsidiary" means any corporation or other entity
a majority or more of whose outstanding voting stock or voting
power is beneficially owned directly or indirectly by the
Company.
1.18 "Successor Company" means after a Change in
Control any Person that owns all or a substantial portion of the
Company's business or assets, and any Person that has an
ownership interest in the Company.
2. Employment. Unless otherwise agreed by the Company,
the Key Employee agrees to devote his full time and attention to
the business and affairs of the Company and to use his best
efforts to provide satisfactory services to the Company.
<PAGE>
3. Benefit.
3.1 Entitlement to Benefit. If, during the Applicable
Period, the Key Employee's employment with the Company or
Successor Company is Involuntarily Terminated, or the Plan is
terminated by the Company or Successor Company, then the Benefit
shall accrue and shall be paid by the Company (or the Successor
Company, as applicable) to the Key Employee or to the Key
Employee's Beneficiary, as the case may be, in accordance with
the terms of Paragraph 3.2. If the Key Employee's entitlement to
a Benefit does not accrue during the Applicable Period, then this
Agreement shall terminate upon the expiration of the Applicable
Period.
3.2 Payment of Benefit. The Benefit amount, if any,
less all deductions required by law, shall be paid by the Company
(or the Successor Company, as applicable) to the Key Employee or
Beneficiary, as the case may be, in a single lump sum payment not
later than seven (7) days after the later of the date of the Key
Employee's Involuntary Termination, or the date of the
termination of the Agreement, as applicable, and payment shall,
in the discretion of the Company (or Successor Company), either
be made to the Key Employee or Beneficiary, as applicable, by
hand delivery at the office of the Company or delivery in
accordance with the provisions of subparagraph 11.5 of this
Agreement. Notwithstanding any contrary provisions of this
Agreement, the Benefit accrued shall not be paid until the Key
Employee terminates employment with the Company or Successor
Company, as applicable.
4. Termination or Amendment of Agreement.
4.1 Termination of Agreement. This Agreement shall
terminate upon the date that any of the following events first
occurs:
(a) cessation of the Company's business;
(b) approval by the Company's shareholders or
directors to dissolve or liquidate the Company;
(c) upon the date that the Company breaches any
obligation imposed on it under this Agreement (including, but not
limited to, adopting an amendment in violation of subparagraph
4.2 of this Agreement) or under any other deferred compensation
agreement between the Company and the Key Employee, including,
but not limited to, failing to pay all or any portion of any
benefits required to be paid to the Key Employee under this
Agreement, or any other deferred compensation agreement with the
Key Employee, but only if such employee first delivers written
notice by certified or registered mail of such breach to the
Company pursuant to subparagraph 11.5, and the Company fails to
cure such breach during the period that terminates twenty (20)
days after the date such notice is delivered to the Company; or
<PAGE>
(d) the decision of the Company to terminate the
Plan at any time, with or without cause; or,
(e) the failure of any Successor Company to
assume expressly the obligations of this Agreement.
Notwithstanding the foregoing, this Agreement shall remain
in full force and effect and shall survive any termination until
the Key Employee's entire Benefit, if any, accrued under
subparagraph 3.1 of this Agreement as of the date that causes the
Agreement's termination, less all deductions required by law, is
distributed to the Key Employee in accordance with the provisions
of subparagraphs 3.1 and 3.2 of this Agreement.
4.2 Amendment of Agreement. Except as otherwise
provided under this Agreement, the Company may terminate, amend
or supplement this Agreement, at any time prior to the beginning
of the Applicable Period with or without the consent of the Key
Employee. The Company shall deliver a copy of the amendment to
the Key Employee. Provided, however, notwithstanding the
foregoing, during the Applicable Period, the Company shall not
amend this Agreement to: (a) reduce the amount of, or alter the
time, method, or form of distributing, the Benefit payable
pursuant to this Agreement determined as of the date immediately
prior to the date of such amendment; (b) shorten the Applicable
Period; or (c) limit the circumstances under which a Change in
Control may occur or a Key Employee may be entitled to the
Benefit payable pursuant to this Agreement.
5. Funding. The Plan shall be "unfunded" for purposes of
federal income taxation and for purposes of the Employee
Retirement Income Security Act of 1974, as amended, as that term
is interpreted, from time to time, for such purposes; provided,
however, the Company may obtain life insurance, disability
insurance, or both, to informally fund its obligations hereunder,
and the Company shall be the owner and beneficiary of the policy
or policies. The Key Employee shall submit to medical
examinations, supply information, and execute documents as may be
required by the insurance company or companies. Neither the Key
Employee, nor the Plan, shall be deemed to have any right, title,
or interest in or to any specific assets of the Company,
including any insurance policies or the proceeds therefrom, and
any such policies shall not in any way be considered to be
security for the performance of the obligations under this
Agreement. Nothing contained in this Agreement and no action
taken pursuant to its provisions shall create or be construed to
create a trust of any kind or a fiduciary relationship between
the Company and the Key Employee or the Beneficiary. Any funds
that may be invested to meet the provisions of this Agreement
shall continue for all purposes to be a part of the general funds
of the Company. To the extent any person acquires a right to
receive payments from the Company under this Agreement, that
right will be no more secure than the right of an general
<PAGE>
unsecured creditor of the Company. The Benefit payable under
this Agreement, if the conditions of Paragraph 3.1 are met,
constitutes a mere promise by the Company to make payments in the
future.
6. Non-Assignability. The Key Employee or Beneficiary
shall not have any right to commute, encumber, transfer, convey,
or dispose of the right to the Benefit payable under this
Agreement. The Benefit and the right to it are not subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Key Employee or Beneficiary. Except to the
extent contrary to applicable law, the Benefit under this
Agreement is not transferable by operation of law if the Key
Employee or Beneficiary becomes insolvent or bankrupt. Any
attempt by the Key Employee or Beneficiary to commute, encumber,
transfer, convey, or dispose of the right to the Benefit payable
under this Agreement, shall be void and ineffectual.
7. Participation in Other Plans. Nothing contained in
this Agreement shall be construed to alter, abridge, or affect
the rights and privileges of the Key Employee to participate in
and be covered by any employee plans that the Company now has or
may hereafter adopt. Any payment under this Plan shall be
independent of, and in addition to, those payable under any other
plan or agreement that may be in effect with respect to the Key
Employee.
8. Employment Rights. This Agreement shall not be deemed
to constitute a contract of employment between the Company and
the Key Employee and shall create no right of the Key Employee to
continue in the Company's employ, nor shall this Agreement
restrict the right of the Company to discharge the Key Employee
or to terminate the Key Employee's employment.
9. Plan Administration.
9.1 Plan Administrator. This Agreement and the Plan
shall be administered by the Plan Administrator. The Plan
Administrator shall make all determinations as to the right of
the Key Employee or the Beneficiary, as applicable, to receive
the Benefit provided by this Agreement.
9.2 Claims Procedure. If a Benefit under this Agree-
ment is not paid to the Key Employee or the Beneficiary, as
applicable, and such person feels entitled to it, such person
shall make a claim in writing to the Plan Administrator. If the
claim is denied, in whole or in part, the Plan Administrator
shall inform the claimant in writing within 45 days setting forth
the reasons for denial in layman's terms, with specific reference
to the provisions of this Agreement upon which the denial is
based, and with a description of the review procedures set forth
in subparagraph 9.3.
<PAGE>
9.3 Review Procedure. If a claim for the Benefit
under this Agreement is denied, the claimant may, within 60 days
after the denial, submit to the Plan Administrator, in writing,
such information that will, in the claimant's opinion, support
the claimant's right to the Benefit. If the Plan Administrator,
after reviewing the information submitted by the claimant,
determines that the claimant is not entitled to the Benefit
claimed, the Plan Administrator shall afford the claimant or his
representative a reasonable opportunity to appear personally
before the Plan Administrator, to submit oral or written
comments, and to review any documents pertinent to the Plan
Administrator's decision. The Plan Administrator shall render
its final decision, in writing, within 60 days after the
appearance, with the specific reasons therefor.
10. Expenses. All costs and expenses of administering the
Plan shall be paid by the Company.
11. Miscellaneous.
11.1 Binding Effect. This Agreement shall be binding
on the legal representatives, successors, heirs, and assignees of
the Company and the Key Employee; provided, further, unless the
context clearly provides otherwise, any reference to, or duty or
obligation imposed on, the Company shall also be deemed to refer
to, and be the binding duty and obligation of, the Successor
Company.
11.2 Governing Law. This Agreement has been negotiated
and prepared in the State of Florida, and the validity,
construction, and enforcement of this Agreement shall be governed
by, and construed in accordance with, the laws of Florida
(excluding its choice of law provisions if such laws would result
in the application of laws of a jurisdiction other than Florida).
Each party consents and agrees that Tampa, Hillsborough County,
Florida, shall be the proper, exclusive, and convenient venue for
any legal proceeding in federal or state court relating to this
Agreement, and each party to this Agreement waives any defense,
whether asserted by motion or by pleading, that Tampa,
Hillsborough County, Florida, is an improper or inconvenient
venue.
11.3 Entire Agreement. This instrument contains the
final, complete, and exclusive expression of the parties' under-
standing and agreement concerning the transactions contemplated
by this Agreement and supersedes any prior or contemporaneous
agreement or representation, oral or written, by either of them.
Any vagueness or ambiguity in the meaning of this Agreement shall
be interpreted in a manner most favorable to the Key Employee.
<PAGE>
11.4 Descriptive Headings. The titles preceding the
text of the paragraphs and subparagraphs of this Agreement are
inserted solely for convenience of reference and shall neither
constitute a part of this Agreement nor affect its meaning,
interpretation, or effect.
11.5 Notices. Any notice, communication, or payment of
Benefit required or permitted to be sent by either party under
this Agreement shall be made in writing and shall be deemed
delivered when presented by hand delivery or when deposited in a
United States postal service office or letter box for mailing by
first class mail or certified mail, return receipt requested
(whether or not the return receipt is subsequently received),
postage prepaid and addressed to the appropriate party as fol-
lows:
If to the Company:
Executive Vice President-Administration
Kash n' Karry Food Stores, Inc.
P.O. Box 11675
Tampa, Florida 33680
If to the Key Employee:
The address set forth in Schedule A
or at such other addresses as either party may designate in
writing to the other party.
11.6 Gender. Throughout this Agreement, except where
the context otherwise requires, the masculine gender shall be
deemed to include the feminine and the neuter and the singular
number shall be deemed to include the plural and vice-versa.
11.7 Attorneys' Fees. If any suit or action shall be
instituted to enforce or to interpret this Agreement, the
prevailing party shall be entitled to recover from the non-
prevailing party all costs, and reasonable attorneys' fees,
expended as part of such suit, action, or appeal thereof.
<PAGE>
IN WITNESS WHEREOF, the Company and the Key Employee have
executed this Agreement this 9th day of February, 1994.
ATTEST: KASH N' KARRY FOOD STORES, INC.
/s/ Raymond P. Springer By: /s/ Ronald J. Floto
Executive Vice President Its: CEO
(Corporate Seal)
"COMPANY"
WITNESSES:
_________________________ ______________________________
_________________________
"Key Employee"
4/c:/mdm/pp/K6727-1.SVE
<PAGE>
SCHEDULE A
Beneficiary Designation Form
1. I hereby designate ___________________________________
as my Beneficiary to receive the Benefit remaining unpaid on the
date of my death, and if ____________________________ is not then
living, then I designate ______________________ to be my
secondary Beneficiary.
2. My current residence address and telephone number for
purposes of giving notice under subparagraph 11.5 of the
Agreement is:
_________________________
Street
_________________________
City, State, and Zip Code
_________________________
Telephone Number
Dated this _____ day of _____________, 1994.
WITNESSES:
__________________________ _________________________
__________________________
"Key Employee"
4/c:/mdm/pp/K6727-1.SVE
