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 April 28, 1996
Commission File No. 34-025260
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. The registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
As of June 6, 1996, there were 4,674,314 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
April 28, July 30,
1996 1995
--------- --------
(Unaudited)
Current assets:
Cash and cash equivalents $ 3,181 $ 4,803
Accounts receivable 12,579 6,504
Inventories 88,460 86,840
Prepaid expenses and other current assets 4,891 4,310
-------- --------
Total current assets 109,111 102,457
Property and equipment, at cost, less
accumulated depreciation 132,965 139,967
Favorable lease interests, less accumulated
amortization of $2,650 and $1,152 27,304 28,802
Deferred financing costs, less accumulated
amortization of $1,782 and $809 4,169 3,684
Excess reorganization value, less accumulated
amortization of $14,056 and $6,627 87,263 94,692
Deferred tax asset 1,200 1,200
Other assets 2,412 2,770
-------- ---------
Total assets $364,424 $373,572
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,610 $ 5,563
Accounts payable 44,808 39,231
Accrued expenses 32,226 44,499
--------- ---------
Total current liabilities 82,644 89,293
Long-term debt, less current obligations 213,712 218,131
Other long-term liabilities 15,194 16,510
Stockholders' equity:
Common Stock of $.01 par value.
Authorized 5,500,000 shares; 4,674,314
and 4,649,943 shares outstanding. 46 46
Capital in excess of par value 46,692 46,449
Retained earnings 6,136 3,143
---------- ----------
Total stockholders' equity 52,874 49,638
---------- ----------
Total liabilities & stockholders' equity $364,424 $373,572
========== ==========
See accompanying notes to financial statements.
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KASH N' KARRY FOOD STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
Thirteen Thirteen
Weeks Ended Weeks Ended
April 28, April 30,
1996 1995
-------- --------
Sales $256,410 $269,927
Cost of sales 198,885 211,722
-------- --------
Gross profit 57,525 58,205
Selling, general and
administrative expenses 38,175 38,896
Depreciation and amortization 6,270 6,457
-------- --------
Operating income 13,080 12,852
Interest expense 6,469 6,942
-------- --------
Income before income taxes 6,611 5,910
Provision for income taxes 2,963 3,189
-------- --------
Net income $ 3,648 $ 2,721
======== ========
Net income per common share $ 0.77 $ 0.58(A)
======== ========
(A) Restated to reflect the 3-for-2 stock split effected in the form of a
stock dividend paid on July 17, 1995.
See accompanying notes to financial statements.
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KASH N' KARRY FOOD STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
----------------------- --------
Thirty-nine Seventeen Twenty-Two
Weeks Ended Weeks Ended Weeks Ended
April 28, April 30, January 1,
1996 1995 1995
-------- -------- --------
Sales $788,132 $356,281 $426,681
Cost of sales 625,184 280,662 340,802
-------- -------- --------
Gross profit 162,948 75,619 85,879
Selling, general and
administrative expenses 117,844 51,122 68,819
Depreciation and amortization 18,598 8,436 10,234
-------- -------- --------
Operating income 26,506 16,061 6,826
Interest expense 19,458 9,344 13,719
-------- -------- --------
Income (loss) before reorganization
items, income taxes, extraordinary
item and change in accounting
principle 7,048 6,717 (6,893)
Reorganization items -- -- (4,869)
-------- -------- --------
Income (loss) before income taxes,
extraordinary item and change
in accounting principle 7,048 6,717 (11,762)
Provision for income taxes 4,055 3,189 --
Income (loss) before extra- -------- -------- --------
ordinary item and change
in accounting principle 2,993 3,528 (11,762)
Extraordinary item - gain on
debt discharge -- -- 70,166
Cumulative effect of change in
accounting principle -
postretirement medical benefits -- -- (2,000)
-------- -------- --------
Net income $ 2,993 $ 3,528 $56,404
======== ======== ========
Net income per common
share $ 0.63 $ 0.75(A) (B)
======== ======== ========
(A) Restated to reflect the 3-for-2 stock split effected in the form of a
stock dividend paid on July 17, 1995.
(B) Net income per common share is not meaningful prior to January 1, 1995
due to the significant change in the capital structure in connection
with the Restructuring.
See accompanying notes to financial statements.
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KASH N' KARRY FOOD STORES, INC.
STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
----------------------- --------
Thirty-Nine Seventeen Twenty-Two
Weeks Ended Weeks Ended Weeks Ended
April 28, April 30, January 1,
1996 1995 1995
-------- -------- --------
Net cash flow from operating activities:
Net income $ 2,993 $ 3,528 $ 56,404
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation and amortization,
excluding deferred financing costs 18,598 8,436 10,234
Amortization of deferred
financing costs 978 494 1,152
Provision for income taxes 4,055 3,189 --
Issuance of additional senior
notes in lieu of cash interest 16,630 -- --
Reorganization items -- -- 4,869
Change in accounting principle -- -- 2,000
Gain on discharge of debt -- -- (70,166)
(Increase) decrease in assets:
Accounts receivable (6,075) (983) 2,322
Inventories (1,620) 3,908 (5,917)
Prepaid expenses and other assets (483) (403) (194)
Increase (decrease) in liabilities:
Accounts payable 5,577 4,192 1,800
Accrued expenses and other
liabilities (13,740) 3,309 9,083
-------- -------- --------
Net cash provided by
operating activities 26,913 25,670 11,587
-------- -------- --------
Cash used by investing activities:
Additions to property and equipment (25,888) (1,509) (665)
Leased asset additions (3,019) -- --
-------- -------- --------
Net cash used by investing
activities (28,907) (1,509) (665)
-------- -------- --------
See accompanying notes to financial statements.
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KASH N' KARRY FOOD STORES, INC.
STATEMENTS OF CASH FLOWS
(Continued)
(In Thousands)
(Unaudited)
Reorganized Predecessor
Company Company
----------------------- --------
Thirty-Nine Seventeen Twenty-Two
Weeks Ended Weeks Ended Weeks Ended
April 28, April 30, January 1,
1996 1995 1995
-------- -------- --------
Cash provided (used) by financing activities:
Borrowings under credit loan
facility $ 21,592 $ 4,200 $50,800
Sale of common stock -- -- 10,000
Proceeds from exercise of common
stock options 243 -- --
Proceeds from sale-leaseback 26,110 -- --
Additions to obligations under
capital leases 3,019 -- --
Repayments of credit loan
facility (29,043) (19,918) (60,928)
Repayments of other long-term
liabilities (20,118) (1,937) (7,363)
Other financing activities (1,431) (251) (9,294)
-------- -------- --------
Net cash provided (used) by
financing activities 372 (17,906) (16,785)
-------- -------- --------
Net increase (decrease) in cash
and cash equivalents (1,622) 6,255 (5,863)
Cash and cash equivalents at beginning
of period 4,803 989 6,852
-------- -------- --------
Cash and cash equivalents at end
of period $ 3,181 $ 7,244 $ 989
======== ======== ========
See accompanying notes to financial statements.
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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 1995
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 condensed financial statements as of and for the periods
subsequent to January 1, 1995 were prepared according to the
principles of fresh start reporting contained in American
Institute of Certified Public Accountants' Statement of Position
90-7 "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code." As a result of the implementation of fresh
start accounting, the Company's condensed financial statements as
of July 30, 1995 and as of and for the period ended April 28,
1996 are not comparable to the Company's condensed financial
statements of periods prior to January 1, 1995. Therefore, where
applicable, the condensed financial statements for the
"Reorganized Company" have been separately identified from those
of the "Predecessor Company." Results for the period ended April
28, 1996 are not necessarily indicative of the results to be
attained for the full year.
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. Long-term debt consists of the following:
April 28, July 30,
1996 1995
Term loan and revolving -------- --------
credit facilities $ 25,692 $ 33,143
Senior Floating Rate Notes 23,942 22,953
Senior Fixed Rate Notes 136,803 121,162
Mortgages payable 17,867 33,108
Capital lease obligations and other 15,018 13,328
Long-term debt including -------- --------
current portion 219,322 223,694
Less current portion (5,610) (5,563)
-------- --------
Long-term debt $213,712 $218,131
======== =========
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KASH N' KARRY FOOD STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In Thousands)
(Unaudited)
4. SFAS No. 121, "Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed Of," is
effective for years beginning after December 15, 1995. This
statement requires that long-lived assets and certain intangibles
to be held and used by the Company be reviewed for impairment.
This pronouncement is not expected to have a material impact on
the financial statements of the Company.
5. In October 1995, the Financial Accounting Standards Board
issued SFAS No. 123, "Accounting for Stock Based Compensation."
With respect to stock options granted to employees, SFAS No. 123
permits companies to continue using the accounting method
promulgated by the Accounting Principles Board Opinion No. 25
("APB No. 25"), "Accounting for Stock Issued to Employees," to
measure compensation or to adopt the fair value based method
prescribed by SFAS No. 123. If APB No. 25's method is continued,
pro forma disclosures are required as if SFAS No. 123 accounting
provisions were followed. Management has determined not to adopt
SFAS No. 123's accounting recognition provisions. In the opinion
of management, SFAS No. 123 is not expected to have a material
impact on the Company's financial statements.
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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
The discussion below compares the results of operations for
the thirteen weeks ended April 28, 1996 (the "1996 Three-Month
Period") with the thirteen weeks ended April 30, 1995 (the "1995
Three Month Period"); and the thirty-nine weeks ended April 28,
1996 (the "1996 Nine-Month Period") with the thirty-nine weeks
ended April 30, 1995 (the "1995 Nine-Month Period"). Except as
specifically acknowledged below, management believes that the
impact of the Restructuring and the implementation of fresh start
reporting did not significantly affect the results of operations
for the 1995 Nine-Month Period, and that the combined operating
results of the individual seventeen week period and twenty-two
week period ended April 30, 1995 and January 1, 1995,
respectively, are indicative of the results of operations of the
thirty-nine week period ended April 30, 1995. The following
table compares certain income and expense line items as a
percentage of sales:
1996 1995 1996 1995
Three- Three- Nine- Nine-
Month Month Month Month
Period Period Period Period
--------- --------- --------- ----------
Sales 100.00% 100.00% 100.00% 100.00%
Gross profit 22.44% 21.56% 20.67% 20.63%
Selling, general and
administrative expenses 14.89% 14.41% 14.95% 15.32%
Depreciation and amortization 2.45% 2.39% 2.36% 2.38%
Operating income 5.10% 4.76% 3.36% 2.93%
Interest expense 2.52% 2.57% 2.47% 2.95%
Income (loss) before income
taxes and "fresh start"
accounting adjustments 2.58% 2.19% 0.89% (0.02)%
"Fresh start" accounting
adjustments, net -- -- -- 8.08%
Provision for income taxes 1.16% 1.18% 0.51% 0.41%
Net income (loss) 1.42% 1.01% 0.38% 7.65%
Sales. Sales for the 1996 Three-Month Period were $256.4
million, or $13.5 million less than the 1995 Three Month Period.
Reduced promotional activity, combined with an increase in new
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KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
store and remodel activity of traditional as well as non-
traditional competitors, are the primary reasons for the decrease
in sales. In addition, Company stores under remodel experienced
sales decreases during the remodel period. Sales for the 1996
Nine-Month Period were $788.1 million compared to $783.0
million for the 1995 Nine-Month Period. Same store sales
increased 0.1% for the 1996 Nine-Month Period despite a same
store sales decrease of 5.6% for the 1996 Three-Month Period.
Gross Profit. The improvement in gross profit, as a
percentage of sales, for the 1996 Three-Month Period was
primarily due to the abovementioned reduced investment in
promotional activities combined with improved sales distributions
of higher margin perishable departments, which resulted from the
Company's store remodeling program and marketing emphasis on
perishables. The improvement in gross profit, as a percentage of
sales, for the 1996 Nine-Month Period is primarily the result of
the improvement in sales distributions of the higher margin
perishable departments.
Selling, General and Administrative Expenses. Selling,
general and administrative expenses decreased from $38.9 million
for the 1995 Three-Month Period to $38.2 million for the 1996
Three-Month Period. However, due to the sales decrease from the
prior year, selling, general and administrative expenses, as a
percentage of sales, increased for the 1996 Three-Month Period.
Improvements in store labor, group insurance, casualty insurance
and utilities were partially offset by increased advertising,
systems and floor care expenses and lower recycling income due to
significantly lower cardboard prices. Selling, general and
administrative expenses were 14.95% of sales for the 1996 Nine-
Month Period compared to 15.32% of sales for the 1995 Nine-Month
Period, or a decrease of $2.1 million.
Depreciation and Amortization. The decrease in depreciation
and amortization for the 1996 Three-Month Period and the 1996
Nine-Month Period are primarily attributable to the sale and
simultaneous leaseback of certain fee-owned store properties
partially offset by depreciation of assets associated with new
stores and remodels.
Interest Expense. Interest expense decreased $0.5 million
for the 1996 Three-Month Period, primarily due to sale-leaseback
transactions of certain store properties completed during the
year. Interest expense for the 1996 Nine-Month Period was $19.5
million, or $3.6 million less than the 1995 Nine-Month Period.
The decrease was primarily the result of converting $105 million
of 14% Subordinated Debentures into equity in connection with the
financial restructuring completed in December 1994 and the impact
of the sale-leaseback transactions noted above, partially offset
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KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
by an interest moratorium on the Subordinated Debentures, old
Fixed Rate Notes, and old Floating Rate Notes during the
financial restructuring period of the prior year.
Financial Condition
The Company's existing credit agreement provides for a term
loan facility of $9.9 million and a revolving credit facility of
$50.0 million for working capital requirements and letters of
credit. As of June 6, 1996 the Company had borrowed $9.9 million
under the term loan and $21.3 million under the working capital
line and had $10.8 million of letters of credit issued against
the revolving credit facility.
For the 1996 fiscal year, the Company expects to spend
approximately $28.0 million of cash for capital expenditures. Two
new stores were opened in the current fiscal year and
approximately forty stores are expected to be remodeled.
In August, the Company completed a sale-leaseback of three
of its fee-owned store properties and applied the net proceeds of
$9.1 million to the outstanding balance of the term loan. In
December, the Company amended its existing credit agreement with
The CIT Group/Business Credit, Inc., to effectively increase the
credit facility by $5.0 million, to provide more favorable terms
and to extend the term of the agreement through December 1998. As
amended, the credit facility consists of a $9.9 million term loan
due in December 1998 and a $50.0 million revolving credit
facility for working capital and letters of credit. In January,
the Company completed a sale-leaseback of four fee-owned store
properties, sold its beneficial interest in three real estate
trusts to a third party and applied the aggregate net proceeds of
$12.7 million to repay a mortgage encumbering eight store
properties. In March, the Company completed a subsequent sale-
leaseback of three additional fee-owned store properties, and is
marketing its beneficial interest in the three real estate trusts
to a third party. The Company is still actively pursuing
transactions on its two remaining fee-owned store properties, the
sale-leaseback of a store facility that is operating as a ground
lease, and the sale of two unimproved real estate sites, the
total of which could provide up to an additional $8.0 million of
net cash proceeds. In addition, the Company exercised its option
of paying interest in kind on its Senior Floating Rate Notes in
August and on its Senior Fixed Rate Notes in August and February.
In November, the Company signed a five year agreement with
Gooding's Supermarkets, Inc. to supply groceries to the 17-store
chain, and estimates that shipments to Gooding's could
approximate $75.0 million a year.
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KASH N' KARRY FOOD STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Based upon the Company's ability to generate working capital
through its operations and its existing credit facility, the
Company believes that it has the financial resources necessary to
pay its capital obligations and implement its business plan.
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.
-12-<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is engaged in various legal actions and claims
arising in the ordinary course of business, including products
liability actions and suits charging violations of certain civil
rights laws and Florida's RICO Act. Management believes, after
discussions with legal counsel, that the ultimate outcome of such
litigation and claims will not have a material adverse effect on
the Company's financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit
No. Description
- ------- ---------------------------------------------------------
2 First Amended Plan of Reorganization filed by the
Company with the United States Bankruptcy Court of the
District of Delaware on November 9, 1994, as amended by
notices of technical modifications thereto filed on
November 9, 1994, and December 12, 1994 (previously
filed as Exhibit 2 to the Company's Quarterly Report on
Form 10-Q for the period ended October 30, 1994, which
exhibit is hereby incorporated by reference).
3(i)(a) Restated Certificate of Incorporation filed with the
Delaware Secretary of State on December 29, 1994
(previously filed as Exhibit 3(i) to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated
by reference).
3(i)(b) Certificate of Designations of Series A Junior
Participating Preferred Stock filed with the Secretary
of State of the State of Delaware on April 26, 1995
(previously filed as Exhibit 3(i)(b) to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
3(ii)(a) Bylaws adopted October 12, 1988 (previously filed as
Exhibit 3(ii)(a) to the Company's Quarterly Report on
Form 10-Q for the period ended January 29, 1995, which
exhibit is hereby incorporated by reference).
3(ii)(b) First Amendment to Bylaws adopted July 30, 1991
(previously filed as Exhibit 3(ii)(b) to the Company's
-13-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated
by reference).
3(ii)(c) Second Amendment to Bylaws adopted December 29, 1994
(previously filed as Exhibit 3(ii)(c) to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated
by reference).
3(ii)(d) Third Amendment to Bylaws adopted April 13, 1995
(previously filed as Exhibit 3(ii)(d) to the Company's
Quarterly Report on Form 10-Q for the period ended
April 30, 1995, which exhibit is hereby incorporated by
reference).
3(ii)(e) Fourth Amendment to Bylaws adopted March 8, 1996 (filed
herewith).
4.1 Indenture dated as of December 29, 1994, between the
Company and Shawmut Bank Connecticut, N.A., as Trustee,
relating to 11.5% Senior Fixed Rate Notes due 2003
(previously filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated
by reference).
4.2 Indenture dated as of December 29, 1994, between the
Company and IBJ Schroder Bank & Trust Company, as
Trustee, relating to Senior Floating Rate Notes due
2003 (previously filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
January 29, 1995, which exhibit is hereby incorporated
by reference).
4.3(a) Rights Agreement dated as of April 13, 1995 between the
Company and Shawmut Bank Connecticut, N.A., as Rights
Agent (previously filed as Exhibit 1 to the Company's
Current Report on Form 8-K dated April 13, 1995, which
exhibit is hereby incorporated by reference).
4.3(b) First Amendment to Rights Agreement dated as of June
13, 1995 (previously filed as Exhibit 4.3(b) to the
Company's Quarterly Report on Form 10-Q for the period
ended April 30, 1995, which exhibit is hereby
incorporated by reference).
-14-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
4.4 Specimen form of Common Stock certificate (previously
filed as Exhibit 4.4 to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.1(a) Credit Agreement dated as of December 29, 1994, among
the Company, certain lenders, The CIT Group/Business
Credit, Inc., as administrative agent, and Bank of
America National Trust and Savings Association, as
co-agent (previously filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the period
ended January 29, 1995, which exhibit is hereby
incorporated by reference).
10.1(b) Amended and Restated Credit Agreement dated as of
December 19, 1995, among the Company, certain lenders,
and The CIT Group/Business Credit, Inc., as
administrative agent (previously filed as Exhibit
10.1(b) to the Company's Quarterly Report on Form 10-Q
for the period ended January 28, 1996, which exhibit is
hereby incorporated by reference).
10.1(c) First Amendment to Amended and Restated Credit
Agreement dated as of March 28, 1996, among the
Company, certain lenders and The CIT Group/Business
Credit, Inc., as administrative agent (filed herewith).
10.2 Mortgage, Fixture Filing, Security Agreement and
Assignment of Rents between the Company, as mortgagor,
and Sun Life Insurance Co. of America, as mortgagee,
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).
10.3 Mortgage between the Company, as mortgagor, and Ausa
Life Insurance Company, as mortgagee, dated as of
November 21, 1989 (mortgage satisfied in January 1996)
(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).
10.4 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.
-15-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
33-25621, which exhibit is hereby incorporated by
reference).
10.5(a) Services Agreement dated as of March 1, 1995 between
the Company and GSI Outsourcing Corporation (previously
filed as Exhibit 10.5(a) to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.5(b) First Amendment to Services Agreement between the
Company and GSI Outsourcing Corporation (previously
filed as Exhibit 10.5(b) to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.5(c) Guaranty of Payment, Nondisturbance and Attornment
Agreement dated as of June 1995 among the Company, GSI
Outsourcing Corporation and IBM Credit Corporation
(previously filed as Exhibit 10.5(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended
July 30, 1995, which exhibit is hereby incorporated by
reference).
10.5(d) Addendum to Services Agreement between the Company and
GSI Outsourcing Corporation dated as of July 1995
(previously filed as Exhibit 10.5(d) to the Company's
Annual Report on Form 10-K for the fiscal year ended
July 30, 1995, which exhibit is hereby incorporated by
reference).
10.6 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).
10.7(a) 1995 Non-Employee Director Stock Option Plan adopted on
March 9, 1995 (previously filed as Exhibit 10.7(a) to
the Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.7(b) Form of Non-Qualified Stock Option Agreement entered
into between the Company and certain directors, as
optionees, pursuant to the 1995 Non-Employee Director
Stock Option Plan (previously filed as Exhibit 10.7(b)
to the Company's Registration Statement on Form S-1,
-16-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.8 Non-Qualified Stock Option Agreement dated as of
January 17, 1995, between the Company and Green Equity
Investors, L.P. (previously filed as Exhibit 10.8 to
the Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.9 Management Services Agreement dated as of December 29,
1994, by and between the Company and Leonard Green &
Partners (previously filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the period
ended January 29, 1995, which exhibit is hereby
incorporated by reference).
10.10(a) Employment Agreement dated as of January 24, 1995,
between the Company and Ronald Johnson (previously
filed as Exhibit 10.10 to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.10(b) Letter agreement dated as of May 22, 1996, amending
Employment Agreement with Ronald Johnson (filed
herewith).
10.11 Employment Agreement dated as of March 6, 1995, between
the Company and Gary M. Shell (previously filed as
Exhibit 10.11 to the Company's Registration Statement
on Form S-1, Registration No. 33-58999, which exhibit
is hereby incorporated by reference).
10.12(a) Employment Agreement dated as of March 16, 1995,
between the Company and Clifford C. Smith, Jr.
(previously filed as Exhibit 10.12 to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.12(b) Letter agreement dated as of May 23, 1996, amending
Employment Agreement with Clifford C. Smith, Jr. (filed
herewith).
10.13(a) Employment Agreement dated as of July 8, 1995, between
the Company and BJ Mehaffey (previously filed as
Exhibit 10.13 to the Company's Annual Report on Form
-17-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
10-K for the fiscal year ended July 30, 1995, which
exhibit is hereby incorporated by reference).
10.13(b) Letter agreement dated as of May 23, 1996, amending
Employment Agreement with BJ Mehaffey (filed herewith).
10.14 Incentive Compensation Plan adopted on October 26, 1994
(previously filed as Exhibit 10.13 to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.15 Amended and Restated Kash n' Karry Retirement Estates
and Trust (401(k) Plan) 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).
10.16(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).
10.16(b) 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).
10.16(c) Master Second Amendment to Deferred Compensation
Agreements, dated as of December 30, 1993 between the
Company and the key employees party thereto (previously
filed as Exhibit 10.13(d) to the Company's Quarterly
Report on Form 10-Q for the period ended January 30,
1994, which exhibit is hereby incorporated by
reference).
10.16(d) Master Third Amendment to Deferred Compensation
Agreements, dated as of September 2, 1994, between the
Company and the key employees party thereto (previously
filed as Exhibit 10.2 to the Company's Quarterly Report
-18-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
on Form 10-Q for the period ended January 29, 1995,
which exhibit is hereby incorporated by reference).
10.17(a) 1995 Key Employee Stock Option Plan (previously filed
as Exhibit 10.16(a) to the Company's Registration
Statement on Form S-1, Registration No. 33-58999, which
exhibit is hereby incorporated by reference).
10.17(b) Non-Qualified Stock Option Agreement dated March 9,
1995 between the Company and Ronald E. Johnson
(previously filed as Exhibit 10.16(b) to the Company's
Registration Statement on Form S-1, Registration No. 33-
58999, which exhibit is hereby incorporated by
reference).
10.17(c) Form of Non-Qualified Stock Option Agreement entered
into between the Company and certain key employees, as
optionees, pursuant to the 1995 Key Employee Stock
Option Plan (previously filed as Exhibit 10.16(b) to
the Company's Registration Statement on Form S-1,
Registration No. 33-58999, which exhibit is hereby
incorporated by reference).
10.18 Employment and Consulting Agreement dated September 1,
1994 between the Company and Anthony R. Petrillo
(previously filed as Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended
July 30, 1995, which exhibit is hereby incorporated by
reference).
10.19 Form of Bonus Deferred Compensation Agreement dated as
of July 28, 1995 between the Company and certain key
employees (previously filed as Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal
year ended July 30, 1995, which exhibit is hereby
incorporated by reference).
10.20 Supply Agreement dated as of November 29, 1995 between
the Company and Gooding's Supermarkets, Inc.
(previously filed as Exhibit 10.20 to the Company's
Quarterly Report on Form 10-Q for the period ended
October 29, 1995, which exhibit is hereby incorporated
by reference).
10.21 Separation, Waiver and Release Agreement dated as of
January 31, 1996 between the Company and Raymond P.
Springer (previously filed as Exhibit 10.21 to the
-19-<PAGE>
Exhibit
No. Description
- ------- ---------------------------------------------------------
Company's Quarterly Report on Form 10-Q for the period
ended January 28, 1996, which exhibit is hereby
incorporated by reference).
10.22(a) Employment Agreement dated as of January 26, 1996
between the Company and Richard D. Coleman (filed
herewith).
10.22(b) Letter Agreement dated as of May 23, 1996, amending
Employment Agreement with Richard D. Coleman (filed
herewith).
11 Statement re computation of per share earnings (filed
herewith).
21 Subsidiaries of the Company (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K:
None
-20-<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
KASH N' KARRY FOOD STORES, INC.
Date: June 7, 1996 By:/s/ Richard D. Coleman
______________________________
Richard D. Coleman
Senior Vice President,
Administration
Date: June 7, 1996 By:/s/ Marvin H. Snow, Jr.
______________________________
Marvin H. Snow, Jr.
Vice President, Controller
FOURTH AMENDMENT TO BYLAWS
OF
KASH N' KARRY FOOD STORES, INC.,
a Delaware corporation
The following amendment to the Bylaws of Kash n' Karry Food
Stores, Inc. (the "Corporation") was adopted on March 8, 1996, at
a regular meeting of the Board of Directors of the Corporation,
as permitted by Article XIV of the Bylaws:
1. The following shall be added to Article IV, Section 2,
of the Bylaws of the Corporation:
"In addition, the Board may empower the President to
appoint any officer of the Corporation named in
Section 1 of this Article, except for the Chairman
of the Board, the President and any Vice President
having the duties of Chief Financial Officer. Any
such officer appointed by the President shall serve
at the pleasure of the President, and shall hold
office until his resignation, removal or other
disqualification from service, or until his
successor shall be appointed."
2. The first sentence of Article IV, Section 10, of the
Bylaws is hereby amended to read as follows:
"The Treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct
accounts of the properties and business transactions
of the Corporation, and shall send or cause to be
sent to the stockholders of the Corporation such
financial statements and reports as are by law or
these Bylaws required to be sent to them."
3. The foregoing amendment became effective on March 8,
1996.
DATED: June 6, 1996.
/s/ Richard D. Coleman
___________________________________
Richard D. Coleman, Secretary of
Kash n' Karry Food Stores, Inc.
14/knk/amd-byl4
FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (the "Amendment"), dated as of March 28, 1996, is
entered into by and among KASH N' KARRY FOOD STORES, INC., a
Delaware corporation (the "Company"), each of the lenders that is
a signatory to this Amendment (collectively, the "Lenders") and
THE CIT GROUP/BUSINESS CREDIT, INC., as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"), and
amends that certain Amended and Restated Credit Agreement dated
as of December 19, 1995 among the Company, the Lenders and the
Administrative Agent (as the same is in effect immediately prior
to the effectiveness of this Amendment, the "Existing Credit
Agreement" and as the same may be amended, supplemented or
modified and in effect from time to time, the "Credit
Agreement"). Capitalized terms used and not otherwise defined in
this Amendment shall have the same meanings in this Amendment as
set forth in the Credit Agreement, and the rules of
interpretation set forth in Section 1.05 of the Credit Agreement
shall be applicable to this Amendment.
RECITAL
The Company has request that the Lenders amend certain
covenants and consent to certain actions under the Existing
Credit Agreement, and the Lenders are willing to agree to so
amend the Existing Credit Agreement and to give such consent all
on the terms and subject to the conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants and agreements set forth below and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
SECTION 1. Amendments. On the terms of this Amendment
and subject to the satisfaction of the conditions precedent set
forth below in Section 3, the Existing Credit Agreement shall be
amended as follows:
(a) Section 8.12 of the Existing Credit Agreement
is amended by inserting the parenthetical phrase "(or $36,000,000
solely with respect to the Company's fiscal year ending in July
of 1996)" immediately following the figure $30,000,000 in clause
(a) of Section 8.12.
(b) Section 8.13 of the Existing Credit Agreement
is amended to read in its entirety as follows:
<PAGE>
"8.13 Lease Obligations. The aggregate obligations of
the Company and its Consolidated Subsidiaries for the
payment of rent for any Property under operating leases
or agreements to lease (including pursuant to any such
arrangements with the Trusts) shall not exceed
$32,000,000 during any fiscal year of the Company."
SECTION 2. Consent. On the terms hereof and subject
to the satisfaction of the conditions precedent set forth below
in Section 3, the Lenders consent and agree that, for purposes of
Section 2.10(c) of the Credit Agreement:
(a) the Commitments shall not be subject to
automatic reduction as otherwise set forth in such section upon
the Disposition by the Company pursuant to Section 8.05 of the
Credit Agreement of (i) the Company's fee interest in Store Nos.
702, 878, 886 and 891, (ii) the beneficial interest of the
Company in the Trusts that are or become the fee owners of Store
Nos. 702, 886 and 891 in connection with any Disposition referred
to in clause (i) above, (iii) improvements relating to the
Company's Store No. 722 and (iv) certain raw land owned by the
Company in Hillsborough County, Florida that the Company commonly
refers to as the "Dale Mabry/Lambright Land" or "Store No. 734"
(and the Company agrees that the Net Available Proceeds of all
such Dispositions shall promptly be paid to the Administrative
Agent and applied to the prepayment of the Revolving Credit Loans
as set forth in Section 2.10(d)(i) of the Credit Agreement); and
(b) the Net Available Proceeds of any such
Disposition referred to in clause (a) above as well as any
Dispositions made by the Company during the period after the
Restatement Effective Date and prior to the Amendment Effective
Date (collectively, the "Designated Dispositions") shall be
deemed to be zero solely for purposes of determining whether
Commitment reductions (but not prepayments) are required to be
made pursuant to Section 2.10(c) of the Credit Agreement in
connection with Dispositions other than the Designated
Dispositions.
SECTION 3. Conditions to Effectiveness. The
amendments and consent set forth in Sections 1 and 2 of this
Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent on or prior to March
29, 1996 (the date of satisfaction of all such conditions being
referred to as the "Amendment Effective Date"):
(a) On or before the Amendment Effective Date,
the Company shall deliver to the Administrative Agent, on behalf
of the Lenders, the following described documents (each of which
shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel):
2
<PAGE>
(i) This Amendment, duly executed and
delivered by the Company, the Lenders and the Administrative
Agent;
(ii) Any and all documents and instruments
required to be delivered on or before the Amendment
Effective Date pursuant to Section 8.18 of the Credit
Agreement; and
(iii) Such other documents, instruments,
approvals or opinions as the Administrative Agent, any
Lender or special counsel to the Administrative Agent may
reasonably request.
(b) On or before the Amendment Effective Date,
all corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by this Amendment,
and all documents incidental thereto, shall be reasonably
satisfactory in form and substance to the Administrative Agent
and its counsel, and the Administrative Agent and such counsel
shall have received all such counterpart originals or certified
copies of such documents, opinions, certificates and evidence as
they may reasonably request.
(c) All governmental actions or filings necessary
for the execution, delivery and performance of this Amendment
shall have been made, taken or obtained, and no order, statutory
rule, regulation, executive order, decree, judgment or injunction
shall have been enacted, entered, issued, promulgated or enforced
by any court or other governmental entity which prohibits or
restricts the transactions contemplated by this Amendment nor
shall any action have been commenced or threatened seeking any
injunction or any restraining or other order to prohibit,
restrain, invalidate or set aside the transactions contemplated
by this Amendment.
(d) The representations and warranties set forth
in this Amendment shall be true and correct as of the Amendment
Effective Date.
SECTION 4. The Company's Representations and
Warranties. In order to induce the Lenders to enter into this
Amendment and to give the consent and to amend the Existing
Credit Agreement in the manner provided in this Amendment, the
Company represents and warrants to each Lender as of the
Amendment Effective Date as follows:
(a) Power and Authority. The Company has all
requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated by, and
perform its obligations under, the Existing Credit Agreement as
amended by this Amendment (hereafter referred to as the "Amended
Credit Agreement").
3<PAGE>
(b) Authorization of Agreements. The execution
and delivery of this Amendment by the Company, and the
performance of the Amended Credit Agreement by the Company have
been duly authorized by all necessary action, and this Amendment
has been duly executed and delivered by the Company.
(c) Enforceability. The Amended Credit Agreement
constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general. The enforceability of the Company's obligations
hereunder is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
(d) No Conflict. The execution and delivery by
the Company of this Amendment and the performance by the Company
of the Amended Credit Agreement do not and will not
(i) contravene, in any material respect, any provision of any
law, regulation, decree, ruling, judgment or order that is
applicable to the Company or its properties or other assets,
(ii) result in a breach of or constitute a default under the
charter or bylaws of the Company or any material agreement,
indenture, lease or instrument binding upon it, or its properties
or other assets or (iii) result in the creation or imposition of
any Liens on its Properties or Collateral other than as permitted
under the Credit Agreement.
(e) Governmental Consents. No authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by the Company of this
Amendment.
(f) Representations and Warranties in the Credit
Agreement. The Company confirms that as of the Amendment
Effective Date the representations and warranties contained in
Section 7 of the Credit Agreement are (before and after giving
effect to this Amendment) true and correct in all material
respects (except to the extent any such representation and
warranty is expressly stated to have been made as of a specific
date, in which case it shall be true and correct as of such
specific date) and that no Default has occurred and is
continuing.
SECTION 5. Miscellaneous.
(a) Reference to and Effect on the Existing
Credit Agreement and the Other Basic Documents.
(i) Except as specifically amended by this
Amendment and the documents executed and delivered in
connection herewith, the Existing Credit Agreement and the
4
<PAGE>
other Basic Documents shall remain in full force and effect
and are hereby ratified and confirmed.
(ii) The execution and delivery of this
Amendment and performance of the Amended Credit Agreement
shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any
right, power or remedy of the Lenders under, the Existing
Credit Agreement or any of the other Basic Documents.
(iii) Upon the conditions precedent set forth
herein being satisfied, this Amendment shall be construed as
one with the Existing Credit Agreement, and the Existing
Credit Agreement shall, where the context requires, be read
and construed throughout so as to incorporate this Amendment.
(b) Fees and Expenses. The Company acknowledges
that all costs, fees and expenses incurred in connection with
this Amendment will be paid in accordance with Section 11.03 of
the Existing Credit Agreement.
(c) Headings. Section and subsection headings in
this Amendment are included for convenience of reference only and
shall not constitute a part of this Amendment for any other
purpose or be given any substantive effect.
(d) Counterparts. This Amendment may be executed
in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.
(e) Governing Law. This Amendment shall be
governed by and construed according to the laws of the State of
New York.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly
executed this Amendment as of the date first above written.
KASH N' KARRY FOOD STORES, INC., a
Delaware corporation
By:/s/ Richard D. Coleman
_______________________________
Title: Sr. V-P, Administration
LENDERS
THE CIT GROUP/BUSINESS CREDIT, INC.
By:/s/ Guy Fuchs
_______________________________
Title: V.P.
HELLER FINANCIAL, INC.
By:/s/ Dwayne L. Coker
_______________________________
Title: Vice President
NATWEST BANK, N.A.
By:/s/ Therese M. Earley
_______________________________
Title: V.P.
ADMINISTRATIVE AGENT
THE CIT GROUP/BUSINESS CREDIT,
INC., as Administrative Agent
By:/s/ Guy Fuchs
_______________________________
Title: V.P.
6
May 22, 1996
Personal and Confidential
Mr. Ronald Johnson
17802 Osprey Pointe Place
Tampa, Florida 33647
Re: Employment Agreement Modification
Dear Ron:
I am pleased to advise you that the Compensation Committee
of Kash N' Karry Food Stores, Inc., (the "Company") has
determined to modify your employment agreement, dated as of
January 24, 1995, with the Company (the "Employment Agreement")
to (i) provide enhanced base salary continuation protection in
the event your employment with the Company is terminated Without
Cause (as defined in Section 7.2 of the Employment Agreement)
within a specified period after the occurrence of a change in
ownership of the Company, and (ii) clarify the application of
Section 7.4(f) to the stock option granted to you on May 1, 1996.
Accordingly, the Employment Agreement, in accordance with
Section 10.5 of the Employment Agreement, is hereby modified,
effective as of May 1, 1996, as follows:
1. Section 2.1 of the Employment Agreement is hereby
amended by adding thereto a new last sentence to read as follows:
"Notwithstanding the above, if, prior to the
Scheduled Termination Date, a Change in Control
(as defined in Section 7.4 below); occurs the Term
shall expire upon the later to occur of (i) the
Scheduled Termination Date, and (ii) the second
anniversary of the date on which any such Change
of Control occurred (the "CIC Anniversary Date")."
<PAGE>
- 2 -
2. Section 7.4(c) of the Employment Agreement is hereby
deleted in its entirety and replaced with a new Section 7.4(c) to
read as follows:
"(c) Subject to Section 7.5 and except in
the case of a termination Without Cause under
Section 7.2(d), the Employee shall be entitled to
receive all amounts of salary as would have been
payable under Section 3.1 hereof through the
Scheduled Termination Date (the "Salary
Continuation Period"), which amounts shall be paid
as and when the same would have been payable under
the Agreement had it not been terminated;
provided, however, in the case of a termination
Without Cause pursuant to Section 7.2(c), the
Employee is entitled to elect to receive all
salary due under this Section 7.4(c) in a lump
sum, discounted to reflect the present value of
that salary over the Salary Continuation Period
(as defined in Section 7.5); provided, further,
however, that if (x) there occurs within one year
after the occurrence of a Change in Control (as
defined below) a termination Without Cause (other
than one under Section 7.2(d), the Salary
Continuation Period shall not be less than two
years from the date of termination;, or (y) there
occurs within the one year period commencing
immediately upon the termination of the one year
period described in (x) above (the "Second One
Year Period") a termination Without Cause (other
than one under Section 7.2(d)), the Salary
Continuation period, after the date of
termination, shall not be less than twenty-four
months less the number of whole or partial months
transpired in the Second One Year Period as of the
date of the Employee's termination of employment;"
3. Section 7.4 of the Employment Agreement is hereby
amended by adding a new paragraph at the end thereof to read as
follows:
"For purposes of Section 7.4(c) above, (i)"Change
in Control" shall mean and be deemed to have
occurred if, after May 1, 1996, any Person (as
defined below) becomes the beneficial owner (as
defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of (a) securities of the Company
(not including in the securities beneficially
owned by such Person any securities acquired
directly from the Company in any transaction,
including without limitation, any
recapitalization, reorganization or bankruptcy
proceeding) representing more than fifty percent
(50%) of the combined voting power of the
Company's then outstanding securities, or (b) all
or substantially all of the assets of the Company,
and (ii) "Person" shall have the meaning ascribed
thereto in Section 3(a)(9) of the Exchange Act, as
<PAGE>
- 3 -
modified, applied and used in Sections 13(d) and
14(d) thereof; provided, however, that a Person
shall not include (A) the Company or any of its
subsidiaries or any of the Original Stockholders
(as defined in the Company's 1995 Key Employee
Stock Option Plan), (B) a trustee or other
fiduciary holding securities under an employee
benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (C) an
underwriter temporarily holding securities
pursuant to an offering of such securities, (D) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the
same character and proportions as their ownership
of stock of the Company, or (E) any entity or
individual acquiring securities or assets of the
Company in connection with any bankruptcy
proceeding. In addition, the Employee's
employment (if in fact terminated) shall be deemed
to have been terminated following a Change of
Control by the Company Without Cause if the
Employee's employment was terminated Without Cause
within six months demonstrates that such
termination, or the circumstance(s)or event(s)
constituting such a termination, occurred (1) at
the request of a Person who has entered into an
agreement with the Company the consummation of
which will constitute a Change in Control (or who
has taken other steps reasonably calculated to
effect a Change in Control) or (2) otherwise in
connection with, as a direct result of or in
anticipation of a Change in Control."
4. Prior to the occurrence of a "Change of Control" (as
defined in Section 3 of this Agreement), Section 7.4(f) shall not
apply to the stock option granted to you on May 1, 1996 to
acquire (when vested and exercised) 25,378 shares of the
Company's common stock at an exercise price equal to $22.00 per
share.
5. Section 7.5 of the Employment Agreement shall be amended
by deleting the first sentence thereof and replacing it with a
new first sentence to read as follows:
"In the event of termination of employment
hereunder, the Employee shall be under no
obligation to seek alternative employment or other
gainful occupation during the period from the
termination of this Agreement through the later to
occur of (a) the CIC Anniversary Date, and (b) the
Scheduled Termination Date (the "Unexpired Term")
by way of mitigation of amounts payable to the
Employee under this Article 7; provided however,
that, except in the case of Employee's Termination
Without Cause under Section 7.2(c), if the
Employee provides, directly or indirectly
(including through any personal service entity),
any services (whether as employee, consultant,
independent contractor or otherwise) to any person
<PAGE>
- 4 -
engaged in a business similar to the business of
the company as then conducted (a "Third Party")
during the Unexpired Term, all amounts paid or
payable to the Employee by or on behalf of such
Third Party in respect thereof (exclusive of any
fringe benefits, profit sharing and deferred
compensation arrangement customarily offered to
senior management of the Third Party) ("Offset
Amounts") shall reduce any amounts payable
thereafter by the Company to the Employee under
Sections 7.4(c), (d) and (e) hereof on a dollar-
for-dollar basis."
6. Except as expressly modified herein, the Employment
Agreement shall remain in full force and effect in accordance
with its terms and provisions as the same are set forth on the
date hereof.
Please indicate your acceptance of and agreement to the
above modifications by dating and signing this modification
agreement in the space provided below.
KASH N' KARRY FOOD STORES, INC.
By: /s/ Peter Zurkow
____________________________
Name: Peter Zurkow
Title: Member, Compensation Committee
AGREED TO AND ACCEPTED:
/s/ Ronald E. Johnson
________________________
Ronald Johnson
Date: May 30, 1996
_________________
May 23, 1996
Personal and Confidential
Mr. Cliff Smith
Senior Vice President-Perishables
8029 Long Nook Lane
Charlotte, NC 28277
Re: Employment Agreement Modification
Dear Mr. Smith:
I am pleased to advise you that the Compensation Committee
of Kash N' Karry Food Stores, Inc., (the "Company") has
determined to modify your employment agreement, dated as of March
16, 1995, with the Company (the "Employment Agreement") to
provide enhanced base salary continuation protection in the event
your employment with the Company is terminated Without Cause (as
defined in Section 7.2 of the Employment Agreement) within one
year after the occurrence of a change in ownership of the
Company.
Accordingly, the Employment Agreement, in accordance with
Section 10.5 of the Employment Agreement, is hereby modified,
effective as of May 1, 1996, as follows:
1. Section 2.1 of the Employment Agreement is hereby
amended by adding thereto a new last sentence to read as follows:
"Notwithstanding the above, if, prior to the Scheduled
Termination Date, a Change in Control (as defined in Section 7.4
below); occurs the Term shall expire upon the later to occur of
(i) the Scheduled Termination Date, and (ii) the first
anniversary of the date on which any such Change of Control
occurred (the "CIC Anniversary Date")."
2. Section 7.4(c) of the Employment Agreement is hereby
deleted in its entirety and replaced with a new Section 7.4(c) to
read as follows:
"(c) Subject to Section 7.5 and except in the case of a
termination Without Cause under Section 7.2(d), the Employee
shall be entitled to receive all amounts of salary as would have
been payable under Section 3.1 hereof through the Scheduled
Termination Date (the "Salary Continuation Period"), which
amounts shall be paid as and when the same would have been
payable under the Agreement had it not been terminated;
provided, however, that if there occurs within one year after the
occurrence of a Change in Control (as defined below) a termination
Without
<PAGE>
Cause (other than one under Section 7.2(d),
the Salary Continuation Period shall not be less than one year
from the date of termination;"
3. Section 7.4 of the Employment Agreement is hereby
amended by adding a new paragraph at the end thereof to read as
follows:
For purposes of Section 7.4(c) above, (i)"Change in
Control" shall mean and be deemed to have occurred if,
after May 1, 1996, any Person (as defined below)
becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of (a) securities of
the Company (not including in the securities
beneficially owned by such Person any securities
acquired directly from the Company in any transaction,
including without limitation, any recapitalization,
reorganization or bankruptcy proceeding) representing
more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, or
(b) all or substantially all of the assets of the
Company, and (ii) "Person" shall have the meaning
ascribed thereto in Section 3(a)(9) of the Exchange
Act, as modified, applied and used in Sections 13(d)
and 14(d) thereof; provided, however, that a Person
shall not include (A) the Company or any of its
subsidiaries or any of the Original Stockholders (as
defined in the Company's 1995 Key Employee Stock Option
Plan), (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any of its subsidiaries (in its capacity as
such), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities,
(D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
character and proportions as their ownership of stock
of the Company, or (E) any entity or individual
acquiring securities or assets of the Company in
connection with any bankruptcy proceeding. In
addition, the Employee's employment (if in fact
terminated) shall be deemed to have been terminated
following a Change of Control by the Company Without
Cause if the Employee's employment was terminated
Without Cause within six months demonstrates that such
termination, or the circumstance(s)or event(s)
constituting such a termination, occurred (1) at the
request of a Person who has entered into an agreement
with the Company the consummation of which will
constitute a Change in Control (or who has taken other
steps reasonably calculated to effect a Change in
Control) or (2) otherwise in connection with, as a
direct result of or in anticipation of a Change in Control."
4. Section 7.5 of the Employment Agreement shall be amended
by deleting the first sentence thereof and replacing it with a
new first sentence to read as follows:
"In the event of termination of employment hereunder,
the Employee shall be under no obligation to seek
alternative employment or other gainful occupation
during the period from the termination of this
Agreement through the later to occur of
<PAGE>
(a) the CIC
Anniversary Date, and (b) the Scheduled Termination
Date (the "Unexpired Term") by way of mitigation of
amounts payable to the Employee under this Article 7;
provided however, that, except in the case of
Employee's Termination Without Cause under Section
7.2(c), if the Employee provides, directly or
indirectly (including through any personal service
entity), any services (whether as employee, consultant,
independent contractor or otherwise) to any person
engaged in a business similar to the business of the
company as then conducted (a "Third Party") during the
Unexpired Term, all amounts paid or payable to the
Employee by or on behalf of such Third Party in respect
thereof (exclusive of any fringe benefits, profit
sharing and deferred compensation arrangement
customarily offered to senior management of the Third
Party) ("Offset Amounts") shall reduce any amounts
payable thereafter by the Company to the Employee under
Sections 7.4(c), (d) and (e) hereof on a dollar-for-
dollar basis."
5. Except as expressly modified herein, the Employment
Agreement shall remain in full force and effect in accordance
with its terms and provisions as the same are set forth on the
date hereof.
Please indicate your acceptance of and agreement to the
above modifications by dating and signing this modification
agreement in the space provided below.
KASH N' KARRY FOOD STORES, INC.
By:/s/ Ronald Johnson
______________________________
Name: Ronald Johnson
Title: Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ Cliff Smith
_______________________
Mr. Cliff Smith
Senior Vice President-Perishables
Date: May 23, 1996
May 23, 1996
Personal and Confidential
Mr. BJ Mehaffey
Senior Vice President-Operations
15002 Hickory Grove Place
Midlothian, VA 23112
Re: Employment Agreement Modification
Dear Mr. Smith:
I am pleased to advise you that the Compensation Committee
of Kash N' Karry Food Stores, Inc., (the "Company") has
determined to modify your employment agreement, dated as of July
8, 1995, with the Company (the "Employment Agreement") to provide
enhanced base salary continuation protection in the event your
employment with the Company is terminated Without Cause (as
defined in Section 7.2 of the Employment Agreement) within one
year after the occurrence of a change in ownership of the
Company.
Accordingly, the Employment Agreement, in accordance with
Section 10.5 of the Employment Agreement, is hereby modified,
effective as of May 1, 1996, as follows:
1. Section 2.1 of the Employment Agreement is hereby
amended by adding thereto a new last sentence to read as follows:
"Notwithstanding the above, if, prior to the Scheduled
Termination Date, a Change in Control (as defined in Section 7.4
below); occurs the Term shall expire upon the later to occur of
(i) the Scheduled Termination Date, and (ii) the first
anniversary of the date on which any such Change of Control
occurred (the "CIC Anniversary Date")."
2. Section 7.4(c) of the Employment Agreement is hereby
deleted in its entirety and replaced with a new Section 7.4(c) to
read as follows:
"(c) Subject to Section 7.5 and except in the case of a
termination Without Cause under Section 7.2(d), the Employee
shall be entitled to receive all amounts of salary as would have
been payable under Section 3.1 hereof through the Scheduled
Termination Date (the "Salary Continuation Period"), which
amounts shall be paid as and when the same would have been
payable under the Agreement had it not been terminated;
provided, however, that if there occurs within one year after the
occurrence of a Change in Control (as defined below) a
termination Without
<PAGE>
Cause (other than one under Section 7.2(d),
the Salary Continuation Period shall not be less than one year
from the date of termination;"
3. Section 7.4 of the Employment Agreement is hereby
amended by adding a new paragraph at the end thereof to read as
follows:
For purposes of Section 7.4(c) above, (i)"Change in
Control" shall mean and be deemed to have occurred if,
after May 1, 1996, any Person (as defined below)
becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of (a) securities of
the Company (not including in the securities
beneficially owned by such Person any securities
acquired directly from the Company in any transaction,
including without limitation, any recapitalization,
reorganization or bankruptcy proceeding) representing
more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, or
(b) all or substantially all of the assets of the
Company, and (ii) "Person" shall have the meaning
ascribed thereto in Section 3(a)(9) of the Exchange
Act, as modified, applied and used in Sections 13(d)
and 14(d) thereof; provided, however, that a Person
shall not include (A) the Company or any of its
subsidiaries or any of the Original Stockholders (as
defined in the Company's 1995 Key Employee Stock Option
Plan), (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any of its subsidiaries (in its capacity as
such), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities,
(D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
character and proportions as their ownership of stock
of the Company, or (E) any entity or individual
acquiring securities or assets of the Company in
connection with any bankruptcy proceeding. In
addition, the Employee's employment (if in fact
terminated) shall be deemed to have been terminated
following a Change of Control by the Company Without
Cause if the Employee's employment was terminated
Without Cause within six months demonstrates that such
termination, or the circumstance(s)or event(s)
constituting such a termination, occurred (1) at the
request of a Person who has entered into an agreement
with the Company the consummation of which will
constitute a Change in Control (or who has taken other
steps reasonably calculated to effect a Change in
Control) or (2) otherwise in connection with, as a
direct result of or in anticipation of a Change in Control."
4. Section 7.5 of the Employment Agreement shall be amended
by deleting the first sentence thereof and replacing it with a
new first sentence to read as follows:
"In the event of termination of employment hereunder,
the Employee shall be under no obligation to seek
alternative employment or other gainful occupation
during the period from the termination of this
Agreement through the later to occur of
<PAGE>
(a) the CIC
Anniversary Date, and (b) the Scheduled Termination
Date (the "Unexpired Term") by way of mitigation of
amounts payable to the Employee under this Article 7;
provided however, that, except in the case of
Employee's Termination Without Cause under Section
7.2(c), if the Employee provides, directly or
indirectly (including through any personal service
entity), any services (whether as employee, consultant,
independent contractor or otherwise) to any person
engaged in a business similar to the business of the
company as then conducted (a "Third Party") during the
Unexpired Term, all amounts paid or payable to the
Employee by or on behalf of such Third Party in respect
thereof (exclusive of any fringe benefits, profit
sharing and deferred compensation arrangement
customarily offered to senior management of the Third
Party) ("Offset Amounts") shall reduce any amounts
payable thereafter by the Company to the Employee under
Sections 7.4(c), (d) and (e) hereof on a dollar-for-
dollar basis."
5. Except as expressly modified herein, the Employment
Agreement shall remain in full force and effect in accordance
with its terms and provisions as the same are set forth on the
date hereof.
Please indicate your acceptance of and agreement to the
above modifications by dating and signing this modification
agreement in the space provided below.
KASH N' KARRY FOOD STORES, INC.
By:/s/ Ronald Johnson
_______________________________
Name: Ronald Johnson
Title: Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ BJ Mehaffey
_________________________
Mr. BJ Mehaffey
Senior Vice President-Operations
Date: May 23, 1996
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into
as of January 26, 1996, between KASH N' KARRY FOOD STORES, INC., a
Delaware corporation (the "Company"), and RICHARD D. COLEMAN (the
"Employee").
WHEREAS, the Company and the Employee desire to enter into
this Agreement to assure the Company of the services of the
Employee for the benefit of the Company and to set forth the
respective rights and duties of the parties hereto;
WHEREAS, the Company is in the business of owning, operating
and managing supermarkets and retail liquor, food, grocery and
warehouse format stores in Florida and may, in the future, own,
operate and manage additional supermarkets or retail liquor, food,
grocery or warehouse format stores in or outside of Florida (such
business, present and future, being hereinafter referred to as the
"Business");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, terms and conditions set forth herein, the
Company and the Employee agree as follows:
ARTICLE I.
Employment
1.1 Employment and Title. The Company hereby employs the
Employee, and the Employee hereby accepts such employment, as the
1<PAGE>
Senior Vice President - Administration, Chief Financial Officer
and Secretary of the Company, upon the terms and conditions set
forth herein.
1.2 Services.
During the Term (as hereinafter defined) hereof, the
Employee agrees to perform diligently and in good faith such
duties and services for the Company under the direction of the
Chief Executive Officer of the Company (the "CEO") as are
consistent with the positions of Senior Vice President -
Administration, Chief Financial Officer and Secretary of the
Company. The Employee agrees to devote his best efforts and all
of his full business time, energies and abilities to the services
to be performed hereunder and for the exclusive benefit of the
Company; provided, that this clause shall not be construed to
prevent the Employee from personally, and for his own account,
trading in stocks, bonds, securities, real estate, or other forms
of investment for his own benefit, so long as any such activity
does not materially interfere with the performance of his duties
hereunder, and, provided, further, that Employee shall be entitled
to engage in those further activities permitted under Section 1.4.
The Employee shall be vested with such authority as is generally
concomitant with the positions to which he is appointed.
1.3 Location. The principal place of employment and the
location of the Employee's principal office and ordinary place of
work shall be in Tampa, Florida; provided, however, the Employee
shall, when requested by his superiors, or may, if he determines
2<PAGE>
it to be reasonably necessary, temporarily perform services
outside said area as are reasonably required for the proper
performance of his duties under this Agreement.
1.4 Exclusivity. The Employee shall not, without the prior
written consent of the Company, directly or indirectly, during the
term of this Agreement render services of a business, professional
or commercial nature to any other person or entity, whether for
compensation or otherwise.
1.5 Representations. Each party represents and warrants to
the other that he/it has full power and authority to enter into
and perform this Agreement and that his/its execution of and
performance of this Agreement shall not constitute a default under
or breach of any of the terms of any agreement to which he/it is a
party or under which he/it is bound. Each party represents that
no consent or approval of any third party is required for his or
its execution, delivery and performance of this Agreement. The
Employee further represents and warrants to the Company that he is
free to accept this employment, and that he has no other
obligations or commitments of any kind to any one which would in
any way hinder or interfere with his acceptance of, full
performance of his obligations under, or exercise of his best
efforts with respect to, this Agreement.
3<PAGE>
ARTICLE 2
Term
2.1 Term. The term of the Employee's employment hereunder
(the "Term") shall commence on January 26, 1996 (the "Commencement
Date") and shall continue until (but not including) the second
anniversary of the Commencement Date (the "Scheduled Termination
Date") unless earlier terminated pursuant to the provisions of
this Agreement. On or before July 24, 1997, the parties agree to
begin negotiating the terms of the Employee's employment, if any,
after the Scheduled Termination Date.
ARTICLE 3
Compensation
3.1 Salary. As compensation for the services to be
rendered by the Employee, the Company shall pay the Employee,
during the Term of this Agreement, an annual salary in the amount
of One Hundred Thirty-five Thousand Dollars ($135,000), which
salary shall accrue weekly (prorated for periods less than a week)
and shall be payable in equal weekly installments, in arrears.
3.2 Other Compensation. During the Term hereof, the
Employee shall be entitled to participate, on a basis
proportionate to the participation of the other executive officers
of the Company, in any compensatory plan, contract or arrangement
that is available to the Company's most senior executive officers
from time to time during the Term hereof, including, but not
4<PAGE>
limited to (a) the Company's current bonus plan, generally
referred to as the Incentive Compensation Plan, as in effect on
the Commencement Date, and (b) the 1995 Key Employee's Stock
Option Plan. Effective as of March 8, 1996, the Company will
grant to the Employee options to purchase an additional 7,616
shares of the then outstanding common stock of the Company for an
exercise price of $22 5/8 per share, and on such other terms and
conditions as shall be approved by the Stock Option Committee
pursuant to the Stock Option Plan.
3.3 Benefits and Perquisites. The Employee shall be
entitled, during the Term hereof, to the same medical, hospital,
dental and life insurance coverage and benefits, vacations, and
other perquisites, as are available to the Company's most senior
executive officers on the Commencement Date or benefits that are
substantially comparable.
3.4 Withholding. Any and all amounts payable under this
Agreement, including, without limitation, amounts payable in the
event of the termination hereof under Sections 7.3 and 7.4 hereof,
are subject to withholding for such federal, state and local taxes
as the Company in its reasonable judgment determines to be
required pursuant to any applicable law, rule or regulation.
3.5 Annual Review. No less frequently than annually, the
Board of Directors shall review the Employee's performance of his
duties and services under this Agreement, and may, commensurate
with the Employee's and the Company's performance, increase, but
not decrease, the salary, stock options, other compensation and
5<PAGE>
benefits payable to the Employee under this Agreement during the
remaining Term.
ARTICLE 4
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. The Employee shall be
furnished with an office at the principal office of the Company,
or at such other location as may be agreed to by the Employee and
the Board of Directors, and other working facilities and
secretarial and other assistance suitable to his position and
adequate for the performance of his duties hereunder. The Company
shall reimburse the Employee for all the Employee's reasonable
expenses incurred while employed and performing his duties under
and in connection with the terms and conditions of the Agreement,
subject to the Employee's full appropriate documentation,
including, without limitation, receipts for all such expenses in
the manner required pursuant to Company's policies and procedures
and the Internal Revenue Code.
4.2 Insurance. The Company may secure in its own name or
otherwise, and at its own expense, life, disability and other
insurance covering the Employee or the Employee and others, and
the Employee shall not have any right, title or interest in or to
such insurance other than as expressly provided herein. The
Employee agrees to assist the Company in procuring such insurance
by submitting to the usual and customary medical and other
examinations to be conducted by such physician(s) as the Company
6<PAGE>
or such insurance company may designate and by signing such
applications and other written instruments as may be required by
the insurance companies to which application is made for such
insurance.
ARTICLE 5
Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this
Agreement, the Employee shall be unable to perform in all material
respects his duties hereunder for a period exceeding one hundred
twenty (120) consecutive calendar days, or a total of one hundred
eighty-six (186) non-consecutive calendar days, by reason of
illness or incapacity, this Agreement may be terminated by the
Company at its election pursuant to Section 7.2(b) hereof.
5.2 Right to Replace. If the Employee's illness or
incapacity, whether by physical or mental cause, renders him
unable for a minimum period of 30 consecutive calendar days to
carry out his duties and responsibilities as set forth herein, the
Company shall have the right to designate a person to temporarily
succeed the Employee in the capacity described in Article 1
hereof; provided, however, that if the Employee returns to work
from such illness or incapacity within the six (6) month period
following his inability due to illness or incapacity, he shall be
entitled to be reinstated in the capacity described in Article 1
hereof with all duties and privileges attendant thereto.
7<PAGE>
5.3 Rights Prior to Termination. The Employee shall be
entitled to his full remuneration and benefits hereunder during
such illness or incapacity unless and until an election is made by
the Company to terminate this Agreement in accordance with the
provisions of this Article.
ARTICLE 6
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and
at all times thereafter, the Employee agrees to maintain the
confidential nature of all trade secrets, including, without
limitation, development ideas, acquisition strategies and plans,
financial information, records, "know-how", methods of doing
business, customer, supplier and distributor lists and all other
confidential information of the Company. The Employee shall not
be obligated to maintain the confidential nature of information
the disclosure of which is required by law or which already is in
the public domain. The Employee shall not use (other than in
connection with his employment), in any way whatsoever, such trade
secrets except as authorized in writing by the Company. The
Employee shall, upon terminating his employment, deliver to the
Company any and all records, books, documents or any other
materials whatsoever (including all copies thereof) containing
such trade secrets, which shall be and remain the property of the
Company.
8<PAGE>
6.2 Non-Removal of Records. All documents, papers,
materials, notes, books, correspondence, drawings and other
written and graphical records relating to the Business of the
Company which the Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company
and shall not be removed from their respective premises without
the Company's prior written consent.
ARTICLE 7
Termination
7.1 Termination For Cause. This Agreement and the
employment of the Employee may be terminated by the Company "For
Cause" in any of the following circumstances:
(a) The Employee has committed any act or acts of
fraud or misappropriation that result in or are intended to result
in his personal enrichment at the expense of the Company;
(b) The Employee is in default in a material respect
in the performance of his obligations, services or duties
hereunder, which shall include, without limitation, the Employee's
disregarding the written instructions (in the Company's minutes or
otherwise) from the Company's Board of Directors or his superiors
concerning the conduct of his duties hereunder, the Employee's
acting in a manner materially inconsistent with the published
policies of the Company or its affiliates, as promulgated from
time to time and which are generally applicable to all employees
9<PAGE>
and/or senior executives of the Company, the Employee's acting in
a manner materially inconsistent with the customary standards of
performance applicable to persons in similar positions in the
supermarket industry in the United States, or if the Employee has
breached any other material provision of this Agreement; provided
that if, and only if, such default or breach is curable, the
Employee shall not be in default hereunder unless he shall have
failed to cure such default or breach within 15 days of written
notice thereof by the Company to the Employee;
(c) The Employee is grossly negligent, which causes
substantial damage or loss to the Company, or engages in willful
misconduct in the performance of his duties hereunder; provided,
however, that the Employee may be terminated under this paragraph
7.1(c) only if the disinterested directors of the Company's Board
of Directors first unanimously approve of the termination; or
(d) The Employee has engaged in illegal activities
which, individually, or in the aggregate, reflect materially
adversely upon, or have a materially adverse impact on, the
Company.
A termination For Cause under this Section 7.1 shall be
effective upon the date set forth in a written notice of
termination delivered to the Employee.
7.2 Termination Without Cause. This Agreement and the
employment of the Employee may be terminated "Without Cause" as
follows:
10<PAGE>
(a) by mutual agreement of the parties hereto;
(b) at the election of the Company at any time by its
giving at least thirty (30) days advance written notice to the
Employee;
(c) at the election of the Employee by his giving
written notice to the Company in the event that the Company shall
default in or breach the performance of any of its obligations
under this Agreement, or in the event that the Company shall
effect a material diminution or material adverse change in the
Employee's title, responsibilities or duties; provided, that if,
and only if, such default, breach, diminution or change is
curable, the Employee may not elect to give notice under this
Section 7.2 (c), unless the Company shall have failed to cure such
default, breach, diminution or change within fifteen (15) days of
written notice thereof provided by the Employee to the Company; or
(d) upon the Employee's death.
A termination Without Cause under this Section 7.2 shall be
effective upon the date set forth in a written notice of
termination delivered hereunder, which shall be not less than
thirty (30) days nor more than 45 days after the giving of such
notice, except for a termination pursuant to Section 7.2(d)
hereof, which shall be automatically effective upon the occurrence
of the event described therein.
7.3 Effect of Termination For Cause. If the Employee's
employment is terminated For Cause:
11<PAGE>
(a) The Employee shall be entitled to accrued salary
through the date of termination;
(b) The Employee shall be entitled to reimbursement
for expenses accrued through the date of termination in accordance
with the provisions of Section 4.1 hereof; and
(c) Except as provided in Article 11, this Agreement
shall thereupon be of no further force and effect.
7.4 Effect of Termination Without Cause. If the Employee's
employment is terminated Without Cause:
(a) The Employee shall be entitled to accrued salary
through the date of termination;
(b) The Employee shall be entitled to reimbursement
for expenses accrued through the date of termination in accordance
with the provisions of Section 4.1 hereof; and
(c) Subject to Section 7.5 and except in the case of a
termination Without Cause under Section 7.2(d), the Employee shall
be entitled to receive all amounts of salary as would have been
payable under Section 3.1 hereof through the Scheduled Termination
Date, which amounts shall be paid as and when the same would have
been payable under the Agreement had it not been terminated;
provided, however, in the case of a termination Without Cause
pursuant to Section 7.2 (c), then Employee is entitled to elect to
receive all salary due under this Section 7.4 (c) in a lump sum,
discounted to reflect the present value of that salary over the
Unexpired Term(as defined in section 7.5);
12<PAGE>
(d) Subject to Section 7.5 and except in the case of a
termination Without Cause under Section 7.2(d), the Employee shall
be entitled to receive all medical, hospital and dental coverage
and benefits as would have been payable under Section 3.3 hereof
through the Scheduled Termination Date, which amounts shall be
paid as and when the same would have been payable under the
Agreement had it not been terminated, and if the Employee is not
entitled to participate in any such benefit plan under the terms
thereof following the termination, then the Company shall provide
the Employee with substantially identical coverage and benefits;
(e) Subject to Section 7.5, if the Employee is
participating in a Company bonus plan as of the date of
termination, he shall be entitled to an accrued bonus through the
date of termination, computed on a per diem basis based upon the
bonus which would have otherwise been payable to the Employee for
the fiscal year during which the date of termination falls had the
Agreement not been terminated, computed on the same basis as in
effect immediately prior to the date of termination, which bonus
shall be paid as and when the same would have otherwise been
payable under the bonus plan had the Agreement not been
terminated; and
(f) Except as provided in Article 11, this Agreement
shall be of no further force or effect.
7.5 Mitigation and Offset. In the event of a termination
of employment hereunder, the Employee shall be under no obligation
to seek alternative employment or other gainful occupation during
13<PAGE>
the period from the termination of this Agreement through the
Scheduled Termination Date (the "Unexpired Term") by way of
mitigation of amounts payable to the Employee under this Article
7; provided, however, that, except in the case of Employee's
Termination Without Cause under Section 7.2 (c), if the Employee
provides, directly or indirectly (including through any personal
service entity), any services (whether as employee, consultant,
independent contractor or otherwise) to any person engaged in a
business similar to the business of the Company as then conducted
(a "Third Party") during the Unexpired Term, all amounts paid or
payable to the Employee by or on behalf of such Third Party in
respect thereof (exclusive of any fringe benefits, profit sharing
and deferred compensation arrangements customarily offered to
senior management of the Third Party) ("Offset Amounts") shall
reduce any amounts payable thereafter by the Company to the
Employee under Sections 7.4(c), (d) and (e) hereof on a dollar-
for-dollar basis. Upon the request of the Company, from time to
time, the Employee shall certify in writing to the Company all
Offset Amounts received or receivable by him and shall provide the
Company with true copies of all written agreements and a summary
of the terms of all oral agreements pursuant to which such Offset
Amounts are paid or payable to the Employee.
7.6 Full Settlement. The payments provided for in Article
7 of this Agreement are in full settlement of any claims the
Employee may have against the Company arising out of his
termination, including, but not limited to, any claims for
14<PAGE>
wrongful discharge; provided, however, that nothing herein shall
limit any rights or obligations of the parties under any other
agreement with the Company or any pension, severance, retirement,
stock option, deferred compensation or other benefit plans of the
Company which are applicable to the Employee and which provide for
specified rights and obligations in the event of a termination of
the Employee's employment with the Company.
ARTICLE 8
Non-Competition And Non-Interference
8.1 Non-Competition. The Employee agrees that during the
Term hereof and for a period of one year thereafter, except in the
case of a Termination Without Cause, the Employee will not,
directly, indirectly or as an agent on behalf of or in conjunction
with any person, firm, partnership, corporation or other entity,
own, manage, control, join, or participate in the ownership,
management, operation, or control of, or be financially interested
in or advise, lend money to, or be employed by or provide
consulting services to, or be connected in any manner with (a) any
supermarket, retail food store, grocery store, liquor store,
warehouse store or any similar business located in market areas
where the Company operates; or (b) any company, entity or business
with which Company was in active negotiation for the purchase of a
supermarket, retail food store, grocery store, liquor store or
warehouse store at the time of termination of the Employee's
15<PAGE>
employment, or with any other company which shall acquire such
supermarket, retail food store, grocery store, liquor store or
warehouse store. The Employee acknowledges that the business of
the Company is presently conducted throughout the counties in
Florida listed on Exhibit A attached hereto and any county
contiguous thereto and that such counties constitute the present
market area of the Company.
Ownership of less than 1% of the stock in a publicly-held
company shall not be deemed a violation of this Section 8.1.
8.2 Non-Interference. The Employee agrees that during the
Term hereof and for a period of one year thereafter, the Employee
will not, directly, indirectly or as an agent on behalf of or in
conjunction with any person, firm, partnership, corporation or
other entity, induce or entice any employee of the Company to
leave such employment or cause anyone else to do so.
8.3 Severability. If any covenant or provision contained
in Section 8.1 is determined to be void or unenforceable in whole
or in part, it shall not be deemed to affect or impair the
validity of any other covenant or provision. The parties intend
that the covenants contained in Section 8.1 shall be deemed to be
a series of separate covenants, one for each county referenced
therein. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant
contained in such Section. If, in any arbitration or judicial
proceeding, a court shall refuse to enforce all of the separate
covenants deemed included in such Section, then such unenforceable
16<PAGE>
covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to
permit the remaining separate covenants to be enforced in such
proceedings.
ARTICLE 9
Remedies
9.1 Equitable Remedies. The Employee and the Company agree
that the services to be rendered by the Employee pursuant to this
Agreement, and the rights and interests granted and the
obligations to be performed by the Employee to the Company
pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a
peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in any action at law, and that a
breach by the Employee of any of the terms of the Agreement will
cause the Company great and irreparable injury and damage. In the
event of a breach or threatened breach of Article 6, Section 8.1
or Section 8.2, the Employee hereby expressly agrees that the
Company shall be entitled to the remedies of injunction, specific
performance and other equitable relief to prevent a breach of the
Agreement, both pendente lite and permanently, against the
Employee, as such breach would cause irreparable injury to the
Company and a remedy at law would be inadequate and insufficient.
Therefore, the Company may, in addition to pursuing its other
remedies, obtain an injunction from any court having jurisdiction
in the matter restraining any further violation. The Employee
17<PAGE>
agrees that a bond in the amount of $5,000 shall be adequate
security for issuance of any temporary injunction. The Company
shall also be entitled to such damages as it can show it has
sustained, directly or indirectly, by reason of said breach.
9.2 Rights and Remedies Preserved. Nothing in this
Agreement except Sections 7.6 and 10.11 shall limit any right or
remedy the Company or the Employee may have under this Agreement
or pursuant to law for any breach of this Agreement by the other
party. Except as set forth in Sections 7.6 and 10.11, the rights
granted to the Company and the Employee herein are cumulative and
the election of one shall not constitute a waiver of such party's
right to assert all other legal remedies available under the
circumstances.
ARTICLE 10
Miscellaneous
10.1 No Waivers. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of
any such provision, nor prevent such party thereafter from
enforcing such provision or any other provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and the
Employee under the terms of this Agreement may be delivered
personally, by telecopy, telex or other form of written electronic
transmission, or by registered or certified mail, postage prepaid,
and shall be addressed as follows:
18<PAGE>
If to the Company: Ronald E. Johnson
Chief Executive Officer
Kash n' Karry Food Stores, Inc.
6422 Harney Road
Tampa, Florida 33610
Telecopier: (813) 626-9550
With a copy to: Robert S. Bolt, Esq.
Barnett, Bolt, Kirkwood & Long
601 Bayshore Boulevard
Suite 700
Tampa, Florida 33606
Telecopier: (813) 251-6711
If to the Employee: Richard D. Coleman
5005 Garrick Court
Tampa, FL 33624
Either party may hereafter notify the other in writing of any
change in address. Any notice shall be deemed duly given (i) when
personally delivered, or (ii) on the third day after it is mailed
by registered or certified mail, postage prepaid, as provided
herein.
10.3 Severability. The provisions of this Agreement are
severable and if any provision of this Agreement shall be held to
be invalid or otherwise unenforceable, in whole or in part, the
remainder of the provisions, or enforceable parts thereof, shall
not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of
the Company under this Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Company,
including the survivor upon any merger, consolidation or
19<PAGE>
combination of the Company with any other entity. The Employee
shall not have the right to assign, delegate or otherwise transfer
any duty or obligation to be performed by him hereunder to any
person or entity, nor to assign or transfer any rights hereunder.
10.5 Entire Agreement. With respect to the terms of
Employee's employment, this Agreement supersedes all prior
agreements and understandings between the parties hereto, oral or
written, and may not be modified or terminated orally. No
modification, termination or attempted waiver shall be valid
unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced.
This Agreement was the subject of negotiation by the parties
hereto and their counsel. The parties agree that no prior drafts
of this Agreement shall be admissible as evidence (whether in any
arbitration or court of law) in any proceeding which involves the
interpretation of any provisions of this Agreement.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Florida without reference to the conflict of law principles
thereof.
10.7 Section Headings. The section headings contained
herein are for the purposes of convenience only and are not
intended to define or limit the contents of said sections.
10.8 Further Assurances. Each party hereto shall cooperate
and shall take such further action and shall execute and deliver
such further documents as may be reasonably requested by any other
20<PAGE>
party in order to carry out the provisions and purposes of this
Agreement.
10.9 Gender. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it"
or "its" whenever applicable. Words in the singular shall be read
and construed as though in the plural and words in the plural
shall be read and construed as though in the singular in all cases
where they would so apply.
10.10 Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall be deemed one
original.
10.11 Arbitration. The parties hereto agree that any
dispute concerning or arising out of the provisions of the
Agreement shall be resolved by arbitration in accordance with the
rules of the American Arbitration Association. Such arbitration
shall be held in Tampa, Florida and the decision of the
arbitrator(s) shall be conclusive and binding on the parties and
shall be enforceable by either party in any court of competent
jurisdiction. The arbitrator may, in his or her discretion, award
attorneys' fees and costs to such party as he or she sees fit in
rendering his or her decision. Notwithstanding the foregoing, if
any dispute arises hereunder as to which the Company desires to
exercise any rights or remedies under Section 9.1 hereof, the
Company may, in its discretion, in lieu of submitting the matter
to arbitration, bring an action thereon in any court of competent
jurisdiction in Hillsborough County, Florida, which court may
21<PAGE>
grant any and all relief available in equity or at law. In any
such action, the prevailing party shall be entitled to reasonable
attorneys' fees and costs as may be awarded by the court.
ARTICLE 11
Survival
11.1 Survival. The provisions of Article 6, 8, 9 and 10,
and Sections 7.3, 7.4, 7.5 and 7.6 of this Agreement shall survive
the termination of this Agreement whether upon, or prior to, the
Scheduled Termination Date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.
KASH N' KARRY FOOD STORES, INC.,
a Delaware corporation
/s/ Julie Hicks By: /s/ Ronald E. Johnson
_________________________ __________________________
Name: Ronald E. Johnson
/s/ BJ Mehaffey Title: Chairman,
_________________________ President & CEO
As to the Company
/s/ Julie Hicks /s/ Richard D. Coleman
_________________________ _______________________________
RICHARD D. COLEMAN
/s/ BJ Mehaffey
______________________
As to the Employee
rsb\KnK\Coleman employment agreement dated January 26, 1996
22
May 23, 1996
Personal and Confidential
Mr. Richard D. Coleman
Senior Vice President-Administration and CFO
5005 Garrick Court
Tampa, FL 33624
Re: Employment Agreement Modification
Dear Mr. Smith:
I am pleased to advise you that the Compensation Committee
of Kash N' Karry Food Stores, Inc., (the "Company") has
determined to modify your employment agreement, dated as of
January 26, 1996, with the Company (the "Employment Agreement")
to provide enhanced base salary continuation protection in the
event your employment with the Company is terminated Without
Cause (as defined in Section 7.2 of the Employment Agreement)
within one year after the occurrence of a change in ownership of
the Company.
Accordingly, the Employment Agreement, in accordance with
Section 10.5 of the Employment Agreement, is hereby modified,
effective as of May 1, 1996, as follows:
1. Section 2.1 of the Employment Agreement is hereby
amended by adding thereto a new last sentence to read as follows:
"Notwithstanding the above, if, prior to the Scheduled
Termination Date, a Change in Control (as defined in Section 7.4
below); occurs the Term shall expire upon the later to occur of
(i) the Scheduled Termination Date, and (ii) the first
anniversary of the date on which any such Change of Control
occurred (the "CIC Anniversary Date")."
2. Section 7.4(c) of the Employment Agreement is hereby
deleted in its entirety and replaced with a new Section 7.4(c) to
read as follows:
"(c) Subject to Section 7.5 and except in the case of a
termination Without Cause under Section 7.2(d), the Employee
shall be entitled to receive all amounts of salary as would have
been payable under Section 3.1 hereof through the Scheduled
Termination Date (the "Salary Continuation Period"), which
amounts shall be paid as and when the same would have been
payable under the Agreement had it not been terminated;
provided, however, that if there occurs within one year after the
occurrence of a Change in Control (as defined below) a
termination Without
<PAGE>
Cause (other than one under Section 7.2(d),
the Salary Continuation Period shall not be less than one year
from the date of termination;"
3. Section 7.4 of the Employment Agreement is hereby
amended by adding a new paragraph at the end thereof to read as
follows:
For purposes of Section 7.4(c) above, (i)"Change in
Control" shall mean and be deemed to have occurred if,
after May 1, 1996, any Person (as defined below)
becomes the beneficial owner (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of (a) securities of
the Company (not including in the securities
beneficially owned by such Person any securities
acquired directly from the Company in any transaction,
including without limitation, any recapitalization,
reorganization or bankruptcy proceeding) representing
more than fifty percent (50%) of the combined voting
power of the Company's then outstanding securities, or
(b) all or substantially all of the assets of the
Company, and (ii) "Person" shall have the meaning
ascribed thereto in Section 3(a)(9) of the Exchange
Act, as modified, applied and used in Sections 13(d)
and 14(d) thereof; provided, however, that a Person
shall not include (A) the Company or any of its
subsidiaries or any of the Original Stockholders (as
defined in the Company's 1995 Key Employee Stock Option
Plan), (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any of its subsidiaries (in its capacity as
such), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities,
(D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
character and proportions as their ownership of stock
of the Company, or (E) any entity or individual
acquiring securities or assets of the Company in
connection with any bankruptcy proceeding. In
addition, the Employee's employment (if in fact
terminated) shall be deemed to have been terminated
following a Change of Control by the Company Without
Cause if the Employee's employment was terminated
Without Cause within six months demonstrates that such
termination, or the circumstance(s)or event(s)
constituting such a termination, occurred (1) at the
request of a Person who has entered into an agreement
with the Company the consummation of which will
constitute a Change in Control (or who has taken other
steps reasonably calculated to effect a Change in
Control) or (2) otherwise in connection with, as a
direct result of or in anticipation of a Change in Control."
4. Section 7.5 of the Employment Agreement shall be amended
by deleting the first sentence thereof and replacing it with a
new first sentence to read as follows:
"In the event of termination of employment hereunder,
the Employee shall be under no obligation to seek
alternative employment or other gainful occupation
during the period from the termination of this
Agreement through the later to occur of
<PAGE>
(a) the CIC
Anniversary Date, and (b) the Scheduled Termination
Date (the "Unexpired Term") by way of mitigation of
amounts payable to the Employee under this Article 7;
provided however, that, except in the case of
Employee's Termination Without Cause under Section
7.2(c), if the Employee provides, directly or
indirectly (including through any personal service
entity), any services (whether as employee, consultant,
independent contractor or otherwise) to any person
engaged in a business similar to the business of the
company as then conducted (a "Third Party") during the
Unexpired Term, all amounts paid or payable to the
Employee by or on behalf of such Third Party in respect
thereof (exclusive of any fringe benefits, profit
sharing and deferred compensation arrangement
customarily offered to senior management of the Third
Party) ("Offset Amounts") shall reduce any amounts
payable thereafter by the Company to the Employee under
Sections 7.4(c), (d) and (e) hereof on a dollar-for-
dollar basis."
5. Except as expressly modified herein, the Employment
Agreement shall remain in full force and effect in accordance
with its terms and provisions as the same are set forth on the
date hereof.
Please indicate your acceptance of and agreement to the
above modifications by dating and signing this modification
agreement in the space provided below.
KASH N' KARRY FOOD STORES, INC.
By: /s/ Ronald Johnson
______________________________
Name: Ronald Johnson
Title: Chief Executive Officer
AGREED TO AND ACCEPTED:
/s/ Richard D. Coleman
______________________
Mr. Richard D. Coleman
Senior Vice President- Administration and CFO
Date: May 23, 1996
EXHIBIT 11
KASH N' KARRY FOOD STORES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
PRIMARY FULLY DILUTED
EARNINGS EARNINGS
---------- ----------
Thirteen Weeks
Ended April 28, 1996:
Net income $3,648,000 $3,648,000
========== ==========
Common shares
outstanding at
beginning of period 4,649,943 4,649,943
Stock option plans:
Shares under option
at end of period 252,243 252,243
Treasury shares which
could be purchased (169,177) (169,177)
---------- ----------
Average number of
shares outstanding 4,733,009 4,733,009
=========== ===========
Income per share $0.77 $0.77
=========== ===========
PRIMARY FULLY DILUTED
EARNINGS EARNINGS
---------- ----------
Thirty-nine Weeks
Ended April 28, 1996
Net income $2,993,000 $2,993,000
========== ==========
Common shares
outstanding at
beginning of period 4,649,943 4,649,943
Stock option plans:
Shares under option
at end of period 252,243 252,243
Treasury shares which
could be purchased (157,311) (157,311)
----------- -----------
Average number of
shares outstanding 4,744,875 4,744,875
=========== ===========
Loss per share $ 0.63 $ 0.63
=========== ===========
EXHIBIT 21
KASH N' KARRY FOOD STORES, INC.
SUBSIDIARIES
SUBSIDIARY STATE OF ORGANIZATION
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
KNK 702 DELAWARE BUSINESS TRUST DELAWARE
KNK 886 DELAWARE BUSINESS TRUST DELAWARE
KNK 891 DELAWARE BUSINESS TRUST DELAWARE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION DERIVED FROM THE CONDENSED
FINANCIAL STATEMENTS OF KASH N' KARRY FOOD STORES, INC. AS OF AND FOR
THE PERIOD ENDED APRIL 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-28-1996
<PERIOD-START> JUL-31-1995
<PERIOD-END> APR-28-1996
<CASH> 3,181
<SECURITIES> 0
<RECEIVABLES> 12,579
<ALLOWANCES> 0
<INVENTORY> 88,460
<CURRENT-ASSETS> 109,111
<PP&E> 160,420
<DEPRECIATION> 27,455
<TOTAL-ASSETS> 364,424
<CURRENT-LIABILITIES> 82,644
<BONDS> 213,712
0
0
<COMMON> 46
<OTHER-SE> 52,828
<TOTAL-LIABILITY-AND-EQUITY> 364,424
<SALES> 788,132
<TOTAL-REVENUES> 788,132
<CGS> 625,184
<TOTAL-COSTS> 761,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,458
<INCOME-PRETAX> 7,048
<INCOME-TAX> (4,055)
<INCOME-CONTINUING> 2,993
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,993
<EPS-PRIMARY> $0.63
<EPS-DILUTED> $0.63
</TABLE>
