-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LcFzjq290fv3pXb1nJQmHl2ptVJL73vgDxMoJItrxlc30f1a/WQTY2FXVxxm1Nts 6rOgSilDt2n3N5nug0yjVQ== 0000912057-96-011828.txt : 19960612 0000912057-96-011828.hdr.sgml : 19960612 ACCESSION NUMBER: 0000912057-96-011828 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960607 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN TRAFFIC CO CENTRAL INDEX KEY: 0000077155 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 250716800 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09930 FILM NUMBER: 96578163 BUSINESS ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SRYACUSE STATE: NY ZIP: 13221-4737 BUSINESS PHONE: 8145369900 MAIL ADDRESS: STREET 1: 1200 STATE FAIR BLVD CITY: SYRACUSE STATE: NY ZIP: 13221-4737 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 4, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to ---------- ---------- Commission file number 1-9930 THE PENN TRAFFIC COMPANY (Exact name of registrant as specified in its charter) Delaware 25-0716800 (State of incorporation) (IRS Employer Identification No.) 1200 State Fair Blvd., Syracuse, NY 13209 (Address of principal executive offices) (Zip Code) (315) 453-7284 (Telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X . NO . --- --- Common stock, par value $1.25 per share: 10,869,941 shares outstanding as of May 30, 1996 Page 1 of 13 PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE PENN TRAFFIC COMPANY CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (All dollar amounts in thousands, except per share data) THIRTEEN WEEKS ENDED THIRTEEN WEEKS ENDED MAY 4, 1996 APRIL 29, 1995 -------------------- -------------------- TOTAL REVENUES $827,658 $860,028 COST AND OPERATING EXPENSES: Cost of sales (including buying and occupancy costs) 635,996 662,449 Selling and administrative expenses 170,845 164,222 -------- -------- OPERATING INCOME 20,817 33,357 Interest expense 34,560 33,034 -------- -------- (LOSS) INCOME BEFORE INCOME TAXES (13,743) 323 Benefit (provision) for income taxes 4,714 (194) -------- -------- NET (LOSS) INCOME $ (9,029) $ 129 -------- -------- -------- -------- PER SHARE DATA: Net (loss) income $ (.83) $ .01 -------- -------- -------- -------- Average number of common shares outstanding 10,896,286 11,149,486 See Notes to Interim Consolidated Financial Statements. - 2 - THE PENN TRAFFIC COMPANY CONSOLIDATED BALANCE SHEET (All dollar amounts in thousands)
UNAUDITED MAY 4, 1996 FEBRUARY 3, 1996 ----------- ---------------- ASSETS CURRENT ASSETS: Cash and short-term investments $ 58,707 $ 58,585 Accounts and notes receivable (less allowance for doubtful accounts of $1,851 and $1,483, respectively) 83,724 83,519 Inventories (Note 3) 353,943 356,309 Prepaid expenses and other current assets 18,318 15,717 ---------- ---------- Total Current Assets 514,692 514,130 NONCURRENT ASSETS: Capital leases - net 128,325 122,529 Property, plant and equipment - net 595,904 602,440 Intangible assets - net 428,753 431,394 Other assets and deferred charges - net 92,286 89,653 ---------- ---------- $1,759,960 $1,760,146 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 2,658 $ 2,728 Current portion of obligations under capital leases 12,041 11,735 Trade accounts and drafts payable 192,884 208,880 Payroll and other accrued liabilities 81,000 82,154 Accrued interest expense 15,918 33,812 Payroll taxes and other taxes payable 14,957 16,880 Deferred income taxes 30,385 30,385 ---------- ---------- Total Current Liabilities 349,843 386,574 NONCURRENT LIABILITIES: Long-term debt 1,243,031 1,200,997 Obligations under capital leases 132,177 126,197 Deferred income taxes 38,789 38,789 Other noncurrent liabilities 58,374 60,860 ---------- ---------- Total Liabilities 1,822,214 1,813,417 ---------- ---------- SHAREHOLDERS' EQUITY: Preferred Stock - authorized 10,000,000 shares at $1.00 par value; none issued Common Stock - authorized 30,000,000 shares at $1.25 par value; 10,867,941 shares and 10,840,849 shares issued, respectively 13,611 13,606 Capital in excess of par value 180,069 180,029 Retained deficit (244,771) (235,223) Minimum pension liability adjustment (6,606) (6,606) Unearned compensation (3,932) (4,452) Treasury stock, at cost (625) (625) ---------- ---------- Total Shareholders' Equity (62,254) (53,271) ---------- ---------- $1,759,960 $1,760,146 ---------- ---------- ---------- ----------
See Notes to Interim Consolidated Financial Statements. - 3 - THE PENN TRAFFIC COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS UNAUDITED (All dollar amounts in thousands) THIRTEEN THIRTEEN WEEKS ENDED WEEKS ENDED MAY 4, 1996 APRIL 29, 1995 ----------- -------------- OPERATING ACTIVITIES: Net (loss) income $ (9,029) $ 129 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 18,745 18,892 Amortization of intangibles 4,077 4,253 Other - net (2,305) (1,037) Net change in assets and liabilities: Accounts receivable and prepaid expenses (2,598) 3,300 Inventories 2,366 (7,193) Accounts payable and accrued expenses (36,967) (6,855) Deferred charges and other assets (1,152) 358 --------- --------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (26,863) 11,847 --------- --------- INVESTING ACTIVITIES: Capital expenditures (20,143) (22,467) Other - net 1,148 2 --------- --------- NET CASH (USED IN) INVESTING ACTIVITIES (18,995) (22,465) --------- --------- FINANCING ACTIVITIES: Increase in long-term debt 104,840 Payments to settle long-term debt (876) (839) Borrowings of revolver debt 143,000 173,600 Payment of revolver debt (205,000) (159,400) Proceeds from sale-and-leaseback transactions 9,087 Reduction of capital lease obligations (2,801) (2,254) Payment of debt issuance costs (2,315) Other - net 45 100 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 45,980 11,207 --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 122 589 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 58,585 46,519 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 58,707 $ 47,108 --------- --------- --------- --------- See Notes to Interim Consolidated Financial Statements. - 4 - THE PENN TRAFFIC COMPANY NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements 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 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The results of operations for the interim periods are not necessarily an indication of results to be expected for the year. In the opinion of management, all adjustments necessary for a fair presentation of the results are included for the interim periods, and all such adjustments are normal and recurring. These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Annual Report on Form 10-K for the fiscal year ended February 3, 1996. Net (loss) income per share of common stock is based on the average number of shares and equivalents, as applicable, of common stock outstanding during each period. Fully diluted (loss) income per share is not presented for each of the periods since conversion of the Company's shares under option would be anti- dilutive or the reduction from primary (loss) income per share is less than three percent. - 5 - NOTE 2 - SUPPLEMENTAL FINANCIAL INFORMATION (In thousands of dollars) FIRST QUARTER, FISCAL 1997 Operating Income $20,817 Depreciation and Amortization 22,822 LIFO Provision 1,000 Cash Interest Expense 33,485 FIRST QUARTER, FISCAL 1996 Operating Income $33,357 Depreciation and Amortization 23,145 LIFO Provision 0 Cash Interest Expense 31,964 NOTE 3 - INVENTORIES If the first-in, first-out (FIFO) method had been used by the Company, inventories would have been $18,848,000 and $17,848,000 higher than reported at May 4, 1996 and February 3, 1996, respectively. NOTE 4 - DEBT OFFERING In April 1996, the Company issued $100,000,000 of 11.50% Senior Notes due April 15, 2006 (the "11.50% Senior Notes") in an underwritten public offering. During First Quarter Fiscal 1997, proceeds of the issuance of the 11.50% Senior Notes were applied to the repayment of indebtedness outstanding under the Company's revolving credit facility. - 6 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED MAY 4, 1996 ("FIRST QUARTER FISCAL 1997") COMPARED TO THIRTEEN WEEKS ENDED APRIL 29, 1995 ("FIRST QUARTER FISCAL 1996") The following table sets forth statement of operations components expressed as a percentage of total revenues for First Quarter Fiscal 1997 and First Quarter Fiscal 1996: First Quarter Ended May 4, April 29, 1996 1995 Total revenues 100.0% 100.0% Gross profit (1) 23.2 23.0 Selling and administrative expenses 20.7 19.1 Operating income 2.5 3.9 Interest expense 4.2 3.8 (Loss) income before income taxes (1.7) 0.1 Net (loss) income (1.1) 0.0 (1) Total revenues less cost of sales. Total revenues for First Quarter Fiscal 1997 decreased to $827.7 million from $860.0 million in First Quarter Fiscal 1996. First Quarter Fiscal 1996 revenues include $19.4 million generated by 11 of the Company's former general merchandise stores (Harts) and five former Acme stores, all of which were closed after First Quarter Fiscal 1996. Excluding these closed stores, revenues for First Quarter Fiscal 1997 decreased by 1.5%. Wholesale supermarket sales were $101.7 million in First Quarter Fiscal 1997 and $101.4 million in First Quarter Fiscal 1996. Same store sales for First Quarter Fiscal 1997 declined 1.0%. - 7 - RESULTS OF OPERATIONS (CONTINUED) In First Quarter Fiscal 1997, gross profit was $191.7 million compared to First Quarter Fiscal 1996 gross profit of $197.6 million, representing 23.2% and 23.0% of total revenues, respectively. The increase in gross profit as a percentage of total revenues for First Quarter Fiscal 1997 resulted from the classification of certain expenses approximating $1.8 million as selling and administrative expenses in First Quarter Fiscal 1997 which had been recorded in cost of sales in First Quarter Fiscal 1996. Selling and administrative expenses for First Quarter Fiscal 1997 were $170.8 million compared with $164.2 million in First Quarter Fiscal 1996 representing 20.7% and 19.1% of total revenues, respectively. The increase in selling and administrative expenses as a percentage of total revenues for First Quarter Fiscal 1997 primarily resulted from (1) increased payroll and promotional expenses related to the Company's repositioning program which emphasizes increased levels of customer service and enhanced perishables departments in its stores, (2) an increase in fixed and semi-fixed expenses as a percentage of total revenues during a period of low price inflation and a decline in same store sales, and (3) the classification of certain expenses approximating $1.8 million as selling and administrative expenses in First Quarter Fiscal 1997 which had been recorded in cost of sales in First Quarter Fiscal 1996. Depreciation and amortization expense was $22.8 million in First Quarter Fiscal 1997 and $23.1 million in First Quarter Fiscal 1996, representing 2.8% and 2.7% of total revenues, respectively. Operating income for First Quarter Fiscal 1997 was $20.8 million or 2.5% of total revenues compared to $33.4 million or 3.9% of total revenues in First Quarter Fiscal 1996. The decline in operating income as a percentage of total revenues was the result of increased selling and administrative expenses as a percentage of total revenues, partially offset by an increase in gross profit as a percentage of total revenues. Interest expense for First Quarter Fiscal 1997 and First Quarter Fiscal 1996 was $34.6 million and $33.0 million, respectively. The increase in interest expense is due to the higher debt levels outstanding during First Quarter Fiscal 1997. Loss before income taxes was $13.7 million for First Quarter Fiscal 1997, compared to income of $0.3 million for First Quarter Fiscal 1996. The reason for the decline is the decrease in operating income combined with an increase in interest expense. The income tax benefit was $4.7 million for First Quarter Fiscal 1997 compared to a provision of $0.2 million in First Quarter Fiscal 1996. The effective tax rates vary from the statutory rates due to differences between income for financial reporting and tax reporting purposes, primarily related to goodwill amortization resulting from prior acquisitions. Net loss was $9.0 million in First Quarter Fiscal 1997 compared to net income of $0.1 million in First Quarter Fiscal 1996. - 8 - LIQUIDITY AND CAPITAL RESOURCES During First Quarter Fiscal 1997, operating income decreased to $20.8 million from $33.4 million for First Quarter Fiscal 1996. Interest expense for First Quarter Fiscal 1997 was $34.6 million as compared to $33.0 million during First Quarter Fiscal 1996. Net loss for First Quarter Fiscal 1997 was $9.0 million as compared to net income of $0.1 million for First Quarter Fiscal 1996. Payments of principal and interest on the Company's $1.2 billion of long- term debt (excluding capital leases) will materially restrict Company funds available to finance capital expenditures and working capital. Principal payments of long-term debt of $1.9 million, $2.2 million and $3.3 million are due during the remainder of Fiscal 1997, Fiscal 1998 and Fiscal 1999, respectively. The Company has a revolving credit facility (the "Revolving Credit Facility") which provides for borrowings of up to $250 million, subject to a borrowing base limitation measured by eligible inventory and accounts receivable of the Company. The Revolving Credit Facility matures in April 2000 and is secured by a pledge of the Company's inventory, accounts receivable and related assets. As of May 4, 1996, additional availability under the Revolving Credit Facility was $137.1 million. During First Quarter Fiscal 1997, the Company's internally generated funds from operations, amounts available under the Revolving Credit Facility and the proceeds of sale-and-leaseback and mortgage transactions provided sufficient liquidity to meet the Company's operating, capital expenditure and debt service needs. In April 1996, the Company issued $100 million of 11.50% Senior Notes due April 15, 2006 (the "11.50% Senior Notes") in an underwritten public offering. During First Quarter Fiscal 1997, proceeds of the issuance of the 11.50% Senior Notes were used to repay indebtedness outstanding under the Revolving Credit Facility. The Company has entered into three interest rate swap agreements, each of which expires within the next three years, that effectively convert $125 million of its fixed rate borrowings into variable rate obligations. Under the terms of these agreements, the Company makes payments at variable rates which are based on LIBOR and receives payments at fixed interest rates. The net amount paid or received is included in interest expense. In October 1995, Penn Traffic's Board of Directors authorized the repurchase by the Company of up to 500,000 shares of its outstanding common stock, of which 45,200 shares have been repurchased. No shares of common stock were repurchased in First Quarter Fiscal 1997. Penn Traffic's debt agreements contain limitations on the Company's ability to repurchase its common stock which currently prohibit it from repurchasing any additional shares of its common stock. Cash flows to meet the Company's requirements for operating, investing and financing activities in First Quarter Fiscal 1997 are reported in the Consolidated Statement of Cash Flows. For the thirteen week period ended May 4, 1996, the Company experienced a negative cash flow from operating activities of $26.9 million. - 9 - LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) Working capital increased by $37.3 million from February 3, 1996 to May 4, 1996. The Company is in compliance with all terms and restrictive covenants of its long-term debt agreements. The Company expects to spend approximately $80 million on capital expenditures, including capital leases, during Fiscal 1997. The Company expects to finance such capital expenditures through internally generated cash flow, borrowings under the Revolving Credit Facility, new capital leases and mortgages. Capital expenditures will be principally for new stores, replacement stores and remodeled store facilities. In First Quarter Fiscal 1997, the Company opened a replacement store and completed three expansions. - 10 - PART II. OTHER INFORMATION All items which are not applicable or to which the answer is negative have been omitted from this report. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Penn Traffic's Annual Meeting of Stockholders was held on June 4, 1996. At the Annual Meeting, the holders of Penn Traffic common stock considered and voted upon a proposal to approve and adopt the Company's Amended and Restated Directors' Stock Option Plan (the "Plan"). Approval and adoption of the Plan required the affirmative vote of a majority of the votes cast. There were 6,950,767 votes cast in favor of the Plan and 2,981,152 votes cast against the Plan. There were 45,622 abstentions. At the Annual Meeting, two directors were elected to serve for three-year terms on the Company's Board of Directors by the following votes: FOR WITHHELD Martin A. Fox 7,033,500 2,944,041 Harold S. Poster 7,030,122 2,947,419 At the Annual Meeting, the selection of Price Waterhouse LLP as auditors for the Company for Fiscal 1997 was ratified by a vote of 9,195,631 shares in favor and 776,827 shares opposed. There were 5,084 abstentions. - 11 - ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits EXHIBIT NUMBER DESCRIPTION 4.8C Officer's Certificate pursuant to the Indenture filed as Exhibit 4.8, dated April 23, 1996, establishing the terms of the 11.50% Senior Notes due April 15, 2006. 10.5N Amendment No. 13, dated as of May 31, 1996, to the Loan and Security Amendment. 27.1 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the fiscal quarter ended May 4, 1996. - 12 - 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. THE PENN TRAFFIC COMPANY June 07, 1996 /s/- John T. Dixon ---------------------------------- By: John T. Dixon (President and Chief Executive Officer, and Director) June 07, 1996 /s/- Eugene R. Sunderhaft ---------------------------------- By: Eugene R. Sunderhaft (Senior Vice President and Secretary, Principal Financial Officer and Principal Accounting Officer) - 13 - EX-4.8C 2 EXHIBIT 4.8C THE PENN TRAFFIC COMPANY Officers' Certificate Pursuant to Sections 3.01, 3.03 and 11.04 of the Indenture John T. Dixon, President and Chief Executive Officer of The Penn Traffic Company, a Delaware corporation (the "Company"), and Eugene R. Sunderhaft, Senior Vice President - Finance and Secretary of the Company, DO HEREBY CERTIFY: 1. Each of the undersigned (i) has read Sections 2.01, 3.01, 3.03, 3.04, 11.04 and 11.05 of the Indenture dated as of December 15, 1993 (the "Indenture") between the Company and United States Trust Company of New York, as Trustee; (ii) has examined such accounts and records of the Company and made such inquiries of officers, employees and agents of the Company as he has deemed necessary to express his opinion as contained herein; and (iii) is of the opinion that such examinations and inquiries are sufficient to enable him to express an informed opinion as to whether or not the covenants and conditions precedent which are stated herein to be complied with have been complied with; 2. Attached hereto as Exhibit A is a true and correct copy of a specimen of the Company's 11 1/2% Senior Notes due April 15, 2006 (the "Notes"), the aggregate principal amount of which shall be limited to $100,000,000 and which shall have the terms set forth in such Exhibit A; 3. The Notes shall be issuable in the form of one or more Global Securities to be deposited with or on behalf of, The Depositary Trust Company and the form of the legends for such Global Securities are as set forth in the attached Exhibit A; 4. After giving effect to the authentication and delivery of the Notes pursuant to the Company Order dated the date hereof (i) the aggregate principal amount of Notes Outstanding will not exceed the maximum aggregate principal amount permitted to be Outstanding pursuant to authorization by the Company's Board of Directors; and (ii) the Company will not be in Default and no Event of Default will have occurred; and 5. All conditions precedent provided for in the Indenture relating to the authentication and delivery of the Notes have been complied with. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Indenture. This Certificate may be executed in counterparts, each one of which shall be deemed an original and which together shall constitute one document. IN WITNESS WHEREOF, the undersigned have executed this Certificate this 23rd day of April, 1996. /s/ John T. Dixon ------------------------ John T. Dixon President and Chief Executive Officer /s/ Eugene R. Sunderhaft ------------------------- Eugene R. Sunderhaft Senior Vice President - Finance and Secretary -2- EXHIBIT A No.___ $100,000,000.00 CUSIP 707832AG6 THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE PENN TRAFFIC COMPANY Incorporated under the laws of the State of Delaware 11 1/2% Senior Notes due April 15, 2006 THE PENN TRAFFIC COMPANY, for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of $100,000,000.00 on April 15, 2006 and to pay interest thereon semiannually in arrears at the rate of 11 1/2% per annum on April 15 and October 15 of each year, commencing October 15, 1996, until the principal hereof is paid or made available for payment. All payments of principal, premium, if any, and interest shall be made in immediately available funds and in the manner and subject to the terms set forth in provisions appearing on the reverse hereof, which provisions, in their entirety, shall for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, THE PENN TRAFFIC COMPANY has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its President or a Vice President and attested by its Secretary or an Assistant Secretary. Dated: April 23, 1996 THE PENN TRAFFIC COMPANY By____________________________ Eugene R. Sunderhaft Vice President - Finance and Secretary Attest:____________________ Francis D. Price, Jr. Vice President and Assistant Secretary [SEAL] A-4 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: April 23, 1996 UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By:___________________________ Authorized Signatory or UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee By: BANKERS TRUST COMPANY, as Authenticating Agent By:_______________________ Authorized Signatory A-5 (BACK OF SECURITY) THE PENN TRAFFIC COMPANY 11 1/2% Senior Notes due April 15, 2006. 1. INTEREST. THE PENN TRAFFIC COMPANY (the "Company"), a Delaware corporation, promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually in arrears on April 15 and October 15 of each year, commencing October 15, 1996. Interest on the Securities will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from April 23, 1996. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Securities (except defaulted interest) to the Persons who are registered Holders of Securities at the close of business on the regular record date, which shall be the April 1 and October 1, as the case may be, next preceding the interest payment date even though Securities are cancelled after the record date and on or before the interest payment date. Any such interest not so punctually paid or duly provided for, and any interest payable on such defaulted interest (to the extent lawful), will forthwith cease to be payable to the Holder on such regular record date and shall be payable to the Person in whose name this Security is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Company, notice of which shall be given to Holders not less than 5 days prior to such special record date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. All payments of principal, premium, if any, and interest on the Securities will be made by the Paying Agent by wire transfer of immediately available funds to a separate account of DTC or its nominee, provided that, the Company may pay principal, premium, if any, and interest to Holders other than the DTC or its nominee by check in immediately available funds. The Company may mail an interest check to such Holder's registered address. 3. PAYING AGENT AND REGISTRAR. Bankers Trust Company, a New York banking corporation, will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to any Holder. The Company may act in any such capacity. 4. INDENTURE. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued under an Indenture dated as of December 15, 1993 (the "Indenture") between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made A-6 part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990, as in effect on the date of the Indenture ("TIA"). The Securities are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. This Security is one of the series designated on the face hereof limited to $100,000,000.00 in aggregate principal amount. The Securities are unsecured general obligations of the Company. Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Indenture. 5. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples thereof. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not exchange or register the transfer of any Security or portion of a Security selected for redemption. Also, it need not exchange or register the transfer of any Securities for a period of 15 days before a selection of Securities to be redeemed. 6. OPTIONAL REDEMPTION. The Securities may not be redeemed prior to April 15, 2001. On or after such date, the Securities may be redeemed at the election of the Company as a whole at any time or in part from time to time at the Redemption Prices (expressed in percentages of principal amount) set forth below plus accrued interest to the Redemption Date, if redeemed during the 12- month period beginning April 15 of the years indicated below: Year Percentage ---- ---------- 2001.................. 104.00% 2002.................. 102.66% 2003.................. 101.33% 2004 and thereafter... 100.00% Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed, at his registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. On and after the Redemption Date interest ceases to accrue on Securities or portions of them called for redemption. These Securities shall not have the benefit of any sinking fund obligations. 7. PERSONS DEEMED OWNERS. The registered Holder of a Security may be treated as its owner for all purposes. A-7 8. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture and the rights of the Holder of the Securities of each series to be affected under the Indenture may be amended at any time by the Company and the Trustee with the consent of the Holders of at least a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Without the consent of any Holder, the Indenture or the Securities may be amended to cure any ambiguity, defect or inconsistency; to comply with Section 5.01 of the Indenture; to make any change that does not adversely affect the legal rights of any Holder; to comply with the requirements of the SEC to maintain qualification of the Indenture under the TIA; to add to or change the provisions of the Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or to provide for the appointment of a successor Trustee with respect to one or more (but not all) series of Securities issued pursuant to the Indenture, as provided in Section 7.08 of the Indenture. 9. REMEDIES. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee of for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. 10. PREPAYMENT AT HOLDER'S OPTION UPON CERTAIN MERGER AND CHANGE OF CONTROL EVENTS. In the event of a Change of Control or in the event of a merger where, immediately after giving effect to the merger, the surviving corporation does not meet the Consolidated Interest Coverage Ratio set forth in the Indenture, the Company shall be obligated to make an offer to purchase this Security at a purchase price in cash equal to 101% of its principal amount plus accrued interest, after the occurrence of such Change in Control or merger. Holders of Securities which are the subject of such an offer to repurchase shall receive an offer to repurchase and may elect to have such Securities A-8 repurchased in accordance with the provisions of the Indenture pursuant to and in accordance with the terms of the Indenture. The Company shall give the Holder of this Security notice of such right of repurchase not less than 20 nor more than 60 business days prior to the consummation of a merger, consolidation, transfer, sale or lease that would require the Company to offer to repurchase the Securities and not more than 45 business days following any other event constituting a Change of Control, mailed by first-class mail to the Holder's last address as it appears upon the register. The Holder shall have the right to have this Security repurchased if, among other things, the Security is tendered for repurchase no later than five business days prior to the applicable repurchase date. The Company shall have no obligation to consummate any merger, consolidation, transfer, sale or lease that is the subject of any such notice, and if any such merger, consolidation, transfer, sale or lease that was the subject of any notice described above is not consummated, the Holder will not be entitled to have this Security prepaid, and any Securities tendered for prepayment will be returned. 11. TRUSTEE DEALINGS WITH THE COMPANY. United States Trust Company of New York, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or any Affiliate with the same rights it would have as if it were not the Trustee. 12. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. This waiver and release are part of the consideration for the issue of the Securities. 13. UNCLAIMED MONEY. If money for the payment of principal of or interest on any Security remains unclaimed for two years after the date on which such payment shall have come due, the Trustee or Paying Agent will pay the money back to the Company at the Company's written request. After that, Holders entitled to this money must look to the Company for payment, unless a law governing abandoned property designates another Person. 14. DISCHARGE UPON REDEMPTION OR MATURITY. Subject to the terms of the Indenture, the Indenture will be discharged and cancelled with respect to Securities of any series upon the payment of all Securities of such series. The Indenture contains provisions for defeasance at any time of certain restrictive covenants with respect to this Security (in each case upon compliance with certain conditions set forth therein). 15. AUTHENTICATION. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. A-9 16. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS SECURITY AND THE INDENTURE. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and UNIF GIFT MIN ACT (= Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture, which has in it the text of this Security in larger type. Requests may be made to The Penn Traffic Company, 1200 State Fair Boulevard, Syracuse, New York 13221, Attention: Eugene R. Sunderhaft. A-10 OPTION OF HOLDER TO ELECT REPURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 5.01 of the Indenture, check the box: / / Dated:____________________ Your Signature:_________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee:_________________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) A-11 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to _____________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. _____________________________________________________________ Dated:______________________ Your Signature:________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: _______________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) A-12 EX-10.5N 3 EXHIBIT 10.5N AMENDMENT NO. 13 TO LOAN AND SECURITY AGREEMENT AMENDMENT NO. 13, dated as of May 31, 1996 (this "AMENDMENT") to that certain Loan and Security Agreement dated as of March 5, 1993, as amended by Amendment Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 (collectively, the "LOAN AGREEMENT") among THE PENN TRAFFIC COMPANY ("Penn Traffic"), DAIRY DELL, BIG M SUPERMARKETS, INC. and PENNY CURTISS BAKING COMPANY, INC. (individually, each a "BORROWER" and collectively, the "BORROWERS"), the Lenders listed therein (collectively, the "LENDERS") and FLEET BANK, N.A. (as successor to Natwest USA Credit Corp.), as Agent for the Lenders (in such capacity, the "AGENT"), is made by, between and among the Borrowers, the Agent, and the Lenders. Capitalized terms used herein, except as otherwise defined herein, shall have the meanings given to such terms in the Loan Agreement. WHEREAS, the Borrowers have requested that the Agent and the Lenders amend the Loan Agreement to, among other things, (i) modify the existing Interest Coverage ratio set forth in Section 10.18 of the Loan Agreement; (ii) modify the Consolidated EBDAIT covenant set forth in Section 10.20 of the Loan Agreement; (iii) modify the Net Cash Flow covenant set forth in Section 10.23 of the Loan Agreement; (iv) modify the provisions of the Loan Agreement regarding distributions and repurchases of Penn Traffic's capital stock and debt; and (v) modify the interest rate applicable under the Loan Agreement in certain circumstances. WHEREAS, the Borrowers, the Agent and the Lenders have agreed to amend the Loan Agreement pursuant to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended as of the effective date hereof as follows: (i) the definition of "Eurodollar Rate" in Section 1.1 of the Loan Agreement is hereby amended by deleting such definition in its entirety and by substituting, in lieu thereof, the following: "EURODOLLAR RATE" means, for the Interest Period for a Eurodollar Revolving Loan, a rate per annum equal to the sum of: (a) two and one-quarter percent (2 1/4%); and (b) the rate determined pursuant to the following formula: LIBOR ------------------------------------ 1 - Eurocurrency Reserve Requirement PROVIDED, HOWEVER, that during a Reduction Period the Eurodollar Rate shall mean a rate per annum of (a) one-quarter of one percent (1/4%) lower than such rate if the Interest Coverage Ratio was 2.0 to 1 or more, but less than 2.1 to 1 or (b) one half of one percent (1/2%) lower than such rate if the Interest Coverage Ratio was 2.1 to 1 or more, and PROVIDED, FURTHER, that during an Increase Period the Eurodollar Rate shall mean a rate per annum of one-quarter of one percent (1/4%) higher than such rate; (ii) the definition of "Prime-Based Rate" in Section 1.1 of the Loan Agreement is hereby amended by deleting such definition in its entirety and by substituting, in lieu thereof, the following: "PRIME-BASED RATE" means the Prime Lending Rate plus one percent (1%), PROVIDED, HOWEVER, that during a Reduction Period, "Prime-Based Rate" means the Prime Lending Rate plus three- quarters of one percent ( 3/4%) if during a Reduction Period the Interest Coverage Ratio was 2.0 to 1 or more but less than 2.1 to 1 or one half of one percent (1/2%) if the Interest Coverage Ratio was 2.1 to 1 or more as the case may be; and PROVIDED, FURTHER, that during an Increase Period the "Prime-Based Rate" means the Prime Lending Rate plus one and one-quarter percent (1 1/4%). (iii) Section 1.1 shall be amended by adding the following definition of "INCREASE PERIOD" in proper alphabetical order: "INCREASE PERIOD" means each period (x) commencing on the first day of the Fiscal Quarter immediately following a Fiscal Quarter in which the Agent receives a certificate under Section 8.2(e) showing that, for the Coverage Period ending on the last day of the Fiscal Year or Fiscal Quarter to which such certificate relates, the Interest Coverage Ratio was less than the Interest Coverage Requirement for such Coverage Period and (y) continuing until the last day of the first Fiscal Quarter thereafter in which the Agent receives a certificate under Section 8.2(e) showing that, for the Coverage Period ending on the last day of the Fiscal Year or Fiscal Quarter to which such certificate relates, the Interest Coverage Ratio was equal to or 2 greater than the Interest Coverage Requirement for such Coverage Period. As used herein, the term "Interest Coverage Requirement" shall mean for any Coverage Period ending (i) in the Fiscal Year of the Borrower ending on or about January 31, 1997, 1.6 to 1; (ii) in the Fiscal Year of the Borrower ending on or about January 31, 1998, 1.6 to 1; (iii) in the Fiscal Year of the Borrower ending on or about January 31, 1999, 1.65 to 1; (iv) in the Fiscal Year of the Borrower ending on or about January 31, 2000, 1.75 to 1; and (v) in the Fiscal Year of the Borrower ending on or about January 31, 2001, 1.80 to 1. (iv) Section 10.6 of the Loan Agreement is hereby amended by deleting such Section in its entirety and by substituting, in lieu thereof, the following: "10.6 DISTRIBUTIONS. None of the Borrowers or any of the PT Stores Group Subsidiaries shall directly or indirectly declare or make, or incur any liability to make, any Distribution, except a PT Stores Group Subsidiary wholly owned by a Borrower may make Distributions to such Borrower. Notwithstanding the foregoing, if no Event of Default has occurred and is continuing, a Borrower may repurchase its capital stock, or options or rights therefor, from an employee in connection with the termination of such employee's employment, so long as the aggregate cumulative amount of all such repurchases by all Borrowers does not exceed $1,000,000 in any Fiscal Year or $4,000,000 from the date hereof through the Commitment Expiration Date. In addition, if no Event or Event of Default has occurred and is continuing, Penn Traffic may repurchase its capital stock on the open market for a fair market value; PROVIDED, HOWEVER, that the aggregate purchase price for all such repurchases during the term of this Agreement shall not exceed $10,000,000; and PROVIDED, FURTHER, that Penn Traffic shall give the Agent written notice within one (1) Business Day of any such repurchase if the purchase price for such repurchase plus the aggregate purchase price for all prior repurchases of the capital stock of Penn Traffic not previously reported shall exceed an aggregate of $1,000,000; and PROVIDED, FURTHER, that no such repurchase may be made in the event that such repurchase would not be permitted under the indentures and other agreements executed in connection with the Senior Notes and the Subordinated Notes; and PROVIDED, FURTHER, that no such repurchase may be made unless, both before and after giving effect to such repurchase under this Section 10.6 and any payments on account of Debt made or to be made on the same day as permitted under Section 10.9 hereof, Availability shall be at least $75,000,000." 3 (v) Section 10.9 of the Loan Agreement is hereby amended by deleting such Section in its entirety and by substituting, in lieu thereof, the following: "10.9 PREPAYMENT. None of the Borrowers or any of their Subsidiaries shall voluntarily prepay any Debt, except: (a) the Obligations in accordance with their terms; (b) Debt refinanced with the proceeds of (i) Permitted Refinancing Debt, (ii) the other Debt permitted by Section 10.8(1), or (iii) the issuance of any capital stock of a Borrower on or after the Closing Date; PROVIDED, HOWEVER, that no such prepayment under this clause (b) may be made unless, both before and after giving effect to such prepayment and any repurchases of Penn Traffic's capital stock to be made on the same day as permitted under the third sentence of Section 10.6 hereof, Availability shall be at least $75,000,000; (c) a purchase or redemption of Subordinated Notes or Senior Notes, other than with the proceeds of Permitted Refinancing Debt, the other Debt permitted by Section 10.8(1), or capital stock, if the following conditions are met: (i) no Event or Event of Default exists at the time of such purchase or redemption or would exist after giving effect thereto; (ii) all Subordinated Notes or Senior Notes so purchased or redeemed are promptly surrendered for cancellation; (iii) the aggregate cumulative purchase and redemption price paid in connection with all such purchases and redemptions of Subordinated Notes and Senior Notes after the date hereof (exclusive of amounts paid in respect of accrued interest) does not exceed $50,000,000; (iv) a PRO FORMA Interest Coverage Ratio for the Coverage Period ended most recently prior to such purchase or redemption (determined on a basis that assumes that such purchase or redemption, and all other purchases and redemptions during such Coverage Period permitted by any of the provisions of this Agreement, occurred on the first day of such Coverage Period) is not less than 1.8 to 1; and (v) a pro forma calculation based on the assumption that such purchase and redemption, and all other such purchases and redemptions during the period of 12 months ended on the date of such purchase or redemption, had all occurred on the first day of such 12-month period, and that all accrued but unpaid interest at the date of such purchase or redemption was paid in full, indicates that the pro forma Combined Borrowing Capacity at the end of each week during such 12-month period would have exceeded the pro forma aggregate outstanding principal balance of all Revolving Loans at the end of each such week by at least $30,000,000; (d) the Penn Traffic 13 1/2% Subordinated Notes due 1998 that are outstanding on the date hereof; (e) the Debt listed on Exhibit R; and (f) other Debt so long as the aggregate cumulative principal amount prepaid after the date hereof in reliance on this clause does not exceed $5,000,000. On or before sixty (60) days after the Closing Date, Penn Traffic shall have redeemed, 4 repurchased or otherwise retired at least $50,000,000 in face amount of the P & C Senior Subordinated Notes, and on or before September 30, 1993, Penn Traffic shall have redeemed all of the Big Bear Senior Notes that were not tendered pursuant to the tender offer referred to in Section 6.1(g). On or before October 31, 1993 Penn Traffic shall have redeemed, repurchased or otherwise retired all of the P & C Senior Subordinated Notes." (vi) Section 10.18 of the Loan Agreement shall be amended by deleting such Section 10.18 in its entirety, and by substituting, in lieu thereof, the following: "10.18 INTEREST COVERAGE. For each Coverage Period, the PT Stores Group will maintain the Interest Coverage Ratio for such Coverage Period set forth in the following table: Each Coverage Period Ending In Ratio ---------------- ----- Fiscal Year 1994 1.55:1 Fiscal Year 1995 1.60:1 Fiscal Year 1996 1.65:1 Fiscal Year 1997 1.45:1 Fiscal Year 1998 1.50:1 Fiscal Year 1999 1.55:1 Fiscal Year 2000 1.65:1 Fiscal Year 2001 1.75:1" (vii) Section 10.20 of the Loan Agreement shall be amended by deleting such Section 10.20 in its entirety, and by substituting, in lieu thereof, the following: "10.20 CONSOLIDATED EBDAIT. The Borrowers will not permit Consolidated EBDAIT at the end of each Fiscal Quarter for the four most recent consecutive Fiscal Quarters of the Borrower ending on or prior to the date of determination to be less than: 5 Fiscal Quarter/Fiscal Year Amount -------------------------- ------ Fourth 1996 $225,000,000 First 1997 $210,000,000 Second 1997 $200,000,000 Third 1997 $202,500,000 Fourth 1997 $205,000,000 First 1998 $207,500,000 Second 1998 $210,000,000 Third 1998 $212,500,000 Fourth 1998 $215,000,000 First 1999 $218,750,000 Second 1999 $222,500,000 Third 1999 $226,250,000 Fourth 1999 $230,000,000 First 2000 $233,750,000 Second 2000 $237,500,000 Third 2000 $241,250,000 Fourth 2000 $245,000,000" (viii) Section 10.23 of the Loan Agreement shall be amended by deleting such Section 10.23 in its entirety and by substituting, in lieu thereof, the following: "10.23 NET CASH FLOW. The Borrowers will not permit (i) Net Cash Flow to be less than negative twenty million dollars (-$20,000,000) for the Fiscal Year ending February 1, 1997 taken as a whole; (ii) Net Cash Flow to be less than zero (0) for 6 the entire two Fiscal Quarter period taken as a whole immediately succeeding any Fiscal Quarter (subsequent to the Fiscal Quarter ended February 1, 1997) during which Availability at any time is less than $75,000,000; or (iii) Net Cash Flow to be less than negative five million dollars (-$5,000,000) for either of the two Fiscal Quarter periods immediately succeeding any Fiscal Quarter (subsequent to the Fiscal Quarter ended February 1, 1997) during which Availability at any time is less than $75,000,000." 3. REPRESENTATIONS AND WARRANTIES. As an inducement to the Agent and the Lenders to enter into this Amendment, each of the Borrowers hereby represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders as follows: (a) It has the power and authority to enter into this Amendment and has taken all corporate action required to authorize its execution, delivery, and performance of this Amendment. This Amendment has been duly executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms. The execution, delivery, and performance of this Amendment will not violate its certificate of incorporation or by-laws or any agreement or legal requirements binding upon it. (b) As of the date hereof and after giving effect to the terms of this Amendment: (i) the Loan Agreement is in full force and effect and constitutes a binding obligation of the Borrowers, enforceable against the Borrowers and owing in accordance with its terms; (ii) the Obligations are due and owing by the Borrowers in accordance with their terms; and (iii) Borrowers have no defense to or setoff, counterclaim, or claim against payment of the Obligations and enforcement of the Loan Documents based upon a fact or circumstance existing or occurring on or prior to the date hereof. (c) The Obligations under the Loan Agreement as amended by this Amendment constitute "Senior Indebtedness" as defined under the indentures relating to the Senior Notes and to the Subordinated Notes. 4. NO IMPLIED AMENDMENTS. Except as expressly provided herein, the Loan Agreement and the other Loan Documents are not amended or otherwise affected in any way by this Amendment. 7 5. ENTIRE AGREEMENT; MODIFICATIONS; BINDING EFFECT. This Amendment constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior oral or written understandings about such matter. Each of the Borrowers confirms that, in entering into this Amendment, it did not rely upon any agreement, representation, or warranty by the Agent or any Lender except those expressly set forth herein. No modification, rescission, waiver, release, or amendment of any provision of this Amendment may be made except by a written agreement signed by the parties hereto. The provisions of this Amendment are binding upon and inure to the benefit of the representatives, successors, and assigns of the parties hereto; provided, however, that no interest herein or obligation hereunder may be assigned by any Borrower without the prior written consent of the Required Lenders. 6. EFFECTIVE DATE. This Agreement shall become effective upon compliance with the conditions set forth immediately below: (i) No Event or Event of Default shall have occurred and there shall have been no material adverse change in the business or financial condition of any of the Borrowers. (ii) The Borrowers shall deliver to the Agent for the benefit of the Lenders an opinion of Borrowers' counsel in form and substance satisfactory to the Agent and its counsel (which opinion shall cover such matters as the Agent may reasonably request, including a statement that the Obligations under the Loan Agreement as amended by this Amendment constitute "Senior Indebtedness" as defined under the indentures relating to the Senior Notes and to the Subordinated Notes). (iii) The Borrowers shall deliver to the Agent a certificate of the Borrowers' Chief Executive or Chief Financial Officer with respect to Section (i) above and such other instruments and documents as the Agent shall reasonably request. (iv) The Agent shall have received an original counterpart of this Amendment, duly executed and delivered by the Borrowers and the Required Lenders. (v) The Agent shall have received payment of an amendment fee in the amount of $250,000 for the benefit of the Lenders. 8 7. COUNTERPARTS. This Amendment may be executed in any number of counterparts, and by each party in separate counterparts, each of which is an original, but all of which shall together constitute one and the same agreement. 8. GOVERNING LAW. This Amendment is deemed to have been made in the State of New York and is governed by and interpreted in accordance with the laws of such state, provided that no doctrine of choice of law (except as may be applicable under the UCC with respect to the Security Interest) shall be used to apply the laws of any other state or jurisdiction. IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written. 9 EX-27 4 EXHIBIT 27 FDS
5 1,000 3-MOS FEB-01-1997 FEB-04-1996 MAY-04-1996 58,707 0 83,724 1,851 353,943 514,692 921,975 326,071 1,759,960 349,843 1,389,907 0 0 13,611 (75,865) 1,759,960 814,468 827,658 635,996 635,996 170,845 368 34,560 (13,743) 4,714 (9,029) 0 0 0 (9,029) (.83) 0
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