SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-10725
FURR'S/BISHOP'S, INCORPORATED
INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION
NO.75-2350724
6901 QUAKER AVENUE, LUBBOCK, TX 79413
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (806)792-7151
- ------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
As of May 12, 1997, there were 48,674,850 shares of Common Stock
outstanding.
Page 1 of 15
Exhibit Index Located on Page 11
<PAGE>
FURR'S/BISHOP'S, INCORPORATED
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
April 1, 1997 (Unaudited) and December 31, 1996 3
Unaudited Condensed Consolidated Statements
of Operations - For the thirteen weeks
ended April 1, 1997 and April 2, 1996 5
Unaudited Consolidated Statement of Stockholders'
Deficit - For the thirteen weeks ended
April 1, 1997 6
Unaudited Condensed Consolidated Statements of
Cash Flows - For the thirteen weeks ended
April 1, 1997 and April 2, 1996 7
Notes to Unaudited Condensed Consolidated
Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
Page 2
<PAGE>
<TABLE> FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
<CAPTION> April 1, December 31,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,413 $ 3,696
Accounts and notes receivable, net 1,180 1,186
Inventories 5,603 5,722
Prepaid expenses and other 1,179 380
---------- ----------
Total current assets 9,375 10,984
Property, plant and equipment, net 59,299 63,806
Other assets 544 469
---------- ----------
$ 69,218 $ 75,259
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
(Continued on following page)
Page 3
<PAGE>
<TABLE>
FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(dollars in thousands, except per share amounts)
<CAPTION> April 1, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Deficit
Current liabilities:
Current maturities of long-term debt $ 5,493 $ 5,493
Trade accounts payable 6,148 5,498
Other payables and accrued expenses 13,742 14,882
Reserve for store closings - current portion 1,056 1,078
----------- -----------
Total current liabilities 26,439 26,951
Reserve for store closings, net of current portion 2,605 2,470
Long-term debt, net of current portion 66,401 69,147
Other payables 7,146 8,265
Excess of future lease payments over fair value,
net of amortization 3,353 3,482
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $.01 par value; 5,000,000
shares authorized, none issued
Common stock, $.01 par value; 65,000,000 shares
authorized, 48,672,193 and 48,671,188 issued
and outstanding 487 487
Additional paid-in capital 55,867 55,866
Pension liability adjustment (2,854) (2,854)
Accumulated deficit (90,226) (88,555)
----------- -----------
Total stockholders' deficit (36,726) (35,056)
----------- -----------
$ 69,218 $ 75,259
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Page 4
<PAGE> FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
<TABLE> UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<CAPTION> Thirteen weeks ended
----------------------------
April 1, 1997 April 2, 1996
<S> <C> <C>
Sales $ 47,353 $ 48,747
Costs and expenses:
Cost of sales (excluding depreciation) 14,343 15,089
Selling, general and administrative 29,469 29,218
Depreciation and amortization 2,725 2,349
Special charges (net) 2,431 0
------------ ------------
48,968 46,656
------------ ------------
Operating income (loss) (1,615) 2,091
Interest expense 56 66
------------ ------------
Net income (loss) $ (1,671) $ 2,025
============ ============
Weighted average number of shares
of common stock outstanding:
Primary 49,152,508 50,251,366
============ ============
Fully diluted 49,187,994 50,251,366
============ ============
Net income (loss) per share:
Primary $ (0.03) $ 0.04
============ ============
Fully diluted $ (0.03) $ 0.04
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Page 5
<PAGE>
<TABLE>
FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THIRTEEN WEEKS ENDED APRIL 1, 1997
(dollars in thousands)
<CAPTION> Additional Pension Total
Common Paid-In Liability Accumulated Stockholders'
Stock Capital Adjustment Deficit Deficit
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 $ 487 $ 55,866 $ (2,854) $ (88,555) $ (35,056)
Warrants exercised 1 1
Net loss (1,671) (1,671)
------ -------- -------- --------- ---------
Balance,
April 1, 1997 $ 487 $ 55,867 $ (2,854) $ (90,226) $ (36,726)
====== ======== ======== ========= =========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Page 6
<PAGE>
<TABLE> FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Thirteen weeks ended
---------------------------
April 1, 1997 April 2, 1996
<S> <C> <C>
Cash flows from operating activities:
Net income: $ (1,671) $ 2,025
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortizatio 2,725 2,349
Loss (gain) on disposition of assets 34 (28)
Special charges (credits) 2,431
Other, net 111 295
Changes in operating assets and liabilities:
Decrease in accounts and notes receivable 5 143
Decrease in inventories 119 190
Increase in prepaid expenses and other (798) (215)
Decrease in trade accounts payable and other
payables, accrued expenses and other
liabilities (485) (481)
--------- ----------
Net cash provided by operating activities 2,471 4,278
--------- ----------
Cash flows used in investing activities:
Purchases of property, plant and equipment (1,641) (1,928)
Expenditures charged to reserve for store
closings (377) (342)
Proceeds from the sale of property, plant and
equipment 4 59
Other, net (1) 58
--------- ----------
Net cash used in investing activities (2,015) (2,153)
--------- ----------
Cash flows used in financing activities:
Payment of indebtedness (2,746) (1,048)
Other, net 7 (23)
--------- ----------
Net cash used in financing activities (2,739) (1,071)
--------- ----------
Increase (decrease) in unrestricted cash and
cash equivalents (2,283) 1,054
Cash and cash equivalents at beginning of period 3,696 186
--------- ----------
Cash and cash equivalents at end of period $ 1,413 $ 1,240
========= ==========
Supplemental disclosure of cash flow information:
Interest paid, including $2,746 and $1,007
of interest classified as payment of
indebtedness $ 2,748 $ 1,015
========= ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
Page 7
<PAGE>
FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------
NOTE A: Summary of Significant Accounting Policies
Furr's/Bishop's, Incorporated (the "Company"), a Delaware corporation,
operates cafeterias and specialty restaurants through its subsidiary Cafeteria
Operators, L.P., a Delaware limited partnership (together with its
subsidiaries, the "Partnership"). The financial statements presented herein
are the unaudited condensed consolidated financial statements of
Furr's/Bishop's, Incorporated and its majority owned subsidiaries.
The accompanying unaudited condensed consolidated financial statements
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 consolidated financial statements, and notes thereto, which are
included in the Company's Form 10-K for the year ended December 31, 1996. The
accompanying unaudited condensed consolidated financial statements reflect the
accounts of the Company after elimination of all material intercompany and
interpartnership accounts and transactions, and in the opinion of management
include all adjustments, of a normal recurring nature, necessary for a fair
presentation. Certain expenditures benefiting more than one period are charged
to operations on a percentage of sales or on a pro rata basis over the 52-53
week fiscal year. Certain amounts have been reclassified in the statements of
operations for the thirteen weeks ended April 2, 1996 to conform to the
classifications used in the financial statements for the period ended April 1,
1997.
The results of operations for the thirteen weeks ended April 1, 1997 may
not be indicative of the results that may be expected for the fiscal year
ending December 30, 1997.
NOTE B: Income Tax
During the thirteen week period ended April 1, 1997, the Company had a net
loss for income tax purposes. The resulting tax benefit from the net operating
loss has been offset by an increase in the tax valuation allowance.
NOTE C: Special Charges
The loss from operations for the quarter ended April 1, 1997 includes net
special charges of $2.4 million primarily resulting from the writedown to
carrying values of property, plant and equipment. The results of operations
includes a charge of $1.9 million for the writedown of assets and adjustments
to closed store reserves of units previously closed, as well as one unit to be
closed. Also included is $1.8 million to recognize the writedown of certain
assets in property, plant and equipment to estimated fair values in accordance
with Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121"). Also included is a credit of $1.3 million related to the
settlement of a lawsuit previously filed against the Company by the Internal
Revenue Service.
Page 8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Thirteen Weeks Ended April 1, 1997
- ----------------------------------
Results of operations. Sales for the first fiscal quarter of 1997 were
$47.4 million, a decrease of $1.4 million from the same quarter of 1996. The
operating loss for the first quarter of 1997 was $1.6 million compared to
income of $2.1 million in the comparable period in the prior year. The
operating results of the first quarter of 1997 included net special charges of
$2.4 million. The net loss for the first quarter of 1997 was $1.7 million
compared to income of $2.0 million in the first quarter of 1996. During the
first quarter of 1997, sales were negatively impacted by severe winter weather
and by including fewer units in the operating results.
Sales. Restaurant sales in comparable units were 1.2% lower in the first
quarter of 1997 than the same quarter of 1996. Sales for the first fiscal
quarter were $228 thousand lower than the prior year due to there being a net
of two fewer units included in operating results. Sales by Dynamic Foods to
third parties was $585 thousand lower in the first quarter of 1997 than the
prior year.
Cost of sales. Excluding depreciation, cost of sales was 30.3% of sales
for the first quarter of 1997 as compared to 31.0% for the same quarter of
1996. The decrease in the percentage of revenues was the result of changes in
the menu mix and lower product costs.
Selling, general and administrative. Selling, general and administrative
("SG&A") expense was higher in the aggregate by $251 thousand in the first
quarter of 1997 as compared to 1996 due to increases in some expense categories
being partially offset by there being fewer units included in the operating
results. The change in SG&A expense included increases of $409 thousand in
salaries, wages and related benefits, $214 thousand in marketing expense, and
decreases of $115 thousand in taxes other than income tax. SG&A expense was
$305 thousand lower than the prior year due to there being a net of two fewer
units included in operating results.
Depreciation and amortization. Depreciation and amortization expense was
higher by $376 thousand in the first quarter of 1997 due primarily to higher
depreciation on newly acquired property, plant and equipment, along with the
use of shorter depreciation periods.
Special Charges. The loss from operations for the quarter ended April 1,
1997 includes net special charges of $2.4 million primarily resulting from the
writedown to carrying values of property, plant and equipment. The results of
operations includes a charge of $1.9 million for the writedown of assets and
adjustments to closed store reserves of units previously closed, as well as one
unit to be closed. Also included is $1.8 million to recognize the writedown of
certain assets in property, plant and equipment to estimated fair values in
accordance with SFAS 121. Also included is a credit of $1.3 million related to
the settlement of a lawsuit.
Interest expense. Interest expense was $56 thousand in the first quarter
of 1997, which was slightly lower than the comparable period in the prior year.
In accordance with Statement of Financial Accounting Standards No. 15, the
restructured debt was recorded at the sum of all future principal and interest
payments and there is no recognition of interest expense thereon.
Page 9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES OF
FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
----------------------------------------------
During the thirteen weeks ended April 1, 1997, cash provided from
operating activities of the Company was $2.5 million compared to $4.3 million
in the same period of 1996. The Company made capital expenditures of $1.6
million during the first thirteen 3weeks of 1997 compared to $1.9 million
during the same period of 1996. Cash, temporary investments and marketable
securities were $1.4 million at April 1, 1997 compared to $2.0 million at April
2, 1996. The cash balance in the prior year included $800 thousand which was
restricted pursuant to collateral requirements in a letter of credit agreement.
The current ratio of the Company was .35:1 at April 1, 1997 compared to .32:1
at April 2, 1996. The Company's total assets at April 1, 1997 aggregated $69.2
million, following the net special charges of $2.4 million, compared to $78.3
million at April 2, 1996.
The Company's restaurants are a cash business. Funds available from cash
sales are not needed to finance receivables and are not generally needed
immediately to pay for food, supplies and certain other expenses of the
restaurants. Therefore, the business and operations of the Company have not
historically required proportionately large amounts of working capital, which
is generally common among similar restaurant companies.
Total scheduled maturities of long-term debt of the Company and its
subsidiaries over the next five fiscal years are: $2.7 million in 1997, $5.5
million in 1998, $5.5 million in 1999, $5.5 million in 2000 and $52.7 million
in 2001.
The Partnership has outstanding $71.9 million of 12% Notes due December
31, 2001, which includes $26.1 million of interest to maturity. Under the
terms of the indenture covering the 12% Notes, a semi-annual cash interest
payment of approximately $2.7 million is due on each March 31 and September 30.
The obligations of the Partnership under the 12% Notes are secured by a
security interest in and a lien on all of the personal property of the
Partnership and mortgages on all fee and leasehold properties of the
Partnership (to the extent such properties are mortgageable).
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"), which specifies the computation, presentation and disclosure
requirements for earnings per share for entities with publicly held common
stock for both interim and annual periods ending after December 15, 1997.
Management of the Company does not expect the adoption of the provisions of
SFAS 128 in fiscal year 1997 to have a material impact.
Page 10
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
10 Employment Letter Agreement, dated as of March 24, 1997, by and
among Theodore J. Papit and Furr's/Bishop's, Incorporated.
11 Computation of Net Income (Loss) Per Common Share
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended April 1,
1997.
Page 11
<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.
FURR'S/BISHOP'S, INCORPORATED FURR'S/BISHOP'S, INCORPORATED
BY: /s/ Theodore J. Papit /s/ Alton R. Smith
----------------------------- ------------------------------
Theodore J. Papit Alton R. Smith
President and Chief Executive Officer Principal Accounting Officer
DATE: May 16, 1997
Page 12
<PAGE>
Employment Letter Agreement Exhibit 10.2
March 24, 1997
PRIVATE & CONFIDENTIAL
Mr. Ted Papit
6209 Corinthian Bay
Plano, Texas 75093
Dear Ted:
I have outlined below the terms of your proposed employment at Furr's/Bishop's
that the CEO Search Committee is prepared to recommend for consideration by the
full Board of Directors of Furr's/Bishop's.
- - Start date - April 1, 1997
- - Title - President and Chief Executive Officer
- - Base salary - $25,000 per month ($300,000 annualized)
- - Bonus - minimum first year guaranteed $100,000 based on formal incentive
compensation program as adopted by the Board and outlined to you.
- - Stock Options - 500,000 shares which vest over five years per company
policy.
- - Apartment in Lubbock will be provided by the company for you for up to one
year. This part of the agreement may be extended with Board approval.
- - Three weeks minimum paid vacation during the first full year of employment.
- - One year severance agreement in the event of change of control or separation
for reasons other than cause.
- - Options would vest immediately in the event of change of control or
termination for reasons other than cause.
If you find that these terms are acceptable, please sign a copy of this letter
and return it to me immediately and I will proceed to present your proposed
employment terms for consideration by the full Board of Directors of
Furr's/Bishop's. Obviously, any formal offer of employment to you is subject
to final approval by the full Board of Directors of Furr's/Bishop's.
We will look forward to seeing you in Big Springs on Wednesday night to
formally introduce you to the Board. Also, we look forward to your spending
Thursday with us.
/s/ Sanjay Varma
- ----------------------------------
Sanjay Varma
These terms are acceptable to me:
/s/ Ted Papit 3/25/97
- ----------------------------------- -------------
Ted Papit Date
Page 13
<PAGE>
FURR'S/BISHOP'S, INCORPORATED
ATTACHMENT TO EMPLOYMENT LETTER FOR
TED PAPIT DATED MARCH 24, 1997
Definition of the terms "cause" and "change of control"
as used in the Employment Letter
Termination or separation for "cause" means termination or separation
because of: (i) your failure to perform, or willful and continual neglect of,
your material duties or obligations as President and Chief Executive Officer,
which continues after written notice that such actions are occurring has been
furnished by Furr's/Bishop's to you and you have been afforded a reasonable
opportunity of at least ten (10) days to cure the same, all as determined by
the Board of Directors of Furr's/Bishop's; (ii) your conviction of any crime or
offense involving (a) moral turpitude, either in connection with the
performance of your obligations to Furr's/Bishop's or its affiliates or which
shall adversely affect your ability to perform such obligations or (b) money or
other property of Furr's/Bishop's or its affiliates; or (iii) chronic
alcoholism or drug addiction.
A "change of control" shall be deemed to have occurred upon any of the
following events:
(a) if the stockholders of Furr's/Bishop's approve a sale or disposition
of all or substantially all of the assets of Furr's/Bishop's to an entity that
is not then an affiliate (as such term is defined in Rule 405 promulgated under
the Securities Act of 1933, as amended) of Furr's/Bishop's; or
(b) the election during any period of twelve (12) months or less of a
majority of the members of the Board of Directors of Furr's/Bishop's without
the approval of the election or nomination for election of such new member or
members by a majority of the members of the Board who were members at the
beginning of the period, or members of the Board thereafter recommended to
succeed such original members (or their successors hereunder) by a majority of
the members of the Board who were members at the beginning of the period (or
their successors hereunder).
Page 14
<PAGE>
<TABLE>
Exhibit 11
FURR'S/BISHOP'S, INCORPORATED AND SUBSIDIARIES
UNAUDITED COMPUTATION OF NET INCOME PER SHARE
(Dollars and shares in thousands, except per share amounts)
<CAPTION> Thirteen weeks ended
----------------------------
April 1, 1997 April 2, 1996
<S> <C> <C>
Net Income (Loss) $ (1,671) $ 2,025
========== ==========
Primary:
Weighted average number of
common shares outstanding 48,672 48,650
Common shares issued upon exercise of
outstanding warrants, net of shares assumed
to be repurchased 481 1,601
---------- ----------
Primary weighted average number of
common and common equivalent shares
outstanding 49,153 50,251
========== ==========
Primary net income (loss) per
share of common stock $ (0.03) $ 0.04
========== ==========
Fully Diluted:
Weighted average number of
common shares outstanding 48,672 48,650
Common shares issued upon exercise of
outstanding warrants, net of shares assumed
to be repurchased 516 1,601
---------- ----------
Fully diluted weighted average
common and common equivalent shares
outstanding 49,188 50,251
========== ==========
Fully diluted net (loss) income
per share of common stock $ (0.03) $ 0.04
========== ==========
</TABLE>
Page 15
<PAGE>
Form of Nonqualified Stock Option Agreement Exhibit 10.1
FURR'S/BISHOP'S, INCORPORATED
NONQUALIFIED
STOCK OPTION AGREEMENT
Under the terms and conditions of the 1995 Stock Option Plan (the "Plan"),
a copy of which is attached hereto and incorporated in this Agreement by
reference, Furr's/Bishop's, Incorporated (the "Company") grants to
_____________________ (the "Optionee") the option to purchase ____________
shares of the Company's Common Stock, $.01 par value, at the price of _________
per share, subject to adjustment as provided in the Plan (the "Option").
Specifically, this Option is granted pursuant to Section 23 of the Plan.
This Option shall be for a term commencing on the grant date hereof and
ending ______________________, unless this Option is terminated earlier in the
event the Optionee ceases to be a voting member of the Board of Directors of
the Company for any reason, as provided in the Plan.
This Option shall be exercisable as to one-third (1/3) of the shares
subject to the Option (________ shares) on each of the first, second and third
anniversary dates of the grant date hereof.
This Option is a nonqualified stock option which is not intended to be
governed by Section 422 of the Internal Revenue Code of 1986, as amended.
The Optionee, in accepting this Option, accepts and agrees to be bound by
all the terms and conditions of this Nonqualified Stock Option Agreement and of
the Plan which pertain to nonqualified stock options granted under the Plan.
Granted the ______ day of ____________, 19___.
FURR'S/BISHOP'S, INCORPORATED
By: ___________________________________
Name
Title
ACCEPTED this ____ day of ____________, 19___.
__________________________________________________
Optionee
Page 16
Exhibit 10.3
NONQUALIFIED STOCK OPTION AGREEEMENT
1995 STOCK OPTION PLAN
OF FURR'S/BISHOP'S, INCORPORATED
This STOCK OPTON AGREEMENT (the "Agreement") is made between
FURR'S/BISHOP'S, INCORPORATED, a Delaware corporation (the "Company"), and
(the "Executive"). The Company considers that its
interests will be served by granting the Executive an option to purchase shares
of common stock of the Company as an inducement for his continued and effective
performance of services for the Company. The Board of Directors of the Company
(the "Board") has adopted, and the stockholders have approved, the 1995 Stock
Option Plan of Furr's/Bishop's, Incorporated (the "Plan"), a copy of which is
attached hereto and incorporated by reference herein. The Executive has been
designated as a participant in the Plan.
IT IS AGREED:
1. Subject to the terms of the Plan, on (the "Date of
Grant"), the Company hereby grants to the Executive an incentive stock option
(the "Option") to purchase shares of the common stock of the Company,
$.01 par value per share, at a price of per share, subject to adjustment
as provided in the Plan (the "Option Price"). The Option is exercisable
according to the following schedule:
(a) On the day after the first anniversary of the Date of Grant, the
Option may be exercised with respect to up to 1/5 of the shares subject to the
Option;
(b) after each succeeding anniversary of the Date of Grant, the Option
may be exercised with respect to up to an additional 1/5 of the shares subject
to the Option, so that after the expiration of the fifth anniversary of the
Date of Grant the Option shall become exercisable in full; and
(c) to the extent not exercised, installments shall be cumulative and may
be exercised in whole or in part.
Notwithstanding the above, the Option shall become fully exercisable upon
the occurrence of either (i) termination of the Executive's employment by the
Company other than in a termination for cause or (ii) a change of control. For
this purpose, the Executive's employment will be deemed to have been terminated
by the company for cause if the Company severs its employment relationship with
the Executive because of (i) his failure to perform, or willful and continual
neglect of, his material duties or obligations as , which
continues after written notice that such actions are occurring has been
furnished by the Company to him and he has been afforded a reasonable
opportunity of at least ten (10) days to cure the same, all as determined by
the Board; (ii) his conviction of any crime or offense involving (a) moral
turpitude, either in connection with the performance of his obligations to the
Company or its affiliates or which shall adversely affect his ability to
perform such obligations or (b) money or other property of the Company or its
affiliates; or (iii) chronic alcoholism or drug addiction. For purposes of
this Agreement a "change of control" shall be deemed to have occurred upon (a)
the stockholders of the Company approving a sale or disposition of all or
substantially all of the assets of the Company to an entity that is not then an
affiliate (as such term is defined in Rule 405 promulgated under the Securities
Page 17
<PAGE>
Act of 1933, as amended) of the Company; or (b) the election during any period
of twelve (12) months or less of a majority of the members of the Company
without the approval of the election or nomination for election of such new
member or members by a majority of the members of the Board who were members at
the beginning of the period, or members of the Board thereafter recommended to
succeed such original members (or their successors hereunder) by a majority of
the members of the Board who were members at the beginning of the period (or
their successors hereunder).
2. The Option granted to the Executive under this Agreement shall not be
transferable or assignable by Employee other than by will or the laws of
descent and distribution, and shall be exerciseable during the Executive's
lifetime only by him.
3. The Option, to the extent such rights shall not previously have been
exercised, shall terminate and become null and void on the earliest of:
(a) the last day within the ten year period commencing on the Date of
Grant (the "Expiration Date");
(b) the date that is 30 days after the date of severance of the
Executive's employment with the Company and all subsidiaries of the Company as
defined in the Plan ("Subsidiaries") for any reason other than death,
retirement as defined in the Plan ("Retirement"), or disability as defined in
the Plan ("Disability");
(c) the date that is 90 days after the date of severance of the
Executive's employment with the Company and all Subsidiaries because of
Retirement;
(d) the date that is 180 days after the date of the Executive's severance
of employment with the Company and all Subsidiaries because of Disability; or
(e) the date that is 180 days after the date of the Executive's death;
provided that he dies either while employed with the Company or Subsidiary or
within 30 days after his severance of employment with the Company and all
Subsidiaries.
In the event of the severance of the Executive's employment with the
Company and all Subsidiaries for any reason prior to the Expiration Date, the
Option shall not continue to vest after his severance of employment. Upon the
death of the Executive, his executors, administrators or any person or persons
to whom his Option may be transferred by will or by the laws of descent and
distribution, shall have the right to exercise the Option with respect to the
number of shares that the Executive would have been entitled to exercise if he
were still alive.
4. This Agreement may not be changed or terminated orally but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
5. The Company shall not be deemed by the grant of the Option (as
distinguished from a separate employment agreement, if any) to be required to
employ the Executive for any period.
Page 18
<PAGE>
6. The Executive shall not have any rights as a stockholder with respect
to any shares covered by the Option until the date of the issuance of the stock
certificate or certificates to him for such shares following his exercise of
the Option pursuant to its terms and conditions and payment for the shares. No
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such certificate or certificates are issued.
7. The Executive consents to the placing on the certificate for any
shares covered by the Option of an appropriate legend restricting resale or
other transfer of such shares except in accordance with the Securities Act of
1933 and all applicable rules thereunder.
8. In the event of any difference of opinion concerning the meaning or
effect of the Plan or this Agreement, such difference shall be resolved by the
committee referred to in the Plan.
9. The validity, construction and performance of this agreement shall be
governed by the laws of the State of Delaware. Any invalidity of any provision
of this Agreement shall not affect the validity of any other provision.
10. All offers, notices, demands, requests, acceptances or other
communications hereunder shall be in writing and shall be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to the Company shall be addressed to its
principal office, and any notice mailed to the Executive shall be addressed to
the Executive's residence address as it appears on the books and records of the
Company or to such other address as either party may hereafter designate in
writing to the other.
11. This Agreement shall, except as herein stated to the contrary, inure
to the benefit of and bind the legal representatives, successors and assigns of
the parties hereto.
12. This Option is a nonqualified stock option which is not intended to
be governed by section 422 of the Internal Revenue Code of 1986, as amended.
13. In accepting this Option, the Executive accepts and agrees to be
bound by all the terms and conditions of the Plan which pertain to nonqualified
stock options granted under the Plan.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to
be effective as of the day and year first above written.
FURR'S/BISHOP'S, INCORPORATED
By:__________________________
Name and Title
______________________________
Page 19
<PAGE>
Exhibit 10.4
INCENTIVE STOCK OPTION AGREEEMENT
1995 STOCK OPTION PLAN
OF FURR'S/BISHOP'S, INCORPORATED
This STOCK OPTON AGREEMENT (the "Agreement") is made between
FURR'S/BISHOP'S, INCORPORATED, a Delaware corporation (the "Company"), and
(the "Executive"). The Company considers that its
interests will be served by granting the Executive an option to purchase shares
of common stock of the Company as an inducement for his continued and effective
performance of services for the Company. The Board of Directors of the Company
(the "Board") has adopted, and the stockholders have approved, the 1995 Stock
Option Plan of Furr's/Bishop's, Incorporated (the "Plan"), a copy of which is
attached hereto and incorporated by reference herein. The Executive has been
designated as a participant in the Plan.
IT IS AGREED:
1. Subject to the terms of the Plan, on (the "Date of
Grant"), the Company hereby grants to the Executive an incentive stock option
(the "Option") to purchase shares of the common stock of the Company,
$.01 par value per share, at a price of per share, subject to adjustment
as provided in the Plan (the "Option Price"). The Option is exercisable
according to the following schedule:
(a) On the day after the first anniversary of the Date of Grant, the
Option may be exercised with respect to up to 1/5 of the shares subject to the
Option;
(b) after each succeeding anniversary of the Date of Grant, the Option
may be exercised with respect to up to an additional 1/5 of the shares subject
to the Option, so that after the expiration of the fifth anniversary of the
Date of Grant the Option shall become exercisable in full; and
(c) to the extent not exercised, installments shall be cumulative and may
be exercised in whole or in part.
Notwithstanding the above, the Option shall become fully exercisable upon
the occurrence of either (i) termination of the Executive's employment by the
Company other than in a termination for cause or (ii) a change of control. For
this purpose, the Executive's employment will be deemed to have been terminated
by the Company for cause if the Company severs its employment relationship with
the Executive because of (i) his failure to perform, or willful and continual
neglect of, his material duties or obligations as , which
continues after written notice that such actions are occurring has been
furnished by the Company to him and he has been afforded a reasonable
opportunity of at least ten (10) days to cure the same, all as determined by
the Board; (ii) his conviction of any crime or offense involving (a) moral
turpitude, either in connection with the performance of his obligations to the
Company or its affiliates or which shall adversely affect his ability to
perform such obligations or (b) money or other property of the Company or its
affiliates; or (iii) chronic alcoholism or drug addiction. For purposes of
this Agreement a "change of control" shall be deemed to have occurred upon (a)
the stockholders of the Company approving a sale or disposition of all or
substantially all of the assets of the Company to an entity that is not then an
Page 20
<PAGE>
affiliate (as such term is defined in Rule 405 promulgated under the Securities
Act of 1933, as amended) of the Company; or (b) the election during any period
of twelve (12) months or less of a majority of the members of the Company
without the approval of the election or nomination for election of such new
member or members by a majority of the members of the Board who were members at
the beginning of the period, or members of the Board thereafter recommended to
succeed such original members (or their successors hereunder) by a majority of
the members of the Board who were members at the beginning of the period (or
their successors hereunder).
THE EXECUTIVE IS HEREBY NOTIFIED THAT IF HIS EMPLOYMENT IS TERMINATED
OTHER THAN IN A TERMINATION FOR CAUSE OR THERE IS A CHANGE OF CONTROL, A
PORTION OF THE OPTION MAY BE TAXED AS IF IT WERE A NONQUALIFIED STOCK OPTION
RATHER THAN AN INCENTIVE STOCK OPTION.
To the extent that the aggregate fair market value of Stock with respect
to which incentive stock options are exercisable for the first time by the
Executive during any calendar year (under the Plan or any other plan of the
Company of its affiliates) exceeds $100,000, the options will be treated as
nonqualified stock options. For purposes of this rule, the fair market value
of the Stock is determined at the time the option for the Stock is granted.
2. The Option granted to the Executive under this Agreement shall not be
transferable or assignable by Employee other than by will or the laws of
descent and distribution, and shall be exerciseable during the Executive's
lifetime only by him.
3. The Option, to the extent such rights shall not previously have been
exercised, shall terminate and become null and void on the earliest of:
(a) the last day within the ten year period commencing on the Date of
Grant (the "Expiration Date");
(b) the date that is 30 days after the date of severance of the
Executive's employment with the Company and all subsidiaries of the Company as
defined in the Plan ("Subsidiaries") for any reason other than death,
retirement as defined in the Plan ("Retirement"), or disability as defined in
section 22(e)(3) of the Internal Revenue Code of 1986, as amended
("Disability");
(c) the date that is 90 days after the date of severance of the
Executive's employment with the Company and all Subsidiaries because of
Retirement;
(d) the date that is 180 days after the date of the Executive's severance
of employment with the Company and all Subsidiaries because of Disability; or
(e) the date that is 180 days after the date of the Executive's death;
provided that he dies either while employed with the Company or Subsidiary or
within 30 days after his severance of employment with the Company and all
Subsidiaries.
THE EXECUTIVE IS HEREBY NOTIFIED THAT THE OPTION WILL BE TAXED AS IF IT
WERE A NONQUALIFIED STOCK OPTION RATHER THAN AN INCENTIVE STOCK OPTION TO THE
EXTENT THAT IT IS NOT EXERCISED ON OR BEFORE ONE DAY LESS THAN THREE MONTHS
AFTER THE EXECUTIVE'S RETIREMENT.
Page 21
<PAGE>
In the event of the severance of the Executive's employment with the
Company and all Subsidiaries for any reason prior to the Expiration Date, the
Option shall not continue to vest after his severance of employment. Upon the
death of the Executive, his executors, administrators or any person or persons
to whom his Option may be transferred by will or by the laws of descent and
distribution, shall have the right to exercise the Option with respect to the
number of shares that the Executive would have been entitled to exercise if he
were still alive.
4. This Agreement may not be changed or terminated orally but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
5. The Company shall not be deemed by the grant of the Option (as
distinguished from a separate employment agreement, if any) to be required to
employ the Executive for any period.
6. The Executive shall not have any rights as a stockholder with respect
to any shares covered by the Option until the date of the issuance of the stock
certificate or certificates to him for such shares following his exercise of
the Option pursuant to its terms and conditions and payment for the shares. No
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such certificate or certificates are issued.
7. The Executive consents to the placing on the certificate for any
shares covered by the Option of an appropriate legend restricting resale or
other transfer of such shares except in accordance with the Securities Act of
1933 and all applicable rules thereunder.
8. In the event of any difference of opinion concerning the meaning or
effect of the Plan or this Agreement, such difference shall be resolved by the
committee referred to in the Plan.
9. The validity, construction and performance of this agreement shall be
governed by the laws of the State of Delaware. Any invalidity of any provision
of this Agreement shall not affect the validity of any other provision.
10. All offers, notices, demands, requests, acceptances or other
communications hereunder shall be in writing and shall be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to the Company shall be addressed to its
principal office, and any notice mailed to the Executive shall be addressed to
the Executive's residence address as it appears on the books and records of the
Company or to such other address as either party may hereafter designate in
writing to the other.
11. This Agreement shall, except as herein stated to the contrary, inure
to the benefit of and bind the legal representatives, successors and assigns of
the parties hereto.
12. This Option is an incentive stock option which is intended to be
governed by section 422 of the Internal Revenue Code of 1986, as amended.
13. In accepting this Option, the Executive accepts and agrees to be
bound by all the terms and conditions of the Plan which pertain to nonqualified
stock options granted under the Plan.
Page 22
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to
be effective as of the day and year first above written.
FURR'S/BISHOP'S, INCORPORATED
By:___________________________________
Name and Title
___________________________________
Page 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FURR'S/BISHOP'S, INCORPORATED FINANCIAL STATEMENTS AS OF AND FOR THE
PERIOD ENDED APRIL 1, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> APR-01-1997
<CASH> 1,413
<SECURITIES> 0
<RECEIVABLES> 1,202
<ALLOWANCES> 22
<INVENTORY> 5,603
<CURRENT-ASSETS> 9,375
<PP&E> 120,608
<DEPRECIATION> 61,309
<TOTAL-ASSETS> 69,218
<CURRENT-LIABILITIES> 26,439
<BONDS> 66,401
0
0
<COMMON> 487
<OTHER-SE> (37,213)
<TOTAL-LIABILITY-AND-EQUITY> 69,218
<SALES> 47,353
<TOTAL-REVENUES> 47,353
<CGS> 14,343
<TOTAL-COSTS> 14,343
<OTHER-EXPENSES> 34,625
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> (1,671)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,671)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,671)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
