-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, E8fbp1WQI5ruQLcyv6g6oWUdl4hRI/MXWqQUoBHoSBj0q3u7h2699P3HYAArdMpY /v7id1D2/FFhXDeGN9H92A== 0000890587-94-000095.txt : 19940701 0000890587-94-000095.hdr.sgml : 19940701 ACCESSION NUMBER: 0000890587-94-000095 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOODARAMA SUPERMARKETS INC CENTRAL INDEX KEY: 0000037914 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 210717108 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05745 FILM NUMBER: 94534952 BUSINESS ADDRESS: STREET 1: 303 W MAIN ST CITY: FREEHOLD STATE: NJ ZIP: 07728 BUSINESS PHONE: 9084624700 MAIL ADDRESS: STREET 1: 303 W MAIN ST CITY: FREEHOLD STATE: NJ ZIP: 07728 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 ___________________________ For the Quarterly period ended April 30, 1994 Commission file number 1-5745-1 FOODARAMA SUPERMARKETS, INC. 303 West Main Street Freehold, N.J. 07728 I.D. # 21-0717108 Telephone #908-462-4700 Indicate by check mark whether the Registrant (1) has filed all annual, quarterly and other reports required to be filed with the Commission and (2) has been subject to the filing requirements for at least the past 90 days. Yes X No_______ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. OUTSTANDING AT CLASS April 30, 1994 Common Stock 1,118,150 shares $1 par value FOODARAMA SUPERMARKETS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets April 30, 1994 and October 30, 1993 Consolidated Statements of Operations For the thirteen weeks ended April 30, 1994 and May 1, 1993 Consolidated Statements of Cash Flows for the thirteen weeks ended April 30, 1994 and May 1, 1993 Notes to the Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 3. Default Upon Senior Securities See Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources -- Forbearance Agreement Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 4.01 Forbearance Agreement and Amendment, dated as of May 31, 1994, among Foodarama Super- markets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., and cer- tain other senior noteholders as set forth on the signature pages thereto. 4.02 Standstill Agreement, dated as of May 31, 1994, among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Super- markets of Connecticut, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent. 4.03 Amendment No. 5, dated as of June 1, 1994, to a certain credit agreement among Foodarama Supermarkets, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent. (b) No reports on Form 8-K were required to be filed for the 13 weeks ended April 30,1994. PART I FINANCIAL INFORMATION FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Balance Sheets - April 30, 1994 and October 30, 1993 (IN THOUSANDS) ASSETS April 30, October 30, 1994 1993 (Unaudited) (Audited) Current Assets: Cash and cash equivalents $ 4,103 $ 4,765 Merchandise inventories 28,381 33,983 Receivables and other 5,451 8,624 Total current assets 37,935 47,372 Property and equipment: Land 1,762 1,762 Buildings and improvements 2,132 2,132 Leaseholds and leasehold improvements 32,886 31,732 Equipment 49,950 48,042 Property under capital leases 9,649 9,649 Equipment under capital leases 8,676 8,859 105,055 102,176 Less accumulated depreciation and amortization including $9,628, 1994 and $8,984, 1993 relating to property and equipment under capital leases 42,479 39,474 62,576 62,702 Other assets: Investment in related party 8,626 8,626 Intangibles 7,351 8,145 Other 4,338 4,457 20,315 21,228 $120,826 $131,302 See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Balance Sheets - April 30, 1994 and October 30, 1993 (IN THOUSANDS EXCEPT PER SHARE DATE) (continued) LIABILITIES AND SHAREHOLDERS' EQUITY April 30, October 30, 1994 1993 (Unaudited) (Audited) Current liabilities: Current portion of long-term debt $ 8,422 $ 2,523 Current portion of long-term debt, related party 88 204 Long-term obligation in default classified as current 28,379 34,415 Current portion of obligations under capital leases 1,120 1,245 Accounts payable: Related party 13,573 16,638 Other 12,782 12,112 Accrued expenses and other 5,337 10,009 Total current liabilities 69,701 77,146 Long-term debt 2,827 3,587 Long-term debt, related party 89 176 Obligations under capital leases 9,107 9,699 Deferred income taxes 4,921 4,921 Other long-term liabilities 3,560 3,921 Mandatory redeemable preferred stock subscribed $12.50 par: authorized 1,000,000 shares; 136,000 shares issued 1,700 1,700 Shareholders' equity: Common stock, $1.00 par; authorized 2,500,000 shares; issued 1,621,627 shares 1,622 1,622 Capital in excess of par 2,351 2,351 Retained Earnings 31,570 32,831 35,543 36,804 Less 503,477 shares, held in treasury, at cost 6,622 6,622 28,921 30,182 $120,826 $131,302 See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (IN THOUSANDS - EXCEPT PER SHARE DATA) 13 Weeks Ended 4/30/94 5/01/93 Sales $ 151,546 $ 169,002 Cost of Sales 115,413 127,814 Gross profit 36,133 41,188 Operating expenses 36,782 39,090 (Loss) Income from operations ( 649) 2,098 Interest - net 1,268 1,615 (Loss) Income before taxes (1,917) 483 Income tax (benefit) provision ( 616) 193 Net (loss) income $ (1,301) $ 290 Net (loss) income per common share $ (1.19) $ .23 Weighted average of common shares outstanding 1,118,150 1,118,150 Dividends per share - 0 - - 0 - See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Operations - Unaudited (IN THOUSANDS - EXCEPT PER SHARE DATA) 26 Weeks Ended 4/30/94 5/01/93 Sales $ 309,037 $ 341,721 Cost of Sales 234,202 257,319 Gross profit 74,835 84,402 Operating expenses 74,182 80,345 (Loss) Income from operations 653 4,057 Interest - net 2,504 3,372 (Loss) Income before taxes (1,851) 685 Income tax (benefit) provision ( 590) 274 Net (loss) income $ (1,261) $ 411 Net (loss) income per common share $ (1.18) $ .34 Weighted average of common shares outstanding 1,118,150 1,118,150 Dividends per share - 0 - - 0 - See accompanying notes to consolidated financial statements. FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (IN THOUSANDS) Oct. 31, 1993 Nov. 1, 1992 to April 30, 1994 to May 1, 1993 (Unaudited) Cash flows from operating activities: Net (Loss) income $ (1,261) $ 411 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 4,594 5,170 Amortization, other 1,431 1,732 Changes in assets and liabilities: Decrease in inventories 5,602 1,563 Decrease in receivables and other 3,173 3,262 Increase in other assets ( 518) (1,439) Decrease in accounts payable (2,395) (3,113) Decrease in other liabilities (5,033) (1,995) Net cash provided by operating activities 5,593 5,591 Cash flows from investing activities: Purchase of property, plant and equipment (4,468) (3,832) Net cash used in investing activities (4,468) (3,832) Cash flows from financing activities: Proceeds from sales of preferred stock - 1,700 Principal payments under long-term debt (1,100) (5,179) Principal payments under capital lease obligations ( 687) ( 780) Proceeds from issuance of long-term debt - 2,000 Net cash used in financing activities (1,787) (2,259) Net Decrease in cash and cash equivalents ( 662) ( 500) Cash and cash equivalents, beginning of period 4,765 8,348 Cash and cash equivalents, end of period $ 4,103 $ 7,848 See accompany notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 Basis of Presentation The unaudited condensed Consolidated Financial Statements as of April 30, 1994, included herein, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and rule 10-01. The balance sheet at October 30, 1993 has been taken from the audited financial statements at that date. In the opinion of the management of registrant, all adjustments (consisting only of normal recurring accruals) which registrant considers necessary for a fair presentation of the results of operation for the period have been made. Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The reader is referred to the consolidated financial statements and notes thereto included in the Registrant's annual report on Form 10-K for the year ended October 30, 1993. These results are not necessarily indicative of the results for the entire fiscal year. Note 2 Postretirement Benefits other than Pensions Effective October 31, 1993, the Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." The Registrant provides limited postretirement medical benefits to certain individuals under deferred compensation agreements. The Registrant does not provide such benefits to most of its non-union workforce and benefits related to its union employees are covered by collective bargaining agreements which require monthly contributions and which are not subject to the provisions of SFAS No. 106 requiring an accrual for such benefits. SFAS No. 106 requires the Registrant to accrue the estimated cost of retiree benefit payments during the years the employee provides services. The Registrant previously expensed the costs of such benefits. The Registrant recognized the cumulative effect of this liability on the immediate recognition basis. The cumulative effects as of January 29, 1994 of adopting SFAS No. 106 were an increase in accrued postretirement benefits and a decrease in pre-tax earnings of $146,000 ($.08 per share), which has been included in the Registrant's financial statements for the fiscal quarter ended January 29, 1994. The Registrant's liability for such postretirement benefits is not funded. The effect of SFAS No. 106 on earnings for the fiscal quarter ended April 30, 1994 was not material. Note 3 Income Taxes In the fiscal quarter ended April 30, 1994, the Registrant adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," effective October 31, 1993. The effect of adopting SFAS No. 109 on the Registrant's financial statements was also immaterial for fiscal quarter ended April 30, 1994. The Registrant provided a valuation allowance against all deferred tax assets recorded as of October 30, 1993. There was no change in the valuation allowance for the fiscal quarter ended April 30, 1994. Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operation Liquidity and Capital Resources Forbearance Agreement On June 1, 1994, the Company entered into a Standstill Agreement with its three bank lenders (the "Banks") and a Forbearance Agreement and Amendment with certain of its senior noteholders (collectively, the "Agreements"). The outstanding principal balance of the Company's indebtedness to the Banks as of June 1, 1994 was $15,957,000 and to its noteholders $19,195,000. The instruments pursuant to which these loans were made are referred to herein as the "Loan Documents," and the Banks and the Company's senior noteholders are referred to herein collectively as the "Holders." As of June 15, 1994, the Forbearance Agreement has been subscribed to by the Holders of senior notes totalling $15,682,000, representing 82.6% of the outstanding balance of such notes. The Agreements provide that the Company pay to the senior noteholders subscribing to the Forbearance Agreement and Amendment the interest on the senior notes which was due on June 1, 1994, which interest totaled $983,450, and the Company has paid such interest to all subscribing senior noteholders, but the Company has not paid to the senior noteholders the $2,523,000 principal payment due to such Holders on such date. Under the Agreements, the Holders agreed to forbear until September 30, 1994 from exercising their rights under the Loan Documents on account of certain specified defaults by the Company under the Loan Documents, including the failure to pay principal on June 1, 1994 to Holders of the senior notes. The Agreements contain a number of affirmative and negative covenants including covenants to supply designated information to the Holders and, except with the consent of the Banks and the Holders of two- thirds in principal amount of the senior notes, not to incur additional indebtedness for borrowed money, not to sell assets nor to engage in certain other specified transactions. In addition, the Agreements provide that the Company shall continue to employ at its own expense its present restructuring advisor, or another restructuring advisor acceptable to the Holders, to assist the Company in the formulation of a business plan. The Agreements terminate if Wakefern Food Corporation modifies the terms on which it presently provides merchandise to the Company, if the Company has a negative cash flow (as defined in the Agreement) in any fiscal month during the four-month forbearance period, or if the Company suffers a pre-tax loss (calculated in accordance with the Agreement) in excess of $600,000 in any three-month period commencing with the three- month period ending July 31, 1994. The Agreements and a restated amendment to the Credit Agreement with the Company's bank creditors provide that interest under the Credit Agreements should be paid monthly and not semi-annually as heretofore required under the Loan Documents. A holder of a senior note in the principal amount of $1,346,278 issued under a certain Note Purchase Agreement dated June 1, 1994 which had not executed a forbearance agreement with the Company, has given the Company notice that it is accelerating the entire unpaid principal amount of its note, together with accrued interest. The Company is in default in paying principal and interest to such noteholder in the respective amounts of $177,014.44 and $83,497.08, both due June 1, 1994. In giving such notice, the noteholder reserved its right to take any and all appropriate remedies available to it under the terms of the related note agreement, but did not take any other action to enforce repayment of the note. Although no assurances can be given, the Company does not anticipate any such demand at the present stage of the Company's attempt to restructure its institutional indebtedness. In this connection, the Company will deliver on June 15th to its institutional lenders a business plan prepared by its restructuring advisers which it anticipates will be the basis of the negotiation of a restructuring of such indebtedness. Working Capital As a result of covenant violations at April 30, 1994, $28.4 million of debt due to senior lenders has been classified as a current liability thereby creating a working capital deficiency of $31.8 million. At May 1, 1993, working capital was $6.0 million. Cash flows (in millions) were as follows: 4/30/94 5/01/93 Operating activities $ 5.6 $ 5.6 Investing activities (4.5) (3.8) Financing activities (1.8) (2.3) Totals $( .7) $( .5) Registrant intensified its program to generate cash through inventory reduction which resulted in a decrease in inventory of $5.6 million from year end to April 30, 1994. Receivables and other current assets decreased $3.2 million since year end due in part to the sale of the New York division on October 18, 1993 and speedier collection of receivables for manufacturers' coupons. Accounts payable and accrued expenses decreased by $7.4 million from year end by reason of the New York sale, payments for property and equipment of the Neptune store, interest and other expense payments and payment of amounts due for workers' compensation insurance and a reduction of payables due Wakefern Food Corp. Registrant has no available lines of credit. Results of Operations (13 weeks ended 4/30/94 compared to 13 weeks ended 5/01/93) Sales: Sales for the twenty-one stores in operation for the current quarter totaled $151.5 million, including one World Class replacement store opened 9/23/93. Sales for the twenty-six stores in operation in the prior period totaled $169.0 million of which $22.3 million represented sales of the five New York stores sold 10/18/93. Comparable store sales were down 1.3% period to period. Gross Profit: The current period produced gross profit of 23.84% versus 24.37% in the prior year period. General price reductions to stimulate sales growth contributed to this shortfall coupled with price discounting to sell off excess inventory to generate cash flow. The lack of cash flow also curtailed the Registrant's ability to buy deal merchandise which enhances gross profit. Additionally, by reason of cash flow problems, the Registrant lost warehouse cash discounts of .07%. Operating Expenses: These expenses totaled 24.27% of sales during this quarter compared to 23.13% in the prior year period. Depreciation and amortization represented 3.97% and 4.08% for the respective periods. Advertising costs rose by .07%, utilities and insurance rose by .10%, outside services including snow plowing added .06% and warehouse service fees totaled .33%. The salary freeze and layoffs initiated in November 1992 reduced prior period expenses by approximately $400,000. Reversal of a pension reserve reduced second quarter 1993 expenses by $500,000. Health and welfare premiums reflect a reduction of costs for the plan year ended April 30, 1993 of approximately $400,000. A closed store lease was sold for $125,000. Pre-opening costs expensed in the current quarter were $103,000 compared to $314,000 in the prior year period. (Loss) Income From Operations: The current period loss of $649,000 resulted from a sales decline of 1.3%, reduced gross profit of $800,000 and increased expenses of $1,700,000 versus the prior year period. PART II OTHER INFORMATION Item 3. Default Upon Senior Securities See Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources -- Forbearance Agreement Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 4.01 Forbearance Agreement and Amendment, dated as of May 31, 1994, among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., and certain other senior noteholders as set forth on the signature pages thereto. 4.02 Standstill Agreement, dated as of May 31, 1994, among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent. 4.03 Amendment No. 5, dated as of June 1, 1994 to a certain credit agreement among Foodarama Supermarkets, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent. (b) No reports on Form 8-K were required to be filed for the 13 weeks ended April 30,1994. Interest Expense: Current period costs were $1,284,000 (.85% of sales) compared to $1,674,000 (.99% of sales) in the prior year period. Total debt decreased by $18.7 million since 5/1/93 while interest rates have increased on floating rate debt and by reason of defaults on bank and noteholder debt. Interest Income: Period to period declined to $16,000 versus $108,000. Income Taxes: Tax benefits have been computed at 32% of the current period pre-tax loss based on fiscal 1993 results versus a 40% provision in the prior year period. The Registrant provided a valuation allowance against all deferred tax assets recorded as of October 31, 1993. There was no change in the valuation allowance for the fiscal quarter ended April 30, 1994. Net (Loss) Income: A net loss of $1,301,000 was realized for the current quarter versus net income of $290,000 in the prior year period. The loss per common share of $1.19 is based on 1,118,150 shares outstanding after a provision of $34,000 for preferred stock dividends. In the prior year period, net income per common share was $.23 based on 1,118,150 shares after a provision for preferred stock dividends of $29,000. 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. FOODARAMA SUPERMARKETS, INC. (Registrant) Date: June 14, 1994 /S/ JOSEPH J. SAKER (Signature) Joseph J. Saker, President Chief Executive Officer Date: June 14, 1994 /S/ JOSEPH C. TROILO (Signature) Joseph C. Troilo Senior Vice President (& Principal Financial and Accounting Officer) EXHIBIT INDEX 4.01 Forbearance Agreement and Amendment, dated as of May 31, 1994, among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., and certain other senior noteholders as set forth on the signature pages thereto 4.02 Standstill Agreement, dated as of May 31, 1994, among Foodarama Supermarkets, Inc., Shop Rite of Malverne, Inc., New Linden Price Rite, Inc., Regal Drugs, Inc., Shop Rite of Reading, Inc., Shop Wise Supermarkets of Connecticut, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent 4.03 Amendment No. 5, dated as of June 1, 1994, to a certain credit agreement among Foodarama Supermarkets, Inc., the Chase Manhattan Bank (National Association), First Fidelity Bank, United Jersey Bank, and the Chase Manhattan Bank (National Association) as agent EX-4 2 EXHIBIT 4.01 FORBEARANCE AGREEMENT AND AMENDMENT Dated as of May 31, 1994 This Forbearance Agreement and Amendment (this "Agreement"), dated as of May 31, 1994, entered into by and among Foodarama Supermarkets, Inc., a New Jersey corporation (the "Company"), Shop Rite of Malverne, Inc., a New York corporation, New Linden Price Rite, Inc., a New Jersey corporation, Regal Drugs, Inc., a New Jersey corporation, Shop Rite of Reading, Inc., a Pennsylvania corporation, Shop Wise Supermarkets of Connecticut, Inc., a New Jersey corporation (collectively, the "Subsidiary Guarantors"; and together with the Company, the "Obligors"), each of the senior noteholders set forth on the signature pages hereto (collectively, together with their transferees, the "Senior Noteholders" and, individually, a "Senior Noteholder"). W I T N E S S E T H: WHEREAS, the Senior Noteholders are all of the holders (directly or indirectly through nominees thereof) of $31,000,000 aggregate original principal amount of the Company's senior secured promissory notes issued and delivered pursuant to the several Note Purchase Agreements, each dated June 1, 1989, among the Company and each of the purchasers of the Notes (as defined in the Note Agreements) set forth on the signature pages thereto (collectively, as amended or modified from time to time, the "Note Agreements"); WHEREAS, the Notes are entitled to the benefits of (i) the Subsidiary Guaranty, dated as June 16, 1989, by the Subsidiaries of the Company named therein in favor of the Senior Noteholders (the "Subsidiary Guaranty") and (ii) the Trust and Pledge Agreement, dated June 16, 1989, among the Company, IBJ Schroder Bank & Trust Company, as Trustee, and the banks and other lenders named therein (the "Pledge Agreement"; and together with the Note Agreements, the Notes, the Subsidiary Guaranty and all other agreements, instruments and documents executed in connection with the Note Agreements, collectively, the "Note Documents"); WHEREAS, the Company has requested the forbearance of the Senior Noteholders with respect to certain existing and anticipated defaults and Events of Default (as defined in the Note Agreements), and the Senior Noteholders are willing to grant such forbearance on the terms and conditions provided below. NOW, THEREFORE, in consideration of the agreements herein contained, the parties hereto hereby agree intending to be legally bound hereby as follows: Section 1. Defined Terms. Unless otherwise defined herein, terms defined in the Note Agreements are used herein as therein defined. Section 2. Specified Defaults. As used herein, "Specified Defaults" shall mean the following continuing defaults and Events of Default: (i) The Company's failure to make the principal pay- ment on the Notes due on June 1, 1994 pursuant to Section 3.1(a) of the Note Agreements is a default under Section 8.1(a) of the Note Agreements; (ii) The Company's noncompliance with the restriction on Capital Expenditures set forth in Section 6.19 of the Note Agreements for the fiscal year ending in 1993 is a default under Section 8.1(e) of the Note Agreements; (iii) The Company's continuing noncompliance with the minimum Consolidated Working Capital set forth in Section 6.1(b) of the Note Agreements is a default under Section 8.1(d) of the Note Agreements; and (iv) The Company's continuing noncompliance with the minimum interest coverage ratio set forth in Section 6.14 of the Note Agreements and the minimum Cash Flow Coverage Ratio set forth in Section 6.15 of the Note Agreements is a de- fault under Section 8.1(c) of the Note Agreements. Section 3. Forbearance. The Senior Noteholders agree, on the terms and subject to the conditions hereof, to forbear during the period (the "Forbearance Period") from and after the Effective Date (as defined in Section 4 below) until (but excluding) the Forbearance Termination Date (as defined in Section 5 below) in the exercise of the rights and remedies available under the Note Agreements and the other Note Documents with respect to any Specified Default. Notwithstanding such forbearance, it is understood by the Company that the Senior Noteholders have not waived any Specified Default or any other default or Event of Default or any rights or remedies in respect thereof under the Note Documents or otherwise. During the For- bearance Period, the Senior Noteholders shall be permitted to exercise all of their rights under the Note Documents as if no default or Event of Default had occurred, except as may be lim- ited or provided otherwise in this Agreement. Section 4. Conditions. As conditions precedent to the effectiveness of this Agreement, on or prior to June 1, 1994 (the "Effective Date"): (i) the Company shall have delivered to each of the Senior Noteholders an agreement (the "Bank Standstill Agreement"), substantially similar to this Agreement, ex- ecuted by The Chase Manhattan Bank (National Association), individually, and in its capacity as agent for the banks under the Credit Agreement, First Fidelity Bank, and United Jersey Bank, with respect to the defaults by the Company and its Subsidiaries under the Credit Agreement, in form and substance satisfactory to the Required Holders; and (ii) the Company shall have paid each of the Senior Noteholders that have executed this Agreement the interest payment due on June 1, 1994 for the semiannual period ending on such date in respect of each of such holder's Notes. Section 5. Termination. Except for the amendments to the Note Agreements set forth in Section 6 hereof which shall survive any termination of this Agreement or as otherwise pro- vided herein, this Agreement shall terminate and be of no further force or effect at 10:00 a.m. (New York time) on the date (the "Forbearance Termination Date") which is the earliest of: (i) September 30, 1994; (ii) the date that Wakefern Food Corp. ("Wakefern"), directly or indirectly, changes or otherwise modifies in any manner whatsoever the terms that the Company purchases and receives merchandise and services from Wakefern (including, without limitation, the quantity of merchandise being made available to the Company or the length of time such trade credit is extended) from those in effect on May 27, 1994 other than such changes or modifications that are eco- nomically beneficial to the Company or otherwise consented to in writing by the Required Holders; (iii) the date of the occurrence of the Forbearance Termination Date (as such term is defined in the Bank Standstill Agreement) under the Bank Standstill Agreement; (iv) the date of the filing of a petition to commence a case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insolvency law of any jurisdiction, and in the case of an involuntary proceeding the passage of 60 days from the date of such filing without such filing being dismissed or stayed, by or with respect to any Obligor; (v) the date any Senior Noteholder gives notice to the Company of the termination of this Agreement by reason of the occurrence of any one or more of the following events: (a) a breach by any of the Obligors of any of the representations, warranties or covenants contained in this Agreement which breach shall continue for three (3) Business Days after any of the Obligors have knowledge thereof; (b) the Net Cash Flow (determined in the manner set forth in Exhibit A attached hereto) for the Com- pany and its consolidated Subsidiaries less the aggregate amount of Interest Expense for such period (other than interest paid in respect of the Notes on June 1, 1994) is negative for any Company fiscal month commencing with the fiscal month end- ing June 25, 1994; (c) the Company and its consolidated Subsidiaries have a pre-tax loss in excess of $600,000 (the calcu- lation of the pre-tax loss shall include Interest Expenses and exclude (i) restructuring expenses (including professional fees and expenses) and (ii) income, expenses, profits or losses associ- ated with any sale of assets permitted under Section 6.8 of the Note Agreements or other asset or capital disposition) determined on a consoli- dated basis without duplication in accordance with GAAP, for the three-month period commencing May 1, 1994 or for any three-month period commencing thereafter; or (d) any default or Event of Default, other than a Specified Default, shall occur and be continuing. From and after the Forbearance Termination Date, the Senior Noteholders shall be entitled to exercise and enforce any and all rights and remedies available to the Senior Noteholders as a consequence of any Specified Defaults that have occurred prior to, during or after the Forbearance Period. Section 6. Amendments to Note Agreements. The Company hereby agrees with the Senior Noteholders to amend the Note Agreements and Note Documents as follows: (i) Monthly Interest Payments; Default Interest. Section 1.1 of the Note Agreements designated "Authorization of Notes" is hereby amended by adding the following sentence at the end of such section: "Notwithstanding any of the foregoing or anything in the Note Agreements, the Notes, the other Note Documents or otherwise, (a) commencing on July 1, 1994, interest on the Notes shall be payable on a monthly basis on the first day of each calendar month, or, if such day is not a Business Day, the first Business Day thereafter (it being understood and agreed that the interest payment due on June 1, 1994 shall be for the semiannual period ending on such date and shall be paid by the Company on such date) and (b) the per annum rate of interest payable in respect of the principal payment on the Notes due on June 1, 1994 (in the event such principal payment shall not have been made on such date) shall be 14.90%." (ii) Defined Terms. Section 9.1 of the Note Agreements designated "Defined Terms" is hereby amended by adding in appropriate alphabetical sequence the following definitions: "'Interest Expense' shall mean, for any period, the sum of the following, without duplication, for the Company and its consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP): (a) all interest paid in cash or accrued as a liability on Debt during such period (including, without limitation, imputed interest on Capital Lease Obligations) plus (b) all fees or commissions and net losses amortized during such period in respect of all Interest Rate Protection Agreements plus (c) fees or commissions payable during such period in respect of any letters of credit (including, without limitation, any letters of credit issued pursuant to the Credit Agreement) minus (d) all net gains during such period in respect of all Interest Rate Protection Agreements minus (e) all interest income received during such period." "'Required Holders' shall mean, at any time, a holder or holders of at least 66-2/3% in aggregate unpaid Principal amount of all Notes at such time outstanding." The Note Agreements and the other Note Documents are each hereby deemed to be amended to reflect the foregoing. Section 7. Amendments; Extensions. The terms of this Agreement may be modified or amended only by a writing or writ- ings executed by each of the Senior Noteholders and the Obligors. It is understood and agreed that the Senior Noteholders are not and shall not be under any obligation, express or implied, to consent to any modification or amendment hereof or to any exten- sion of the Forbearance Period. Section 8. Continuing Effect. Except as expressly provided herein or as may hereafter be modified by a separate document, each Note Document shall continue unchanged and in full force and effect, and all rights, powers and remedies of the Senior Noteholders and the Obligors thereunder are hereby ex- pressly reserved. Without in any way limiting the generality of the foregoing, the Obligors shall be liable in accordance with the Note Agreements and the other Note Documents for any and all sums and charges due pursuant thereto, including, without limita- tion, default interest and late charges, if any. The Company hereby acknowledges and agrees that in accordance with the terms and provisions of the Note Documents as amended hereby, interest on the principal payment required to have been made to the Senior Noteholders on June 1, 1994 pursuant to Section 3 of the Note Agreements shall accrue at the per annum rate of 14.90% until such principal payment is made to the Senior Noteholders. Section 9. Covenants. The Obligors covenant and agree that: (i) The Obligors shall provide the following informa- tion to (x) each of the Senior Noteholders holding in excess of $1,000,000 in principal amount of the Notes and (y) any such other Senior Noteholder requesting such information (such Senior Noteholders referred to in (x) and (y) above shall be referred to herein collectively as the "Requesting Senior Noteholders") no later than 10 days after the Ef- fective Date, or, if permitted by the Required Holders, at such other reasonable times as the Obligors and the Required Holders may agree, and shall continue to provide to each of the Requesting Senior Noteholders any updated information of the type described below: (a) all documents and agreements relating to indebt- edness or obligations of the Company and its Subsidiaries to any Person; (b) all documents and agreements relating to any pledge of assets or equity, direct or indirect, of the Company and any of its Subsidiaries; (c) the most recent appraisal of all property owned by the Company and its Subsidiaries; (d) information describing each of the Obligor's lease obligations, by location, including but not lim- ited to dates of lease commencement and lease expiration, extension and renewal options, parties to such leases (including identification of par- ties in which any officer, director or stockholder of the Company has a direct or indirect ownership interest), base and other rents payable, whether the premises covered by such leases are used in the business of the Obligors, and defaults, if any; (e) debt profile of each Obligor, identifying, among other things, direct and contingent obligations, maturities, required payments and related infor- mation; (f) all documents, agreements and policies relating to the Company's relationship with Wakefern; (g) information relating to any proposed disposition of assets outside of the ordinary course of business; (h) management letters from the Company's outside auditors, including any such management letters for the 1992 and 1993 fiscal years; (i) an organizational chart for the Company and its Subsidiaries identifying all officers and direc- tors, together with a narrative description of the responsibilities of all officers; and (j) a cash budget projection for the Forbearance Period. (ii) The Obligors shall provide the following informa- tion to each of the Requesting Senior Noteholders during the Forbearance Period: (a) a weekly report on cash receipts and disbursements (identifying the uses thereof) of the Obligors on a consolidated basis; (b) a consolidated inventory purchasing report on a weekly basis prepared by the Restructuring Advisor (as hereinafter defined) in the form annexed here- to as Exhibit A; (c) reports on a weekly basis showing store-by-store sales together with comments thereto, prepared by the Restructuring Advisor; (d) a report relating to the status of any disposi- tions or proposed dispositions of any assets of any Obligor, outside of the ordinary course of business, on a monthly basis; (e) status updates relating to discussions with other creditors of the Obligors on a weekly basis; (f) such financial information relating to the Obli- gors as may from time to time reasonably be re- quested by the Requesting Senior Noteholders, including, without limitation, projections (with assumptions), prospects, assets, liabilities, dispositions, refinancings, cash flow analyses and projections, business plans, capital expenditure budgets and the like; (g) all written information (including, without limi- tation, that relating to projections and assump- tions, prospects, business plans, assets, liabili- ties, dispositions and refinancings, etc.) pro- vided to other creditors of the Obligors; and (h) a report on the actual cash flow of the Company and its consolidated Subsidiaries for each fiscal month of the Company, in the form attached hereto as Exhibit A, which report will be delivered to each of the Requesting Senior Noteholders within 10 days after the end of each such fiscal month. All reports required to be provided by this Section 9(ii) shall be reviewed and approved by the Restructuring Advisor prior to being provided to the Requesting Senior Noteholders. (iii) The Company shall pay from time to time, within 10 days after request therefor, all reasonable fees, expenses and disbursements of the Senior Noteholders (including their audit and legal expenses). The first payment of such fees shall be made on the Effective Date. (iv) During the Forbearance Period, except in the ordinary course of business or as otherwise consented to in writing by the Required Holders, neither the Company nor any of its Subsidiaries shall: (a) incur additional indebtedness (direct or contin- gent) for borrowed money or for the deferred purchase price of property or services (excluding indebtedness to Wakefern incurred in the ordinary course of business); (b) incur additional obligations to purchase, sell or lease (as lessee or lessor) property, except for Approved Capital Expenditures (as hereinafter defined); (c) sell, dispose of, pledge or otherwise transfer its assets or any interest therein; (d) pay any dividends or distributions except for pay- ments between and among the Obligors; (e) make any other payments or prepayments on Indebt- edness; (f) acquire any additional assets, except for Approved Capital Expenditures (as hereinafter defined); or (g) create any liens against its assets; except that the Company and its Subsidiaries may. (A) pay interest at contract rates on non- accelerated obligations for borrowed money; (B) pay expenses and other obligations (other than indebtedness for borrowed money or guaranties thereof) incurred in the ordinary course of the Obligors' business (including lease obligations) as presently conduct and (C) make capital expenditures (including commitments therefor) in accordance with schedules to be provided by the Compa- ny and approved the Required Holders (the "Approved Capital Expenditures"). (v) The Company shall continue to employ at its own expense Buccino & Associates, Inc. or another restructuring advisor (the "Restructuring Advisor") acceptable to the Required Holders to advise and assist the Company and its Subsidiaries during the Forbearance Period in connection with the evaluation of their businesses and the disposition of operating and nonoperating assets, and the formulation of a strategic plan to return the Company and its Subsidiaries to profitability in accordance with the terms and conditions provided below: (a) the Restructuring Advisor shall prepare a written restructuring plan (the "Business Plan") that includes an evaluation of the operating assets of the Obligors on a store-by-store basis, an evalu- ation of operations (including inventory and cash management, MIS and reporting functions), plans for the disposition of operating and nonoperating assets (including details of the plan for disposi- tion and/or closing of stores located in Pennsyl- vania) and a proposal for the repayment of debt obligations; (b) the Company shall allow the Requesting Senior Noteholders to have direct and independent access to the Restructuring Advisor, including allowing the Requesting Senior Noteholders to meet with the Restructuring Advisor at periodic intervals as reasonably requested by the Requesting Senior Noteholders, and will authorize and instruct the Restructuring Advisor to answer any questions that the Requesting Senior Noteholders may have on the operations and management of the Company and its Subsidiaries; (c) the Restructuring Advisor shall have responsibil- ity for any studies, analyses or evaluations of information systems, inventory, accounts receiv- able collection opportunities, cash management, capital expenditures, SG&A costs and the like; (d) the Company shall deliver to each of the Requesting Senior Noteholders as soon as possible but in any event no later than June 15, 1994 the Business Plan, which Business Plan, together with the Company's proposed implementation thereof, shall be acceptable to the Company, the Restruc- turing Advisor and the Required Holders; and (e) the Company shall have appointed a chief financial officer or other officer or officers (which ap- pointment shall have been approved by the Board of Directors of the Company), as soon as possible but in any event no later than June 30, 1994, with authority to implement and execute the Business Plan and the Company shall have by such date (I) commenced the implementation of the Business Plan with respect to the components of the Business Plan relating to inventory purchasing, cash man- agement, plans for dispositions of operating and nonoperating assets and capital expenditures and (II) instructed such chief financial officer or other applicable officer to so implement and execute the other components of the Business Plan as soon as practicable. (vi) The Company will, and will cause each of its Subsidiaries to, permit representatives of any Requesting Senior Noteholders, during normal business hours, to ex- amine, copy and make extracts from its books and records, to inspect any of its properties, and to discuss its business and affairs with its officers and its outside accountants, all to the extent reasonably requested by such Requesting Senior Noteholders (as the case may be). (vii) The Obligors shall give immediate notice by facsimile to each Senior Noteholder of any event or condition described in Section 5(ii), Section 5(iii) or Section 5(v) above. (viii) Except as otherwise consented to in writing by the Required Holders, the Company shall have in effect at all times during the Forbearance Period an undertaking from Wakefern entitling the Company to purchase and receive merchandise and services from Wakefern on the same terms offered to the Company immediately prior to the Effective Date, in form and substance satisfactory to the Required Holders. (ix) Except as otherwise consented to in writing by the Required Holders, the Company shall not (a) at any time after the Effective Date through the Forbearance Termination Date have an outstanding indebtedness (excluding trade ac- counts payable and accrued liabilities to Wakefern) that bears an interest rate or service charge in excess of 14.9% per annum, or (b) for the period from the Effective Date through the Forbearance Termination Date pay or accrue in- terest or service charge expenses in excess of $250,000 in the aggregate on account of past due balances owed to Wakefern by the Company. Section 10. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken to- gether shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. Section 11. Benefit of Agreement. This Agreement is solely for the benefit of the signatories hereto (and their respective successors and assigns) and no other Person (includ- ing, without limitation, any other creditor of or claimant against any Obligor or shareholder of any Obligor) shall have any rights under, or because of the existence of, this Agreement. Section 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. Section 13. No Commitment or Waiver. Neither this Agreement nor any action or inaction on the part of the Senior Noteholders shall be construed to constitute or represent (i) a commitment by any of the Senior Noteholders to restructure any indebtedness of the Obligors, or (ii) an intention by the Senior Noteholders or any Obligor to waive, modify or, except as ex- pressly provided in Section 3 above, forbear from exercising any of their rights, powers, privileges or remedies under the Note Agreements or the other Note Documents, at law, in equity or otherwise, and the Obligors acknowledge, agree and confirm that no such commitment, waiver or, except as expressly provided in Section 6 above, modification, except as expressly provided in Section 3 above, forbearance has been offered, granted, extended or agreed to by the Senior Noteholders. Nothing set forth in this Agreement shall be construed so as to require the Senior Noteholders to agree to the terms of any modification to the Note Agreements or the other Note Documents proposed by any of the Obligors. Section 14. Due Authorization. Each party executing and delivering this Agreement represents and warrants to all other parties that: (i) such party has the full authority and legal right and power to execute and deliver this Agreement, and to perform the terms hereof and the transactions contemplated hereby; (ii) all necessary corporate or other action on the part of such party to be taken in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and effectively taken; and (iii) the execution, delivery and performance by such party does not constitute a violation or breach of such party's articles of incorporation or by-laws, or any law by which such party is bound. Section 15. Entire Agreement. This Agreement consti- tutes the entire and final agreement among the parties hereto with respect to the subject matter hereof and there are no other agreements, understandings, undertakings, representations or warranties among the parties hereto with respect to the subject matter hereof except as set forth herein. Section 16. Remedies. No failure on the part of the Senior Noteholders or any of the Obligors or any of their agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder or under the Note Agreements or the other Note Documents shall operate as a waiver thereof; nor shall any single or partial exercise by any Senior Noteholder or any of the Obligors, or any of their agents of any right, power or remedy hereunder or under the Note Agreements or the other Note Documents preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Section 17. Headings, Etc. Section or other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. Section 18. Voluntary Agreement. The Obligors rep- resent and warrant that they are represented by legal counsel of their choice, are fully aware of the terms contained in this Agreement and have voluntarily and without coercion or duress of any kind entered into this Agreement, and the documents and agreements executed and to be executed in connection with this Agreement. Section 19. Notices. Any documents, reports, notices, consents or requests which are required or may be given hereunder shall be given to the parties at the addresses and in the manner provided in the Note Agreements, except that copies of any notices to any of the Senior Noteholders shall also be sent to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Chaim J. Fortgang, Esq. Facsimile No.: (212) 403-2000 Section 20. Further Assurances. Each party shall ex- ecute all additional documents and do all acts not specifically referred to herein which are reasonably necessary to fully effec- tuate the intent of this Agreement. Section 21. Time of Essence. Time is strictly of the essence of this Agreement and full and complete performance of each and every provision hereof. Section 22. Limited Recourse. The sole remedy of the Senior Noteholders for breach of this Agreement or the terms, covenants, conditions, representations and warranties contained herein shall be to terminate this Agreement and exercise their rights under the Note Documents. The Senior Noteholders shall have not any right to seek specific performance or damages by reason of a breach of this Agreement. Section 23. Note Documents in Full Force. Each Obligor covenants and agrees that the Note Documents and the provisions thereof are and remain legal, valid and binding ob- ligations of the Obligors enforceable in accordance with their terms and remain in full force and effect. No Obligor has any claim, demand, action, defense or offset against any of its ob- ligations under the Note Documents or against any of the Senior Noteholders. The Obligors hereby waive and release each of the Senior Noteholders and their respective employees, agents and representatives from any and all claims, demands, causes of ac- tion, defenses and offsets against liabilities of any kind or character whatsoever, known or unknown, which any Obligor ever had, now has or might hereafter have against such Senior Note- holder, for or by reason of any matter, cause or thing whatsoever occurring on or before the date hereof which relates to or arises out of the Note Documents, any obligations or responsibilities of the Senior Noteholders under or in respect of the Note Documents, or any credit heretofore extended to the Obligors. In addition, the Obligors agree not to commence, join in, assist, cooperate, prosecute or participate in any suit or other proceeding in a position that is adverse to the Senior Noteholders arising di- rectly or indirectly from any of the foregoing matters. This Section 23 and the covenants, agreements and representations set forth herein shall survive the termination of this Agreement. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the day and year first above written. OBLIGORS FOODARAMA SUPERMARKETS, INC. By /s/ JOSEPH SAKER Title: President SHOP RITE OF MALVERNE, INC. By /s/ JOSEPH SAKER Title: President NEW LINDEN PRICE RITE, INC. By /s/ JOSEPH SAKER Title: President REGAL DRUGS, INC. By /s/ JOSEPH SAKER Title: President SHOP RITE OF READING, INC. By /s/ JOSEPH SAKER Title: President SHOP WISE SUPERMARKETS OF CONNECTICUT, INC. By /s/ JOSEPH SAKER Title: President FORBERANCE AGREEMENT AND ADMENDMENT SENIOR NOTEHOLDERS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA Note Number: RB-1 By /s/ MARY ANN R. MATOON Title: Director - Private Placements 730 Third Avenue New York, New York 10017 FORBERANCE AGREEMENT AND AMENDMENT CENTRAL LIFE ASSURANCE COMPANY Note Number: RB-2 By /s/ ROBERT B. LINDSTROM Title: Vice President - Private Placements 611 Fifth Avenue Des Moines, IA 50309 FORBERANCE AGREEMENT AND AMENDMENT STATE MUTUAL LIFE INSURANCE COMPANY Note Number: Ra-18 By /s/ ROBERT STRAUSS Title: Vice President One State Mutual Drive Rome, GA 30162 FORBERANCE AGREEMENT AND AMENDMENT NATIONS BANK (PREVIOUSLY SECURITY TRUST BANK) Note Number: [unknown - $100,000] By /s/ HAROLD ZIRKIN Title: 805 15th Street Washington, DC 20005 FORBERANCE AGREEMENT AND AMENDMENT NATIONS BANK (PREVIOUSLY SECURITY TRUST BANK) Note Number: [unknown - $100,000] By /s/ MARSHALL CUTLER Title: 805 15th Street Washington, DC 20005 Note Number:_____________ By /s/ [illegible] Title: 245 Park Avenue New York, NY 10167 EXHIBIT A Foodarama Supermarkets, Inc. Pro Forma Monthly Cash Flow Analysis
Cash Flow Before Professional Costs Summary 4 wks ending 5 wks ending 4 wks ending 5 wks ending Cumulative June 25 July 30 August 27 October 1 Total Beginning Balance, Book Cash In: Merchandise Sales Receipts Other Receipts: Rents, etc. Total Cash in, All Sources Cash Out: Wakefern Billings: Wakefern Inventory Purchases Wakefern Assessments, Insurance, other Costs Wakefern Offsets Total Wakefern Billings Non-Wakefern Purchases Total Payroll, Fringe Operating Disbursements Stores: Rents: Base, CAM, Real Estate Taxes Utilities: Electric, Gas, Steam Purchased Services, Stores All Other operating Disbursements, Stores Total Operating Disbursements, Stores Direct Corporate Disbursements Operating Disbursements, Before Interest: Capital Expenditures Retirement of Smutko Acquisition - Princ. Total Operating Disbursements, Before Interest Cash Out, Before Interest Net Cash Flow Less Interest Expense Pro Forma Ending Cash, Book, Before Interest
EX-4 3 STANDSTILL AGREEMENT dated as of May 31, 1994 among: (i) Foodarama Supermarkets, Inc., a corporation duly organized and validly existing under the law of the State of New Jersey (the "Company"); (ii) Shop Rite of Malverne, Inc., a corporation duly organized and validly existing under the law of the State of New York; (iii) New Linden Price Rite Inc., a corporation duly organized and validly existing under the law of the State of New Jersey; (iv) Regal Drugs, Inc., a corporation duly organized and validly existing under the law of the State of New Jersey; (v) Shop Rite of Reading, Inc., a corporation duly organized and validly existing under the law of the State of Pennsylvania; (vi) Shop Wise Supermarkets of Connecticut, Inc., a corporation duly organized and validly existing under the law of the State of New Jersey ((i) through (vi) being collectively re- ferred to herein as the "Obligors"); (vii) The Chase Manhattan Bank (National Association), a national banking association; (viii) First Fidelity Bank, a national banking associ- ation; (ix) United Jersey Bank, a national banking associa- tion ((vii) through (ix) being collectively referred to herein as the "Banks"); and (x) The Chase Manhattan Bank (National Association), as Agent (the "Agent") for the Banks under the Credit Agreement (as defined herein). The Company, the Agent and the Banks are parties to that certain Credit Agreement dated as of March 16, 1989 (as amended, the "Credit Agreement"). The Company has requested the forbearance of the Agent and the Banks with respect to certain existing and anticipated defaults and Events of Default (as defined in the Credit Agreement), and the Agent and the Banks are willing to grant such forbearance on the terms and conditions provided below. Accordingly, the parties hereto hereby agree as follows: Section 1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined. Section 2. Specified Defaults. As used herein, "Specified Defaults" shall mean the following continuing defaults and Events of Default: (i) The Company's failure to make the principal payment on the Senior Notes due on June 1, 1994 is a default under Section 9(b) of the Credit Agreement; (ii) The Company's non-compliance with the re- striction on Capital Expenditures set forth in Section 8.14(a) of the Credit Agreement for the fiscal year ending in 1993 is a default under Section 9(d) of the Credit Agreement; (iii) The Company's non-compliance with the minimum debt service ratio set forth in Section 8.26 of the Credit Agreement for the fiscal year ending in 1993 is a default under Section 9(d) of the Credit Agree- ment; (iv) The Company's continuing non-compliance with the minimum current ratio set forth in Section 8.12(a) of the Credit Agreement and the minimum working capital set forth in Section 8.12(b) of the Credit Agreement is a default under Section 9(d) of the Credit Agreement; (v) The Company's continuing non-compliance with the minimum interest coverage ratio set forth in Sec- tion 8.10 of the Credit Agreement and the minimum Cash Flow Coverage Ratio set forth in Section 8.11 of the Credit Agreement is a default under Section 9(d) of the Credit Agreement; (vi) The Company's anticipated non-compliance with the minimum Net Worth covenant set forth in Sec- tion 8.13(a) of the Credit Agreement for the third and fourth fiscal quarters in 1994. Section 3. Forbearance. The Agent and the Banks agree, on the terms and subject to the conditions hereof, to forbear during the period (the "Forbearance Period") from and after the Effective Date (as defined in Section 4 below) until (but excluding) the Forbearance Termination Date (as defined in Section 5 below) in the exercise of the rights and remedies available under the Credit Agreement and the Credit Documents with respect to any Specified Default. Notwithstanding such forbearance, it is understood by the Company that the Agent and the Banks have not waived any Specified Default or any other default or Event of Default or any rights or remedies in respect thereof under the Credit Documents or otherwise. During the Forbearance Period, the Banks shall be permitted to exercise all of their rights under the Credit Documents as if no default or Event of Default had occurred, except as may be limited or provided otherwise in this Standstill Agreement. Section 4. Conditions. As conditions precedent to the effectiveness of this Standstill Agreement, on or prior to June 1, 1994 (the "Effective Date") (i) the Company shall have delivered to the Banks an agreement (the "Noteholder Forbearance Agreement"), substan- tially similar to this Standstill Agreement, executed by Teachers Insurance and Annuity Association of America, Central Life Assurance Company, State Mutual Life Insurance Company, and any other holder of Senior Notes with respect to the defaults by the Company and its Subsidiaries under certain Note Purchase Agreements dated as of June 1, 1989, in form and substance satisfactory to the Banks; and (ii) the Company shall have delivered to the Banks an amendment to the Credit Agreement executed by the Company and the Banks providing for the payment of Interest Expenses to the Banks on a monthly basis on the first day of each calendar month, commencing on June 1, 1994. Section 5. Termination. Except as otherwise provided herein, this Standstill Agreement shall terminate and be of no further force or effect at 10:00 a.m. (New York time) on the date (the "Forbearance Termination Date") which is the earliest of: (i) September 30, 1994; (ii) the date that Wakefern Food Corp. ("Wakefern"), direct- ly or indirectly, changes or otherwise modifies in any manner whatsoever the terms on which the Company pur- chases and receives merchandise and services from Wakefern (including, without limitation, the quantity of merchandise being made available to the Company or the length of time such trade credit is extended) from those in effect on May 27, 1994, other than such chang- es or modifications that are economically beneficial to the Company or otherwise consented to in writing by the Banks (iii) the date of the filing of a petition to commence a case or proceeding for liquidation or reorganization or otherwise to take advantage of any bankruptcy or insol- vency law of any jurisdiction, and in the case of an involuntary proceeding the passage of 60 days from the date of such filing without such filing being dismissed or stayed, by or with respect to any Obligor; (iv) the date the Agent gives notice to the Company of the termination of this Standstill Agreement by reason of the occurrence of any one or more of the following events: (a) a breach by any of the Obligors of any of the representations, warranties or covenants contained in this Standstill Agreement which breach shall continue for three (3) Business Days after any of the Obligors have knowledge thereof; (b) the Company and its consolidated Subsidiaries have a pre-tax loss in excess of $600,000 (the calcula- tion of the pre-tax loss shall include Interest Expenses and exclude (i) restructuring expenses (including professional fees and expenses) and (ii) income, expenses, profits or losses associat- ed with any Transfer permitted under Section 8.05(c) of the Credit Agreement or other asset or capital disposition), determined on a consolidated basis without duplication in accordance with GAAP, for the three-month period commencing May 1, 1994 or for any three-month period commencing thereaf- ter; (c) the Cash Flow for the Company and its consolidated Subsidiaries is negative for any fiscal month commencing on or after June 1, 1994; for purposes of this Agreement "Cash Flow" shall mean, for any period, the amount indicated on the third to last line (entitled "Net Cash Flow") of the Cash Flow Report attached hereto as Exhibit B (determined on a consolidated basis for the Company and its con- solidated Subsidiaries without duplication in accordance with GAAP); or (d) any default or Event of Default, other than a Specified Default, shall occur and be continuing. (v) the date of termination of the Noteholder Forbearance Agreement. From and after the Forbearance Termination Date, the Agent and the Banks shall be entitled to exercise and enforce any and all rights and remedies available to the Agent and the Banks as a consequence of any Specified Defaults that have occurred prior to, during or after the Forbearance Period. Section 6. Amendments; Extensions. The terms of this Standstill Agreement may be modified or amended only by a writing or writings executed by the Agent, each Bank and the Obligors. It is understood and agreed that the Agent is not and shall not be under any obligation, express or implied, to consent to any modification or amendment hereof or to any extension of the Forbearance Period. Section 7. Continuing Effect. Except as expressly provided herein or as may hereafter be modified by a separate document, each Credit Document shall continue unchanged and in full force and effect, and all rights, powers and remedies of the Agent, the Banks and the Obligors thereunder are hereby expressly reserved. Without in any way limiting the generality of the foregoing, the Obligors shall be liable in accordance with the Credit Agreement and the other Credit Documents for any and all sums and charges due pursuant thereto, including, without limita- tion, default interest and late charges, if any. Section 8. Covenants. The Obligors covenant and agree that: (i) the Obligors shall provide the following informa- tion to each of the Banks no later than 10 days after the Effective Date, or, if permitted by the Banks, at such other reasonable times as the Obligors and the Banks may agree, and shall continue to provide to each of the Banks any updated information of the type described below: (a) all documents and agreements relating to indebtedness or obligations of the Company and its Subsidiaries to any Person; (b) all documents and agreements relating to any pledge of assets or equity, direct or indirect, of the Company and any of its Subsidiaries; (c) the most recent appraisal of all property owned by the Company and its Subsidiaries; (d) information describing each of the Obligor's lease obligations, by location, including, but not limited to dates of lease commencement and lease expiration, extension and renewal options, parties to including identification of parties in which any officer, director or stockholder of the Company has a direct or indirect ownership interest), base and other rents payable, whether the premises covered by such leases are used in business of the Obligors, and defaults, if any; (e) debt profile of each Obligor, identifying, among other things, direct and contingent obligations, maturities, required payments and related information; (f) all documents, agreements and policies relating to the Company's relationship with Wakefern Food Corp. ("Wakefern"); (g) information relating to any proposed disposition of assets outside of the ordinary course of business; (h) management letters from the Company's outside auditor, including any such management letter for the 1992 and 1993 fiscal years; (i) an organizational chart for the Company and its Subsidiaries identifying all officers and directors together with a narrative description of the responsibilities of all officers; (j) a cash budget projection for the Forberance Period; and (k) all existing management and employment contracts between the Company and its Subsidiaries and any officer or former officer thereof. (ii) the Obligors shall provide the following informa- tion to each of the Banks during the Forbearance Period: (a) a weekly report on cash receipts and disbursements (identifying the uses thereof) of the Obligors on a consolidated basis; (b) a consolidated inventory purchasing report on a weekly basis prepared by the Restructuring Advisor (as hereinafter defined), in the form annexed hereto as Exhibit A; (c) reports on a weekly basis showing store -by- store sales, together with comments thereto, prepared by the Restructuring Advisor; (d) a report relating to the status of any dispositions or proposed dispositions of any assets of any Obligor, outside of the ordinary course of business, on a monthly basis; (e) status updates relating to discussions with other creditors of the Obligors on a weekly basis; (f) such financial information relating to the Obligors as may from time to time reasonably be requested by the Banks, including, with limitation, projections (with assumpt prospects, assets, liability refinancings, cash flow analyses and projections, business plans, capital expenditure budgets and the like; and (g) all written information (including, without limitation, that relating to projections and assumptions, prospects, business plan sets, liabilities, dispositions and refinancings, etc.) provided to other creditors of the Obligors; and (h) a report on the Cash Flow of the Company and its consolidated Subsidiaries for each fiscal month of the Company in the form attached hereto as Exhibit B, which report will be delivered to each of the Banks within 10 days after the end of each such fiscal month. All reports required to be provided by this Section 8(ii) shall be reviewed and approved by the Restructuring Advisor prior to being provided to the Banks. (iii) the Company shall pay from time to time, within 10 days after request therefor, all reasonable fees, expens- es and disbursements of the Agent and the Banks (including their audit and legal expenses). The first payment of such fees shall be made on the Effective Date; (iv) during the Forbearance Period, except in the ordinary course of business or as otherwise consented to in writing by the Banks, neither the Company nor any of its Subsidiaries shall: (a) incur additional indebtedness (direct or contin- gent) for borrowed money or for the deferred pur- chase price of property or services (excluding indebtedness to Wakefern incurred in the ordinary course of business); (b) incur additional obligations to purchase, sell or lease (as lessee or lessor) property, except for Approved Capital Expenditures (as hereafter de- fined); (c) sell, dispose of, pledge or otherwise transfer its assets or any interest therein; (d) pay any dividends or distributions except for payments between and among the Obligors; (e) make any other payments or prepayments on Indebt- edness; (f) acquire any additional assets, except for Approved Capital Expenditures (as hereafter defined); or (g) create any liens against its assets; except that the Company and its Subsidiaries may: (A) pay interest at contract rates on non-accelerated obligations for borrowed money; provided, however, that the Company may pay interest in respect of the princi- pal payment on the Senior Notes due on June 1, 1994 (in the event such principal payment shall not have been made on such date) at a rate not to exceed 14.9% per annum; (B) pay expenses and other obligations (other than indebt- edness for borrowed money or guaranties thereof) in- curred in the ordinary course of the Obligors' business (including lease obligations) as presently conducted; and (C) make capital expenditures (including commitments there- for) in accordance with schedules to be provided by the Company and approved by the Banks (the "Approved Capi- tal Expenditures"); (v) the Company shall continue to employ at its own expense Buccino & Associates, Inc. or another restructuring advisor (the "Restructuring Advisor") acceptable to the Banks to advise and assist the Company and its Subsidiaries during the Forbearance Period in connection with the evaluation of their businesses and the disposition of operating and non-operating assets, and the formulation of a strategic plan to return the Company and its Subsidiaries to profitability in accordance with the terms and conditions provided below: (A) the Restructuring Advisor shall prepare a written restructuring plan (the "Business Plan") that includes an evaluation of the operating assets of the Obligors on a store-by-store basis, an evaluation of operations (including inventory and cash management, MIS and reporting functions), plans for the disposition of operating and non-operating assets (including details of the plan previously discussed with the Banks for the disposition and/or closing of stores located in Penn- sylvania), and a proposal for the repayment of debt obligations; (B) the Company shall allow the Banks to have direct and independent access to the Restructuring Advisor, in- cluding allowing the Banks to meet with the Restructur- ing Advisor at periodic intervals as reasonably re- quested by the Banks, and will authorize and instruct the Restructuring Advisor to answer any questions that the Banks may have on the operations and management of the Company and its Subsidiaries; (C) the Restructuring Advisor shall have responsibility for any studies, analyses or evaluations of information systems, inventory, accounts receivable collection opportunities, cash management, capital expenditures, SG&A costs and the like; (D) the Company shall deliver to each of the Banks no later than June 15, 1994 the Business Plan, which Business Plan, together with the Company's proposed implementa- tion thereof, shall be acceptable to the Company, the Restructuring Advisor and the Banks; and (E) the Company shall have appointed a chief financial officer or other officer or officers (which appointment shall have been approved by the Board of Directors of the Company) as soon as possible but in any event no later than June 30, 1994, with authority to implement and execute the Business Plan, and the Company shall have by such date (I) commenced the implementation of the Business Plan with respect to the components of the Business Plan relating to inventory purchasing, cash management, plans for dispositions of operating and nonoperating assets, and capital expenditures, and (II) instructed such chief financial officer or other appli- cable officer to so implement and execute the other components of the Business Plan as soon as practicable; (vi) the Company will, and will cause each of its Subsidiar- ies to, permit representatives of any Bank or the Agent, during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its properties, and to discuss its business and affairs with its officers and its outside accountants, all to the extent reasonably requested by such Bank or the Agent (as the case may be); (vii) the Obligors shall give immediate notice by facsimile to the Agent of any event or condition described in Section 5(ii), 5(v) and in clauses (a) through of (d) of Section 5(iv) above; (viii) the Company shall have in effect at all times during the Forbearance Period an undertaking from Wakefern entitling the Company to purchase and receive merchandise and services from Wakefern on the same terms offered to the Company immediately prior to the Effective Date, in form and substance satisfactory to the Banks; and (ix) the Company shall not (a) at any time after the Effective Date through the Forbearance Termination Date have an outstanding indebtedness (excluding trade accounts payable and accrued liabilities to Wakefern) that bears an interest rate or service charge in excess of 14.9% per annum, or (b) for the period from the Effective Date through the Forbearance Termina- tion Date pay or accrue interest or service charge expenses in excess of $250,000 in the aggregate on account of past due balances owed to Wakefern by the Company. Section 9. Counterparts. This Standstill Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Standstill Agreement by signing any such counterpart. Section 10. Benefit of Agreement. This Standstill Agreement is solely for the benefit of the signatories hereto (and their respective successors and assigns), and no other Person (including, without limitation, any other creditor of or claimant against any Obligor or shareholder of any Obligor) shall have any rights under, or because of the existence of, this Standstill Agreement. SECTION 11. GOVERNING LAW. THIS STANDSTILL AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. Section 12. No Commitment or Waiver. Neither this Standstill Agreement nor any action or inaction on the part of the Agent or any of the Banks shall be construed to constitute or represent (i) a commitment by the Agent or the Banks to restruc- ture any indebtedness of the Obligors, or (ii) an intention by the Agent, the Banks, or any Obligor to waive, modify or, except as expressly provided in Section 3 above, forbear from exercising any of their rights, powers, privileges or remedies under the Credit Agreement or other Credit Documents, at law, in equity or otherwise, and the Obligors acknowledge, agree and confirm that no such commitment, waiver, modification or, except as expressly provided in Section 3 above, forbearance has been offered, granted, extended or agreed to by the Agent or the Banks. Nothing set forth in this Standstill Agreement shall be construed so as to require the Agent or the Banks to agree to the terms of any modification to the Credit Agreement or the Credit Documents proposed by any of the Obligors. Section 13. Due Authorization. Each party executing and delivering this Standstill Agreement represents and warrants to all other parties that: (i) such party has the full authority and legal right and power to execute and deliver this Standstill Agreement, and to perform the terms hereof and the transactions contem- plated hereby; (ii) all necessary corporate or other action on the part of such party to be taken in connection with the execu- tion, delivery and performance of this Standstill Agreement and the transactions contemplated hereby have been duly and effectively taken; and (iii) the execution, delivery and performance by such party does not constitute a violation or breach of such party's articles of incorporation or by-laws, or any law by which such party is bound. Section 14. Entire Agreement. This Standstill Agree- ment constitutes the entire and final agreement among the parties hereto with respect to the subject matter hereof and there are no other agreements, understandings, undertakings, representations or warranties among the parties hereto with respect to the subject matter hereof except as set forth herein. Section 15. Remedies. No failure on the part of the Agent, the Banks or any of the Obligors or any of their agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder or under the Credit Agreement or the other Credit Documents shall operate as a waiver thereof; nor shall any single or partial exercise by the Agent, the Banks or any of the Obligors, or any of their agents of any right, power or remedy hereunder or under the Credit Agreement or the other Credit Documents preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Section 16. Headings, Etc. Section or other headings contained in this Standstill Agreement are for reference purposes only and shall not in any way affect the meaning or interpreta- tion of this Standstill Agreement. Section 17. Voluntary Agreement. The Obligors repre- sent and warrant that they are represented by legal counsel of their choice, are fully aware of the terms contained in this Standstill Agreement and have voluntarily and without coercion or duress of any kind entered into this Standstill Agreement, and the documents and agreements executed and to be executed in connection with this Standstill Agreement. Section 18. Notices. Any documents, reports, notices, consents or requests which are required or may be given hereunder shall be given to the parties at the addresses and in the manner provided in the Credit Agreement except that copies of any notices to the Agent shall also be sent to: Milbank, Tweed, Hadley & McCloy 1 Chase Manhattan Plaza New York, New York 10005 Attention: Stephen J. Blauner, Esq. Facsimile No.: (212) 530-5219 Section 19. Further Assurances. Each party shall execute all additional documents and do all acts not specifically referred to herein which are reasonably necessary to fully effectuate the intent of this Standstill Agreement. Section 20. Time of Essence. Time is strictly of the essence of this Standstill Agreement and full and complete performance of each and every provision hereof. Section 21. Limited Recourse. The sole remedy of the Agent and the Banks for breach of this Standstill Agreement or the terms, covenants, conditions, representations and warranties contained herein shall be to terminate this Standstill Agreement and exercise their rights under the Credit Documents. Neither the Agent nor the Banks shall have any right to seek specific performance or damages by reason of a breach of this Standstill Agreement. Section 22. Credit Documents in Full Force. Each Obligor covenants and agrees that the Credit Documents and the provisions thereof are and remain legal, valid and binding obligations of the Obligors enforceable in accordance with their terms and remain in full force and effect. No Obligor has any claim, demand, action, defense or offset against any of its obligations under the Credit Documents or against the Agent or the Banks. The Obligors hereby waive and release each of the Banks and the Agent and their respective employees, agents and representatives from any and all claims, demands, causes of action, defenses and offsets against liabilities of any kind or character whatsoever, known or unknown, which any Obligor ever had, now has or might hereafter have against the Banks or the Agent, for or by reason of any matter, cause or thing whatsoever occurring on or before the date hereof which relates to or arises out of the Credit Documents, any obligations or responsibilities of the Banks or the Agent under or in respect of the Credit Documents, or any credit heretofore extended to the Obligors. In addition, the Obligors agree not to commence, join in, assist, cooperate, prosecute or participate in any suit or other proceed- ing in a position that is adverse to the Banks or the Agent arising directly or indirectly from any of the foregoing matters. This Section 22 and the covenants, agreements and representations set forth herein shall survive the termination of this Standstill Agreement. IN WITNESS WHEREOF, the undersigned have caused this Standstill Agreement to be duly executed as of the day and year first above written. Obligors FOODARAMA SUPERMARKETS, INC. By /s/ JOSEPH SAKER Title: President SHOP RITE OF MALVERNE, INC. By /s/ JOSEPH SAKER Title: President NEW LINDEN PRICE RITE, INC. By /s/ JOSEPH SAKER Title: President REGAL DRUGS, INC. By /s/ JOSEPH SAKER Title: President SHOP RITE OF READING, INC. By /s/ JOSEPH SAKER Title: President SHOP WISE SUPERMARKETS OF CONNECTICUT, INC. By /s/ JOSEPH SAKER Title: President Banks THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Borrower By /s/ RON BUCK Title: Vice President FIRST FIDELITY BANK By /s/ PHILIP GOGARTY Title: Vice President UNITED JERSEY BANK By /s/ MARTIN FEIG Title: Vice President Agent THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as Agent By /s/ RON BUCK Title: Vice President Exhibit A
Foodarama Supermarkets, Inc. Inventory Analysis Source Department Document Perishables 6/4/94 6/11/94 6/18/94 6/25/94 7/2/94 7/9/94 7/16/94 7/23/94 7/30/94 Produce Meat Fish Bakery Appy Snack Bar Total Wakefern Grocery Dairy Frozen General Merchandise HABA-65 Liquor Garden Drug Tobacco-51 Floral Total
Source Document Department 6/4/94 6/11/94 6/18/94 6/25/94 7/2/94 7/9/94 7/16/94 7/23/94 7/30/94 DSD Purchases Grocery Diary Frozen General Merchandise HABA Total Commissary Bakery Total Transfers Out Bakery Comm. Total Net Purchases
Exhibit B Foodarama Supermarkets, Inc. Pro Forma Monthly Cash Flow Analysis Cash Flow Before Interest & Professional Costs Summary 4 Weeks 4 Weeks 4 Weeks 4 Weeks Cumulative ending ending ending ending Total June 25 July 30 Aug. 31 Oct. 1 Beginning Balance Book Cash In Merchandise Sales Receipt Other Receipts & Rents, etc. Total Cash In, All Sources Wakefern bilings Cash Out Wakefern Inventory Purchases Wakefern Assesments, Insurance, Other Costs Wakefern Offsets Total Wakefern Billings Non-Wakefern Purchases Total Payroll, Fringe Operating Disbursements, Stores Rents: CAM, Real Estate Taxes Utilities: Electric, Gas, Steam Purchased Services Stores Total Operating Disbursements, Stores Direct Corporate Disbursements Operating Disbursements, Before Interest Capital Expenditures Retirement of Smutko Acquisition - Pr- inc. Total Operating Disbursements, Before In- terest Cash Out, Before Interest Net Cash Flow (total cash from all sourc- es, less cash out before interest) Less Interest Expenses Pro Forma Ending Cash, Book, Before Inter- est EX-4.03 4 AMENDMENT NO. 5 AMENDMENT NO. 5 dated as of June 1, 1994 among: FOODARAMA SUPERMARKETS, INC., a corporation duly organized and validly existing under the laws of the State of New Jersey (the "Company"); each of the banks that is a signatory hereto (the "Banks"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for the Banks (in such capacity, together with its succes- sors in such capacity, the "Agent"). The Company, the Banks and the Agent are parties to a Credit Agreement dated as of March 16, 1989, as amended by an Amendment No. 1 dated as of June 16, 1989, an Amendment No. 2 dated as of January 25, 1990, an Amendment No. 3 dated as of February 5, 1992, and an Amendment No. 4 dated as of February 16, 1993 (as heretofore amended and in effect on the date hereof, the "Credit Agreement") providing, subject to the terms and conditions thereof, for extensions of credit by making loans to the Company and by issuing letters of credit for the account of the Company, in an aggregate principal or face amount not exceeding $26,000,000 (after the effective date of Amendment No. 3). The parties hereto wish to amend certain provisions of the Credit Agreement and, accordingly, the parties hereto hereby agree as follows: Section 1. Definitions. Terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Subject to the satisfaction of the conditions precedent specified in Section 5 hereof, but effective as of the date hereof, the Credit Agreement shall be amended as follows: A. Section 3.02 is amended by adding the following sentence at the end of such section: "Notwithstanding any of the foregoing or any- thing in the Credit Agreement, the Notes, the other Credit Documents or otherwise, com- mencing on June 1, 1994, interest on the Notes shall be payable on a monthly basis on the first day of each calendar month, or if such day is not a Business Day, the first Business Day thereafter (it being understood and agreed that the interest payment due on June 1, 1994 shall be for the period from March 31, 1994 to June 1, 1994) and shall be paid by the Company on such date." B. Reference in the Credit Agreement to "this Agreement" and words of similar import shall be deemed to be references to the Credit Agreement as amended hereby. Section 3. Representations and Warranties. The Company represents and warrants to the Banks and the Agent that the representations and warranties set forth in Section 7 of the Credit Agreement are true and complete on the date hereof as if made on and as of the date hereof (except (a) to the extent any such representation and warranty stated to relate to a specific earlier date is true and correct as of such earlier date or (b) to the extent disclosed by the Company in that certain Standstill Agreement dated as of the date hereof between the Banks and the Company (the "Standstill Agreement")) and as if each reference therein to the Credit Agreement or words of similar import included reference to the Credit Agreement as amended hereby. It further represents and warrants that (a) except as disclosed to the Banks and waived herein or as disclosed to the Banks in the Standstill Agreement, it is in compliance with all of the affir- mative, negative and financial covenants set forth in the Credit Agreement as of the date hereof, (b) all audited financial statements and all financial statements provided to the Securi- ties and Exchange Commission (as part of filings on Form 10-K, Form 10-Q or other SEC forms) delivered to the Banks through the date hereof pursuant to Section 8.01 of the Credit Agreement or otherwise have been complete and correct in all material respects and fairly presented the financial condition of the Company and its Subsidiaries as at such dates and the results of its opera- tions for the periods covered thereby, all in accordance with GAAP consistently applied, (c) on the date hereof no Event of Default or Default has occurred which is not disclosed in the Standstill Agreement, (d) it has no defense, counterclaim, set- off or right to deduct against any amounts due to any of the Banks at the date of execution of this Amendment, (e) the execu- tion and delivery by the Company of this Amendment have been duly authorized by all requisite corporate action, and the Company has obtained any required approvals of third parties for the execu- tion and delivery of such documents, and (f) the Agreement as amended hereby and each of the Credit Documents constitute a valid and binding obligation of the Company or the Subsidiary which is a party hereof or thereof. The Pledge Agreement contin- ues to provide the Banks and certain other lenders with a first priority security interest in the Collateral defined therein. Section 4. Conditions Precedent. As provided in Section 2 hereof, the amendments to the Credit Agreement set forth in Section 2 shall become effective, as of the date hereof, upon the satisfaction of the following conditions precedent: A. Execution by all Parties. This Amendment No. 5 shall have been executed and delivered by each of the parties hereto. B. Guarantors' Consent. Each of the Guarantors under the Subsidiary Guarantee shall have executed the Consent on the signature pages hereof. C. Corporate Action. The Agent shall have received certified copies of the charter and by-laws of the Company (or a certification of the Company that neither the charter nor the by- laws of the Company, as the case may be, has been amended since the date of the certification delivered pursuant to Section 6.01(d) of the Credit Agreement) and all corporate action taken by the Company approving this Amendment No. 5 and the Credit Agreement as amended hereby and the borrowings by the Company under the Credit Agreement as amended hereby (including, without limitation, a certificate setting forth the resolutions of the Board of Directors of the Company adopted in respect of the transactions contemplated hereby and thereby). D. Other Documents. The Agent shall have received such other documents pertaining to this Amendment No. 5 as the Agent or any Bank or special counsel to the Banks may reasonably request. Section 5. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. Without limiting the obligations of the Company under Section 11.03 of the Credit Agreement, the Company agrees to pay or reimburse the Agent on demand for all reasonable out-of-pocket costs and expenses of the Agent (including, without limitation, the reasonable legal fees and expenses) in connection with the negotiation, preparation, execution and delivery of this Amend- ment No. 5 and the other documents referred to herein. This Amendment No. 5 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 5 by signing any such counterpart. THIS AMENDMENT NO. 5 SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 5 to be duly executed as of the date first above written. FOODARAMA SUPERMARKETS, INC. By: /s/ JOSEPH SAKER Name: Joseph Saker Title: President CONSENT Each of the undersigned, as a Guarantor under the Guarantee Agreement dated as of March 16, 1989 between each of the under- signed and The Chase Manhattan Bank (National Association), as Agent, hereby consents to the execution and delivery by Foodarama Supermarkets, Inc. of the foregoing Amendment No. 5 and hereby confirms its continuing guarantee of the obligations of the Company under the Credit Agreement, as amended by said Amendment No. 5, and the other obligations specified in said Guarantee Agreement. GUARANTORS SHOP RITE OF MALVERNE, INC. By: /s/ JOSEPH SAKER Title: President NEW LINDEN PRICE RITE, INC. By: /s/ JOSEPH SAKER Title: President REGAL DRUGS, INC. By: /s/ JOSEPH SAKER Title: President SHOP RITE OF READING, INC. By: /s/ JOSEPH SAKER Title: President SHOP WISE SUPERMARKETS OF CONNECTICUT, INC. By: /s/ JOSEPH SAKER Title: President -----END PRIVACY-ENHANCED MESSAGE-----