EXHIBIT 10.16
LOAN AGREEMENT
THIS AGREEMENT is made as of the 3rd day of December, 1992, by and among
SCHULTZ SAV-O STORES, INC., a Wisconsin corporation ("Borrower"), M&I MARSHALL &
ILSLEY BANK, a Wisconsin banking corporation ("M&I") and FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION, a national banking association ("Firstar") (collectively,
the "Banks" and individually, a "Bank"). Unless otherwise indicated herein,
capitalized terms shall have the meanings set forth in Section 9 hereof.
WITNESSETH:
WHEREAS, Borrower has available from M&I a $9,000,000 revolving credit
facility (the "Existing M&I Facility") evidenced by a promissory note (the
"Existing M&I Note") in the principal amount of $9,000,000; and
WHEREAS, Borrower has available from Firstar a $7,000,000 revolving
credit facility (the "Existing Firstar Facility" and collectively, with the
Existing M&I Facility, the "Existing Facilities") evidenced by a promissory note
(the "Existing Firstar Note") in the principal amount of $7,000,000; and
WHEREAS, Borrower has requested that the Banks amend and replace the
Existing Facilities with a $9,000,000 revolving line of credit facility from M&I
(the "M&I Line of Credit") and a $7,000,000 revolving line of credit facility
from Firstar (the "Firstar Line of Credit" and collectively, with the M&I Line
of Credit, the "Lines of Credit"); and
WHEREAS, Banks are willing to extend the Lines of Credit to Borrower, but
only on the terms and conditions hereinafter set forth and in reliance on the
representations and warranties of Borrower herein contained.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Lines of Credit. M&I and Firstar each agree to extend to Borrower
revolving credit loans (the "Loans") under the M&I Line of Credit and the
Firstar Line of Credit, respectively, on the terms and conditions hereinafter
set forth in this Agreement. All loans made to Borrower pursuant to the Existing
M&I Facility and the Existing Firstar Facility which are outstanding as of the
date hereof shall be deemed to be for purposes of this Agreement Loans made
pursuant to the M&I Line of Credit and the Firstar Line of Credit, respectively,
as of the date hereof.
(a) Interest. Interest shall accrue on the unpaid principal amount
of the Loans from time to time outstanding at a rate per annum equal to
(i) the Prime Rate or (ii) the Offered Rate from time to time elected by
Borrower, with such rate to be adjusted, and with each such adjustment to
become effective, with each election by
Borrower at the Prime Rate or the Offered Rate, as the case may be. If
all or a portion of the principal amount of any Loan made hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), any overdue principal amount thereof shall bear interest at a
rate per annum equal to the Prime Rate plus two percent (2%). Interest
shall be payable monthly in arrears on the first day of each month and at
maturity. Interest shall be computed on the basis of a 360-day year for
the actual number of days elapsed. Any change in the interest rate
resulting from a change in the Prime Rate or the Offered Rate shall
become effective as of the opening of business on the day on which such
change in the Prime Rate or the Offered Rate shall become effective. Each
Bank is authorized to debit Borrower's account at such Bank (Account No.
39-4440 in the case of M&I, and Account No. 12520901 in the case of
Firstar) by the amount of any interest payment which is due to such Bank.
(b) Master Notes. Loans made by M&I and Firstar, respectively,
under the M&I Line of Credit and the Firstar Line of Credit,
respectively, shall be evidenced by two promissory notes of Borrower
substantially in the form of Exhibits A-l and A-2 (the "Master Notes")
payable to the order of M&I and Firstar, respectively, and each
representing in the aggregate the obligation of Borrower to pay to M&I
and Firstar, respectively, the lesser of (a) such Bank's Line of Credit
or (b) the aggregate unpaid principal amount of all Loans made by such
Bank, with interest thereon as provided in subsection 1(a). The Master
Notes shall be dated as of the date of this Agreement and shall be stated
to mature on April 30, 1995 (the "Maturity Date"). Upon the execution and
delivery of the Master Notes by Borrower to Banks, the Existing Notes
shall be superseded and replaced by the Master Notes.
(c) Statement of Account. Each Bank shall record on its records
all Loans made to Borrower by such Bank and accrued interest thereon.
Each Bank shall also record all payments made by Borrower to such Bank.
At least once a month, each Bank may render a statement of account
showing as of the date thereof the indebtedness owed to such Bank on its
Line of Credit, debited and credited as set forth above. Unless Borrower
notifies such Bank in writing of an objection to said statement within
thirty (30) days of the receipt of said statement, said statement shall
be deemed correct and accepted by Borrower and conclusively binding upon
Borrower.
(d) Borrowings; Payments. All Loans to Borrower under the Lines of
Credit shall be made only in amounts not less than $50,000. All payments
by Borrower to a Bank with respect to repayment of Loans under such
Bank's Line of Credit shall be made only in amounts of not less than
$50,000; provided that on the Maturity Date Borrower shall repay Banks
all indebtedness outstanding under the Lines of Credit.
(e) Procedure to Change Amount Outstanding. Duly authorized
officers, employees or agents of Borrower designated by Borrower to Banks
in writing, may from time to time, either orally or in writing, contact a
designated officer or employee of either Bank, requesting that such Bank
increase or decrease the total
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principal amount outstanding under such Bank's Line of Credit; provided
that at no time shall the principal amount outstanding under such Bank's
Line of Credit exceed such Bank's Total Commitment. Upon compliance with
the terms and conditions hereof, such Bank shall immediately increase or
decrease the principal balance then outstanding under its Line of Credit
by crediting or debiting, whichever is appropriate, the requested amount
from the Borrower's account at such Bank referred to in subsection 1(a),
above. All such requests must be received by such Bank no later than 2:00
p.m. All requests received after that time shall be processed as if
received on the following business day. Each oral request shall be
confirmed in writing by the authorized person making the request and
delivered to such Bank in the manner provided in subsection 10(e), below.
Notwithstanding anything herein to the contrary, neither Bank
shall have an obligation to increase the principal amount outstanding
under its Line of Credit after the Maturity Date, or if any event shall
have occurred which either of itself or with the lapse of time or the
giving of notice, or both, would constitute an Event of Default under
this Agreement.
(f) Reduction of Total Commitments. Borrower may, upon not less
than ten (10) days prior written notice to the affected Bank, reduce such
Bank's Total Commitment in integral multiples of $100,000.00; provided,
such reduction shall be accompanied by a prepayment of Loans made
hereunder by such Bank, together with accrued interest on the amount so
prepaid to the date of such prepayment, to the extent, if any, that the
amount of Loans by such Bank then outstanding exceed the amount of such
Bank's Total Commitment as then reduced. Once reduced pursuant to this
provision, neither Bank's Total Commitment may thereafter be increased by
Borrower.
2. Availability Fee. As additional compensation to the Banks for their
agreement to extend the Lines of Credit to Borrower, Borrower agrees to pay to
each Bank an availability fee (the "Availability Fee") quarterly in arrears on
the first day of each quarterly period (or portion thereof) commencing January
1, 1993 and at maturity. The Availability Fee due to each Bank for any quarterly
period (or portion thereof) shall be an amount equal to the product of (i) the
average daily unused amount of such Bank's Line of Credit available for
disbursement during such period multiplied by (ii) 0.000625. Each Bank's
Availability Fee shall be payable quarterly in arrears commencing January 1,
1993 and every three months thereafter on the first business day of each
calendar quarter until the Maturity Date.
3. Representations and Warranties. In order to induce the Banks to enter
into this Agreement and to make the loans herein provided for, and in
recognition of the fact that the Banks are acting in reliance thereupon,
Borrower hereby covenants, represents and warrants as follows:
(a) Corporate Existence; Corporate Power. Borrower is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Wisconsin and is duly authorized under all
applicable provisions of law to
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carry on its business as presently conducted. Borrower is duly qualified
as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of its property or
the conduct of its business requires such qualification and the failure
to so qualify either individually or in the aggregate would have a
material adverse effect on Borrower's financial condition or the conduct
of its business. Borrower has the corporate power and authority to enter
into, deliver, issue and perform all of its obligations under this
Agreement and the Master Notes and to borrow hereunder.
(b) No Legal Bar; Enforceable Obligations. The execution, delivery
and performance of this Agreement and the Master Notes and any other
agreement, certificate or instrument delivered by Borrower to Banks in
connection with this Agreement, prospective borrowings hereunder and use
of the proceeds thereof by Borrower (i) have been duly authorized by all
necessary corporate action, (ii) are not at variance with or in
contravention of any provisions of the Articles of Incorporation and
By-Laws of Borrower, (iii) will not violate any indenture, contract or
agreement to which Borrower is a party or to which it is subject or any
statute, rule or regulation binding upon Borrower, (iv) will not require
any consent or approval of Borrower's stockholders and (v) will not
result in, or require, the creation or imposition of any Lien on any of
Borrower's properties or revenues pursuant to any requirement of law or
contractual obligation of Borrower except as provided in this Agreement.
This Agreement, the Master Notes and any other agreement, certificate or
instrument delivered by Borrower to Banks in connection with this
Agreement when duly executed and delivered on behalf of the Borrower will
constitute legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their terms.
(c) Litigation. Except as set forth on Schedule 1 hereto, Borrower
is not a party to any litigation or administrative proceedings, nor so
far as it is known by Borrower is any litigation or administrative
proceeding threatened against it which would, if adversely determined,
cause any material adverse change in Borrower's financial condition or in
the conduct of its business.
(d) Financial Condition. All copies of financial statements,
documents, contracts, agreements and assignments which Borrower has
furnished to Banks are true and correct in all material respects. There
has been no material change in the property or business operations of
Borrower since the date of the last financial statement delivered to
Banks, except pursuant to the conduct of its ordinary business, and
except as shall have been disclosed in writing by Borrower to Banks prior
to the date of execution of this Agreement. The Banks have previously
been provided with true, correct and complete copies of Note Agreements
dated May 31, 1983 and August 1, 1986 by and between Borrower and
Prudential Insurance Company of America and all amendments thereto
(collectively, the "Note Agreements"). The Note Agreements are in full
force and effect as of the date hereof and Borrower is not in default of
any of its obligations under either of the Note Agreements.
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(e) Taxes. Borrower has paid all federal, state and local taxes
which are required to be paid by it (except for taxes being contested in
good faith by appropriate proceedings and as to which reserves have been
established by Borrower in accordance with GAAP consistently applied,
which reserves and are set forth in Borrower's financial statements).
(f) Securities Laws; Investment Company Act; Board Regulations.
Borrower has filed and will file when due all statements, if any, which
it may be required to file under the provisions of any state or federal
securities laws or regulations. Borrower is not an "investment company"
or a company "controlled" by an "investment company," within the meaning
of the Investment Company Act of 1940, as amended, nor is Borrower
engaged, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time in effect.
(g) Ownership of Property. Borrower owns all of its assets that
appear on its balance sheet free and clear of any Liens, except as
previously disclosed in writing by Borrower to Banks prior to the date
hereof and except for financing leases referred to in Borrower's
financial statements.
(h) Environmental Laws. Except as otherwise provided on Schedule 2
hereto, (i) Borrower is in compliance with all Environmental Laws and all
requirements of law relating to pollution and environmental regulations
in the respective jurisdictions where Borrower is presently doing
business or conducting operations except for those matters where the
failure to comply with all Environmental Laws and such requirements of
law would not have a material adverse effect on the financial condition
or results of operations of Borrower; (ii) to Borrower's knowledge after
reasonable investigation, no Person has caused or permitted materials to
be stored, deposited, treated, recycled or disposed of on, under or at
any real estate owned, leased or occupied by Borrower, which materials,
if known to be present, would require cleanup, removal or some other
remedial action under Environmental Laws; (iii) to Borrower's knowledge
after reasonable investigation, there are not now, nor have there ever
been, tanks or other facilities on, under, or at any real estate owned or
occupied by Borrower which contained materials which, if known to be
present in soils or ground water, would require cleanup, removal or some
other remedial action under Environmental Laws; (iv) to Borrower's
knowledge after reasonable investigation, there are no conditions
existing currently or likely to exist during the term of this loan which
would subject Borrower to damages, penalties, injunctive relief or
cleanup costs under any Environmental Laws or which require or are likely
to require cleanup, removal, remedial action or other response pursuant
to Environmental Laws by Borrower; and (v) Borrower is not subject to any
judgment, decree, order or citation related to or arising out of
Environmental Laws and has not been named or listed as a potentially
responsible party by any governmental body or agency in a matter arising
under any Environmental Laws. Borrower has all permits, licenses and
approvals required
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under Environmental Laws and has paid all fees relating thereto and is in
compliance with all terms and conditions thereof.
(i) ERISA. All Plans maintained by Borrower are in compliance in
all material respects with the applicable provisions of ERISA; Borrower
has not incurred any "accumulated funding deficiency" within the meaning
of Section 302 of ERISA in connection with any Plan; and there has been
no "reportable event" within the meaning of Section 4034(b) of ERISA for
any Plan the occurrence of which would have a material adverse effect on
Borrower, nor has Borrower incurred any material liability to the Pension
Benefit Guaranty Corporation.
4. Affirmative Covenants of Borrower. Borrower covenants and agrees that
so long as the Lines of Credit remain in effect, any Master Note remains
outstanding and unpaid or any amount is owed to the Banks, Borrower shall:
(a) Financial Statements. Deliver to each Bank:
(i) as soon as practicable and in any event within 45 days
after the end of each fiscal quarter in each fiscal year,
statements of earnings and cash flows of the Borrower for the
period from the beginning of the current fiscal year to the end of
such quarterly period, and a balance sheet of Borrower as at the
end of each such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and certified by
an authorized financial officer of Borrower, subject to changes
resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a statement of earnings,
reconciliation of retained earnings, a statement of cash flows and
a balance sheet of Borrower as at the end of such year, setting
forth in each case in comparative form corresponding figures from
the preceding annual audit, all in reasonable detail and
accompanied by an opinion of independent public accountants of
recognized standing selected by Borrower which opinion shall be
without qualification as to the compliance of such statements and
balance sheet with GAAP;
(iii) promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and reports
as it shall send to its stockholders and copies of all
registration statements (without exhibits) and all reports which
it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the
Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of all other
reports submitted to Borrower by independent accountants in
connection with any annual, interim or special audit made by them
of the books of Borrower;
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(v) Each Bank may at any time, and without notice to or
consent of Borrower, deliver to any financial institution which is
a participant in the loans which are the subject of this
Agreement, copies of all financial statements, reports, or any
other documents delivered to Banks hereunder; provided, however,
that neither Bank shall participate the loans which are the
subject of this Agreement to any third party (other than an
affiliate of such Bank or its holding company) without the prior
written consent of the Borrower and the other Bank party hereto;
and
(vi) with reasonable promptness, such other financial data
as the Banks may reasonably request. Together with each delivery
of financial statements required by clauses (i) and (ii), above,
Borrower will deliver to each of the Banks a completed Officer's
Certificate substantially in the form attached hereto as Exhibit
B.
Together with each delivery of financial statements required by
clause (ii), above, Borrower will deliver to the Banks a letter
report of said accountants stating that, in making the audit
necessary to the opinion with respect to such financial
statements, they have obtained no knowledge of any Event of
Default or Default, or, if any such Event of Default or Default
exists, specifying the nature and period of existence thereof.
Borrower also covenants that forthwith upon the President or Chief
Financial Officer of Borrower obtaining knowledge of an Event of
Default or Default, it will deliver to the Banks an Officer's
Certificate specifying the nature thereof, the period of existence
thereof, and what action Borrower proposes to take with respect
thereto. Any management letters or other material non-public
financial information provided to the Banks by Borrower pursuant
to this Agreement shall be used only by the Banks, their
respective employees, agents and representatives, and their
respective accountants and auditors in connection with the
administration of this Agreement and the indebtedness hereunder,
and otherwise shall be held in confidence; provided, however, that
nothing herein contained shall be deemed to prohibit any
disclosure to regulatory or governmental authorities required by
applicable law or regulation.
(b) Books and Records; Inspection of Property. Keep proper books
of record and account; permit any person designated by the Banks (at
Banks' expense) to visit and inspect any of the properties of Borrower,
to examine the corporate books and financial records of Borrower and make
copies thereof or extracts therefrom and to discuss the affairs, finances
and accounts of Borrower with the principal officers of Borrower, all at
such reasonable times and as often as the Banks may reasonably request.
(c) Maintenance of Property Insurance. Keep its properties,
whether owned or leased, in good condition, repair and working order,
other than property no longer deemed by Borrower necessary for the
conduct of its business; maintain
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purchased insurance or self-insurance reserves in such amounts and
against such liabilities and hazards as customarily is maintained by
other companies operating similar businesses and together with each
delivery of financial statements under clause (ii) of subsection 4(a) it
will, upon the Banks' request, deliver an Officer's Certificate
specifying the details of such insurance in effect.
(d) Taxes. Pay and discharge all lawful taxes, assessments and
governmental charges upon it or against its properties prior to the date
on which penalties are attached thereto, unless and to the extent only
that such taxes are contested in good faith and by appropriate
proceedings by Borrower and Borrower has established appropriate reserves
for the payment of such taxes in accordance with GAAP.
5. Negative Covenants. Borrower covenants and agrees that so long as the
Lines of Credit remain in effect, any Master Note remains outstanding and unpaid
or any amount is owed the Banks, Borrower shall not, directly or indirectly:
(a) Working Capital. Permit Working Capital at any time to be less
than $5,000,000.
(b) Tangible Net Worth. Permit Tangible Net Worth at any time to
be less than $32,000,000.
(c) Total Liabilities to Net Worth. Permit the ratio of Total
Liabilities to Tangible Net Worth at any time to exceed 2.0 to 1.0.
(d) Fixed Charge Coverage. Permit the Fixed Charge Coverage Ratio
at any time to be less than 2.0 to 1.0
(e) Total Liabilities Plus Contingent Liabilities to Tangible Net
Worth. Permit the ratio of the sum of Total Liabilities plus Contingent
Liabilities to Tangible Net Worth at any time to exceed 2.5 to 1.0.
(f) Restricted Payments. (i) Pay or declare any dividend on any
class of its stock, or (ii) make any other distribution on account of any
class of its stock, or (iii) redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its stock (all of the foregoing
being herein called "Restricted Payments") except out of Net Earnings
Available For Restricted Payments. There shall not be included in
Restricted Payments or in any computation of Net Earnings Available For
Restricted Payments: (x) dividends paid, or distributions made, in stock
of Borrower; or (y) exchanges of stock of one or more classes of
Borrower, except to the extent that cash or other value payable by
Borrower is involved in such exchange; or (z) retirements of stock out of
the proceeds of the simultaneous sale of other stock.
(g) Liens. Create, assume or suffer to exist any Lien upon any of
its property or assets, whether now owned or hereafter acquired, except:
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(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings;
(ii) other Liens incidental to the conduct of its business
or the ownership of its property and assets which were not
incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate
materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its
business;
(iii) Liens presently existing that are described in
Schedule 3 hereto;
(iv) Liens in connection with Capital Lease Obligations;
(v) Liens on life insurance policies owned by Borrower
securing policy loans obtained from the insurers under such
policies, provided that (A) the aggregate amount borrowed on each
policy shall not exceed the loan value thereof, and (B) Borrower
shall not incur any liability to repay any such loan;
(vi) other Liens placed upon property being acquired by
Borrower to secure a portion of the purchase price thereof
securing Debt permitted by clause (iv) of subsection 5(h);
(vii) liens in favor of a lender or investor which are
granted in connection with a transaction permitted by subsection
5(1); and
(viii) other Liens; provided the aggregate principal amount
of indebtedness secured by such Liens and incurred in any fiscal
year of Borrower shall not exceed $1,000,000;
provided, however, that if Borrower does create, assume or suffer to exist a
Lien on any of its property other than as permitted above, it will make or cause
to be made an effective provision whereby all indebtedness under this Agreement
will be secured by such liens equally and ratably with any and all other
indebtedness thereby secured so long as any such other indebtedness shall be
secured. Borrower covenants that it will, and will cause its independent public
accountants to, make specific reference to the provisions of this paragraph in
all financial statements of Borrower hereafter delivered to any creditor,
prospective creditor or credit rating agency.
(h) Debt. Create, incur, assume or suffer to exist any Funded
Debt, except:
(i) Funded Debt represented by the Master Notes;
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(ii) Funded Debt of Borrower not exceeding an aggregate
principal amount of $1,530,000 at any time outstanding pursuant to
the Note Agreements;
(iii) Capital Lease Obligations which are subject to
limitations specified in subsection 5(k);
(iv) other Funded Debt of Borrower not exceeding an
aggregate principal amount of $4,000,000 at any time outstanding;
and
(v) Funded Debt incurred in connection with Liens permitted
by subsection 5(g)(viii).
(i) Loans, Advances, Investments and Contingent Liabilities. Make
or permit to remain outstanding any loan or advance to, or guarantee,
endorse or otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or
own, purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any Person,
except that Borrower may:
(i) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of
business) owing to Borrower;
(ii) own, purchase or acquire prime commercial paper (or
unrated commercial paper issued by corporate obligors which
support the issuance of such commercial paper through the
availability of a line of credit provided by a United States
commercial bank having capital resources in excess of $50,000,000)
and certificates of deposit due within one year from the date of
purchase and bank repurchase agreements, in United States
commercial banks (having capital resources in excess of
$50,000,000), in each case payable in the United States in United
States dollars, obligations of the United States Government or any
agency thereof, and obligations guaranteed by the United States
Government;
(iii) endorse negotiable instruments for collection in the
ordinary course of business;
(iv) make or permit to remain outstanding travel and other
like advances to officers and employees in the ordinary course of
business;
(v) guarantee, endorse or otherwise be or become
contingently liable, directly or indirectly, in connection with
the obligations of any other person if Borrower shall be and
remain at all times in compliance with subsection 5(e); and
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(vi) make or permit to remain outstanding loans, advances
and investments in Topco, provided that the aggregate amount of
all such loans, advances and investments (at cost) at any time
outstanding shall not exceed an amount necessary for Borrower to
maintain its membership in Topco in good standing;
(j) Merger and Sale of Assets. Merge or consolidate with any other
corporation or sell, lease or transfer or otherwise dispose of all or a
substantial part of its assets, or assets which shall have contributed
more than 20% of Net Earnings for any of the three fiscal years then most
recently ended, to any Person.
(k) Lease Rentals. Enter into, or permit to remain in effect, any
agreements to rent or lease (as lessee) any real or personal property
(except transportation equipment) for initial terms (including options to
renew or extend any term, whether or not exercised) of more than one year
if after giving effect thereto the aggregate amount of all payments in
any fiscal year payable by Borrower to lessors under all such leases,
minus the aggregate of all rentals received by Borrower in such fiscal
year from all sub-lessees would exceed 1.3% of gross consolidated sales
of Borrower and its Subsidiaries for the preceding fiscal year.
(l) Sale and Lease-Back. Enter into any arrangement with any
lender or investor or to which such lender or investor is a party
providing for the leasing by Borrower of real or personal property which
has been or is to be sold or transferred by Borrower to such lender or
investor or to any Person to whom funds have been or are to be advanced
by such lender or investor on the security of such property or rental
obligations of Borrower except to the extent that any such arrangement
with a lender or investor is made in connection with the development by
the Borrower of a new Retail Outlet and such arrangement is completed
within 18 months after the opening of such new Retail Outlet.
(m) Sale or Discount of Receivables. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of
its notes or accounts receivable.
(n) Restrictions on Transactions With Stockholders. Directly or
indirectly, purchase, acquire or lease any property (other than shares of
stock of Borrower) from, or sell, dispose of or lease any property (other
than shares of stock of Borrower) to, or otherwise deal with, in the
ordinary course of business or otherwise (i) any Substantial Stockholder,
or (ii) any corporation in which a Substantial Stockholder owns 5% or
more of the outstanding voting stock, except that such Substantial
Stockholder may be a director, officer or employee of Borrower and may be
paid reasonable compensation in connection therewith.
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(o) Certain Contracts. Enter into or be a party to:
(i) any contract providing for the making of loans,
advances or capital contributions to any Person (except where the
obligation is limited to a fixed maximum amount which is within
the limitations of subsection 5(i)), or for the purchase of any
property from any Person, in each case in order to enable such
Person to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses; or
(ii) any contract for the purchase of materials, supplies
or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or
other property or services shall be made regardless of whether or
not delivery of such materials, supplies or other property or
services is ever made or tendered; or
(iii) any contract for the sale or use of materials,
supplies or other property, or the rendering of services, if such
contract (or any related document) requires that payment for such
materials, supplies or other property, or the use thereof, or
payment for such services, shall be subordinated to any
indebtedness (of the purchaser or user of such materials, supplies
or other property or the Person entitled to the benefit of such
services) owed or to be owed to any Person; provided however, that
nothing contained in this clause (iii) shall prohibit the Borrower
from becoming a general unsecured creditor of another Person in
the ordinary course of business or shall prevent the Borrower from
agreeing to subordinate obligations payable by its franchisees in
favor of third party lenders, as and to the extent required by
such lenders; or
(iv) any other contract which, in economic effect, is
substantially equivalent to a guarantee, except as permitted by,
and within the limitations of, subsection 5(e).
(p) Letters of Credit for Worker's Compensation. Have outstanding
letters of credit issued for the account of Borrower for the benefit of
various states to secure the payment of worker's compensation liability
in such states in an aggregate amount available to be drawn thereunder in
excess of $10,000,000.
(q) Change in Control. Permit any Person or group of Persons
acting in concert (other than affiliates, including without limitation,
employee benefit plans, of the Borrower) to acquire more than 30% of the
Borrower's outstanding voting securities, or permit any two or more
nominees proposed by the Borrower for election to its board of directors
to be defeated in such election pursuant to any single vote of
shareholders of the Borrower.
12
6. Event of Default. An "Event of Default" shall be deemed to have
occurred if:
(a) Any representation or warranty made by Borrower in this
Agreement, or in any certificate of Borrower furnished to Banks
hereunder, shall prove to have been incorrect in any material respect as
of the time when made.
(b) If Borrower shall fail to pay any interest or principal on any
Loan when due hereunder, fail to pay any Availability Fees when due
hereunder, or fail to pay when due any principal or interest on any of
its other indebtedness, if any, to Banks, whether at maturity or by
acceleration or otherwise, and such failure shall continue uncured for a
period of ten (10) days after the applicable due date.
(c) Borrower shall default in the performance or observance of any
covenant or agreement contained in this Agreement or in any other
agreement between Borrower and Banks; provided, however, that a breach in
the performance or observance of an affirmative covenant or agreement
contained in Section 4 of this Agreement shall only constitute a default
if the breach remains uncured for a period of thirty (30) days after
written notice thereof from Banks to Borrower.
(d) Borrower shall:
(i) Apply for or consent to the appointment of a receiver,
trustee or liquidator of Borrower or of all or substantial part of
the assets of Borrower;
(ii) Be unable to, or admit in writing its inability to,
pay its debts as they mature;
(iii) Make a general assignment for the benefit of
creditors;
(iv) Be adjudicated bankrupt or insolvent;
(v) File a voluntary petition in bankruptcy or a petition
or an answer seeking reorganization or an arrangement with
creditors or to take advantage of any insolvency law, or an answer
admitting the material allegations of a petition filed against
Borrower in any bankruptcy, reorganization or insolvency
proceeding; or
(vi) Corporate action shall be taken by Borrower for the
purpose of effecting any of the foregoing.
(e) A petition for an order, judgment or decree shall be filed,
without the application, approval or consent of Borrower, with any court
of competent jurisdiction, seeking reorganization of Borrower, or the
appointment of a receiver,
13
trustee or liquidator of Borrower or of all or a substantial part of the
assets of Borrower, and such petition shall remain undismissed for any
period of sixty (60) days.
(f) An Event of Default (as such term is defined in the Note
Agreements) shall have occurred (regardless of whether such occurrence
shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise) under the Note Agreements.
(g) Borrower shall default in the payment of principal or interest
on any obligation (other than obligations hereunder or under the Note
Agreements) for borrowed money in a principal amount greater than or
equal to $250,000 beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or condition
contained therein or in any agreement or security interest relating to
any such obligation, if the effect of such default is to cause or permit
the holder or holders of such obligation (or a trustee or agent on behalf
of such holder or holders) to cause such obligation to become due prior
to its stated maturity.
(h) A final judgment which, together with other outstanding final
judgments against it, exceeds an aggregate of $100,000 shall be entered
against Borrower and remains outstanding and unsatisfied or unstayed
after sixty (60) days from the date of entry thereof, unless an appeal
has been taken and perfected within the time provided by law and suitable
bond has been provided or other agreement made to stay execution of such
judgment.
7. Rights Upon Default. If the Events of Default specified in Sections
6(d) and 6(e) shall occur, the Banks' obligations to make Loans hereunder shall
immediately terminate and any Loan (with accrued interest thereon) and other
amounts owing under this Agreement and the Master Notes shall immediately become
due and payable. If any other Event of Default shall occur, the Banks may (i) by
notice of default to Borrower, declare the Banks' obligations hereunder
terminated forthwith, whereupon such obligations shall terminate, and/or (ii) by
notice of default to Borrower, declare any Loan and all amounts owing hereunder
and under the Master Notes to be due and payable forthwith, whereupon the same
shall become immediately due and payable. Except as expressly provided above in
this Section, presentment, demand, protest and further notice of any kind are
hereby expressly waived. Notwithstanding the foregoing, the Banks' obligations
to maintain the confidentiality of any nonpublic financial information of
Borrower provided to Banks pursuant to Section 4(a) of this Agreement shall
survive the termination of its other obligations hereunder.
In the event of any occurrence of any Event of Default, Borrower shall
pay all costs and expenses which may be incurred by Banks with respect thereto
and with respect to the collection of any amounts due Banks pursuant hereto or
the enforcement of any provisions hereof, including reasonable attorneys' fees
and expenses of litigation, and all such sums shall be and become part of the
indebtedness pursuant to this Agreement. In addition to and not in lieu of any
other right or remedy they may have at any time, Banks at any time and from time
to time at their election, may (but they shall not be required to) do or perform
or comply with
14
or cause to be done or performed or complied with anything which Borrower may be
required to do or comply with under this Agreement if Borrower shall fail to do
so; Borrower shall reimburse Banks upon demand for any reasonable cost or
expense Banks may pay or incur in such respect, together with interest thereon
at the Prime Rate plus two percent (2%) from the date of such demand until paid.
The failure of Banks at any time or from time to time to exercise any right or
remedy, whether arising from or by virtue of any event of default or otherwise,
shall not constitute a waiver of any such right or remedy and shall not impair
the right of Banks to exercise such right or remedy or any other right or remedy
thereafter or to insist upon strict performance. No waiver of any right or
remedy by Banks shall be valid or effective unless made in writing and signed by
an officer of each Bank. Any effective waiver of any right or remedy shall not
be deemed to constitute a waiver of any other right or remedy then existing or
which may thereafter arise or accrue. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Upon the
occurrence of any Event of Default, and pursuant to the provisions of this
Section, Banks may sue to enforce the obligations of Borrower pursuant to this
Agreement.
8. Conditions of Disbursement. Banks shall be under no obligation to make
any advances under the Lines of Credit pursuant to this Agreement unless the
following conditions shall have been fulfilled:
(a) The representations and warranties of Borrower contained
herein shall be true at the time of the initial advance and at the time
of each subsequent advance under this Agreement as though such
representations and warranties were made at such time.
(b) Borrower shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or complied
with by it.
(c) Prior to the initial advance under this Agreement Borrower
shall have delivered to Banks an opinion in writing of Borrower's legal
counsel, which counsel shall be acceptable to Banks, dated on or after
the date of this Agreement, to the effect that (i) Borrower is a
corporation duly organized and existing under the laws of the State of
Wisconsin, and has the power and authority to enter into this Agreement
and to make borrowings and execute and deliver the Master Notes as
provided for herein; (ii) the execution and delivery of this Agreement
and compliance with the terms hereof by Borrower and the execution and
delivery of the Master Notes pursuant hereto are not at variance or in
contravention of any provision of the Articles of Incorporation, or
By-Laws of Borrower, or any indenture, contract or agreement of which
such counsel has knowledge after due inquiry, to which Borrower is a
party or to which it is subject (or that any such contravention has been
appropriately waived), or any statute, rule or regulation binding upon
Borrower; (iii) all corporate action necessary to authorize Borrower to
enter into this Agreement, to perform its obligations hereunder,
including the obtaining of the Lines of Credit hereunder, and to execute
and deliver any and all documents necessary to comply with the provisions
of this Agreement has been taken; (iv) this Agreement and the Master
Notes have been duly executed by Borrower;
15
(v) this Agreement and the Master Notes constitute the legal, valid and
binding obligations of Borrower and are enforceable against Borrower in
accordance with their terms, except for bankruptcy, insolvency, or the
grant of equitable remedies and other standard exceptions; (vi) no
consent of any public body, agency, commission or board is necessary to
the making and assumption of obligations hereunder by Borrower; and (vii)
so far as it is known to such counsel and except as set forth in Schedule
1 to this Agreement, there is no material litigation, and there are no
material proceedings by any public body, agency or authority, pending or
threatened against Borrower.
(d) Borrower shall furnish to Banks copies of its most recent
financial statements prepared in accordance with the provisions of
subsection 4(a).
(e) Borrower shall furnish Banks with certified resolutions of its
Board of Directors authorizing its execution and delivery of this
Agreement and the performance of its obligations and covenants contained
herein.
(f) Borrower shall furnish Banks with a certificate of incumbency
with respect to the persons authorized to execute this Agreement, the
Master Notes, and all other documents to be executed in connection with
the transactions which are the subject of this Agreement.
9. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Capital Lease Obligations" shall mean all rental obligations
which, under GAAP, are or will be required to be capitalized on the books
of Borrower (including, without limitation, all existing rental
obligations which are required to be so capitalized for calendar or
fiscal years beginning after December 31, 1980), in each case taken at
the amount thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles.
(b) "Contingent Liability" shall mean, as to any Person, any
guarantee of indebtedness or any other obligation of any second Person or
any assurance with respect to the financial condition of any second
Person, whether direct, indirect or contingent, including, without
limitation, (i) any purchase or repurchase agreement or other arrangement
of whatever nature having the effect of assuring or holding harmless any
third Person against loss with respect to any obligation of such second
Person and (ii) any Customer Advances; provided, however, that the term
"Contingent Obligation" shall not include (y endorsements of instruments
for deposit or collection in the ordinary course of business or (z) any
obligations to reimburse an issuer of a letter of credit permitted under
subsection 5(p).
(c) "Current Debt" shall mean any obligation for borrowed money
(and any notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money)
payable on demand or within a period of one year from the date of the
creation thereof; provided that any obligation
16
shall be treated as Funded Debt, regardless of its term, if such
obligation is renewable pursuant to the terms thereof or of a revolving
credit or similar agreement effective for more than one year after the
date of the creation of such obligation, or may be payable out of the
proceeds of a similar obligation pursuant to the terms of such obligation
or of any such agreement. Any obligation secured by a Lien on, or payable
out of the proceeds of such production from, property of Borrower shall
be deemed to be Funded or Current Debt, as the case may be, of Borrower
even though such obligation shall not be assumed by Borrower.
(d) "Customer Advances" shall mean receivables of Borrower,
payable by customers operating Retail Outlets, arising out of sales by
Borrower to such customers of fixtures and equipment, which shall have
remained outstanding for more than thirty (30) consecutive days.
(e) "Environmental Laws" shall mean all federal, state and local
laws including statutes, regulations ordinances, codes, rules and other
governmental restrictions and requirements relating to the discharge,
emission or release of air pollutants, water pollutants or process waste
water or otherwise relating in any way, directly or indirectly, to the
environment or hazardous substances in general or to storage tanks,
petroleum products, PCBs or asbestos, including, but not limited to, the
Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation Environmental
Responsibility, Cleanup and Liability Act of 1980, regulations of the
Environmental Protection Agency, regulations of the Nuclear Regulatory
Agency, and regulations of any state department of natural resources,
state environmental protection agency or any governmental authority
whatsoever, now or at any time hereafter in effect.
(f) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may, from time to time, be supplemented or amended.
(g) "Fixed Charge Coverage Ratio" shall mean the ratio of (i) the
sum of pre-tax income plus depreciation and amortization plus interest
expense to (ii) the sum of interest expense plus current maturities of
long-term debt plus the current portion of Capital Lease Obligations;
provided, however, that for purposes of calculating the Fixed Charge
Coverage Ratio, there shall be excluded from both the numerator and the
denominator the effects that loans and other financing transactions have
on the Company's results of operations to the extent such loans and
financing transactions relate to financing provided by the Company to or
on behalf of its franchisees.
(h) "Funded Debt" shall mean any obligation payable more than one
year from the date of the creation thereof, which under GAAP is shown on
the balance sheet as a liability (including, without limitation, Capital
Lease Obligations and excluding reserves for deferred income taxes and
other reserves to the extent that such reserves do not constitute an
obligation).
17
(i) "GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
(j) "Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof).
(k) "Net Earnings" shall mean gross revenues of Borrower less all
operating and non-operating expenses of Borrower including all charges of
a proper character (including current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are included in
gross revenues, and current additions to reserves), but not including in
gross revenues any gains (net of expenses and taxes applicable thereto)
in excess of losses resulting from the sale, conversion or other
disposition of capital assets (i.e., assets other than current assets),
any gains resulting from the write-up of assets, any equity of Borrower
in the unremitted earnings of any other corporation, or any earnings of
any Person acquired by Borrower through purchase, merger or consolidation
or otherwise for any year prior to the year of acquisition, all
determined in accordance with GAAP.
(l) "Net Earnings Available For Restricted Payments" shall mean an
amount equal to (i) the sum of (A $4,263,000, (B) 40% (or minus 100% in
the case of a deficit) of Net Earnings for the period (taken as one
accounting period) commencing December 29, 1991, and terminating at the
end of the last fiscal quarter preceding the date of any proposed
Restricted Payment, and (C) 100% of the net cash proceeds received by the
Company from the issuance or sale of authorized but unissued shares of
its Common Stock, but only to the extent of the number of such shares
previously acquired in transactions which constituted the making of
Restricted Payments, less (ii) the sum of all Restricted Payments made on
or after December 29, 1991.
(m) "Net Worth" shall mean, as of the time of any determination
thereof, the sum of (A) the par value (or value stated on the books of
Borrower) of the capital stock of all classes of Borrower, plus (or minus
in the case of a deficit) (B) the amount of the surplus, whether capital
or earned, of Borrower, plus (C) the prepaid franchise rights and
trademarks under the Piggly Wiggly Master Franchise Agreement, provided
however, that Net Worth shall not include any intangible assets not
reflected on Borrower's most recent balance sheet; all determined in
accordance with GAAP consistent with those followed in the preparation of
the financial statements referred to in subsection 4 (a).
(n) "Offered Rate" shall mean with respect to each Bank, the rate
of interest per annum from time to time offered by such Bank to Borrower
on Loans. Each Bank shall be entitled to fix and establish its Offered
Rate in its sole and absolute discretion. Upon the request of Borrower,
each Bank shall provide Borrower with a
18
quotation of its current Offered Rate. Each Bank may make loans at, above
or below its Offered Rate.
(o) "Person" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.
(p) "Plan" shall mean as to any Person any pension plan, including
a "multi-employer plan" as defined in Section 4001(a) (3) of ERISA, that
is covered by Title IV of ERISA and in respect of which that Person or a
Commonly Controlled Entity of that Person is an "employer" as defined in
Section 3(5) of ERISA.
(q) "Prime Rate" shall mean with respect to each Bank, such Bank's
announced prime rate per annum from time to time in effect. Each Bank may
make loans at, above or below its Prime Rate.
(r) "Retail Outlets" shall mean and include stores, engaged in
retail trade, owned or operated by Borrower of the type presently
operated by Borrower and engaged in operations similar to those presently
conducted by Borrower, and such stores owned or operated by customers of
Borrower.
(s) "Substantial Stockholder" shall mean (i) any Person owning,
beneficially or of record, directly or indirectly, either individually or
together with all other Persons to whom such Person is related by blood,
adoption or marriage, stock of Borrower (of any class having ordinary
voting power for the election of directors) aggregating 5% or more of
such voting power or (ii) any Person related by blood, adoption or
marriage to any Person described or coming within the provisions of
clause (i) of this subsection 9(s).
(t) "Tangible Net Worth" shall mean, as of the time of any
determination thereof, the excess of (i) the sum of (A) the par value (or
value stated on the books of Borrower) of the capital stock of all
classes of Borrower, plus (or minus in the case of a deficit) (B) the
amount of the surplus, whether capital or earned, of Borrower, plus (C)
the prepaid franchise rights and trademarks under the Piggly Wiggly
Master Franchise Agreement, over (ii) the sum of treasury stock,
unamortized debt discount and expense, good will, trademarks, trade
names, patents, deferred charges and other intangible assets and any
write-up of the value of any assets after December 28, 1985; all
determined in accordance with GAAP consistent with those followed in the
preparation of the financial statements referred to in subsection 4(a);
provided however, that assets held under Capitalized Leases and leasehold
improvements shall not be classified as intangible assets in determining
the amount of Tangible Net Worth.
(u) "Topco" shall mean Topco Associates, Inc., a cooperative
non-profit buying organization.
19
(v) "Total Commitment" of M&I shall mean $9,000,000 less the
aggregate amount of reductions, if any, in M&I's Total Commitment
requested by Borrower pursuant to subsection 1(g) and the "Total
Commitment" of Firstar shall mean $7,000,000 less the aggregate amount of
reductions, if any, in Firstar's Total Commitment requested by Borrower
pursuant to subsection 1(g).
(w) "Total Liabilities" shall mean the aggregate of all
liabilities and reserves of every kind and character of Borrower
determined in accordance with GAAP consistent with those followed in the
preparation of the financial statements referred in subsection 3(d).
(x) "Working Capital" shall mean the excess of current assets over
current liabilities of Borrower, both determined in accordance with GAAP
consistent with those followed in the preparation of the financial
statements referred to in subsection 4(a), provided that there shall not
be included in current assets (i) any loans or advances made by Borrower
except travel and other like advances to officers and employees in the
ordinary course of business, nor (ii) any assets known by Borrower to be
located outside (including any amounts at any time outstanding payable by
Persons known by Borrower to be located outside) the United States of
America and Canada, and further provided that current assets shall
include an amount equal to (i) 50% of LIFO reserves included in the
financial statements and footnotes thereto delivered to the Banks
pursuant to subsection 4(a) and (ii) the difference between $16,000,000
and the aggregate principal amount of debt outstanding pursuant to the
Master Notes.
10. Miscellaneous.
(a) The provisions of this Agreement shall inure to the benefit of
and be binding upon any successor to any of the parties hereto and shall
extend and be available to any holder of the Master Notes and renewals
thereof. Borrower may not assign or otherwise transfer its rights under
this Agreement except with the prior written consent of the Banks.
(b) The Banks and the Borrower may, from time to time, enter into
written amendments, supplements or modifications hereto for the purpose
of adding provisions to any agreements, instruments or other documents
hereunder or for the purpose of changing in any manner the rights of the
Banks or of the Company thereunder, and the Banks may execute and deliver
to the Company a written instrument waiving, on such terms and conditions
as the Banks may specify in such instrument, any of the requirements of
this Agreement or any Default or Event of Default and its consequences.
In the case of any waiver, the Company and the Banks shall be restored to
their former position and rights under this Agreement, and any Default or
Event of Default waived shall be deemed to be cured and not continuing.
However, no waiver of a Default or Event of Default shall extend to any
subsequent or other Default or Event of Default, or impair any right
consequent thereon.
20
No amendment, supplement, modification, or waiver shall be effective
except if in writing and duly executed by both Banks and the Company.
(c) In the event that any date provided herein for any payment by
Borrower shall be a Saturday, Sunday, or legal holiday, such payment date
shall be deemed to be the next business day following such Saturday,
Sunday or legal holiday.
(d) All representations and warranties made herein shall survive
the extension of any advance under this Agreement and the execution and
the delivery of the Master Notes or renewals thereof.
(e) Unless otherwise specified, all notices, requests and demands
to be to or upon the respective parties hereto shall be deemed to be
effective only if in writing or if given by facsimile transmission,
telegraph or telex and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made, in the case of a delivered
notice, when delivered by hand, or, in the case of a mailed notice, when
deposited in the mail, postage prepaid, or in the case of telegraphic
notice, when delivered to the telegraph company, or, in the case of telex
notice, when sent, answer back received, or, in the case of a facsimile
transmission, upon acknowledgement of receipt, addressed as follows, or
to such other address as may be hereafter specified by the respective
parties hereto and any future holders of the Master Notes:
Borrower: Schultz Sav-O Stores, Inc.
2215 Union Avenue
Sheboygan, WI 53081
Attention: Mr. John H. Dahly
Fax: (414) 457-6295
Banks: M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, WI 53202
Attention: Ms. Gina A. Peter
Fax: (414) 765-7625
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Mr. Scott D. Roeper
Fax: (414) 765-5062
provided that any notice, request or demand upon the Banks pursuant to
Section 1 hereof shall not be effective until received.
21
(f) Borrower shall (i) pay or reimburse Banks for all of their
reasonable out-of-pocket costs and expenses incurred in connection with
the negotiation, consideration, development, preparation and/or execution
of and any amendment, supplement or modification to, this Agreement, the
Master Notes or any other document prepared in connection herewith
(whether or not any such amendment, supplement or modification is
effected or consummated), and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Banks, (ii) pay and
reimburse Banks for all of their reasonable costs and expenses including,
but not limited to, litigation costs incurred in connection with the
enforcement or preservations of any rights or questions arising under
this Agreement, the Master Notes or any such other document prepared in
connection herewith, including, without limitation, reasonable fees and
disbursements of counsel to Banks, and (iii) pay, indemnify and hold the
Banks harmless from any and all recording and filing fees and any and all
liabilities with respect to or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of any consummation
of any of the transactions contemplated by, or any amendment, supplement
or modification of, or any waiver or consent under or in respect of this
Agreement or any such other documents. The obligations in this Paragraph
shall survive repayment of the Master Notes and all other amounts payable
hereunder.
(g) This Agreement, the Master Notes and all other documents
delivered in connection herewith and the rights and obligations of the
parties thereto shall be governed by, and construed and interpreted in
accordance with the laws of the State of Wisconsin. Venue for the
settlement of disputes under this Agreement shall be the United States
District Court for the Eastern District of Wisconsin or the Circuit Court
of Milwaukee County, Wisconsin. Borrower consents to the exercise of
jurisdiction by these courts and of vesting of venue therein.
(h) In addition to any of the rights and remedies provided by law,
or any other rights or remedies provided for in this Agreement or any
document delivered in connection herewith, upon the occurrence of any
Event of Default, Banks are hereby irrevocably authorized, at any time
and from time to time without prior notice to Borrower, any such notice
being expressly waived by Borrower, to set-off, appropriate and apply any
and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims,
in any currency, in each case direct or indirect or contingent or matured
or unmatured, at any time held or owing by the Banks to or for the credit
of the account of Borrower, or any part thereof, in such amounts as Banks
may elect, against and on account of the obligations and liabilities of
Borrower to Banks hereunder or under the Master Notes, and claims of
every nature and description of Banks against Borrower, whether arising
hereunder, under any note or otherwise, that the Banks may elect, whether
or not the Banks have made any demand for payment although such
obligations, liabilities and claims may be contingent or unmatured.
22
(i) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
(j) Any term defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the
reference.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman
James H. Dickelman, Chairman,
President and Chief Executive Officer
Attest:
/s/ John H. Dahly
John H. Dahly, Executive Vice President,
Chief Financial Officer, Treasurer and
Secretary
23
M&I MARSHALL & ILSLEY BANK
By: /s/ Gina A. Peter
Gina A. Peter, Vice President
Attest:
/s/
___________, Vice President (Title)
FIRSTAR BANK MILWAUKEE, NATIONAL ASSOCIATION
By: /s/ Scott Roeper
Scott D. Roeper, Vice President
Attest:
/s/ Stephen Carlton
Stephen E. Carlton (Title)
Commercial Banking Officer
24
EXHIBITS TO LOAN AGREEMENT
--------------------------
Exhibit A-l Master Note
Exhibit A-2 Master Note
Exhibit B Officer's Certificate
SCHEDULES TO LOAN AGREEMENT
---------------------------
Schedule 1 Litigation
Schedule 2 Environmental Matters
Schedule 3 Existing Liens
25
Exhibit A-1
MASTER NOTE
Milwaukee, Wisconsin
$9,000,000 December 3, 1992
FOR VALUE RECEIVED, the undersigned, being a Wisconsin
corporation (the "Borrower"), hereby unconditionally promises to pay on the
Maturity Date, to the order of M&I Marshall & Ilsley Bank, a Wisconsin banking
corporation (the "Bank") , at the offices of Bank located at 770 North Water
Street, Milwaukee, Wisconsin 53202, in lawful money of the United States of
America and in immediately available funds, the lesser of (a) the amount of the
M&I Line of Credit or (b) the aggregate unpaid principal amount of all Loans
made by the Bank to the Borrower pursuant to the Agreement (as hereinafter
defined). The Borrower also unconditionally promises to pay interest in like
money at said offices on the unpaid principal amount hereof from time to time
outstanding for the period from and including the date hereof until such amount
shall be paid in full, as provided in the Agreement. The holder of this Master
Note is hereby authorized to record the date and amount of each Loan made by
such holder, and the date and amount of each payment or prepayment of principal,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
This Master Note is one of the Master Notes referred to in the Loan
Agreement, dated as of December 3, 1992, by and between the Borrower, the Bank
and First Wisconsin National Bank of Milwaukee (as amended, modified or
supplemented from time to time, the "Agreement"), is entitled to the benefits
thereof and is subject to optional and mandatory prepayment in whole or in part
as provided therein. All capitalized terms used in this Master Note, unless
herein defined, shall have the meanings assigned to such terms in the Agreement.
Reference is made to the Agreement for relevant terms and provisions which bear
upon this Master Note and the payments hereunder. Upon the occurrence of an
Event of Default as specified in the Agreement, the amounts then remaining
unpaid under this Master Note may be declared to be or may become immediately
due and payable as provided in the Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right or option herein given to the Bank or any holder hereof in
exercising any right or option herein given to the Bank or holder hereof shall
impair such right or option or be considered as a waiver thereof or acquiescence
in any default hereunder. Borrower hereby waives presentment, demand, notice of
dishonor, protest and all other notices and proceedings required as a condition
for payment or collection hereof.
In the event of default hereunder, Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees.
This Master Note shall be governed by and construed in accordance with
the laws of the State of Wisconsin.
BORROWER:
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman (SEAL)
James H. Dickelman, Chairman,
President and Chief Executive Officer
Attest:
/s/ John H. Dahly
John H. Dahly, Executive Vice
President, Chief Financial Officer,
Treasurer and Secretary
2
Exhibit A-2
MASTER NOTE
Milwaukee, Wisconsin
$7,000,000 December 3, 1992
FOR VALUE RECEIVED, the undersigned, being a Wisconsin corporation (the
"Borrower"), hereby unconditionally promises to pay on the Maturity Date, to the
order of Firstar Bank Milwaukee, National Association, a national banking
association (the "Bank"), at the offices of Bank located at 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, in lawful money of the United States of
America and in immediately available funds, the lesser of (a) the amount of the
Firstar Line of Credit or (b) the aggregate unpaid principal amount of all Loans
made by the Bank to the Borrower pursuant to the Agreement (as hereinafter
defined). The Borrower also unconditionally promises to pay interest in like
money at said offices on the unpaid principal amount hereof from time to time
outstanding for the period from and including the date hereof until such amount
shall be paid in full, as provided in the Agreement. The holder of this Master
Note is hereby authorized to record the date and amount of each Loan made by
such holder, and the date and amount of each payment or prepayment of principal,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
This Master Note is one of the Master Notes referred to in the Loan
Agreement, dated as of December 3, 1992, by and between the Borrower, the Bank
and M&I Marshall & Ilsley Bank (as amended, modified or supplemented from time
to time, the "Agreement"), is entitled to the benefits thereof and is subject to
optional and mandatory prepayment in whole or in part as provided therein. All
capitalized terms used in this Master Note, unless herein defined, shall have
the meanings assigned to such terms in the Agreement. Reference is made to the
Agreement for relevant terms and provisions which bear upon this Master Note and
the payments hereunder. Upon the occurrence of an Event of Default as specified
in the Agreement, the amounts then remaining unpaid under this Master Note may
be declared to be or may become immediately due and payable as provided in the
Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right or option herein given to the Bank or any holder hereof in
exercising any right or option herein given to the Bank or holder hereof shall
impair such right or option or be considered as a waiver thereof or acquiescence
in any default hereunder. Borrower hereby waives presentment, demand, notice of
dishonor, protest and all other notices and proceedings required as a condition
for payment or collection hereof.
In the event of default hereunder, Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees.
This Master Note shall be governed by and construed in accordance with
the laws of the State of Wisconsin.
BORROWER:
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman (SEAL)
James H. Dickelman, Chairman,
President and Chief Executive Officer
Attest:
/s/ John H. Dahly
John H. Dahly, Executive Vice
President, Chief Financial Officer,
Treasurer and Secretary
2
Exhibit B
to
Loan Agreement
_______________ ____ 1992
Ms. Gina Peter Mr. Scott Roeper
Vice President Vice President
M&I Marshall & Ilsley Bank Firstar Bank Milwaukee, N.A.
770 North Water Street 777 East Wisconsin Avenue
Milwaukee, WI 53202-3593 Milwaukee, WI 53202
Dear Gina and Scott:
Pursuant to Section 4(a) of the Loan Agreement (the "Loan Agreement")
dated October __, 1992 among Schultz Sav-O Stores, Inc., M&I Marshall & Ilsley
Bank and Firstar Bank Milwaukee, National Association, the following sets forth
calculations of the Company's compliance with certain of the financial covenants
of the Loan Agreement:
(A) Working Capital Computation (Section 5(a))
Add: Current Assets $
----------
50% of LIFO reserve
included in the Borrower's
financial statements
(Section 9(x)) ----------
Unused portion of
revolving credit availability
(Section 9(x)) ----------
$
-----------
Deduct: Current Liabilities
$
Working Capital -----------
$
Minimum requirement -----------
$ 5,000,000
===========
Ms. Gina Peter and Mr. Scott Roeper
_______________ ___ 1992
Page 2
(B) Tangible Net Worth (Section 5(b))
Minimum requirement $
-----------
$ 32,000,000
(C) Total Liabilities to Tangible ===========
Net Worth (Section 5(c))
Total liabilities and shareholders'
investment
Less: Shareholders' investment $
-----------
Total Liabilities $
-----------
Ratio of Total Liabilities to $
Tangible Net Worth -----------
to 1.00
Maximum permitted ============
2.00 to 1.00
(D) Fixed Charge Coverage ============
(Section 5(d))
Add: Pretax income $ $
----------- -----------
Depreciation and
amortization -----------
Interest expense -----------
$
===========
Add: Interest expense $
-----------
Long-term debt: current -----------
Capital leases: current -----------
$
============
Fixed Charge Coverage Ratio to 1.00
============
Minimum permitted 2.00 to 1.00
============
Ms. Gina Peter and Mr. Scott Roeper
_______________ ___ 1992
Page 3
(E) Total Liabilities Plus
Contingent Liabilities to
Tangible Net Worth (Section 5(e))
Add: Total Liabilities $
-----------
Contingent Liabilities:
Notes -----------
Contingent Liabilities:
Leases -----------
Total Liabilities plus
Contingent Liabilities $
===========
Ratio of sum of Total Liabilities
plus Contingent Liabilities to
Tangible Net Worth to 1.00
============
Maximum permitted 2.50 to 1.00
============
(F) Restricted Payments
(Sections 5(f) and 9(n))
Earnings Available for Distribution $ 4,263,000
============
Net Earnings for cumulative period
from December 29, 1991 through most
recent fiscal quarter: $
-----------
40% of Net Earnings $
-----------
100% of net cash proceeds received
from resales of Common Stock previously
acquired in transactions which constituted
the making of Restricted Payments $
-----------
Unrestricted funds $
-----------
Less: Restricted Payments made since
December 29, 1991: $
-----------
Net Earnings Available for Restricted
Payments $
===========
Ms. Gina Peter and Mr. Scott Roeper
_______________ ___ 1992
Page 4
In accordance with Section 4(a) of the Loan Agreement, I hereby certify,
to the best of my knowledge and belief, that there exists no condition, event or
act which would constitute an Event of Default (as defined in the Loan
Agreement), and there exists no condition, event or act which, with notice or
lapse of time, or both, would constitute an Event of Default.
Very truly yours,
SCHULTZ SAV-O STORES, INC.
/s/ John Dahly
John H. Dahly
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
/ smb
Enclosure
SCHEDULE 1
Litigation and Proceedings
1. On November 21, 1991, the Company announced the closing of its
unsuccessful one-year old Bartlett, Illinois corporate-owned Piggly Wiggly Store
and the recording of a reserve of approximately $2,100,000 for anticipated store
closure costs. The store was covered by a twenty year lease. After several
months of informal negotiations to arrive at a mutual settlement to terminate
the lease, the landlord, Bartlett Commons Partnership, an Illinois general
partnership, initiated a complaint on April 28, 1992 in the United States
District Court, Northern District of Illinois, Eastern Division, alleging
damages in excess of $5,000,000, plus its attorneys' fees and costs.
Document requests and notices for depositions have been served in the
case and depositions are now being held.
The Company believes it has liability which could exceed present
reserves. The Company is presently engaged in out-of-court settlement
discussions, which if satisfactorily concluded, would result in an additional
charge to earnings.
If settlement discussions are unsuccessful, the Company intends to
vigorously defend itself, but is unable to completely and accurately assess
final liability.
2. The Company is the sole defendant in a breach of contract lawsuit
pending in the United States District Court for the Western District of Texas,
Economic Dutch Consultants USA, Inc. v. Schultz Sav-O Stores, Inc., Case No.
92-CA-240.
The case arises from equipment leases for video tapes and video players
entered into in 1988 between the Company and Comprehensive Leasing Corporation.
The monthly rental amount for all of the leases combined is approximately
$30,000. The plaintiff claims to be the assignee of Comprehensives' rights under
the leases and sues for $30,000 per month since about August of 1991, when the
initial three-year term of the leases expired and the Company ceased making
payments. Thus, the present amount of plaintiff's claim is in the range of
$450,000 to $500,000.
The Company disputes that the plaintiff is the assignee of the leases and
has asserted a variety of defenses to the claim for payment. The Company has
also asserted a counterclaim seeking damages in the range of $800,000 to
$1,500,000. Plaintiff has challenged the counterclaim. The Company has pending
motions to dismiss the case for lack of jurisdiction and improper venue. If
these motions are granted, the plaintiff could elect to pursue its claims in
Wisconsin, but is unlikely to do so.
In light of the Company's substantial defenses, both procedural and on
the merits, the Company does not presently believe that it has any liability to
the plaintiff.
3. The City of Mequon, Wisconsin is considering the adoption of a
completely new zoning code which may cause an adverse change in the zoning of
certain commercial real estate owned by the Company at the southeast corner of
Mequon and Wauwatosa Roads. This real estate was acquired by the Company in
settlement of a claim against an individual, and not with the intention of
making it the site of a new store location. The affected parcel has a value
estimated by the Company to be approximately $500,000. The change in zoning
could have an adverse impact on the value of this property. The Company
considers it to be a remote possibility that this proceeding could result in a
material adverse effect on the value of such property.
2
SCHEDULE 2 - ENVIRONMENTAL MATTERS
The Company has leased a retail store facility as part of a strip center
in downtown Belvidere, Illinois since 1984. While the retail operation is very
successful, the facility and the equipment are in need of major renovation and
the Company desires to expand the store size by approximately 10,000 SF to a
total of 37,000 SF.
In connection with a developer's assessment of the land and facilities,
certain contaminants were found during Phase One and Phase Two environment
tests. Extensive research indicates that the Company and its retail operation
were not a contributing factor to the contamination.
The Company believes it is not responsible for the contamination, and
further improvement of the site and continuation of retail operations will not
increase the contamination or residual risk the Company already has by its mere
presence as a lessee operating a retail grocery store during the past nine
years.
Schedule 3 - Existing Liens
1. Leases of video rental packages at various store locations, including
videocassette tapes, display cabinets, storage fixtures, video players,
televisions, and signage.
2. Sale-leaseback transactions covering all equipment and fixtures located
at stores in Oshkosh (Aviation Plaza - 2155 South Koeller) and Oak
Creek (2201 East Rawson), Wisconsin.
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, made as of this 23rd day of
September, 1994, by and among SCHULTZ SAV-O STORES, INC. ("Borrower"), M&I
MARSHALL & ILSLEY BANK, a Wisconsin banking corporation ("M&I"), and FIRSTAR
BANK MILWAUKEE, NATIONAL ASSOCIATION, a national banking association ("Firstar")
(together with M&I, the "Banks"). Unless otherwise indicated, capitalized terms
used herein and not defined shall have the meanings assigned thereto in the Loan
Agreement described below.
W I T N E S S E T H:
WHEREAS, Borrower, M&I and Firstar are parties to that certain Loan
Agreement dated as of December 3, 1992 (the "Loan Agreement"); and
WHEREAS, Borrower has available a $9,000,000 revolving line of credit
facility with M&I and a $7,000,000 revolving line of credit facility with
Firstar (collectively, the "Lines of Credit"); and
WHEREAS, Borrower and the Banks desire to amend the Loan Agreement to
extend the Maturity Date of the Lines of Credit, to increase the minimum
Tangible Net Worth required to be maintained by the Borrower, to amend the
covenants relating to Liens and Funded Debt and to amend the definition of Net
Earnings Available for Restricted Payments.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 1(b) (Master Notes). The definition of Maturity
Date in Section 1(b) is amended by deleting "April 30, 1995" and inserting in
lieu thereof "April 30, 1997."
2. Amendment to Section 5(b) (Tangible Net Worth). Section 5(b) of the
Loan Agreement is deleted in its entirety and the following is inserted in lieu
thereof:
"Permit Tangible Net Worth at any time to be less than $36,000,000."
3. Amendment to Section 5(g) (Liens). Section 5(g) is amended by deleting
the word "and" at the end of Subsection 5(g)(viii), by substituting ";" for the
period at the end of Subsection 5(g)(ix) and by adding the following clauses:
"(x) the lien in favor of The Penn Mutual Life Insurance Company
in the form of a Mortgage securing an obligation not to exceed $3,500,000
on certain real property owned by the Borrower and located at 5328 Grand
Avenue, Gurnee, Illinois (the "Gurnee Mortgage Debt"); and
(xi) the Lien in favor of James M. and Beverly A. Lehrer in the
form of a Land Contract securing an obligation not to exceed $300,000 on
certain real property owned by the Borrower and located at Highway 55 and
County Trunk Highway CE, Kaukauna, Wisconsin (the "Kaukauna Land
Contract") ."
4. Amendment to Section 5(h) (Debt). Section 5(h) is amended by deleting
the word "and" at the end of Subsection 5(h)(iv), by substituting ";" for the
period at the end of Subsection 5(h)(v) and by adding the following clauses:
"(vi) Funded Debt of the Borrower not exceeding an aggregate
principal amount of $3,500,000 due on the Gurnee Mortgage Debt; and (vii)
Funded Debt of the Borrower not exceeding an aggregate principal amount
of $300,000 due on the Kaukauna Land Contract."
5. Amendment to Section 9(1) (Net Earnings Available For Restricted
Payments). The definition of Net Earnings Available For Restricted Payments is
amended by deleting the phrase ". . . (A) $4,263,000, (B) 40% (or minus 100% in
the case of a deficit). . ." and inserting in lieu thereof the phrase ". . . (A)
$7,263,000, (B) 50% (or minus 100% in the case of a deficit). . ."
6. Effective Date. This Amendment is effective as of the date hereof upon
the execution and delivery by the Borrower to the Banks of the following:
(a) This Amendment duly executed by the President and Secretary of
the Borrower; and
(b) A copy of the resolution or resolutions, in form satisfactory
to the Banks and their legal counsel, duly adopted by the Board of
Directors of the Borrower approving this Amendment, certified to be true
and correct by the President and Secretary of the Borrower.
7. Miscellaneous.
(a) Continuance of Loan Documents. Except as specifically amended
by this Amendment, the Loan Agreement and all other instruments,
documents and agreements executed and delivered in connection with the
Loan Agreement (collectively, the "Loan Documents") remain in full force
and effect.
(b) Representations and Warranties. The Borrower represents and
warrants that the execution, delivery and performance of this Amendment
are within the corporate powers of the Borrower, have been duly
authorized by all necessary
2
corporate action and do not and will not (a) require any consent or
approval of the shareholders of the Borrower; (b) violate any provision
of the Articles of Incorporation or By-laws of the Borrower or of any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the
Borrower; (c) require the consent or approval of, or filing a
registration with, any government body, agency or authority; or (d)
result in any breach of or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any property of the
Borrower pursuant to any indenture or other agreement or instrument under
which the Borrower is a party or by which it or its properties may be
bound or affected. The Borrower further represents and warrants that this
Amendment constitutes the legal, valid and binding obligation of the
Borrower enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally. In addition, each of the
representations and warranties made by the Borrower in the Loan Agreement
are true and correct as of the date of this Amendment.
(c) References. When any Loan Document is referred to in any other
Loan Document or any of the other documents, instruments or materials
executed and delivered heretofore or hereafter pursuant to the Loan
Agreement, it shall be deemed to refer to such Loan Document as amended
by this Amendment.
(d) Expenses and Attorneys' Fees. The Borrower shall pay all fees
and expenses incurred by the Banks, including the reasonable fees of
counsel, in connection with the preparation of this Amendment, the
consummation of the transactions contemplated by this Amendment and the
protection or enforcement of the rights of the Banks under the Loan
Agreement.
(e) Survival. All agreements, representations and warranties made
in this Amendment or in any documents delivered pursuant to this
Amendment survive the execution of this Amendment and the delivery of any
such document.
(f) Governing Law. This Amendment and the other documents issued
pursuant to this Amendment are governed by the laws of the State of
Wisconsin without reference to the conflict of law principles of such
State.
(g) Counterparts; Headings. This Amendment may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute one and the same agreement.
Article and Section headings in this Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
(h) Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Amendment or affecting the validity or enforceability of such provision
in any other jurisdiction.
3
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Loan Agreement as of the day, month and year first
above-written.
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman
James H. Dickelman, Chairman,
President and Chief Executive Officer
Attest:
/s/ John Dahly
John H. Dahly, Executive Vice President,
Chief Financial Officer, Treasurer and
Secretary
M&I MARSHALL & ILSLEY BANK
By: /s/ Gina A. Peter
Gina A. Peter, Vice President
Attest:
/s/ Jeffrey Ticknor
Jeffrey T. Ticknor, Vice President
FIRSTAR BANK MILWAUKEE, NATIONAL ASSOCIATION
By: /s/ Scott Roeper
Scott D. Roeper, Vice President
Attest:
/s/ Caroline Krider
Caroline Krider, Assistant Vice President
4
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT, made as of this 17th day of
December, 1996, by and among SCHULTZ SAV-O STORES, INC. ("Borrower"), M&I
MARSHALL & ILSLEY BANK, a Wisconsin banking corporation ("M&I"), and FIRSTAR
BANK MILWAUKEE, NATIONAL ASSOCIATION, a national banking association ("Firstar"
and, together with M&I, the "Banks"). Unless otherwise indicated, capitalized
terms used herein and not defined shall have the meanings assigned thereto in
the Loan Agreement described below.
W I T N E S S E T H:
WHEREAS, Borrower, M&I and Firstar are parties to that certain Loan
Agreement dated as of December 3, 1992, as amended by that certain First
Amendment to Loan Agreement dated September 23, 1994 (as so amended, the "Loan
Agreement"); and
WHEREAS, Borrower has available a $9,000,000 revolving line of credit
facility with M&I and a $7,000,000 revolving line of credit facility with
Firstar (collectively, the "Lines of Credit"); and
WHEREAS, Borrower and the Banks desire to amend the Loan Agreement to
extend the Maturity Date of the Lines of Credit.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 1(b) (Master Notes). The definition of Maturity
Date in Section 1(b) is amended by deleting "April 30, 1997" and inserting in
lieu thereof "April 30, 1998."
2. Effective Date. This Amendment shall be effective upon the execution
and delivery by Borrower to the Banks of the following:
a) This Amendment duly executed by the President and Secretary of
Borrower; and
b) A copy of the resolution or resolutions, in form satisfactory
to the Banks and their legal counsel, duly adopted by the Board of
Directors of Borrower approving this Amendment, certified to be true and
correct by the President and Secretary of Borrower.
3. Miscellaneous.
a) Continuance of Loan Documents. Except as specifically amended
by this Amendment, the Loan Agreement and all other instruments,
documents and agreements executed and delivered in connection with the
Loan Agreement (collectively, the "Loan Documents") remain in full force
and effect. This Amendment is an amendment and not a novation.
b) Representations and Warranties. Borrower represents and
warrants that the execution, delivery and performance of this Amendment
are within the corporate powers of Borrower, have been duly authorized by
all necessary corporate action and do not and will not (a) require any
consent or approval of the shareholders of Borrower; (b) violate any
provision of the Articles of Incorporation or By-laws of Borrower or of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to
Borrower; (c) require the consent or approval of, or filing of a
registration with, any government body, agency or authority; or (d)
result in any breach of or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any property of
Borrower pursuant to any indenture or other agreement or instrument under
which Borrower is a party or by which it or its properties may be bound
or affected. Borrower further represents and warrants that this Amendment
constitutes the legal. valid and binding obligation of Borrower
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy or similar laws affecting the enforceability
of creditors' rights generally. In addition, each of the representations
and warranties made by Borrower in the Loan Agreement are true and
correct as of the date of this Amendment.
c) References. When any Loan Document is referred to in any other
Loan Document or any of the other documents, instruments or materials
executed and delivered heretofore or hereafter pursuant to the Loan
Agreement, it shall be deemed to refer to such Loan Document as amended
by this Amendment.
d) Expenses and Attorneys' Fees. In accordance with Section 10(f)
of the Loan Agreement, Borrower shall pay all fees and expenses incurred
by the Banks, including the reasonable fees of counsel, in connection
with the preparation of this Amendment, the consummation of the
transactions contemplated by this Amendment and the protection or
enforcement of the rights of the Banks under the Loan Agreement.
e) Survival. All agreements, representations and warranties made
in this Amendment or in any documents delivered pursuant to this
Amendment shall survive the execution of this Amendment and the delivery
of any such document.
f) Government Law. This Amendment and the other documents issued
pursuant to this Amendment are governed by the laws of the State of
Wisconsin without reference to the conflict of law principles of such
state.
2
g) Counterparts; Headings. This Amendment may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute one and the same agreement.
Article and Section headings in this Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
h) Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Amendment or affecting the validity or enforceability of such provision
in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to Loan Agreement as of the day, month and year first above-written.
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman
James H. Dickelman, Chairman,
President and Chief Executive Officer
Attest:
/s/ John Dahly
John H. Dahly, Executive Vice President,
Chief Financial Officer, Treasurer and
Secretary
M&I MARSHALL & ILSLEY BANK
By: /s/ Gina A. Peter
Gina A. Peter, Senior Vice President
Attest:
/s/ Jeffrey Ticknor
Jeffrey T. Ticknor, Vice President
3
FIRSTAR cBANK MILWAUKEE, NATIONAL ASSOCIATION
By: /s/ Scott Roeper
Scott D. Roeper, First Vice President
Attest:
/s/ Caroline Krider
Caroline Krider, Vice President
4
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT, made as of this 14th day of May,
1997, by and among SCHULTZ SAV-O STORES, INC. ("Borrower"), M&I MARSHALL &
ILSLEY BANK, a Wisconsin banking corporation ("M&I"), and FIRSTAR BANK
MILWAUKEE, NATIONAL ASSOCIATION, a national banking association ("Firstar" and,
together with M&I, the "Banks"). Unless otherwise indicated, capitalized terms
used herein and not defined shall have the meanings assigned thereto in the Loan
Agreement described below.
W I T N E S S E T H:
WHEREAS, Borrower, M&I and Firstar are parties to that certain Loan
Agreement dated as of December 3, 1992, as amended by that certain First
Amendment to Loan Agreement dated September 23, 1994 (the "First Amendment") and
that certain Second Amendment to Loan Agreement dated December 17, 1996 (the
"Second Amendment") (as so amended, the "Loan Agreement"); and
WHEREAS, Borrower has available a $9,000,000 revolving line of credit
facility with M&I and a $7,000,000 revolving line of credit facility with
Firstar (collectively, the "Lines of Credit") pursuant to the Loan Agreement;
and
WHEREAS, Borrower and the Banks desire to amend the Loan Agreement to
amend the definitions of Maturity Date and Net Earnings Available For Restricted
Payments.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 1(b) (Master Notes). The definition of Maturity
Date is amended by deleting "April 30, 1998" and inserting in lieu thereof
"April 30, 1999."
2. Amendment to Section 9(1) (Net Earnings Available For Restricted
Payments). The definition of Net Earnings Available For Restricted Payments is
amended by restating the definition in its entirety as follows:
(1) "Net Earnings Available For Restricted Payments" shall mean an
amount equal to (i) the sum of (A) $12,263,000, (B) 50% (or minus 100% in
the case of a deficit) of Net Earnings for the period (taken as one
accounting period) commencing December 29, 1991, and terminating at the
end of the last fiscal quarter preceding the date of any proposed
Restricted Payment, (C) 100% of the tax benefit realized by the Borrower
as a result of the exercise by employees of stock options of the Borrower
(reflected in the Borrower's Consolidated Statement of Shareholders'
Investment as "Exercise of Stock Options" under the heading "Additional
Paid-in Capital"), and (D) 100% of the net cash proceeds received by the
Company from the issuance or sale
of authorized but unissued shares of its Common Stock, but only to the
extent of the number of such shares previously acquired in transactions
which constituted the making of Restricted Payments, less (ii) the sum of
all Restricted Payments made on or after December 29, 1991.
3. Effective Date. This Amendment shall be effective upon the execution
and delivery by Borrower to the Banks of the following:
a) This Amendment duly executed by the President and Secretary of
Borrower; and
b) A copy of the resolution or resolutions, in form satisfactory
to the Banks and their legal counsel, duly adopted by the Board of
Directors of Borrower approving this Amendment, certified to be true and
correct by the Secretary of Borrower.
4. Miscellaneous.
a) Continuance of Loan Documents. Except as specifically amended
by this Amendment, the Loan Agreement and all other instruments,
documents and agreements executed and delivered in connection with the
Loan Agreement (collectively, the "Loan Documents") remain in full force
and effect. This Amendment is an amendment and not a novation.
b) Representations and Warranties. Borrower represents and
warrants that the execution, delivery and performance of this Amendment
are within the corporate powers of Borrower, have been duly authorized by
all necessary corporate action and do not and will not (a) require any
consent or approval of the shareholders of Borrower; (b) violate any
provision of the Articles of Incorporation or By-laws of Borrower or of
any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to
Borrower; (c) require the consent or approval of, or filing of a
registration with, any government body, agency or authority; or (d)
result in any breach of or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any property of
Borrower pursuant to any indenture or other agreement or instrument under
which Borrower is a party or by which it or its properties may be bound
or affected. Borrower further represents and warrants that this Amendment
constitutes the legal, valid and binding obligation of Borrower
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy or similar laws affecting the enforceability
of creditors' rights generally. In addition, each of the representations
and warranties made by Borrower in the Loan Agreement are true and
correct as of the date of this Amendment except for matters permitted or
contemplated by the Loan Agreement.
c) References. When any Loan Document is referred to in any other
Loan Document or any of the other documents, instruments or materials
executed and
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delivered heretofore or hereafter pursuant to the Loan Agreement, it
shall be deemed to refer to such Loan Document as amended by this
Amendment.
d) Expenses and Attorneys' Fees. In accordance with Section 10(f)
of the Loan Agreement, Borrower shall pay all fees and expenses incurred
by the Banks, including the reasonable fees of counsel, in connection
with the preparation of this Amendment, the consummation of the
transactions contemplated by this Amendment and the protection or
enforcement of the rights of the Banks under the Loan Agreement.
e) Survival. All agreements, representations and warranties made
in this Amendment or in any documents delivered pursuant to this
Amendment shall survive the execution of this Amendment and the delivery
of any such document.
f) Government Law. This Amendment and the other documents issued
pursuant to this Amendment are governed by the laws of the State of
Wisconsin without reference to the conflict of law principles of such
state.
g) Counterparts; Headings. This Amendment may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute one and the same agreement.
Article and Section headings in this Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
h) Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Amendment or affecting the validity or enforceability of such provision
in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
to Loan Agreement as of the day, month and year first above-written.
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman
James H. Dickelman, Chairman, President
and Chief Executive Officer
Attest:
/s/ John Dahly
John H. Dahly, Executive Vice President,
Chief FinancialOfficer, Treasurer and Secretary
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M&I MARSHALL & ILSLEY BANK
By: /s/ Gina A. Peter
Gina A. Peter, Senior Vice President
Attest:
/s/ Jeffrey Ticknor
Jeffrey T. Ticknor, Vice President
FIRSTAR BANK MILWAUKEE, NATIONAL ASSOCIATION
By: /s/ Scott Roeper
Scott D. Roeper, First Vice President
Attest:
/s/ Caroline Krider
Caroline Krider, Vice President
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FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT, effective as of this 31st day of
December, 1998, by and among SCHULTZ SAV-O STORES, INC. ("Borrower"), M&I
MARSHALL & ILSLEY BANK, a Wisconsin banking corporation ("M&I"), and FIRSTAR
BANK MILWAUKEE, N.A., a national banking association ("Firstar" and, together
with M&I, the "Banks"). Unless otherwise indicated, capitalized terms used
herein and not defined shall have the meanings assigned thereto in the Loan
Agreement described below.
W I T N E S S E T H:
WHEREAS, Borrower, M&I and Firstar are parties to that certain Loan
Agreement dated as of December 3, 1992, as amended by that certain First
Amendment to Loan Agreement dated September 23, 1994, that certain Second
Amendment to Loan Agreement dated December 17, 1996, and that certain Third
Amendment to Loan Agreement dated May 14, 1997 (as so amended, the "Loan
Agreement"); and
WHEREAS, Borrower has available a $9,000,000 revolving line of credit
facility with M&I and a $7,000,000 revolving line of credit facility with
Firstar (collectively, the "Lines of Credit") pursuant to the Loan Agreement;
and
WHEREAS, Borrower and the Banks desire to amend the Loan Agreement to
amend the definitions of Maturity Date and Net Earnings Available For Restricted
Payments and to add a representation and warranty regarding the Year 2000 issue.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 1(b) (Master Notes). The definition of Maturity
Date is amended by deleting "April 30, 1999" and inserting in lieu thereof
"April 30, 2001."
2. Amendment to Section 9(1) (Net Earnings Available For Restricted
Payments). The definition of Net Earnings Available For Restricted Payments is
amended by restating the definition in its entirety as follows:
(1) "Net Earnings Available For Restricted Payments" shall mean an
amount equal to (i) the sum of (A) $17,263,000, (B) 50% (or minus 100% in
the case of a deficit) of Net Earnings for the period (taken as one
accounting period) commencing December 29, 1991, and terminating at the
end of the last fiscal quarter preceding the date of any proposed
Restricted Payment, (C) 100% of the tax benefit realized by the Borrower
as a result of the exercise by employees of stock options of the Borrower
(reflected in the Borrower's Consolidated Statement of Shareholders'
Investment as "Exercise of Stock Options" under the heading "Additional
Paid-in Capital"), and
(D) 100% of the net cash proceeds received by the Company from the
issuance or sale of authorized but unissued shares of its Common Stock,
but only to the extent of the number of such shares previously acquired
in transactions which constituted the making of Restricted Payments, less
(ii) the sum of all Restricted Payments made on or after December 29,
1991.
3. Addition of Subsection 3(j). A new subsection 3(j) is hereby added to
the Loan Agreement to read as follows:
(j) Year 2000. The Borrower has reviewed the areas within its
business and operations which could be adversely affected by, and has
developed or is developing a program to address on a timely basis, the
"Year 2000 Issue" (that is, the risk that computer applications used by
the Borrower may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date on
or after December 31, 1999), and has made related appropriate inquiry of
material suppliers and vendors. Based on such review and program, the
Borrower believes that the "Year 2000 Issue" will not have a material
adverse effect on the business, operations, assets, condition (financial
or other) or results of operations of the Borrower. From time to time, at
the request of the Banks, the Borrower shall provide to the Banks such
updated information or documentation as is requested regarding the status
of its efforts to address the Year 2000 Issue.
4. Effective Date. This Amendment shall be effective upon the execution
and delivery by Borrower to the Banks of the following:
a) This Amendment duly executed by the President and Secretary of
Borrower; and
b) A copy of the resolution or resolutions, in form satisfactory
to the Banks and their legal counsel, duly adopted by the Board of
Directors of Borrower approving this Amendment, certified to be true and
correct by the Secretary of Borrower.
5. Miscellaneous.
a) Continuance of Loan Documents. Except as specifically amended
by this Amendment, the Loan Agreement and all other instruments,
documents and agreements executed and delivered in connection with the
Loan Agreement (collectively, the "Loan Documents") remain in full force
and effect. This Amendment is an amendment and not a novation.
b) Representations and Warranties. Customer represents and
warrants that the execution, delivery and performance of this Amendment
are within the corporate powers of Borrower, have been duly authorized by
all necessary corporate action and do not and will not (a) require any
consent or approval of the shareholders of Borrower; (b) violate any
provision of the Articles of Incorporation or By-laws of Borrower or of
any law, rule, regulation, order, writ, judgment, injunction, decree,
2
determination or award presently in effect having applicability to
Borrower; (c) require the consent or approval of, or filing of a
registration with, any government body, agency or authority; or (d)
result in any breach of or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any property of
Borrower pursuant to any indenture or other agreement or instrument under
which Borrower is a party or by which it or its properties may be bound
or affected. Borrower further represents and warrants that this Amendment
constitutes the legal, valid and binding obligation of Borrower
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy or similar laws affecting the enforceability
of creditors' rights generally. In addition, each of the representations
and warranties made by Borrower in the Loan Agreement are true and
correct as of the date of this Amendment except for matters permitted or
contemplated by the Loan Agreement.
c) References. When any Loan Document is referred to in any other
Loan Document or any of the other documents, instruments or materials
executed and delivered heretofore or hereafter pursuant to the Loan
Agreement, it shall be deemed to refer to such Loan Document as amended
by this Amendment.
d) Expenses and Attorneys' Fees. In accordance with Section 10(f)
of the Loan Agreement, Borrower shall pay all fees and expenses incurred
by the Banks, including the reasonable fees of counsel, in connection
with the preparation of this Amendment, the consummation of the
transactions contemplated by this Amendment and the protection or
enforcement of the rights of the Banks under the Loan Agreement.
e) Survival. All agreements, representations and warranties made
in this Amendment or in any documents delivered pursuant to this
Amendment shall survive the execution of this Amendment and the delivery
of any such document.
f) Governing Law. This Amendment and the other documents issued
pursuant to this Amendment are governed by the laws of the State of
Wisconsin without reference to the conflict of law principles of such
state.
g) Counterparts; Headings. This Amendment may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute one and the same agreement.
Article and Section headings in this Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
h) Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Amendment or affecting the validity or enforceability of such provision
in any other jurisdiction.
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IN WITNESS WHEREOF. the parties hereto have executed this Third
Amendment to Loan Agreement as of the day, month and year first
above-written.
SCHULTZ SAV-O STORES, INC.
By: /s/ James H. Dickelman
James H. Dickelman, Chairman, President
and Chief Executive Officer
Attest:
/s/ Armond Go
Armand C. Go, Treasurer and Chief
Accounting Officer
M&I MARSHALL & ILSLEY BANK
/s/ Jeffrey Ticknor
Jeffrey T. Ticknor, Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ Caroline V. Krider
Caroline V. Krider, Vice President
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